Krishna Bhimrao Deshpande Vs. Land
Tribunal, Dharwad & Ors [1992] INSC 223 (3 November 1992)
[LALIT
MOHAN SHARMA AND K. JAYACHANDRA REDDY, JJ.]
ACT:
Constitution
of India, 1950:
Article
252 read with Schedule VII, List n Entry 18- Legislation by Parliament
Requirement-Central Law on ceiling on urban immovable property in pursuance of
Resolution of State Legislature State Laws on other matters relating to the
subject-matter of resolution-Legality of.
Constitution
of India, 1950:
Article
252, Schedule VII, list II, Entry 18-Urban Land (Ceiling and Regulation) Act,
1976 and Karnataka Land Reforms Act as amended in 1974 Object and application
of- Whether any conflict between the Acts.
HEAD NOTE:
In the
year 1972 the Karnataka Legislature passed a resolution under Article 252 of
the Constitution imposing a ceiling on urban immovable property and the
acquisition of such property in excess of the ceiling is limit for public
purposes and all the matters connected therewith shall be regulated in the
State by Parliament by law.
On
1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act
the tenant of the land covered by the Act was entitled to the grant of
occupancy rights after making an application under the Act. The Act came Into
force with effect from 2.1.85. But for the purpose of grant of occupancy
rights, 1.4.74 was the relevant date.
In the
year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder
all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli
Dharwad were declared as urban agglomeration land.
The
Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for imposition of
ceiling on urban properties and the Ceiling Act was made applicable to
Karnataka also in view of the resolution passed by the State Government.
The
lands involved in the present cases were covered by the development plan by the
Belgaum City Town Planning authority as per the Master Plan and they were
included and declared as urban agglomeration in the City of Hubli under the provisions of the Ceiling
Act.
The
owners of the agglomeration lands challenged the order of the Land Tribunal
under the Land Reforms Act conferring occupancy rights on the tenants before
the High Court. They contended that the lands involved in the cases were within
the purview of the Ceiling Act and therefore the provisions of the Land Reforms
Act had no application to such lands on the ground that the provisions of the
Ceiling Act.
The
writ petitions were dismissed by the High Court.
The
owner's writ appeals were also dismissed by a common judgment by the Division
Bench of the High Court. The Division Bench held that there was no conflict
between the two enactments.
The
judgment of the Division Bench was challenged in S.L.P. (Civil) No.
16041-42/88.
Many
of the similar writ petitions that were pending before the High Court were
transferred to the Land Reforms Appellate Tribunal.
The
Appellate Tribunal dismissed the petitions by a common order following the
judgment of the Division Bench of the High Court. Several Civil revision
petitions filed by the land owners against the order of the Appellate Tribunal
were dismissed by the High Court. Some of the special leave petitions were
filed against the order of the High Court in the said civil revision petitions.
The
petitioners-land owners contended that when in pursuance of the resolution of
the State Legislature passed under Article 252 of the Constitution the
Parliament legislated in respect of the topic covered by the resolution. The
Parliamentary law repealed or superseded the existing State legislation on the
topic and therefore such law could not be enforced thereafter; and that vesting
of tenanted land in the State and conferment of occupancy rights under the
provisions of the State Act directly fall under the subject of imposing ceiling
on land holding and other matters incidental or ancillary to the main topic of
imposing ceiling and therefore they were fully covered by the Ceiling Act
passed by the Parliament and the same superseded the State enactment in respect
of such lands.
The
respondents submitted that "imposition of ceiling" was a distinct and
separately identifiable subject and the Parliament was empowered to legislate;
that the power of the State to legislate in respect of the remaining part of
the subject-matter was unaffected; that when two distinct powers came into
existence, vesting law making competence in the State and Parliament, the pith
and substance of the laws made by each of them had to be examined to see whether
any one of them encroached the field set apart as falling within the competence
of the other body; that in any event the provisions of Chapter III of the
Karnataka Land Reforms Act had nothing to do with the imposition of ceiling on
the urban land and that conferring of occupancy rights etc. to the tenants
under Chapter III of the Karnataka Land Reforms Act did not come under the
category of "the matters connected therewith or ancillary or incidental to
the imposition of ceiling" on urban immovable property.
Dismissing
the special leave petitions, this Court,
HELD:
1.01. Article 252 empowers the Parliament to legislate for two or more States
on any of the matters with respect of which the Parliament has no power to make
law except as provided under Articles 249 and 250. This power to legislate is
vested in the Parliament only if two or more State Legislatures think it
desirable to have a law enacted by Parliament on such matters in List II, i.e.
with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition
precedent for vesting the Parliament with such power. [339-C-D] 1.02. The scope
of Entry 18 is very wide and the land mentioned therein may be agricultural or
non-agricultural and may be rural or urban. The subject-matter carved out of
Entry 18 under the resolutions passed by The various State Legislatures related
to only "urban immovable property" and by virtue of the resolution
the law that can be enacted by the Parliament should be a law "imposing a
ceiling on such urban immovable property." [340-B, C] 1.03. From the
resolution it is clear that the subject- matter that was resolved to be
entrusted to the Parliament was the one imposing a ceiling on urban immovable property
and acquisition of such property in excess of the ceiling.
This
subject-matter is the topic that falls within Entry 18 of List II of Schedule
VII to the Constitution and the subject-matter of Entry 18 has been originally
kept apart for the State Legislature to make law and Parliament had no
competence in respect of those matters falling under the wide scope of Entry
18. By virtue of this resolution a part of the area falling under Entry 18 is
transferred to the domain of Parliament to make law relating to the matters
within the transferred area. [339-G, H; 341-A] 2.01. The primary object and the
purpose of the Urban Land (Ceiling and Regulation) Act, 1976 is to provide for the
imposition of ceiling on vacant land in urban agglomeration and for acquisition
of such lands in excess of the ceiling limit and to regulate the construction
of buildings on such lands and for matters connected therewith.
[340-H;
341-A] 2.02. The Karnataka Land Reforms Act as amended in 1974 is a welfare
legislation. The object of the Act was to have a uniform law in the State of Karnataka relating to agrarian reforms,
conferment of ownership on tenants, ceiling on land holdings and for certain
other matters contained therein. [342-D] 2.03. In respect of imposing ceiling
on the land under urban agglomeration the provisions of the Ceiling Act alone
are applicable and to that extent the provisions of Chapter IV of the Karnataka
Land Reforms Act which also deal with the imposition of ceiling would not be
applicable.
[344-C]
2.04. The land in the instant case comes under the urban agglomeration the
imposition of the ceiling should naturally be under the provisions of the Urban
Ceiling Act and not under the Karnataka Land Reforms Act. [344-B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as
compared to imposition of ceiling on owning or to hold agricultural land or any
other kind of property which do not attract the Urban Ceiling Act. These are
two distinct powers and therefore the law making competence can be in two
different legislative bodies.
Consequently
it is difficult to hold that the provisions of Chapter III of the Karnataka
Land Reforms Act are outside the legislative competence of the State
Legislature.
[350-C,
D] 2.06. The one topic that is transferred in the resolution passed under
Article 252 as distinct and separately identifiable and does not include the
remaining topics under Entry 18 in respect of which the State alone has the
power to legislate. [351-D] 2.07. The legislative power of the State has to be
reconciled with that of the Parliament and that in their respective fields each
is supreme. Even assuming that the State enactment has same effect on the
subject-matter falling within the Parliament's legislative competence that by
itself will not render such law invalid or inoperative.
[350-G-H]
2.08. There is no conflict between the Ceiling Act and the State Act. The
imposition of ceiling on urban immovable property is an independent topic and
cannot be construed as to nullify the other subject left in the domain of the
State Legislature under Entry 18 inasmuch as imposition of ceiling is a
distinct and separately identifiable subject and does not cover the other
measures such as regulation of relationship of landlord and tenant in respect
of which the State Legislature has competence to legislate. [351-C-D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms
Act providing for computation of the area in respect of which the tenant may be
granted occupancy rights. But it is clear that ceiling on the area in this
context is only for the purpose of Section 45.
[351-F]
2.10. Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land
Reforms Act deal with the conferment of occupancy rights on the respective
tenants and they do not in any way conflict with the subject matter transferred
to the Parliament by the resolution passed under Section 252. [351-E,F] Thumati
Venkaiah and others v. State of Andhra Pradesh and of others, [1980] 4 SCC 295;
Union of India and others v. Valluri Basavaiah Chowdhary and others, [1979] 3
SCC 324;
Calcutta
Gas Company (Proprietory) Ltd. v. State of West Bengal and others, AIR 1962 SC 1044 and Kannan Devan Hills Produce
Company Ltd. v. The State of Kerala etc., AIR 1972 SC 2301 referred to.
CIVIL
APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos. 16041-42/88.
From
the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P. No
9173/86 and W.A. No 2707/85.
WITH
SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S.
Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S.
Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K.
Kulkarni and Surya Kant for the Respondents.
The
following Order of the Court was delivered by K. JAYACHANDRA REDDY, J. In all
these special leave petitions the common question that arises for consideration
is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in
1974 (`Act' for short) cease to be applicable in all respects to the lands
which came within the purview of the Urban Land (Ceiling and Regulation) Act,
1976 ('Ceiling Act' for short). The lands involved in these matters are covered
by the development plan by the Belgaum City Town Planning authority as per the
Master Plan for the said City and they are included and declared as urban
agglomeration in the City of Hubli under
the provisions of the Ceiling Act. In the year 1972 the Karnataka Legislature
passed a resolution under Article 252 of the Constitution to the effect that
imposing a ceiling on urban immovable property and the acquisition of such
property in excess of the ceiling limit for public purposes and all the matters
connected therewith shall be regulated in the State by Parliament Qby law. The
State Legislature thus divested itself of the legislative competence to enact
law in respect of subject-matter of the resolution. On 1.4.74 the amended
Karnataka Land Reforms Act was enacted and under the said Act the tenant of the
land covered by the Act is entitled to the grant of occupancy rights after
making an application under the Act. This Act came into force with effect from
2.1.85. But for the purpose of grant of occupancy rights 1.4.74 was the
relevant date. While so in the year 1975 the Governor of Karnataka passed the
Urban Aggolmeration Ordinance whereunder all lands between the periphery of 8
K.Ms. of the municipal limits of Hubli Dharwad were declared as urban
agglomeration land. In the year 1976 the Parliament passed the Ceiling Act for
imposition of ceiling on urban properties and the Act was made applicable to
Karnataka also in view of the resolution passed by the State Government
referred to above. The order of the Land Tribunal under the Act conferring
occupancy rights on the tenants was challenged before the High Court contending
that the lands involved in these cases were within the purview of the Ceiling
Act and therefore the provisions of the Land Reforms Act had no application to
such lands on the ground that the provisions of the State Act were repugnant to
the provisions of the Central Act namely the Ceiling Act. The writ petition was
dismissed by the High Court. The owners preferred writ appeals and they were
also dismissed by a common judgment in Writ Appeal Nos. 2707 and 2361/85 etc.
The Division Bench held that there is no conflict between the two enactment in
certain respect i.e. atleast so far as the implementation of the provisions of
Chapter III of the Act are concerned and that provisions of this Chapter of the
Act do not cease to apply to the agricultural lands coming within the meaning
of urban agglomeration in the Ceiling Act. The judgment of the Division Bench
is challenged in S.L.P.(Civil) No. 16041- 42/88. Many of the similar writ
petitions that were pending before the High Court were transferred to the Land
Reforms Appellate Tribunal. The Appellate Tribunal dismissed the petitions by a
common order following the judgment of the Division Bench of the High Court in
Writ Appeal No.2707/85 and connected matters. Several civil revisions petitions
filed by the land owners against the order of the Appellate Tribunal were
dismissed by the High Court. Some of the special leave petitions are filed
against the order of the High Court in the said civil revision petitions. Therefore
all these special leave petitions can be disposed of by a common order.
It was
urged before us that the resolution of the State Legislature passed under
Article 252 of the Constitution shifted the topic covered by the resolution
from List II of Schedule VII to the Constitution and vested the competence to
make the law in respect of the said topic in the Parliament and that thereafter
the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the
Parliament legislates in respect of the topic covered by the resolution, the
Parliamentary law, repeals or supersedes any existing State legislation on the
topic and therefore such law cannot be enforced thereafter.
We
shall first extract some of the relevant provisions of the Constitution of
India and the respective enactments.
Article
246 of the Constitution reads thus:
"246.
Subject-matter of laws made by Parliament and by the Legislatures of States-(l)
Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List I in the
Seventh Schedule (in this Constitution referred to as the "Union
List").
(2) xx
xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has
exclusive power to make laws for such State or any part thereof with respect to
any of the matters enumerated in List II in the Seventh Schedule (in this
Constitution referred to as the "State List").
(4)xx
xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to
the Constitution is in the following terms:
"18.
Land, that is to say, rights in or over land, land tenures including the
relation of landlord and tenant, and the collection of rents, transfer and
alienation of agricultural land; land improvement and agricultural loans;
colonization."
Article 252 of the Constitution reads thus:
"252.
Power of Parliament to legislate for two or more States by consent and adoption
of such legislation by any other State-(1) If it appears to the Legislatures of
two or more States to be desirable that any of the matters with respect to
which Parliament has no power to make laws for the States except as provided in
Articles 249 and 250 should be regulated in such States by Parliament by law,
and if resolutions to that effect are passed by all the Houses of the
Legislatures of those States, it shall be lawful for Parliament to pass an Act
for regulating that matter accordingly, and any Act so passed shall apply to such
States and to any other State by which it is adopted afterwards by resolution
passed in that behalf by the House or, where there are two Houses, by each of
the Houses of the Legislature of that State.
(2)
Any Act so passed by Parliament may be amended or repealed by an Act of
Parliament passed or adopted in like manner but shall not, as respects any
State to which it applics, be amended or repcaled by an Act of the Legislature
of that State." Article 252 empowers the Parliament to legislate for two
or more States on any of the matters with respect of which the Parliament has
no power to make law except as provided under Articles 249 and 250. This power
to legislate is vested in the Parliament only if two or more State Legislatures
think it desirable to have a law enacted by Parliament on such matters in List
II i.e. with respect to which the Parliament has no power to make law for the
State.
The
passing of the resolutions by the State Legislatures is a condition precedent
for vesting the Parliament with such power. The relevant portion of the
resolution passed by the State Legislature under Article 252 reads thus:
"Now,
therefore, in pursuance of clause (1) of Article 252 of the Constitution, this
Assembly hereby resolves that the imposition of a ceiling on urban immovable
property and F acquisition of such property in excess of the ceiling and all
matters connected therewith or ancillary and incidental thereto should be
regulated in the State of Karnataka by Parliament by law." The resolution
states that the imposition of ceiling on urban immovable property and the
acquisition of such property in excess of the ceiling limit with a view to
utilising such excess property for public purposes and all other matters
connected therein or incidental thereto shall be regulated in this State by
Parliament by law. The basic question that arises is what is the actual content
of the subject-matter that was resolved to be entrusted to Parliament by the
State Legislature under Article 252 of the Constitution. From the resolution it
is clear that the subject-matter that was resolved to be entrusted to the
Parliament was the one imposing a ceiling on urban immovable property and
acquisition of such property in excess of the ceiling. It is true that this
subject-matter is the topic that falls within Entry 18 of List 11 of Schedule
VII to the Constitution and the said subject-matter of Entry 18 has been
originally kept apart for the State Legislature to make law and Parliament had
no competence in respect of those matters falling under the wide scope of Entry
18. Now by virtue of this resolution a part of the area falling under Entry 18
is transferred to the domain of Parliament to make law relating to the matters
within the transferred area. The scope of Entry 18 is very wide and the land
mentioned therein may be agricultural or non-agricultural and may be rural or
urban. The subject-matter carved out of Entry 18 under the resolutions passed
by the various State Legislatures related to only- "urban immovable
property" and by virtue of the resolution the law that can be enacted by
the Parliament should be a law "imposing a ceiling on such urban immovable
property. The learned counsel for the petitioners, however, urged that vesting
of tenanted land in the State and conferment of occupancy rights under the
provisions of the State Act directly fall under the subject of imposing ceiling
on and holding and other matters incidental or ancillary to the main topic of
imposing ceiling and therefore they are fully covered by the Ceiling Act passed
by the Parliament and the same supersedes the State enactment in respect of
this land. The learned counsel appearing for the respondents on the contrary
submitted that "imposition of ceiling" is a distinct and separately
identifiable subject and is the power carved out of Entry 18 and vested in the
Parliament to legislate and that the power of the State to legislate in respect
of the remaining part of the subject-matter is unaffected and that when two
distinct powers have come into existence, vesting law making competence in the
State and Parliament, the pith and substance of the laws made by each of them
has to be examined to see whether any one of them encroaches the field set
apart as falling within the competence of the other body. The learned counsel
for the respondents, however, submitted that in any event the provisions of
Chapter III of the Act have nothing to do with the imposition of ceiling on the
urban land and that conferring of occupancy rights etc.
to the
tenants under Chapter 111 of the Act do not come under the category of
"the matters connected therewith or ancillary or incidental to the
imposition of ceiling" on urban immovable property.
Now we
shall refer to the provisions of the Urban Ceiling Act. The Statement of
Objects and Reasons under Preamble to the said Act would show that the primary
object and the purpose is to provide for the imposition of ceiling on vacant
land in urban agglomeration and for acquisition of such lands in excess of the
ceiling limit and to regulate the Marwaha and others. [1974] 1 SCR 165; Miss
Neelima Shangla v. State of Haryana and others, [1986] 4 SCC 268, or Jitendra
Kumar and others v. State of Punjab and others:
[1985]
1 SCR 899." If we have regard to the above enunciation that a candidate
who finds a place in the select list as a candidate selected for appointment to
a civil post, does not acquire an indefeasible right to be appointed in such
posting the absence of any specific Rule entitling him for such appointment and
he could be aggrieved by his non- appointment only when the Administration does
so either arbitrarily or for no bona fide reasons, it follows as a necessary
concomitant that such candidate even if has a legitimate expectation of being
appointed in such posts due to his name finding a place in the select list of
candidates, cannot claim to have a right to be heard before such select list is
cancelled for bona fide and valid reasons and not arbitrarily: In the instant
case, when the Chandigarh Administration which received the complaints about
the unfair and injudicious manner in which select list of candidates for
appointment as conductors in CTU was prepared by the Selection Board
constituted for the purpose, found those complaints to be well founded on an
enquiry got made in that regard, we are unable to find that the Chandigarh
Administration had acted either arbitrarily or without bona fide and valid
reasons in cancelling such 0dubious select list. Hence, the contentions of the
learned counsel for the Respondents as to the sustainability of the Judgment of
CAT under appeal on the ground of non-affording of an opportunity of hearing to
the Respondents (candidates in the select list) is a misconceived one and is
consequently rejected.
In the
result, we allow this appeal, set aside the Judgment under appeal, and reject
the applications made by Respondents before CAT, Chandigarh. However, in the
facts and circumstances of this appeal, we make no order as to costs.
G.N.
Appeal allowed.
FOOD
CORPORATION OF INDIA V. KAMDHENU CATTLE FEED INDUSTRIES NOVEMBER 3, 1992 [J.S.
VERMA, YOGESHWAR DAYAL AND N. VENKATACHALA, JJ.] Constitution of India, 1950:
Article
14-Contractual transactions of State or its instrumentality-Essential
requisites-Non-arbitrariness, fairness in action and due consideration of
legitimate expectation-Ignoring the highest bid- Negotiations for higher offer
and acceptance thereof-Validity of.
Administrative
Law:
Doctrine
of legitimate expectation-Forms part of non arbitrariness and Rule of Law- To
be determined in the larger public interest Open to judicial review.
The
appellant-Corporation invited tenders for sale of stocks of damaged
food-grains. The respondent's bid was the highest. Since the appellant was not
satisfied about the adequacy of the amount offered even in the highest tender,
it invited all the tenders to participate in the negotiations, instead of
accepting the highest tender.
During
the course of negotiations, the respondent refused to revise the rates in its
offer. On the basis of the highest bid made during the negotiations, the
appellant disposed of the stocks of damaged foodgrains, rejecting the highest
tenders. The respondent, whose tender was the highest, challenged the decision
of the appellants by filing a Writ Petition before the High Court. It was contended
that the action of the appellant was arbitrary and hence violative of Art. 14
of the Constitution. The High Court accepted the contention and allowed the
Writ Petition. Being aggrieved by the High Court's decision the
appellant-Corporation preferred the present appeal.
It was
contended on behalf of the appellant that there being no right in the person
submitting the highest tender to claim acceptance thereof, and since all
tenderers were given equal opportunity to participate in the negotiations and
to revise the bid before acceptance, the action of the appellant was not
arbitrary.
The
Respondent contended that since no cogent reasons were indicated for rejecting
all the tenders and for deciding to dispose of the stock by negotiating with
the tenderers for procuring a higher price, such a decision was arbitrary.
Allowing
the appeal, this Court,
HELD:
1.1. In contractual sphere as in all other State actions, the State and all its
instrumentalities have to conform to Article 14 of the Constitution of which
non- arbitrariness is a significant facet. There is no unfettered discretion in
public law. A public authority possesses powers only to use them for public
good. This imposes the duty to act fairly and to adopt a procedure which is
`fairplay in action'. Due observance of this obligation as a part of good
administration raises a reasonable or legitimate expectation in every citizen
to be treated fairly in his interaction with the State and its
instrumentalities, with this element forming a necessary component of the
decision making process in all State actions. To satisfy this requirement of
non-arbitrariness in a State action, it is necessary to consider and give due
weight to the reasonable-or legitimate expectations of the persons likely to be
affected by the decision or else that unfairness in the exercise of the power
may amount to an abuse or excess of power apart from affecting the bona fides
of the decision in a given case. The decision so made would be exposed to
challenge on the ground of arbitrariness. Rule of law does not completely
eliminate discretion in the exercise of power, as it is unrealistic, but
provides for control of its exercise by judicial review. [328-A-D]
12.
The mere reasonable or legitimate expectation of a citizen, in such a
situation, may not by itself be a distinct enforceable right, but failure to
consider and give due weight to it may render the decision arbitrary, and this
is how the requirement of due consideration of a legitimate expectation forms
part of the principle of non- arbitrariness, a necessary concomitant of the
rule of law.
Every
legitimate expectation is a relevant factor requiring due consideration in a
fair decision making process. Whether the expectation of the claimant is
reasonable or legitimate in the context is a question of fact in each case.
Whenever the question arises, it is to be determined not according to the
claimant's perception but in larger public interest wherein other more
important considerations may outweigh what would otherwise have been the
legitimate expectation of the claimant. A bona fide decision of the public
authority reached in this manner would satisfy the requirement of non-
arbitrariness and withstand judicial scrutiny. [328-E-G] 2.1. Even though the
highest tenderer can claim no right to have his tender accepted, there being a
power while inviting tenders to reject all the tenders, yet that power cannot
be exercised arbitrarily and must depend for its validity on the existence of
cogent reasons for such action. The object of inviting tenders for disposal of
a commodity is to procure the highest price while giving equal opportunity to
all the intending bidders to compete.
Procuring
the highest price for the commodity is undoubtedly in public interest since the
amount so collected goes to the public fund. Accordingly, inadequacy of the
price offered in the highest tender would be a cogent ground for negotiating
with the tenderers giving them equal opportunity to revise their bids with a
view to obtain the highest available price. Retaining the option to accept the
highest tender, in case the negotiations do not yield a significantly higher
offer would be fair to the tenderers besides protecting the public interest. A
procedure wherein resort is had to negotiations with the tenderers for
obtaining a significantly higher bid during the period when the offers in the
tenders remain open for acceptance and rejection of the tenders only in the
event of a significant higher bid being obtained during negotiations would
ordinarily satisfy this requirement. This procedure involves giving due weight
to the legitimate expectation of the highest bidder to have his tender accepted
unless outbid by a higher offer, in which case acceptance of the highest offer
within the time the offers remain open would be a reasonable exercise of power
for public good. [329-E-H; 330-A] Shanti Vijay & Co. etc. v. Princess
Fatima Fouzia & Ors. etc., [1980] I S.C.R. 459, relied on.
Council
of Civil Service Unions and Others v. Minister for the Civil Service, 1985 A.C.
374 (H.L.), and In re Preston, 1985 A.C. 835 (H.L.), referred to.
22. In
the instant case, the respondent's highest tender was super seded only by a
significantly higher bid made during the negotiations with all tenderers giving
them equal opportunity to compete by revising their bids. The fact that it was
a significantly higher bid obtained by adopting the right course is sufficient
to demonstrate that the action of the appellant satisfied the requirement of
non-arbitrariness, and it was taken for the cogent reason of inadequacy of the
price offered in the highest tender, which reason was evident to all tenderers
invited to participate in the negotiations and to revise their bids. The High
Court was in error in taking the contrary view. [330-D-E] CIVIL APPELLATE
JURISDICTION: Civil Appeal No. 4731 of 1992.
From
the Judgment and Order dated 21.7.92 of the C.W.N. 7419 of 1992.
Y.P.
Rao for the Appellant. Ashok Sen, H.L. Aggarwal, and K.K. Gupta (NP) for the
Respondent.
The
Judgment of the Court was delivered by VERMA, J. Leave granted.
The
appeal by special leave under Article 136 of the Constitution is against the
judgment and order dated 21.7.92 by which the Civil Writ Petition No. 7419 of
1992 has been allowed by the Punjab & Haryana High Court directing the
appellant Food Corporation of India to allot to the respondent the necessary
stocks of damaged rich for which the tenders had been invited by the appellant,
since the respondent was the highest bidder.
The
appellant invited tenders for sale of stocks of damaged foodgrains in
accordance with the terms and conditions contained in the tender notice
(Annexure `A').
The
tenders were required to be submitted upto 2.45 p.m. on 18.5.92; the tenders
were to be opened on 18.5.92 at 3.00 p.m.; and offers were to remain open for
acceptance upto and inclusive of 17.7.92. The respondent submitted its tender
for a stock of damaged rice within the time specified, but the respondent's
tender was conditional and the full amount of earnest money required by the
terms was also not deposited. It is, however, not necessary to mention the
particulars of these two deficiencies in respondent's tender since they appear
to have been waived by the appellant and are not relied on before us to support
the appellant's action. The respondent's bid in the tender was admittedly the
highest as found on opening, the tenders. lt appears that the appellant was not
satisfied about the adequacy of the amount offered in the highest tenders for
purchase of the stocks of damaged foodgrains and, therefore. instead of
accepting any of the tenders submitted, the appellant invited all the tenderers
to participate in the negotiation on 9.6.92. The respondent refused to revise
the rates offered in its tender. It was Rs. 245 per quintal for certain lots of
this stock;, while the highest offer made during the negotiations was Rs.
275.72 per quintal.
Similarly,
as against the respondent's offer of Rs. 201 per quintal in respect of some
other lots, the highest offer made during the negotiation was Rs. 271.55 per
quintal. On this basis, the appellant was to receive an additional amount of
Rs. 8 lakhs by accepting the highest offer made during the negotiations over
the total amount offered by the respondent for the stock of damaged rice.
Overall, the appellant was offered an excess amount of Rs. 20 lakhs for the
entire stock of damaged foodgrains in the highest offer made during the
negotiations, inasmuch as against the total amount Rs.90 lakhs which the
appellant would have received by acceptance of the highest tenders, the
appellant was to receive the amount of Rs. 1 crore 10 lakhs by accepting the
highest offers made during the negotiations in which all the tenderers,
including the respondent, were given equal opportunity to participate.
The
respondent filed the above Writ Petition in the High Court challenging the
appellant's refusal to accept the highest tender submitted by it for the stock
of damaged rice claiming that the appellant having chosen to invite tenders, it
could not thereafter dispose of the stocks of damaged foodgrains by subsequent
negotiations rejecting the highest tenders on the ground that a higher bid was
obtained by negotiations. This action of the appellant, was alleged to be
arbitrary and, therefore, in substance, violative of Article 14 of the
Constitution. The High Court by its impugned order accepted this contention of
the respondent and allowed the Writ Petition. Hence, this appeal.
It is
not disputed that according to the terms and conditions on which the appellant
had invited tenders, the appellant had reserved the right to reject all the
tenders and, therefore, the highest tender was not bound to be accepted.
Learned counsel for the appellant submitted that there being no right in the
person submitting the highest tender to claim acceptance of the tender, in a
case like the present. where all the tenderers including the respondent, were
invited for negotiation and given equal opportunity to participate and to
revise the bid before acceptance of the highest bid offered during negotiation
which resulted in obtaining an additional amount of Rs. 8 lakhs for the stock
relating to respondent's tender and an overall gain of Rs. 20 lakhs in disposal
of the entire stock of damaged foodgrains, the action of the appellant could
not be termed arbitrary. In reply, Shri A.K. Sen, learned counsel for the
respondent contended that even though the appellant had the right to reject any
tender, including the highest tender, and thereafter negotiate with all the
tenderers to procure the highest price for the commodity, yet this right has to
be exercised reasonably and not arbitrarily, otherwise, the credibility of the
procedure of sale by inviting tenders would be lost. Shri Sen submitted that
the decision not to accept any tender and to negotiate thereafter for obtaining
a higher price than that quoted in the highest bid, cannot be taken on the whim
and caprice of the concerned authority and can be only for cogent reasons
indicated while taking the decision, or else, the decision would be arbitrary.
On this basis, Shri Sen further submitted that in the present case, no cogent
reasons were indicated for rejecting all the tenders and deciding to dispose of
the commodity by negotiation with the tenderers for procuring a higher price.
He
also added that the mere fact that a higher price was obtained by negotiation
would not justify the decision if it was not taken in the manner permissible.
This was the only submission of Shri Sen to support the decision of the High
Court.
In our
view, Shri A.K. Sen is right in the first part of his submission. However, in
the present case, the respondent does not get any benefit therefrom. The High
Court's decision is based on the only ground that once tenders have been
invited and the highest bidder has come forward to comply with the conditions
stipulated in the tender notice, it is not permissible to switch over to
negotiation with all the tenderers and thereby reject the highest tender.
According to the High Court, such a procedure is not countenanced by the rule
of law. This is not the same, as the submission of Shri Sen which is limited to
permissibility of such a course only on cogent grounds indicated while deciding
to switch over to the procedure of negotiation after receiving the tenders to
satisfy the requirement of non arbitrariness, a necessary concomitant of the
rule of law. The proposition enunciated by the High Court which forms the sole
basis of its decision is too wide to be acceptable and has to be limited in the
manner indicated hereafter.
In
contractual sphere as in all other State actions, the State and all its
instrumentalities have to conform to Article 14 of the Constitution of which
non-arbitrariness is a significant facet. There is no unfettered discretion in
public law: A public authority possesses powers only to use them for public
good. This impose the duty to act fairly and to adopt a procedure which is
`fairplay in action'. Due observance of this obligation as a part of good
administration raises a reasonable or legitimate expectation in every citizen
to be treated fairly in his interaction with the State and its
instrumentalities, with this element forming a necessary component of the
decision making process in all State actions. To satisfy this requirement of
non- arbitrariness in a State action, it is, therefore, necessary to consider
and give due weight to the reasonable or legitimate expectations of the persons
likely lo be affected by the decision or else that unfairness in the exercise
of the power may amount to an abuse or excess of power apart from affecting the
bona fides of the decision in a given case. The decision so made would be
exposed to challenge on the ground of arbitrariness. Rule of law does not
completely eliminate discretion in the exercise of power, as it is unrealistic,
but providers for control of its exercise by judicial review.
The
mere reasonable or legitimate expectation of a citizen, in such a situation,
may not by itself be a distinct enforceable right, but failure to consider and
give due weight to it may render the decision arbitrary, and this is how the
requirement of due consideration of a Legitimate expectation forms part of the
principle of non- arbitrariness, a necessary concomitant of the rule of law.
Every
legitimate expectation is a relevant factor requiring due consideration a fair
decision making process. Whether the expectation of the claimant is reasonable
or legitimate in the context is a question of fact in each case. Whenever the
question arises, it is to be determined not according to the claimant's
perception but in larger public interest wherein other more important
considerations may outweigh what would otherwise have been the legitimate
expectation of the claimant. A bona fide decision of the public authority
reached in this manner would satisfy the requirement of non-arbitrariness and
withstand judicial scrutiny. The doctrine of legitimate expectation gets
assimilated in the rule of law and operates in our legal system in this manner
and to this extent.
In
Council of Civil Service Unions and Others v. Minister for the Civil Service,
1985 A.C. 374 (H.L.) the House of Lords indicated the extent to which the
legitimate expectation interfaces with exercise of discretionary power. The
impugned action was upheld as reasonable, made on due consideration of all
relevant factors including the legitimate expectation of the applicant, wherein
the considerations of national security were found to outweigh that which
otherwise would have been the reasonable expectation of the applicant. Lord
Scarman pointed out that `the controlling factor in determining whether the
exercise of prerogative power is subject to judicial review is not its source
but its subject-matter'. Again in In re preston 1985 A.C. 835 (H.L.) it was
stated by Lord Scarman that `the principle of fairness has an important place
in the law of judicial review' ant `unfairness in the purported exercise of a
power can be such that it is an abuse of excess of power'. These decisions of
the House of Lords give a similar indication of the significance of the
doctrine of legitimate expectation. Shri A.K. Sen referred to Shanti Vijay
& Co. etc. v. Princess Fatima Fouzia & Ors. etc., [1980] 1 S.C.R. 459,
which holds that court should interfere where discretionary power is not
exercised reasonably and in good faith.
From
the above, it is clear that even though the highest tenderer can claim no right
to have his tender accepted, there being a power while inviting tenders to
reject all the tenders, yet the power to reject all the tenders cannot be exercised
arbitrarily and must depend for its validity on the existence of cogent reasons
for such action. The object of inviting tenders for disposal of a commodity is
to procure the highest price while giving equal opportunity to all the
intending bidders to compete.
Procuring
the highest price for the commodity is undoubtedly in public interest since the
amount so collected goes to the public fund. Accordingly, inadequacy of the
price offered in the highest tender would be a cogent ground for negotiating
with the tenderers giving them equal opportunity to revise their bids with a
view to obtain the highest available price. The inadequacy may be for several
reasons known in the commercial field. Inadequacy of the prince quoted in the
highest tender would be a question of fact in each case.
Retaining
the option to accept the highest tender, in case the negotiations do not yield
a significantly higher offer would be fair to the tenderers besides protecting
the public interest. A procedure wherein resort is had to negotiations with the
tenderers for obtaining a significantly higher bid during the period when the
offers in the tenders remain open for acceptance and rejection of the tenders
only in the event of a significant higher bid being obtained during negotiations
would ordinarily satisfy this requirement. This procedure involves giving due
weight to the legitimate expectation of the highest bidder to have his tender
accepted unless outbid by a higher offer, in which case acceptance of the
highest offer within the time the offers remain open would be a reasonable
exercise power for public good.
In the
present case, the last date upto which the offer made in the tender was to
remain open for acceptance was 17.7.92. After opening the tenders on 18.5.92,
the appellant decided to negotiate with all the tenderers on 9.6.92 when
significantly higher amount, as indicated earlier, was offered above the amount
quoted in the highest tender. In such a situation, if the negotiations did not
yield the desirable result of obtaining a significantly higher price, the
appellant had the option to accept the highest tender before the last date,
viz., 17.7.92 upto which the offer made therein was to remain open for
acceptance. In this manner, the respondent's higher tender was superseded only
by a significantly higher bid made during the negotiations with all tenderers
giving them equal opportunity to compete by revising their bids. The fact that
it was a significantly higher bid obtained by adopting this course is
sufficient in the facts of the present case to demonstrate that the action of
the appellant satisfied the requirement of non- arbitrariness, and it was taken
for the cogent reason of inadequacy of the price offered in the highest tender,
which reason was evident to all tenderers invited to participate in the
negotiations and to revise their bids. The High Court was in error in taking
the contrary view.
Consequently,
this appeal is allowed. The impugned judgment of the High Court is set aside,
resulting in dismissal of the respondent's writ petition, No costs, G.N. Appeal
allowed.
KRISHNA
BHIMRAO DESHPANDE v. LAND TRIBUNAL, DHARWAD AND ORS.
NOVEMBER
3, 1992 [LALIT MOHAN SHARMA AND K. JAYACHANDRA REDDY, JJ.] Constitution of
India, 1950:
Article
252 read with Schedule VII, List n Entry 18- Legislation by Parliament
Requirement-Central Law on ceiling on urban immovable property in pursuance of
Resolution of State Legislature State Laws on other matters relating to the
subject-matter of resolution-Legality of. Constitution of India, 1950:
Article
252, Schedule VII, list II, Entry 18-Urban Land (Ceiling and Regulation) Act,
1976 and Karnataka Land Reforms Act as amended in 1974 Object and application
of- Whether any conflict between the Acts.
In the
year 1972 the Karnataka Legislature passed a resolution under Article 252 of
the Constitution imposing a ceiling on urban immovable property and the
acquisition of such property in excess of the ceiling is limit for public
purposes and all the matters connected therewith shall be regulated in the
State by Parliament by law.
On
1.4.74 the Karnataka Land Reforms (Amendment) Act was enacted and under the Act
the tenant of the land covered by the Act was entitled to the grant of
occupancy rights after making an application under the Act. The Act came Into
force with effect from 2.1.85. But for the purpose of grant of occupancy
rights, 1.4.74 was the relevant date.
In the
year 1975 the Karnataka Urban Agglomeration Ordinance was passed, whereunder
all lands between the periphery of 8 K.Ms. of the municipal limits of Hubli
Dharwad were declared as urban agglomeration land.
The
Parliament passed the Urban Land (Ceiling and Regulation) Act, 1976 for
imposition of ceiling on urban properties and the Ceiling Act was made
applicable to Karnataka also in view of the resolution passed by the State
Government.
The
lands involved in the present cases were covered by the development plan by the
Belgaum City Town Planning authority as per the Master Plan and they were
included and declared as urban agglomeration in the City of Hubli under the
provisions of the Ceiling Act.
The
owners of the agglomeration lands challenged the order of the Land Tribunal
under the Land Reforms Act conferring occupancy rights on the tenants before
the High Court. They contended that the lands involved in the cases were within
the purview of the Ceiling Act and therefore the provisions of the Land Reforms
Act had no application to such lands on the ground that the provisions of the
Ceiling Act.
The
writ petitions were dismissed by the High Court.
The
owner's writ appeals were also dismissed by a common judgment by the Division
Bench of the High Court. The Division Bench held that there was no conflict
between the two enactments.
The
judgment of the Division Bench was challenged in S.L.P. (Civil) No.
16041-42/88.
Many
of the similar writ petitions that were pending before the High Court were
transferred to the Land Reforms Appellate Tribunal.
The
Appellate Tribunal dismissed the petitions by a common order following the judgment
of the Division Bench of the High Court. Several Civil revision petitions filed
by the land owners against the order of the Appellate Tribunal were dismissed
by the High Court. Some of the special leave petitions were filed against the
order of the High Court in the said civil revision petitions.
The
petitioners-land owners contended that when in pursuance of the resolution of
the State Legislature passed under Article 252 of the Constitution the
Parliament legislated in respect of the topic covered by the resolution. The
Parliamentary law repealed or superseded the existing State legislation on the
topic and therefore such law could not be enforced thereafter; and that vesting
of tenanted land in the State and conferment of occupancy rights under the
provisions of the State Act directly fall under the subject of imposing ceiling
on land holding and other matters incidental or ancillary to the main topic of
imposing ceiling and therefore they were fully covered by the Ceiling Act
passed by the Parliament and the same superseded the State enactment in respect
of such lands.
The
respondents submitted that "imposition of ceiling" was a distinct and
separately identifiable subject and the Parliament was empowered to legislate;
that the power of the State to legislate in respect of the remaining part of
the subject-matter was unaffected; that when two distinct powers came into
existence, vesting law making competence in the State and Parliament, the pith
and substance of the laws made by each of them had to be examined to see
whether any one of them encroached the field set apart as falling within the
competence of the other body; that in any event the provisions of Chapter III
of the Karnataka Land Reforms Act had nothing to do with the imposition of ceiling
on the urban land and that conferring of occupancy rights etc. to the tenants
under Chapter III of the Karnataka Land Reforms Act did not come under the
category of "the matters connected therewith or ancillary or incidental to
the imposition of ceiling" on urban immovable property.
Dismissing
the special leave petitions, this Court,
HELD:
1.01. Article 252 empowers the Parliament to legislate for two or more States
on any of the matters with respect of which the Parliament has no power to make
law except as provided under Articles 249 and 250. This power to legislate is
vested in the Parliament only if two or more State Legislatures think it
desirable to have a law enacted by Parliament on such matters in List II, i.e.
with respect to which the Parliament has no power to make law for the State.
The passing of the resolutions by the State Legislatures is a condition
precedent for vesting the Parliament with such power. [339-C-D] 1.02. The scope
of Entry 18 is very wide and the land mentioned therein may be agricultural or
non-agricultural and may be rural or urban. The subject-matter carved out of
Entry 18 under the resolutions passed by The various State Legislatures related
to only "urban immovable property" and by virtue of the resolution the
law that can be enacted by the Parliament should be a law "imposing a
ceiling on such urban immovable property." [340-B, C] 1.03. From the
resolution it is clear that the subject- matter that was resolved to be
entrusted to the Parliament was the one imposing a ceiling on urban immovable
property and acquisition of such property in excess of the ceiling.
This
subject-matter is the topic that falls within Entry 18 of List II of Schedule
VII to the Constitution and the subject-matter of Entry 18 has been originally kept
apart for the State Legislature to make law and Parliament had no competence in
respect of those matters falling under the wide scope of Entry 18. By virtue of
this resolution a part of the area falling under Entry 18 is transferred to the
domain of Parliament to make law relating to the matters within the transferred
area. [339-G, H; 341-A] 2.01. The primary object and the purpose of the Urban
Land (Ceiling and Regulation) Act, 1976 is to provide for the imposition of
ceiling on vacant land in urban agglomeration and for acquisition of such lands
in excess of the ceiling limit and to regulate the construction of buildings on
such lands and for matters connected therewith.
[340-H;
341-A] 2.02. The Karnataka Land Reforms Act as amended in 1974 is a welfare
legislation. The object of the Act was to have a uniform law in the State of
Karnataka relating to agrarian reforms, conferment of ownership on tenants,
ceiling on land holdings and for certain other matters contained therein.
[342-D] 2.03. In respect of imposing ceiling on the land under urban
agglomeration the provisions of the Ceiling Act alone are applicable and to
that extent the provisions of Chapter IV of the Karnataka Land Reforms Act
which also deal with the imposition of ceiling would not be applicable.
[344-C]
2.04. The land in the instant case comes under the urban agglomeration the
imposition of the ceiling should naturally be under the provisions of the Urban
Ceiling Act and not under the Karnataka Land Reforms Act. [344-B, C] 2.05.
Imposition of ceiling on urban land is a distinct and independent subject as
compared to imposition of ceiling on owning or to hold agricultural land or any
other kind of property which do not attract the Urban Ceiling Act. These are
two distinct powers and therefore the law making competence can be in two
different legislative bodies.
Consequently
it is difficult to hold that the provisions of Chapter III of the Karnataka
Land Reforms Act are outside the legislative competence of the State
Legislature.
[350-C,
D] 2.06. The one topic that is transferred in the resolution passed under
Article 252 as distinct and separately identifiable and does not include the
remaining topics under Entry 18 in respect of which the State alone has the
power to legislate. [351-D] 2.07. The legislative power of the State has to be
reconciled with that of the Parliament and that in their respective fields each
is supreme. Even assuming that the State enactment has same effect on the
subject-matter falling within the Parliament's legislative competence that by
itself will not render such law invalid or inoperative.
[350-G-H]
2.08. There is no conflict between the Ceiling Act and the State Act. The
imposition of ceiling on urban immovable property is an independent topic and
cannot be construed as to nullify the other subject left in the domain of the
State Legislature under Entry 18 inasmuch as imposition of ceiling is a
distinct and separately identifiable subject and does not cover the other
measures such as regulation of relationship of landlord and tenant in respect
of which the State Legislature has competence to legislate. [351-C-D] 2.09.
There is a ceiling provision under Section 45(2) of the Karnataka Land Reforms
Act providing for computation of the area in respect of which the tenant may be
granted occupancy rights. But it is clear that ceiling on the area in this
context is only for the purpose of Section 45.
[351-F]
2.10. Provisions in the Chapters II, III, V, VI to XI of the Karnataka Land
Reforms Act deal with the conferment of occupancy rights on the respective
tenants and they do not in any way conflict with the subject matter transferred
to the Parliament by the resolution passed under Section 252. [351-E,F] Thumati
Venkaiah and others v. State of Andhra Pradesh and of others, [1980] 4 SCC 295;
Union of India and others v. Valluri Basavaiah Chowdhary and others, [1979] 3
SCC 324;
Calcutta
Gas Company (Proprietory) Ltd. v. State of West Bengal and others, AIR 1962 SC
1044 and Kannan Devan Hills Produce Company Ltd. v. The State of Kerala etc.,
AIR 1972 SC 2301 referred to.
CIVIL
APPELLATE JURISDICTION: Special Leave Petition (Civil) Nos. 16041-42/88.
From
the Judgment and Order dated 27.7.1988 of the Karnataka High Court in W.P. No
9173/86 and W.A. No 2707/85.
WITH
SLP (C) Nos. 12258, 12254, 12260/90 & 8608/91 R.N. Narasimhamurthy, S.S.
Javali, S.N. Bhat and Ravi P. Wadhwani for the Petitioners.
M.S.
Nesargi, R. Jagannath Goulay, M.K. Dua, M. Veerappa, K.H. Nobin Singh, S.K.
Kulkarni and Surya Kant for the Respondents.
The
following Order of the Court was delivered by K. JAYACHANDRA REDDY, J. In all
these special leave petitions the common question that arises for consideration
is whether the provisions of the Karnataka Land Reforms Act, 1961 as amended in
1974 (`Act' for short) cease to be applicable in all respects to the lands
which came within the purview of the Urban Land (Ceiling and Regulation) Act,
1976 ('Ceiling Act' for short). The lands involved in these matters are covered
by the development plan by the Belgaum City Town Planning authority as per the
Master Plan for the said City and they are included and declared as urban
agglomeration in the City of Hubli under the provisions of the Ceiling Act. In
the year 1972 the Karnataka Legislature passed a resolution under Article 252
of the Constitution to the effect that imposing a ceiling on urban immovable
property and the acquisition of such property in excess of the ceiling limit
for public purposes and all the matters connected therewith shall be regulated
in the State by Parliament Qby law. The State Legislature thus divested itself
of the legislative competence to enact law in respect of subject-matter of the
resolution. On 1.4.74 the amended Karnataka Land Reforms Act was enacted and
under the said Act the tenant of the land covered by the Act is entitled to the
grant of occupancy rights after making an application under the Act. This Act
came into force with effect from 2.1.85. But for the purpose of grant of
occupancy rights 1.4.74 was the relevant date. While so in the year 1975 the
Governor of Karnataka passed the Urban Aggolmeration Ordinance whereunder all
lands between the periphery of 8 K.Ms. of the municipal limits of Hubli Dharwad
were declared as urban agglomeration land. In the year 1976 the Parliament
passed the Ceiling Act for imposition of ceiling on urban properties and the
Act was made applicable to Karnataka also in view of the resolution passed by
the State Government referred to above. The order of the Land Tribunal under
the Act conferring occupancy rights on the tenants was challenged before the
High Court contending that the lands involved in these cases were within the
purview of the Ceiling Act and therefore the provisions of the Land Reforms Act
had no application to such lands on the ground that the provisions of the State
Act were repugnant to the provisions of the Central Act namely the Ceiling Act.
The writ petition was dismissed by the High Court. The owners preferred writ
appeals and they were also dismissed by a common judgment in Writ Appeal Nos.
2707 and 2361/85 etc. The Division Bench held that there is no conflict between
the two enactment in certain respect i.e. atleast so far as the implementation
of the provisions of Chapter III of the Act are concerned and that provisions of
this Chapter of the Act do not cease to apply to the agricultural lands coming
within the meaning of urban agglomeration in the Ceiling Act. The judgment of
the Division Bench is challenged in S.L.P.(Civil) No. 16041- 42/88. Many of the
similar writ petitions that were pending before the High Court were transferred
to the Land Reforms Appellate Tribunal. The Appellate Tribunal dismissed the
petitions by a common order following the judgment of the Division Bench of the
High Court in Writ Appeal No.2707/85 and connected matters. Several civil
revisions petitions filed by the land owners against the order of the Appellate
Tribunal were dismissed by the High Court. Some of the special leave petitions
are filed against the order of the High Court in the said civil revision
petitions. Therefore all these special leave petitions can be disposed of by a
common order.
It was
urged before us that the resolution of the State Legislature passed under
Article 252 of the Constitution shifted the topic covered by the resolution
from List II of Schedule VII to the Constitution and vested the competence to
make the law in respect of the said topic in the Parliament and that thereafter
the State enactment ceased to have efficacy in respect of said topic.
Alternatively it was urged that, when in pursuance of the resolution the
Parliament legislates in respect of the topic covered by the resolution, the
Parliamentary law, repeals or supersedes any existing State legislation on the
topic and therefore such law cannot be enforced thereafter.
We
shall first extract some of the relevant provisions of the Constitution of
India and the respective enactments.
Article
246 of the Constitution reads thus:
"246.
Subject-matter of laws made by Parliament and by the Legislatures of States-(l)
Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List I in the
Seventh Schedule (in this Constitution referred to as the "Union
List").
(2) xx
xx xx (3) Subject to clauses (1) and (2), the Legislature of any State has
exclusive power to make laws for such State or any part thereof with respect to
any of the matters enumerated in List II in the Seventh Schedule (in this
Constitution referred to as the "State List").
(4)xx
xx xx " 2 Entry 18 in List II namely the State List of the VII Schedule to
the Constitution is in the following terms:
"18.
Land, that is to say, rights in or over land, land tenures including the
relation of landlord and tenant, and the collection of rents, transfer and
alienation of agricultural land; land improvement and agricultural loans;
colonization."
Article 252 of the Constitution reads thus:
"252.
Power of Parliament to legislate for two or more States by consent and adoption
of such legislation by any other State-(1) If it appears to the Legislatures of
two or more States to be desirable that any of the matters with respect to
which Parliament has no power to make laws for the States except as provided in
Articles 249 and 250 should be regulated in such States by Parliament by law,
and if resolutions to that effect are passed by all the Houses of the
Legislatures of those States, it shall be lawful for Parliament to pass an Act
for regulating that matter accordingly, and any Act so passed shall apply to
such States and to any other State by which it is adopted afterwards by
resolution passed in that behalf by the House or, where there are two Houses,
by each of the Houses of the Legislature of that State.
(2)
Any Act so passed by Parliament may be amended or repealed by an Act of
Parliament passed or adopted in like manner but shall not, as respects any
State to which it applics, be amended or repcaled by an Act of the Legislature
of that State." Article 252 empowers the Parliament to legislate for two
or more States on any of the matters with respect of which the Parliament has
no power to make law except as provided under Articles 249 and 250. This power
to legislate is vested in the Parliament only if two or more State Legislatures
think it desirable to have a law enacted by Parliament on such matters in List
II i.e. with respect to which the Parliament has no power to make law for the
State.
The
passing of the resolutions by the State Legislatures is a condition precedent
for vesting the Parliament with such power. The relevant portion of the
resolution passed by the State Legislature under Article 252 reads thus:
"Now,
therefore, in pursuance of clause (1) of Article 252 of the Constitution, this
Assembly hereby resolves that the imposition of a ceiling on urban immovable
property and F acquisition of such property in excess of the ceiling and all
matters connected therewith or ancillary and incidental thereto should be
regulated in the State of Karnataka by Parliament by law." The resolution
states that the imposition of ceiling on urban immovable property and the
acquisition of such property in excess of the ceiling limit with a view to
utilising such excess property for public purposes and all other matters
connected therein or incidental thereto shall be regulated in this State by
Parliament by law. The basic question that arises is what is the actual content
of the subject-matter that was resolved to be entrusted to Parliament by the
State Legislature under Article 252 of the Constitution. From the resolution it
is clear that the subject-matter that was resolved to be entrusted to the
Parliament was the one imposing a ceiling on urban immovable property and
acquisition of such property in excess of the ceiling. It is true that this
subject-matter is the topic that falls within Entry 18 of List 11 of Schedule
VII to the Constitution and the said subject-matter of Entry 18 has been
originally kept apart for the State Legislature to make law and Parliament had
no competence in respect of those matters falling under the wide scope of Entry
18. Now by virtue of this resolution a part of the area falling under Entry 18
is transferred to the domain of Parliament to make law relating to the matters
within the transferred area. The scope of Entry 18 is very wide and the land
mentioned therein may be agricultural or non-agricultural and may be rural or
urban. The subject-matter carved out of Entry 18 under the resolutions passed
by the various State Legislatures related to only- "urban immovable
property" and by virtue of the resolution the law that can be enacted by
the Parliament should be a law "imposing a ceiling on such urban immovable
property. The learned counsel for the petitioners, however, urged that vesting
of tenanted land in the State and conferment of occupancy rights under the
provisions of the State Act directly fall under the subject of imposing ceiling
on and holding and other matters incidental or ancillary to the main topic of
imposing ceiling and therefore they are fully covered by the Ceiling Act passed
by the Parliament and the same supersedes the State enactment in respect of
this land. The learned counsel appearing for the respondents on the contrary
submitted that "imposition of ceiling" is a distinct and separately
identifiable subject and is the power carved out of Entry 18 and vested in the
Parliament to legislate and that the power of the State to legislate in respect
of the remaining part of the subject-matter is unaffected and that when two
distinct powers have come into existence, vesting law making competence in the
State and Parliament, the pith and substance of the laws made by each of them
has to be examined to see whether any one of them encroaches the field set
apart as falling within the competence of the other body. The learned counsel
for the respondents, however, submitted that in any event the provisions of
Chapter III of the Act have nothing to do with the imposition of ceiling on the
urban land and that conferring of occupancy rights etc.
to the
tenants under Chapter 111 of the Act do not come under the category of
"the matters connected therewith or ancillary or incidental to the
imposition of ceiling" on urban immovable property.
Now we
shall refer to the provisions of the Urban Ceiling Act. The Statement of
Objects and Reasons under Preamble to the said Act would show that the primary
object and the purpose is to provide for the imposition of ceiling on vacant
land in urban agglomeration and for acquisition of such lands in excess of the
ceiling limit and to regulate the construction of buildings on such lands and
for matters connected therewith. Section 21(n) of the Urban Ceiling Act defines
"urban agglomeration" and the material part of it reads thus:
"(n)
"urban agglomeration" (A) in relation to any State or Union territory
specified in column (1) of Schedule 1, means (i) the urban agglomeration
specified in the corresponding entry in column (2) thereof and includes the
peripheral area specified in the corresponding entry in column (3) thereof; and
xx xx xx" Section 2(o) defines "urban land" which reads thus:
"(o)
"urban land" means, - (i) any land situated within the limits of an
urban agglomeration and referred to as such in the master plan; or (ii) in a
case where there is no master plan, or where the master plan does not refer to
any land as urban land, any land within the limits of an urban agglomeration
and situated in any area included within the local limits of a municipality (by
whatever name called), a notified area committee, a town area committee, a city
and town committee, a small town committee, a cantonment board or a panchayat,
but does not include any such land which is mainly used for the purpose of
agriculture.
Explanation-
For the purpose of this clause and clause (q)- (A) xx xx xx (B) land shall not
be deemed to be used mainly for the purpose of agriculture, if such land is not
entered in the revenue or land records before the appointed day as for the
purpose of agriculture;
xx xx
xx (C) notwithstanding anything contained in clause (B) of this Explanation,
land shall not be deemed to be mainly used for the purpose of agriculture if
the land has been specified in the master plan for a purpose other than
agriculture;" For the purpose of the instant case it is enough to note that
Hubli-Dharwad is shown in the Schedule and there is also a master plan prepared
for the area and the land in question also is undoubtedly within the urban
agglomeration and therefore there is no doubt that in respect of imposition of
ceiling on this area comes within the purview of the Urban Ceiling Act. But the
question is whether granting occupancy rights under Chapter III of the Act are
in any manner affected. The Karnataka Land Reforms Act as amended in 1974 is a
welfare legislation. The object of the Act was to have a uniform law in the
State of Karnataka relating to agrarian reforms,
conferment of ownership on tenants, ceiling on land holding and for certain
other matters contained therein. Section 34 of the Act defines
"tenant" thus:
"(34)
"tenant" means an agriculturist who cultivates personally the land he
holds on lease from a landlord and includes,- (i) a person who is deemed to be
a tenant under Section 4;
(ii) a
person who was protected from eviction from any land by the Karnataka Tenants
(Temporary Protection from Eviction) Act, 1961;
(iia)
a person who cultivates personally any land on lease under a lease created
contrary to the provisions of section 5 and before the date of commencement of
the Amendment Act;
(iii)
a person who is a permanent tenant; and (iv) a person who is a protected
tenant.
Explanation-
A person who takes up a contract to cut grass, or to gather the fruits or other
produce of any land, shall not on that account only be deemed to be a
tenant." The provisions of Chapter III of the Karnataka Land Reforms Act
deal with conferment of ownership on tenants.
Section
45 occurring in this Chapter in particular deals with conferring of occupancy
rights on the tenants subject to certain conditions. The relevant portion of
Section 45 reads as under:
"45.
Tenants to be registered as occupants of land on certain conditions-(1) Subject
to the provisions of the succeeding sections of this Chapter, every person who
was a permanent tenant, protected tenant or other tenant or where a tenant has
lawfully sublet, such sub-tenant shall with effect on and from the date of
vesting be entitled to be registered as an occupant in respect of the lands of
which he was a permanent tenant, protected tenant or other tenant or sub-tenant
before the date of vesting and which he has been cultivating personally.
(2) If
a tenant or other person referred to in sub-section (1)- (i) holds land partly
as owner and partly as tenant but the area of the land held by him as owner is
equal to or exceeds a ceiling area he shall not be entitled to be registered as
an occupant of the land held by him as a tenant before the date of vesting;
(ii)
does not hold and cultivate personally any land as an owner, but holds land as
tenant, which he cultivates personally in excess of a ceiling area, he shall be
entitled to be registered as an occupant to the extent of a ceiling area;
(iii)
holds and cultivates personally as an owner of any land the area of which is
less than a ceiling area, he shall be entitled to be registered as an occupant
to the extent of such area as will be sufficient to make up his holding to the
extent of a ceiling area.
xx xx
xx The provisions under Chapter III which exclusively deal with conferment of
occupancy rights on tenants have nothing to do with the imposition of ceiling
on holdings of agricultural land under the Act. It is only Chapter IV of the
said Act which deals with ceiling on land holdings. Now that the land in the
instant case comes under the urban agglomeration the imposition of the ceiling
should naturally be under the provisions of the Urban Ceiling Act and not under
the Karnataka Land Reforms Act. The High Court, however, did not deal with this
aspect. Perhaps it is necessary for us to make it clear that in respect of
imposing ceiling on the land under urban agglomeration the provisions of the
Ceiling Act alone are applicable and to that extent the provisions of Chapter
IV of the Act which also deal with the imposition of ceiling would not be
applicable. As a matter of fact in Thumati Venkaiah and Others v. State of
Andhra Pradesh and Others, [1980] 4 SCC 295 to which we will refer to at a
later stage in detail on the main point, this Court observed thus:
"It
is no doubt true that if the Andhra Pradesh Act seeks to impose ceiling on land
falling within an urban agglomeration, it would be outside the area of its
legislative competence, since it cannot provide for imposition of ceiling on
urban immovable property." However, the crucial question in the instant
case with which we are concerned is whether the provisions of Chapter III of
the Act also become inoperative by virtue of the resolution passed under
Article 252 and particularly on the ground that it is a matter of imposition of
ceiling on urban land or other matters connected therewith or ancillary and
incidental thereto.
A
plain reading of the above provisions in the background of the objects
underlying these two enactments clearly shows that the two Acts operate in two
different fields to a large extent. This Court had an occasion to consider
these aspects in a few cases. In Union of India and others v.Valluri Basavaiah
Chowdhary and others, [1979] 3 SCC 324 this Court, in respect of effect of
passing a resolution under Article 252 of the Constitution by the Andhra
Pradesh Legislature, observed thus:
"The
effect of the passing of a resolution under clause (1) of Article 252 is that
Parliament which has no power to legislate with respect to the matter which is
the subject of the resolution, becomes entitled to legislate with respect to it.
On the other hand, the State Legislature ceases to have a power to make a law
relating to that matter." It was further observed that:
"....It
is not disputed that the subject-matter of Entry 18, List II of the Seventh
Schedule i.e. `land' covers `land and buildings' and would, therefore,
necessarily include `vacant land'. The expression `urban immovable property'
may mean, land and buildings or `buildings' or `lands'. It would take in lands
of every description i.e., agricultural land, urban land or any other kind and
it necessarily includes vacant land." With regards the concept of ceiling
on urban immovable property and the object underlying in passing the resolution
by the several State Governments under Article 252 it was further observed in
the above judgment thus:
"....A
Working Group was constituted under the Chairmanship of the Secretary, Ministry
of Works, Housing and Urban Development. The report of the Working Group shows
that the proposal was to impose a ceiling on urban immovable property. In the
report the said Working Group defined `urban area' to include the area within
the territorial limits of municipalities or other local bodies and also the
peripheral area outside the said limits. Such inclusion of the peripheral
limits in an urban area was accepted by the Government and a model bill
prepared in pursuance thereof also contained such a definition. A copy of each
of the report of the Working Group and the Model Bill referred to was placed on
the table of the Parliament on December 15, 1970 and March 22, 1972
respectively. The said documents were forwarded to the State Government of
Andhra Pradesh, besides other State Governments, for consideration by the State
Legislatures before they passed a resolution authorising the Parliament to make
a law in respect of urban immovable property. Their intention was to include
the lands within the territorial area of an urban area and also its peripheral
areas. The concept of ceiling on urban immovable property and the nature and
content of urban agglomeration ultimately defined by Section 2(n) of the
impugned Act was, therefore, fully, under stood by the State Governments."
Some more observations in the above judgment read thus:
"It
is but axiomatic that once the legislatures of two or more States, by a
resolution in terms of Article 252(1), abdicate or surrender the area, i.e.
their power of legislation on a State subject, the Parliament is competent to
make a law relating to the subject. It would indeed be contrary to the terms of
Article 252(1) to read the resolution passed by the State legislature subject
to any restriction. The resolution, contemplated under Article 252(1) is not
hedged in with conditions.
In
making such a law, the Parliament was not bound to exhaust the whole field of
legislation. It could make a law, like the present Act, with respect to ceiling
on vacant land in an urban agglomeration, as a first step towards the eventual
imposition of ceiling on immovable property of every other description."
One other decision also arose from State of Andhra Pradesh. In Thumati
Venkaiah's case Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings)
Act which is analgous to Karnataka Land Reforms Act was challenged on the
ground that the subject matter of the said law was covered by the topic of the
legislation transferred to Parliament by the resolution under Article 252
passed by the Andhra Pradesh Legislative Assembly and that provisions of the
Ceiling Act alone covered that subject and therefore Andhra Pradesh Land
Reforms (Ceiling on Agricultural Holdings) Act was unenforceable. In this
context Supreme Court again reiterated the same in the said decision. This
Court proceeded to observe as under:
"The
effect of passing of resolutions by the Houses of Legislature of two or more
States under this constitutional provision is that Parliament which has
otherwise no power to legislate with respect to a matter, except as provided in
Articles 249 and 250, becomes entitled to legislate with respect to such matter
and the State legislatures passing the resolutions cease to have power to make
law relating to that matter.
The
resolutions operate as abdication or surrender of the powers of the State
legislatures with respect to the matter which is the subject of the resolutions
and such matter is placed entirely in the hands of Parliament and Parliament
alone can then legislate with respect to it. It is as if such matter is lifted
out of list II and placed in List I of the Seventh Schedule to the
Constitution." It was further observed that:
"The
result was that at the date when the Andhra Pradesh Act was enacted, Parliament
alone was competent to legislate with respect to ceiling on urban immovable
property and acquisition of such property in excess of the ceiling and all
connected, ancillary or incidental matters, and the Andhra Pradesh Legislature
stood denuded of its power to legislate on that subject." On the effect of
ceiling this Court stated thus:
"It
will thus be seen that the Central Act imposes a ceiling on holding of land in
urban agglomeration other than land which is mainly used for the purpose of
agriculture and agriculture in this connection includes horticulture, but does
not include raising of grass, dairy farming, poultry farming, breeding of
live-stock and such cultivation or the growing of such plants as may be
prescribed by the Rules, and moreover, in order to fall within the exclusion,
the land must be entered in the revenue or land record before the appointed day
for the purpose of agriculture and must also not have been specified in the
master plan for a purpose other than agriculture." Considering the
contention that the whole of Andhra Pradesh Land Reforms Act was ultra vires
this Court held thus:
"The
argument of the landholders was that the Andhra Pradesh Act sought to impose
ceiling on land in the whole of Andhra Pradesh including land situate in urban
agglomeration defined in Section 2(n) of the Central Act was an expansive
concept and any area with an existing or future population of more than one
lakh could be notified to be an urban agglomeration, the whole of the Andhra
Pradesh Act was ultra vires and void as being outside the legislative
competence of the Andhra Pradesh Legislature. This argument, plausible though
it may seem, is in our opinion, unsustainable. It is not doubt true that if the
Andhra Pradesh Act seeks to impose ceiling on land falling within an urban
agglomeration, it would be outside the area of its legislative competence,
since it cannot provide for imposition of ceiling on urban immovable property.
But the only urban agglomerations in the State of Andhra Pradesh recognised in
the Central Act were those referred to in Section 2(n)(A)(i) and there can be
no doubt that, so far as these urban agglomerations are concerned, it was not
within the legislative competence of the Andhra Pradesh Legislature to provide
for imposition of ceiling on land situate within these urban agglomerations. It
is, however, difficult to see how the Andhra Pradesh Act could be said to be
outside the legislative competence of the Andhra Pradesh Legislature insofar as
land situate in the other areas of the State of Andhra Pradesh is concerned. We
agree that any other area in the State of Andhra Pradesh with a population of
more than one lakh could be notified as an urban agglomeration under Section
2(n) (A) (ii) of the Central Act, but until it is so notified it would not be
an urban agglomeration and the Andhra Pradesh Legislature would have
legislative competence to provide for imposition of ceiling on land situate
within such area. No sooner such area is notified to be an urban agglomeration,
the Central Act would apply in relation to land situate within such area, but
until that happens, the Andhra Pradesh Act would continue to be applicable to
determine the ceiling on holding of land in such area. It may be noted that the
Andhra Pradesh Act came into force on January 1, 1975 and it was with reference
to this date that the surplus holding of land in excess of the ceiling area was
required to be determined and if there was any surplus, it was to be
surrendered to the State Government. It is therefore clear that in an area
other than that comprised in the urban agglomerations referred to in Section
2(n)(A)(i), land held by a person in excess of the ceiling area would be liable
to be determined as on January 1, 1975 under the Andhra Pradesh Act and only
land within the ceiling area would be allowed to remain with him. It is only in
respect of land remaining with a person, whether an individual or a family
unit, after the operation of the Andhra Pradesh Act, the Central Act would
apply, if and when the area in question is notified to be an urban
agglomeration under Section 2(n)(A)(ii) of the Central Act. We fail to see how
it can at all be contended that merely because an area may possibly in the
future be notified as an urban agglomeration under Section 2(n)(A)(ii) of the
Central Act, the Andhra Pradesh Legislature would cease to have competence to
legislate with respect to ceiling on land situate in such area, even though it
was not an urban agglomeration at the date of enactment of the Andhra Pradesh
Act. Undoubtedly, when an area is notified as an urban agglomeration under
Section 2(n)(A)(ii), the Central Act would apply to land situate in such area
and the Andhra Pradesh Act would cease to have application, but by that time
the Andhra Pradesh Act would have already operated to determine the ceiling on
holding of land falling within the definition of Section 3(j) and situate
within such area. It is therefore not possible to uphold the contention of the
landholders that the Andhra Pradesh Act is ultra vires and void as being
outside the Legislative competence of the Andhra Pradesh Legislature." The
above observations throw a flood of light on the question involved before us.
It can be seen that entire power to legislate in respect of several matters
falling under the wide scope of Entry 18 List II is not transferred.
The
power transferred is only in respect of imposition of ceiling on urban
immovable property. There can be several topics in respect of the subject
matters of regulatory legislations governing the lands or other immovable
properties. The imposition of ceiling on owning property is one such topic and
there can be laws regulating ceiling on owing the property, relationship of lessor
and lessee, payment of rent, manner of granting the lease, conferment of
ownership on the lessee etc. It is the concept of a welfare State which is the
underlying object in such welfare legislations. When viewed from that angle it
is axiomatic that imposition of ceiling on urban land is a distinct and
independent subject as compared to imposition of ceiling on owning or holding
agricultural land or any other kind of property which do not attract the Urhan
Ceiling Act.
Likewise
it cannot be said that the pith and substance of the law governing the
conferment of ownership of land on the tenant is a law regulating the
imposition of ceiling on land holding. Equally it cannot be said that the pith
and substance of the law imposing the ceiling on land holding covers the
subject of conferring ownership of land on the tenant. These are two distinct
powers and therefore the law making competence can be in two different
legislative bodies. Consequently it is difficult to hold that the provisions of
Chapter III of the Karnataka Land Reforms Act are outside the legislative
competence of the State Legislature. In Calcutta Gas Company (Proprietory) Ltd.
v. State of West Bengal and others, AIR 1962 SC 1044 this Court observed as
under:
"The
entries in the three Lists are only legislative heads or fields of legislation;
they demarcate the area over which the appropriate Legislatures can operate. It
is also well settled that widest amplitude should be given to the language of
the entries. But some of the entries in the different Lists 1 or in the same
Lists may overlap and sometimes may also appear to be in direct conflict with
each other. It is then the duty of this Court to reconcile the entries and
bring about harmony between them." It is well settled that the legislative
power of the State has to be reconciled with that of the Parliament and that in
their respective fields each is supreme. Even assuming that the State enactment
has same effect on the subject matter falling within the Parliament's
legislative competence, that by itself will not render such law invalid or
inoperative. In Kannan Devan Hills Produce Company Ltd. v. The State of Kerala
etc., AIR 1972 SC 2301 this Court held as under:
"It
seems to us clear that the State has legislative competence to legislate on
Entry 18, List II and Entry 42 List III. This power cannot be denied on the
ground that it has some effect on an industry controlled under Entry 52 List 1.
Effect
is not the same thing as subject matter. If a State Act, otherwise valid, has
effect on a matter in List I it does not cease to be a legislation with respect
to an entry in List II or List III." However, in the instant case, we are
clearly of the view that there is no conflict. The imposition of ceiling on
urban immovable property is an independent topic and cannot be construed as to
nullify the other subject left in the domain of the State Legislature under
Entry 18 inasmuch as imposition of ceiling is a distinct and separately
identifiable subject and does not cover the other measures such as regulation
of relationship of landlord and tenant in respect of which the State
Legislature has competence to legislate. Thus the one topic that is transferred
in the resolution passed under Article 252 is distinct and separately
identifiable and does not include the remaining topics under Entry 18 in
respect of which the State alone has the power to legislate. An examination of
the various provisions of the State Act makes this aspect clear. The object
underlying the Act is to make a uniform law in the State of Karnataka relating
to agrarian relations, conferment of ownership on tenants, ceiling on land
holdings etc. Chapter II of the Act contains general provisions regarding
tenancy, deemed tenancy, regulation of relationship between landlord and tenant
etc. Sections 44 to 62 of Chapter III provide for vesting of tenanted lands in
the State Government with effect from 1.3.74 and conferment of occupancy rights
on the tenants. Chapter V controls the eligibility to purchase or possess
agricultural lands.
Chapters
VI to XI have many other provisions regarding agrarian reforms. We, however,
find a ceiling provision under Section 45(2) providing for computation of the
area in respect of which the tenant may be granted occupancy rights.
But it
is clear that ceiling on the area in this context is only for the purpose of
Section 45. These are all topics regarding the conferment of occupancy rights
on the respective tenants and they do not in any way conflict with the subject
matter transferred to the Parliament by the resolution passed under Section
252. Consequently these Special Leave Petitions are dismissed.
Petitions
dismissed.
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