S. Vasudeva
Vs. State of Karnataka & Ors [1993] INSC 167 (30 March 1993)
Sawant,
P.B. Sawant, P.B. Singh N.P. (J)
CITATION:
1994 AIR 923 1993 SCR (2) 715 1993 SCC (3) 467 JT 1993 (2) 465 1993 SCALE
(2)244
ACT:
Urban
Land (Ceiling & Regulation) Act, 1976:
Sections
20(1)(a) & (b) and 21--Vacant land in excess of ceiling Iimit--Exemption
could be granted only for the purpose of user of such land--Not for purposes of
transfer--State Government has no power to permit sale of such land even on
ground of undue hardship.
Section
20(1)(b): Exemption--Permission to transfer excess vacant land--Classification
of land-owners as debtors and non-debtors--Reasonableness of--Discretion of
State Government in granting exemption--Unguided and untrammelled--Transfer of
land--Restriction on registration in respect of land not
exempted--Discrimination Irrational-- Hence S.20(1)(b) held violative of
Article 14 of the Constitution of India, 1950.
Sections
26, 27, 28. Transfer of excess vacant land--Not permissible unless encumbered
with a building or portion thereof.
Constitution
of India, 1950:
Article
14--Whether S.20(1)(b) of the Urban Land (Ceiling & Regulation) Act, 1976 is violative
of.
Words
& Phrases:
"Person",
"Undue hardship"-- Meaning in the context of Urban Land (Ceiling & Regulation) Act, 1976--Sections 2(1) and
20(1)(b) respectively.
HEAD NOTE:
The
second respondent, a partnership firm was carrying on the business of
manufacturing and selling polished granites.
It was
running its factory in a small portion of the land owned by it and the rest of
the land was vacant when the Urban Land (Ceiling & Regulation) Act, 1976 was made
applicable to that area. The firm made an application to.
the
State Government for exemption of the vacant land from the provisions of 715
716 the said Act, and the exemption was granted subject to certain conditions.
The
Competent Authority under the Act came to the conclusion that there was some
excess vacant land and directed the publication of a notification u/s 10(1) of
the Act for acquisition of the same. Later, the firm made an application to the
State Government for permission to sell the vacant land to the third respondent
(builders) mainly on the ground that the firm had been incurring huge losses in
its business. On 6.3.1987 the State Government permitted the firm to sell the
land to the builders, only to the extent of 16194 sq. mtrs. Again the firm
riled another application to transfer the remaining 3444 sq. mtrs. of land to
the builders, and on 18.4.1987 the State Government permitted the same subject
to certain conditions.
Consequently,
by a sale deed dated 30.9.1987 the firm entered into a deed of absolute sale
with the builders for sale of the entire vacant land.
Writ
Petitions by way of Public Interest Litigation were riled in the High Court
challenging the exemptions granted by the State Government, for declaring the
sale deed void and inoperative and for acquiring the land for the weaker
sections. A Single Judge allowed the Writ Petitions and gave certain directions
including sale of plots to be carved out from the land and only such number of
plots as would be necessary to discharge the debts of the firm were to be sold
and the remaining portion of the vacant land was to be acquired under the Act.
He also held that there were no mala fides in the State Government granting
exemptions by its orders date 63.1987and 18.4.1987.
Against
the decision of the Single Judge, appeals were preferred before the Division
Bench of the High Court and the Division Bench set aside the findings as well
as the direction given by the Single Judge. Aggrieved by the Judgment of the
Division Bench, the appellants preferred the present appeals.
Allowing
the appeals, this Court, HELD:
BY THE
COURT.
I.I.The
provisions of Section 20(1)(b) of the Urban Land (Ceiling and Regulation) Act, 1976
do not permit the State Government to give exemption to the vacant land in
excess of the ceiling limit for the purposes 717 of transferring the same. [757
C] 1.2.The orders dated 63.1987 and 18.4.1987 granting exemption and permission
to the firm for sale of the land are void ab initio having been passed without
jurisdiction.
Accordingly,
the sale-deed dated 30.9.1987 executed by the 2nd respondent-firm in favour of
the 3rd respondent.
builders
is invalid and inoperative, as the respondent-firm had no legal right to
transfer the land in favour of the builders. [757 F, G] 13.In view of the above
conclusions, it is not necessary to go into the questionsas to whether the
State Government has the power to grant exemption; thecircumstances in which it
can be exercised; and whether financial hardship such as the indebtedness of
the land-holder is sufficient to warrant such exemption or not; and the date on
which such indebtedness is to be assessed and in what manner; and whether in
the present case, the said aspects of the indebtedness were properly
investigated or not for this very reason, there is no need to go into the other
question regarding the mala fide on the part of the authorities while granting
permission to the firm to sell the land to the builders in question. [757 D, E]
Per Sawant, J.
1.The
provisions of Section 20(1)(b) of the Urban Land (Ceiling & Regulation) Act,
1976 do not permit the State Government to exempt vacant land in excess of the
ceiling limit for the purposes of transfer. [753 B] 2.The central object of the
Act, as is evident both from the preamble as well as the statement of objects
and reasons, is to acquire vacant land in excess of the ceiling area and to
prevent speculation and profiteering in the same and also to distribute the
land equitably to subserve the common good.
It is,
therefore, per se against the said object to permit the sale of the excess
vacant land for whatever reasons, including the undue hardship of the
land-holder. To construe the provisions of Section 20 (1) (b) so as to read in
them the conferment of such power on the State Government for whatever reasons,
is to distort and defeat the whole purpose of the legislation. Further, neither
the plain language of the clause nor its context and intendment merit such
construction. Section 20 itself is titled "Power to exempt". The
power given to the State Government under the Section is only to exempt certain
excess vacant lands from the operation of the provisions of Sections 3 to 19 of
Chapter 111, none of which refers to the subject of transfer or 718
restrictions on transfer. Those provisions relate to the calculation. declaration,
acquisition and vesting of the excess vacant land. It is Chapter IV which
relates to the transfers of vacant lands and the restrictions thereon.
Further,
from the scheme of the Act. it is evident that the transfers of the vacant land
were to be regulated by the specific provisions made in it. They were not to be
left to be governed by the unguided discretion of any authority including the
State Government. The specific provisions for regulating the transfer have been
incorporated in Sections 26 to 28 of the Act. Those provisions permit transfer
of only vacant lands within the ceiling limit but without buildings, and of
vacant lands in excess of the ceiling limit but with buildings thereon and
subject to the condition s laid down there. It cannot be suggested that in
defiance of the said provisions, Section 20(1)(b) vests power in the State
Government to sanction sales of excess vacant lands with or without building
thereon. Under Section 20(1) (b), the State Government can only exempt such
excess vacant land from being acquired by it. The Government cannot permit its
transfer when the Act, does not even by implication, authorise it to do so but
permits the transfer subject only to the conditions prescribed by Section 27.
The
legislature cannot be presumed to have prescribed different conditions for
transfer of the same or similar lands. [746 C-H; 747 A]
3. The
restriction on transfer even of vacant land within the ceiling limit but
without building is deemed to be valid. Thus the transfer of the vacant land
without building even if it is within the ceiling limit and of the vacant land
in excess of the ceiling limit with a building or a portion of the building are
subject to the restrictions placed by the Act. Section 20 is subject to the
provisions of sections which follow it including Sections 26 to 28.
Hence
no construction can be placed on clause (b) of sub- section (1) thereof which
will be in conflict with the provisions of sections 26 to 28. [747 E, F] Maharao
Sahib Shri Bhim? Singhji v. Union of India, [1981] 1 SCC 166, referred to.
4.
Since as per the definition of "person" in Section 2(i), the said
provision viz. S.20(1) (a) is applicable not only to individuals, but also to a
family, a firm, a company or an association or body of individuals whether
incorporated or not, the hardship spoken of there, is obviously one related to
the user of the land. In fact, it is difficult to understand the precise
purpose for which clause (b) has been enacted and the meaning of the expression
"undue hardship" there. One is left only to speculate on the subject.
The 719 speculation itself may not be valid. The lands are held by companies,
trusts and associations for industrial and commercial use, for the use of
medical and educational institutes, sports, clubs, cultural activities,
gardens, exhibitions etc. There is no special provision made in the Act to protect
or take care of such users. The only provision under which a relief can be
given to preserve and safeguard such user is Section 20(1) (a). But that
provision can be pressed into service only on the basis of the location of the
land and its present or prospective user and only if it passes the test of
public interest However, all lands in excess of the ceiling limit may not
strictly be necessary for such user, even if the user is in the public
interest. Nevertheless, the withdrawal of a part of the land found to be in
excess may cause an avoidable hardship to the land-holder which may be
disproportionate. to the benefit that is to accrue to the public on account of
such withdrawal. The excess of land may be meager or the severance of such
excess land itself may result in unnecessary hardship. The hardship further has
to be undue and not merely an ordinary hardship which is bound to be caused on
account of the application of the Act to every holder of the excess vacant
land. The undue hardship must be one which cannot be avoided except by granting
a relief of exemption as contemplated by the said provision. The relief from
financial hardship or from indebtedness to the land-holder of such land is
alien both to the object and the scheme of the Act. The classification of the
owners of land for this purpose between debtors and non-debtors is itself
irrational and has no plausible nexus with the object of the Act. Such a
classification is, therefore, discriminatory and violative of Article 14 of the
Constitution. (748 B-H; 749 Al Thakorbhai Dajibhai Desai v. State of Gujarat, AIR 1980 Guj. 1891, overruled.
5.The
exemption which is granted under Section 20(1)(b) has to be supported by
reasons to be recorded in writing.
This
requirement also contemplates an exemption which is related to and promoted by
the use or better use of the land. If it is the financial hardship which was
under the contemplation of the legislature, them was nothing easier than to
make a reference to the same in clause (b) itself and to lay down guidelines
for the inquiry into such hardship. The provisions of sub-section (2) of
Section 20, directly negative either exemption on account of financial hardship
or for the purpose of the transfer of the land, since that sub-section empowers
the State Government to withdraw the exemption already granted If the 720 State
Government is satisfied that any of the conditions subject to which the
exemption is granted either under clause (a) or clause (b) of sub-section (1)
is not complied with. It is inconceivable that the legislature had in mind the
cancellation of the transfer including sale, which cannot be done when it has
already taken place. [749 E-G] 6.It cannot be said that the legislature which
places restrictions on the transfer of the land within the ceiling limit would
at the same time give a carte blanche for the sale of the land in excess of the
ceiling limit. For it would mean, that the State Government cannot have an
option to purchase such land and that the sale can be made by the holder of the
excess land at any price that he chooses.
Such a
reading of Section 20(i)(b) would militate against one of the objects of the
Act, viz., to prevent speculation and profiteering in the sale and purchase of
land.
Moreover,
it would be patently discriminatory. Whereas the holder of vacant land within
the ceiling limit would have to suffer the restrictions placed by Section 26,
the holder of the vacant land in excess of the ceiling limit has not to do so.
He would in fact be in a better position. The provisions with regard to
granting such exemption subject to certain conditions contained in Section 20(1)(b)
do not in any way mitigate the discrimination. When the statute itself places
specific restrictions under Section 26 on the sale of land within the ceiling
limit, it is not possible to reach a conclusion that the conditions on which
the State Government is empowered to permit the sale can be left to the
discretion of the State Government. In fact, such discretion given to the State
Government would itself be violative of Article 14 of the Constitution, the
same being unguided and untrammeled This also shows that the legislature has
not given power to the State Government under Section 20(1)(b) to permit
exemption for sale of the land. Otherwise it would have provided in the section
itself for the conditions on which the permission to sell can be given and such
conditions could not be less onerous than those provided under Section 26 of
the Act. If the power, to permit sale of the land was intended to be given only
for relieving the land-holder of his financial hardship, the section could very
well have provided for sale of such land under Section 26 of the Act or made
provision in Section 20(1)(b) itself for the first option of the State
Government to purchase it. It cannot be said that by not making such provision
either in Section 20(1)(b) or Section 26, the legislature intended to permit
the sale of such land at a price above the fair market price payable under the
Land Acquisition Act, 1894 or the corresponding law and thereby encourage 721
speculation and profiteering, the very evils which the Act intended to curb-A
[750 E-H; 751 A-C] 7.The provisions of Section 27 also militate against the
conferment of the power on the State Government to permit exemption of land for
the purpose of its transfer. The provisions of Section 27 refer to any urban or
urbanisable land with a building. The vacant land in excess of the ceiling
limit may be with or without a building. In fact, the provisions of Section 27
directly negative the conferment of such power, for the said provisions show
that the legislature did not want the sale of any urban or urbanisable land
with a building whether it is within or without the ceiling limit except in
accordance with the provisions of Section 27. For Section 27 speaks of transfer
of any urban or urbanisable land with a building or a portion only of such
building, only with the permission of the competent authority and on the terms
mentioned therein.
This
Court has invalidated the provisions of the said section to the extent they
apply to the vacant land with a building when the land is within the ceiling
limit. But it does apply to land in excess of the ceiling limit and with a
building or a portion of it thereon. It is not possible to accept that there
are two provisions, viz. Section 20(1)(b) and Section 27 operating at the same
time in the same area.
Also
there is nothing either in Section 20(1)(b) or Section 27 to exclude the
operation of Section 27. [751 G, H; 752 A] Maharao Sahib Shri Bhim Singhji etc.
etc. v. Union of India
8.Section
28 does not make any reference to the transfer permitted by the State
Government under Section 20(1) (b).
The
holder of the vacant land in excess of the ceiling limit has not to face the
restriction on the registration of the document of transfer of his land
provided under Section 28 when such transfer is permitted by the State
Government under Section 20(1)(b), whereas the holder of similar land who does
not approach the State Government has to suffer the same when he transfers the
land held by him. The discrimination between the transfers under the different
provisions is irrational and, has no nexus with the object ought to be achieved
by the classification. [752 E-G] 9.If the power to exempt the land for sale is
read in Section 20 (1) (b) with such conditions as the State Government may
choose to place and if either the State Government chooses not to place any
conditions or to 722 place such conditions as are inconsistent with the
provisions of Sections 29 and 30, it would create two sets of lands one where
no restrictions are applicable to the construction thereon or only such
restrictions as the State Government may choose to impose, and the other where
the restrictions on constructions as provided by Section 29 and 30 would be
applicable. [752 G-H; 753 A] Per N.P. Singh, J. (Concurring):
1.The
object of the Act being imposition of ceiling on vacant land in urban
agglomerations and for acquisition of such land in excess of ceiling limit,
with a view to prevent the concentration of urban land in the hands of a few
persons, speculations and profiteering therein, that object will be defeated if
the power under Section 20(1) of the Act is exercised by the State Government
to exempt the excess vacant lands, from the application of Chapter III of the
Act, so that the holder thereof can transfer such lands.
[753
C, D] 2.Under Indian conditions the expression "undue hardship" is
normally related to economic hardship. That is why from time to time many holders
of lands in excess of the ceiling limit, while claiming exemption under clause
(b) put forth their bad economic condition and indebtedness to claim exemption
along with permission to sell such excess lands.
In the
modern set up many holders of such excess lands having undertaken commercial or
industrial ventures with the help of the loans from the Banks and other
financial institutions, put the plea of repayment of such loans as undue
hardship for claiming exemption under clause (b) of section 20(1) aforesaid.
When different provisions take into consideration the lands already transferred
by the holder, between the period 17th February, 1975 (as specified in sub.
sec. (4) of S.4; and the appointed day as well as between the period commencing
from the appointed day and ending with the commencement of the Act, it should
not be easily inferred that the framers of the Act desired that after the
commencement of the Act while exercising the power of exemption under section
20(1) (b) permission should be granted to holders of such excess lands to
transfer such lands to third parties in order to meet their financial
liabilities. [753 G, H; 754 A-F] 3.If Section 21 provides for granting
exemption in respect of excess land held by the holder only on a specific condition
that the holder shall utilise the same for the construction of dwelling units
for weaker section, to 723 serve a public cause, the framers of the Act could
not have conceived the grant of exemption under Section 20(1)(b) to the holder
of the excess land, only to serve his interest, by selling such excess lands.
[754 H; 755 A-F] 4.If the State Government can exempt the vacant land held by
the land holder in excess of the ceiling limit, from the applicability of the
provisions of Chapter III of the Act, in order that the said holder sells such
land to liquidate his debts which amounts to an "undue hardship",
then there will be an apparent conflict between the interest of the land holder
and the public interest. In the interest of the land holder the maximum price
fetched by sale of such land will be the solution of his hardship, whereas that
will run counter, to the object of the Act to prevent speculations and
profiteering". It cannot be said that even in such transfers the dominant
purpose of the legislation, to prevent "the concentration of urban land in
hands of few persons" is nonetheless served. The concentration of urban
land in hands of few persons has to be prevented with a view to bring about
"an equitable distribution of land in urban agglomerations to subserve the
common good". [755 B-D] 5.If the vacant lands which have vested in the
State are also to be disposed of as stipulated under S.23 strictly keeping in
view the spirit and object or the Act, exemption u/s20(1)(b) cannot be granted
to holders of such lands to dispose of the lands in the manner they like, to
the persons they prefer, at the price they dictate, for clearing their debts.
If it is conceded that indebtedness amounts to an undue hardship, then it may
cover the debts incurred even after the commencement of the Act. [756 D, E] 6.This
Court has already held that Section 27(1) in so far as it imposes restriction
on transfer of any urban or urbanisable land with a building or of a portion of
such building which is within ceiling area, was invalid. The said sub-section
(1) of Section 27 was struck down being unconstitutional. Section 26 of the Act
also imposes certain restrictions on transfer of vacant land even within
ceiling limit. It can therefore be stated that Section 26(1) suffers from the
same vice. But neither in that case nor in this case, this court was or is
concerned with Section 26. As such, it is not necessary to express any opinion
in respect of Section 26 of the Act, while considering the issue involved in
the present appeals. [756 G, H; 757 A, B] Maharao Sahib Shri Bhim Singhji etc.
etc. v. Union of India & Ors., [1981] 1 SCC 166, referred to.
724
& CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1454-56 of 1993 etc. etc.
From
the Judgment and Order dated 15.2.1991 of the Karnataka High Court in Writ
Appeal Nos. 2083, 2084 and 2085 of 1989.
K.Madhava
Reddy, P.P. Rao, N.D.B. Raju, Guntur Prabhakar, Dr. Sumand Bhardwaj, Yatish
Mohan Verma and Ranjit Kumar for the Appellants.
Soli
J. Sorabjee, N.B. Shetye, R.N. Narasimha murthy, S.Ganesh, Vineet Kumar, M. Veerappa,
Nobin Singh, P.R. Ramasesh, P. Mahale (NP), S.K. Kulkarni and Surya Kant for
the Respondents.
The
Judgment of the Court was delivered by SAWANT, J. Leave granted.
2.These
appeals arise out of the same facts and judgments of the Karnataka High Court
and are being disposed of by this common judgment. For the sake of the
narration of events Civil Appeal Nos. 1461-72/ 1993 arising out of SLP (Civil)
Nos. 7230-41 of 1991 may be referred to.
The
2nd respondent M/s Naryanaswamy & Sons is a partnership firm. While it was
carrying on the business of manufacturing and selling of polished granites, it
acquired on 30.9.1953, 6 acres and 4 gunthas of land in Survey Nos.
6/1
and 6/2 of Dasarahalli in the heart of Jayanagar Exten- sion of the city of
Bangalore. Out of the said land, 1 acre and 2 gunthas had already been acquired
by the 1st respondent-State Government under notification dated 1.4.1948. The
acquisition proceedings had culminated in an award, granting compensation to
the land owner on 3.3.1955.
In a
small portion of the said land, the 2nd respondent-firm (hereinafter referred
to as the 'firm'), established a granite factory and the rest of the land was
vacant when the Urban Land (Ceiling and Regulation) Act, 1976 (the 'Act') was
made applicable to the Bangalore Agglomeration consisting of the area within
the jurisdiction of the Bangalore City Municipal Corporation and the Trust
Board, and the peripheral area of 5 kms.
3.On
9.6.1983, the firm preferred an application to the State Government for
exemption of the vacant land from the provisions of Chapter III of the Act. By
an order of 17.7.1985, the State Government granted 725 exemption under Section
20 of the Act for industrial use of a granite factory. The exemption related to
16194 sq. mtrs. of land and was granted on the following conditions:
[i]
The entire land utilisation shall be completed within a period of two years
from the date of the order.
[ii]
The exempted land shall be exclusively used for the purpose for which the
exemption was granted and for the purposes related thereto.
[iii]
The land shall not be transferred by way of sale, mortgage, gift, lease or
otherwise without prior permission of the Government and that such permission,
when given, shall be subject to such conditions as the Government may deem fit
to impose.
4.The
3rd respondent-partnership firm M/s. Reevajethu, Builders and Developers [the
'builders'] was constituted on 6.1.1987 with Smt. Shobha Makhija as the major
partner with 50% share and other 18 partners, mainly "to develop the
immovable property to be acquired by the firm of an extent of 5 acres and 24 gunthas
situated at Survey Nos. 6/1 and 6/2 of Dasarahalli of Bangalore City and to
carry on the business as builders and developers of flats, shops, commercial
complexes and other types of buildings, dealers in real estate and all other
allied business and activities" and to "carry on any other business
as may be mutually agreed upon by all the partners". It is not in dispute
that Smt. Shobha Makhija is the sister of the son-in-law of the 4th respondent
who was then the Chief Minister of the State of Karnataka..
5.On
9.1.1987, the competent authority under the Act came to the conclusion that the
excess vacant land out of the said Survey Nos. 6/1 and 6/2 after the grant of
exemption by the Government Order dated 17.7.1985, was 3444 sq. mtrs. The
competent authority accordingly directed the publication of a notification
under Section 10 [1] of the Act for the acquisition of the said excess vacant
land.
6.On
the same day, i.e., 9.1.1987, the firm made an application to the State
Government for permission to sell land to the extent of 5 acres and 24 gunthas
comprised in the said Survey Nos. 6/1 and 6/2 to the 726 builders. The grounds
made out in the application were that due to stiff competition, and nationalisation
of black and pink granite by the southern States including Karnataka, the firm
was running under losses; that its Woodlands Hotel at Madras was also not
making profits since the hotel building had become very old and there were no
funds for modernising it; that its theaters in Madras were also not yielding
profits due to unhealthy competition by the video piracy and the advent of the
television; that the partners of the firm individually and jointly were
indebted to Andhra Bank, of India, State Bank of Mysore and Dena Bank; that the
said debts were of more than Rs. 1 crore 65 lakhs; that suits had been filed in
the High Court of Madras against the partners;
that
the business of the partners had been suffering huge losses specially due to
continuing heavy interest burden;
that
the families of the seven partners of the firm had no other source of income
and had been over-drawing from the firms for their maintenance; and that one of
the partners was seriously ill in a hospital at Bangalore and he had to borrow
money for taking medical treatment.
7.On
6.3.1987, the State Government under Section 20 [1] of the Act permitted the
firm to sell land to the extent of 16194 sq. mtrs. to the builders subject to
certain conditions.
8.On
23.3.1987, the firm filed another application before the State Government
seeking permission to transfer the remaining 3444 sq. mtrs. of vacant land from
Survey Nos. 6/1 and 6/2 to the builders on the ground of undue hardship since
the firm had incurred debts. On 18.4.1987 the State Government under Section 20
[1](a) of the Act granted exemption for the said land from the purview of
Chapter Ill of the Act and also permitted the firm to sell the said 3444 sq. mtrs.
of vacant land from Survey Nos. 6/1 and 6/2 subject to certain conditions.
9.By a
sale deed of 30.9.1987, i.e., a day before the extension of Chapter XXC of the
Income-tax Act providing for preemptive purchase by the Central Government of
immovable property in certain cases on transfer, the firm entered into a deed
of absolute sale for the sale of the property consisting of land to the extent
of 5 acres and 24 gunthas situated in the said Survey Nos. 6/1 and 6/2.
10.On
this undisputed factual matrix, writ petitions were filed by way of public
interest litigation, under Article 226 and 227 of the Constitution before the
High Court for issue of a writ of mandamus [a] directing the respondent-
Government to take action for forfeiture of the land for con- 727 travention of
Section 79 of the Karnataka Land Reforms Act;
[b] for
acquiring the land for the purpose of weaker sections under the provisions of
the Act; [c] for quashing the orders dated 63.1987. and 18.4.1987 granting
exemption to the land in question from the purview of the Act under Section 20
111(a) & (b) of the Act and for declaring the sale deeds dated 30.9.1987
executed by the firm in favour of the builders as void and inoperative; (d).
for directing the State Government to take action under Section 6 of the
Karnataka Parks, Play-fields, and Open Space [Reservation and Regulation] Act,
1985 and for other reliefs.
11.
The learned Single Judge by his judgment and order dated 8.9.1989allowed the
writ petition, and among others,
[1]
quashed the Group Housing Policy of the State Government as embodied in the
decision of the Committee held on 22.10.1986 and communicated under letter
dated 24.11.1986 insofar as it encouraged the Group Housing Scheme through
individuals and partnership of individuals by transferring vacant land to such
persons;
[ii] restrained
the State Government from enforcing the said Policy through individuals and
partnership of individuals against the vacant land;
[iii] declared
as null and void and quashed the orders dated 6.3.1987 and 18.4.1987 granting
exemption;
[iv] declared
the sale deed dated 30.9.1987 executed by the firm in favour of the builders as
nun and void so far as it related to the extent of land admeasuring 19368 Sq. mtrs.
covered by the exemption orders of 6.3.1987 and 18.4.1987.
The
validity of the sale deed so far as it related to the remaining land mentioned
therein was, however, saved by the said declaration;
[v]
directed the State Government, the Special Deputy Commissioner under the Act,
the Bangalore Development Authority and the Municipal Corporation of Ban-
galore to identify the extent of 1 acre, 2 gunthas and 58 square yards which
was acquired in 1948 out of the said Survey No. 6/1 and to set them apart for
the purpose of road and Boulevard and use it only for said purpose;
[vi]
remitted the applications dated 9.1.1987 and 24.3.1987 made by the firm to the
State Government with the direction to consider them in accordance with law
under Section 20 [1](b) of the Act and to exempt them in the light of the
extent of the debt owed by the firm to the creditors prior to the coming into
force of the Act; [vii] directed that even if after examining the, application
in the aforesaid light the State Government granted permission, to the firm to
sell the vacant land on the ground of hardship, the Government should see that,
in the vacant land, sites are formed of various dimensions not exceeding 60' x
90' keeping in view the sites already formed 728 in the locality. The learned
Judge further directed that each such site should be sold by public auction by
the competent authority with the condition that no person is entitled to
purchase in public auction more than one site, and to credit the sale proceeds
in the office of the competent authority under the Act who would pay the amount
to the creditors of the firm. The learned Judge also further directed that only
such number of sites should be sold which are necessary to discharge the debts
and the remaining portion of the vacant land should be acquired under the Act.
It may be noted here that the learned Judge held that the allegations of mala
fides in granting exemptions by the orders of 6.3.1987 and 18.4.1987 against
respondents 4 and 8, were not proved.
12.Against
the said decision of the learned Single Judge, appeals were preferred before
the Division Bench of the High Court, among others, by writ petitioners as well
as the firm and the builders. All the appeals were heard together and the
learned Judges of the Division Bench gave separate but concurring judgments and
set aside the findings as well as the directions given by the learned Single
Judge and dismissed the writ petitions.
13.The
precise questions which arise for our consideration in these appeals are:
[i]
Were the permissions granted by the State Government to sell land admeasuring
16194 sq. mtrs. and 3444 sq. mtrs. by its orders of 6.3.1987 and 18.4.1987
respectively valid under the Act?
[ii]
Were the said orders motivated by mala fides ? and
[iii]
Is the sale deed executed by the firm in favour of the builders on 30.9.1987
void and inoperative?
14.In
order to appreciate the answer to the first and the third question, it is
necessary to understand the scheme of the Act which came into force on
17.2.1976. As the preamble of the Act states, it has been placed on the statute
book
[i] to
provide for the imposition of a ceiling on vacant land in urban
agglomerations;,
[ii] to
provide for the acquisition of which vacant land in excess of the ceiling
limit; and
[iii] to
regulate the construction of buildings on such land and for matters connected
therewith with a view to
[a]
preventing the concentration of urban land in the hands 729 of a few persons
and speculation and profiteering therein and
[b] bringing,
about an equitable distribution of land in urban agglomerations to subserve the
common good. These objects which are otherwise clear from the preamble of the
Act have been explained in the statement of objects and reasons accompanying
the Bill which, among other things, states as follows:
"There
has been a demand for imposing a ceiling on urban property also, especially
after the imposition of a ceiling on agricultural lands by the State Governments
.
With
the growth of population and increasing urbanisation, a need for orderly
development of urban areas has also been felt. It is, therefore, considered
necessary to take measures for exercising social control over the scarce
resource of urban land with a view to ensuring its equitable distribution
amongst the various sections of society and also avoiding speculative
transactions relating to land in urban agglomerations.
xx xx xx
The Bill is intended to achieve the following objectives:- [i] to prevent
concentration of urban property in the hands of a few persons and speculation
and profiteering therein;
[ii]to
bring about socialisation of urban land in urban agglomerations to subserve the
common good by ensuring its equitable distribution;
[iii] to
discourage construction of luxury housing leading to conspicuous consumption of
scarce building materials and to ensure the equitable utilisation of such
materials; and [iv] to secure orderly urbanisation.
The
Bill mainly provides for the following:- [i] imposition of a ceiling on both
ownership and posses- 730 sion of vacant land in urban agglomerations, the
ceiling being on a graded basis according to the classification of the urban
agglomeration;
[ii] acquisition
of the excess vacant land by the State Government with powers to dispose of the
vacant land to subserve the common good;
[iii] payment
of an amount for the acquisition of the excess vacant land, in cash and in
bonds;
[iv] granting
exemptions in respect of certain specific categories of vacant land;
[v] regulating
the transfer of vacant land within the ceiling limit;
[vi] regulating
the transfer of urban or urbanisable land with any building [whether
constructed before or after the commencement of the proposed legislation], for
a period o f 10 years from the commencement of the legislation or the
construction of the building whichever is later;
[vii] restricting
the plinth area for the construction of future residential buildings;
and
[viii] other procedural and miscellaneous matters." It is needless to emphasise
that while interpreting the various provisions of the Act the said objects will
have to be kept in view, constantly. However, only those provisions of the Act
which have a bearing on the controversy before us may be referred to.
The
'vacant land" has been defined in Section 2 (q) as follows:
"vacant
land' means land, not being land mainly used for the purpose of agriculture,,
in an urban agglomeration, but does not include [i] land on which construction
of a building is not permissible under the building regulations in force in the
area in which such land is situated, 731 [ii]in an area where there are
building regulations, the land occupied by any building which has been
constructed before or is being constructed on, the appointed day with the
approval of the appropriate authority and the land appurtenant to such
building; and [iii] in an area where there are no building regulations, the
land occupied by any building which has been constructed before, or is being
constructed on, the appointed day and the land appurtenant to such building;
Provided......................"
The "land appurtenant', in relation to any building, has been defined in
Section 2(g) 'as follows:
"
land appurtenant", in relation to any building, means [i] in an area where
there are building regulations, the minimum extent of land required under such
regulations to be kept as open space for the enjoyment of such building, which
in no case shall exceed' five hundred square metres; or [ii] in an area where
there are no building regulations, an extent of five hundred square metres
contiguous to the land occupied by such building, and includes, in the case of
any budding constructed before the appointed day with a dwelling unit therein,
an additional extent not exceeding five hundred square metres of land, if any,
contiguous to the minimum extent referred to in sub-clause [i] or the extent
referred to in sub-clause [ii], as the case may be".
Section
3 states that except as provided in the Act, on and from the commencement of
the Act, no person shall be entitled to hold any vacant land in excess of the
ceiling limit. The "ceiling limit" is prescribed in Section 4. The
provisions of Section 4, so far as they are relevant for our purpose, 732 may
be reproduced verbatim:
"4.
Ceeling Limit. [1] Subject to the other provisions of this section, in the case
of every person, the ceiling limit shall be,- [a] x x x x x x [b] where such
land is situated in an urban agglomeration falling within category B specified
in Schedule 1, one thousand square metres;
[c] x x
x x x x x [d] x x x x x x x
2. x x
x x x x x 3.Notwithstanding anything contained in sub- section [1], where in
respect of any vacant land any scheme for group housing has been sanctioned by
any authority competent in this behalf immediately before the commencement of
this Act, then, the person holding such vacant land at such commencement shall
be entitled to continue to hold such land for the,purpose of group housing:
Provided
that no more than one dwelling unit in the group housing shall be owned by one
single person;
Provided
further, that the extent of vacant land which such person shall be entitled to
hold shall, in no case, exceed- [a] the extent required under any building
regulations governing such group housing; or [b] the extent calculated by
multiplying the number of dwelling units in the group housin g and the
appropriate ceiling limit referred to in sub-section [1], whichever is
less." 733 Section 5(3) prohibits transfer of the vacant land in excess of
the ceiling limit or any part thereof by way of sale, mortgage, gift, lease or
otherwise until the land-holder has furnished a statement under Section 6 of
the Act and a notification regarding the excess vacant land held by him, has
been published under sub-section [1] of Section 10. Any such transfer is deemed
to be null and void.
Section
6(1) requires every person holding vacant land in excess of the ceiling limit
at the commencement of the Act, to file a statement before the competent
authority under the Act. Read with Section 7, it is clear that the statement to
be filed under Section 6(1) has to include vacant land not only situate in the
same State but also in other States to which the Act applies. In the present
case, admittedly, the firm held land also in Madras in addition to the land in
dispute in the city of Bangalore. It is not known whether the firm had vacant
land in its possession in Madras in addition to the land in dispute and whether
it had shown such land in its return. However, that is not the subject matter
of dispute before us.
Section
8 provides for a draft statement to be prepared by the competent authority, as
regards the vacant land held by the person concerned and calculated on the
basis of the statement filed by him under Section 6 after holding an inquiry
into the matter. The draft statement is to be served on the person concerned
with the notice requiring him to prefer his objections, if any.
Section
9 provides for the final statement with regard to the vacant land in excess of
the ceiling limit to be prepared by the competent authority and to be served on
the person concerned.
After
the service of the final statement under Section 9, on the person concerned,
the competent authority is required by Section 10(1) to cause a notification to
be published in Official Gazette giving the particulars of such vacant land and
stating therein [i] that such land is to be acquired by the concerned State
Government and [ii] the claims of all the persons interested in such vacant
land be made by them giving particulars of the nature of their interest in the
land. Under Section 10(2), the competent authority is required to determine the
nature and extent of such claims and pass such orders as it deems fit. Section
10(3) provides that at any time after the publication of the notification under
Section 10(1), the competent authority may by another notification published in
the Official 734 Gazette of the State concerned, declare that the excess vacant
land referred to in the notification published under Section 10(1) shall with
effect from such date as may be specified in the declaration, be deemed to have
been acquired by the State Government. Upon the publication of such
declaration, the vacant land is deemed to have been vested absolutely in the
State Government free from all encumbrances with effect from the date so
specified.
Section
10 (4) then prohibits transfer of the excess vacant land and also the
alteration of the use of such land between the date of notification published
under Section 10(1) and that of the notification published under Section 10(3).
Section
10(5) enables the competent authority to pass an order requiring the person in
possession of the excess vacant land to surrender the same to the State
Government.
Section
11 requires the State Government to pay compensation to the person or persons
having interest in the vacant land acquired under Section 10(3), at the rates
mentioned therein.
Section
19 exempts certain lands from the provisions of Chapter III of the Act which
comprises Sections 3 to 24.
Then come
the provisions of Section 20 to 24 of Chapter 111.
We are
directly concerned in the present appeals with the said sections along with the
provisions of chapter IV of the Act.
Section
20 permits the State Government to give exemption to any vacant land in excess
of the ceiling limit, from the provisions of Chapter III, for two distinct
purposes. It is necessary to reproduce here the said section:
20.Power
to exempt. (1) Notwithstanding anything contained in any of the foregoing
provisions of this Chapter,- (a) where any person holds vacant land in excess
of the ceiling limit and the State Government is satisfied, either on its own
motion or otherwise, that, having regard to the location of such land, the
purpose for which such land is being or is proposed to be used and such other
relevant factors as the circumstances of the case may require, it is necessary
or expedient in the public interest so to do, that Government may, by order,
exempt, subject to such con- 735 ditions, if any as may be specified in the
order, such vacant land from the provisions of this Chapter;
(b) where
any person holds vacant land in excess of the ceiling limit and the State
Government, either on its own motion or otherwise, is satisfied that the
application of the provisions of this Chapter would cause undue hardship to
such person, that Government may by order, exempt subject to such conditions,
if any, as may be specified in the order, such vacant land from the provisions
of this Chapter:
Provided
that no order under this clause shall be made unless the reasons for doing so
are recorded in writing.
[2] If
at any time the State Government is satisfied that any of the conditions
subject to which any exemption under clause (a) or clause (b) of sub-section
(1) is granted is not complied with by any person, it shall be competent for
the State Government to withdraw, by order, such exemption after giving a
reasonable opportunity to such person for making a representation against the
proposed withdrawal and thereupon the provisions of this Chapter shall apply
accordingly.
It
would be apparent from clause (a) of sub-section [1] of the section that under
it, the State Government is given power to exempt the excess vacant land from
the operation of Chapter III only if the State Government is satisfied that
having regard to [i] the location of the land and [ii] the purpose for which it
is being or is proposed to be used, it is necessary or expedient in the public
interest to exempt it. The paramount consideration is the public interest.
The
exemption granted under this provision may be subject to certain conditions.
But, it does not appear that it is obligatory to impose such conditions. Nor is
it necessary to record reasons when exemption is granted under this clause.
The
power to exempt such land under clause (b) of sub- section [1] can be exercised
by the State Government, if it is satisfied that the application of Chapter III
would cause undue hardship to the landholder. The exemption may be granted
under this clause subject to such conditions, if 736 any, as may be specified
in the order. But, unlike under clause (a), there is no obligation to prescribe
the conditions. The 'permission given under this clause, however, has to be
supported by reasons to be recorded in writing.
Sub-section
[2] of the section enables the government to withdraw the exemption granted
either under clause (a) or (b), if is satisfied that any of the conditions
subject to which the exemption is given, is not complied' with.
Clauses
(a) and (b) of sub-section [1] read with subsection [2] make it clear that the
exemption may either be conditional or absolute. Where it is conditional, it
may be withdrawn, if any of the conditions are not complied with.
The
very fact, however, that the legislature has con- templated imposition of
conditions on exemptions granted under both the clauses, shows that the purpose
of the exemption under either of the clauses cannot be the transfer of the
land. The exemption under clause (a) is obviously for the land being put to a
particular use which use is also necessary or expedient in the public interest,
while exemption under clause (b) is for relieving the person concerned from any
undue hardship which may be caused to him personally, by the withdrawal of the
excess land from his possession probably such as when the person may require
the land for the expansion of the use to which he has already put it, such as
his growing business or activities or to accommodate his growing family. The
clause unfortunately is completely silent on what it intends to convey by the
expression "undue hardship".
Section
21 also contemplates exemption of the excess vacant land from the operation of
the said Chapter but for a purpose other than for the use of the holder of the
land.
The
purpose contemplated there is the construction of dwelling units of the plinth
area of not more than 80 sq. mtrs. for accommodation of the weaker sections of
the society and in accordance with a scheme approved by such authority as the
State Government may specify in that behalf. The person desiring exemption
under this Section has further to declare his intention for construction of
such dwelling units for weaker sections within such time, in such form and in
such manner as may be prescribed. Such declaration is to be made before the
competent authority.
The
competent authority, after receiving such declaration may, after making such
inquiry as it deems fit, declare such land not to be excess land for the
purposes of the said Chapter and permit such person to continue to hold such
land for the aforesaid purpose subject to 737 such terms and conditions as may
be prescribed. Where any such condition is contravened, the competent authority
has been given power to declare the land to be excess land and on such
declaration, the, provisions of Chapter III of the Act are to apply.
The
distinction between Sections 20 and 21 may be noticed at this stage. In the
first instance, the power given under Section 20 is to the State Government and
not to the competent authority. The power given is to exempt the land, and the
exemption is to be granted to a person. The purpose of exemption is either
public interest or relief from personal undue hardship. It does not appear to
be obligatory on the State Government to prescribe any conditions while
granting the exemption. However, if any conditions are specified and if the
State Government later satisfied that there is non-compliance of any of the
conditions, the State Government is given power to withdraw the exemption.
As far
as Section 21 is concerned, the power conferred by it is not to exempt the land
but to declare it not to be excess for the purposes of Chapter III. The power
is given to the competent authority itself. It is to be exercised by it only
under one circumstance. That circumstance is that the holder of the vacant land
should declare before it within a specified time and in the prescribed form and
manner, that he desires to utilise the land for the construction of the
dwelling units of not more than the particular size mentioned therein for
accommodating the weaker sections and in accordance with any scheme approved by
the specified authority. it is the competent authority which is required to
make inquiry as it deems fit into such a declaration, and if it is satisfied,
to declare that such land shall not be excess within the meaning of the said
Chapter. However, it appears that the competent authority is required to
prescribe certain terms and conditions while declaring the land not to be an
excess land, including a condition with regard to the time limit within which
such buildings are to be constructed, and on the breach of any of the
conditions, the competent authority is also given power to declare the land to
be an excess land.
Section
22 enables a person to hold the vacant land on which there stood a building
which he demolished or destroyed or which was demolished or destroyed on
account of natural causes. The holder of such land is required to file a
statement in that behalf within the specified time 738 and if the competent
authority is satisfied that such land is required by the holder for the purpose
of redevelopment in accordance with the master plan, the authority may, subject
to such conditions and restrictions, permit the holder to retain such land for
such purpose. However, if the competent authority is not so. satisfied and does
not therefore, give permission for redevelopment, the provisions of Sections 6
to 14 of the Act become applicable even to such land.
Section
23 provides for the disposal by the State Government of the vacant land
acquired under the Act or acquired under any other law. The State Government
may allot such land to any person for any purpose relating to or in connection
with any industry or for providing residential accommodation, of such type as
may be approved by the State Government, to the employees of any industry. The
'industry' is defined for the purpose to mean any business, profession, trade,
undertaking or manufacture. While making such allotment, the State Government
may impose such conditions as may be specified in the order of allotment. A
breach of any of the conditions imposed enables the State Government to cancel
the allotment, and on such cancellation the land revests in the State
Government free from all encumbrances. Sub- section [4] thereof also enjoins
the State Government to dispose of the vacant lands to subserve the common good
on such terms and conditions as the State Government may deem fit to impose.
Sub-section 15] thereof gives the State Government an overriding power and
enables it to retain or reserve any vacant land acquired under the Act for the
benefit of the public, notwithstanding anything contained in sub-sections [1]
to [4].
Section
24 enables the State Government to assign a part or whole of the acquired land
to those persons who had leased out or mortgaged with possession, of the said
land or had given such land under a hire-purchase agreement and as a
consequence of which they are left with no vacant land or. are left with vacant
land which is less in extent than the ceiling limit.
Chapter
IV of the Act deals with the regulation of transfer and use of urban property.
Section 26 prohibits the sale of vacant land within the ceiling limit except
after giving notice in writing to the competent authority, of the intended
transfer. Where the notice is given, the competent authority shall have the
first option to purchase the land on behalf of the State 739 Government at a
price calculated in accordance with the provisions of the Land Acquisition Act,
1894 or of any other corresponding law for the time being in force. The option
has, however, to be exercised within a period of sixty days from the date of
the receipt of the notice and if no such option is exercised, it will be
presumed that the competent authority has no intention to purchase the land,
and it shall then be lawful for such person to transfer the land to whomsoever,
he may like.
Section
27 prohibits transfer of any urban or urbanisable land by way of sale,
mortgage, gift, lease for a period exceeding ten years, or otherwise, if such
land is with a building, whether constructed before or after the commencement
of the Act. It also prohibits a similar transfer of the land with a portion
only of such building.
The
restriction on the transfer of Such land is for a period of ten years of the
commencement of the Act or from the date on which the building is constructed
whichever is later, except with the previous permission of the competent
authority. The competent authority is given power to grant or refuse permission
to transfer, after holding an inquiry.
If the
permission is not refused within sixty days of the receipt of the application,
the permission is deemed to have been granted. If the permission applied for is
for the transfer of such land by way of sale, the competent authority is given
the first option to purchase such land with the building or a portion of the
building, as the case may be, and if the option is not exercised within sixty
days, the applicant is free to sell the land to any person he may like.
For
the purpose of calculating the price, where the purchase is made by the
authority, the provisions of the Land Acquisition Act, 1894 or of the
corresponding- law are made applicable. This Section has since been, struck
down by this Court in Maharao Sahib Shri Bhim Singhji etc. etc. v. Union of
India & Ors., [1981] 1 SCC 166 to the extent it operates on the vacant
lands within the ceiling limit. In other words, as the law stands today, the
section applies only to transfer of the urban and urbanisable lands in excess
of the ceiling limit and which have a building or a portion of building
constructed thereon.
Section
29 prohibit s construction of buildings with dwelling units with a plinth area
exceeding particular dimensions, depending upon the category to which the urban
agglomerations belong.
Section
30 gives power to the competent authority to stop or demolish construction
which is being made or made in contravention of 740 Section 29.
Section
35 gives power to the State Government to issue orders and directions of a
general character as it may consider necessary in respect of any matter
relating to the powers and duties of the competent authority and the competent
authority has to give effect to such orders and directions.
Section
36 gives power to the Central Government to. give such directions to any State
as may appear to it to be necessary for carrying into execution in the State
concerned, any of the provisions of the Act or-of any rules made thereunder.
The Central Government may also under this Section require any State Government
to furnish such returns, statistics, accounts and other information as may be
deemed necessary.
15.The
examination of the aforesaid relevant provisions of the Act shows a clear
intention of the legislature and reveals a definite scheme. It has to be
admitted that the provisions of the Act as are drafted have not succeeded in
translating into, words the clear intention of the legislature and to that
extent the Act is an inelegant and confused piece of drafting. However, since
the intention is clear, a harmonious reading of all the provisions consistent
with that intention is necessary to interpret and understand each of the said
provisions. The intention of the legislature is to acquire all vacant land in
excess of the ceiling limit prescribed by the Act and the main purpose of the Act,
as stated earlier, is three-fold, viz.,
[i] to
prevent concentration of the urban land in the hands of a few persons and to
prevent speculation and profiteering therein;
[ii] to
distribute the urban land equitably and
[iii] to
regulate the construction of buildings on the urban lands.
Consistent
with these objectives, the Act provides for acquisition of all urban vacant
land in excess of the ceiling limit and prohibits its transfer in any form
absolutely. All that the Act permits in the case of such excess vacant land is
either express exemption from the operation of Sections 3 to 19 of Chapter III
of the Act by the State Government under Section 20 or non-declaration of such
land as an excess vacant land by the competent authority under Section 21 or
the retention of such land with the land-holder to be permitted by the
competent authority under Section 22 of the Act.
The
effect of exemption of the land from the provisions of Sections 3 to 19 or of
the non-declaration of the land as excess land or of the 741 retention of the
land with the land-holder under Sections 20, 21 and 22 respectively, is not to
permit the land-holder to deal with it as he likes including to transfer it. In
fact, the exemption, the non-declaration an the retention permitted, is on
certain conditions which are required to be prescribed by the State Government
or the competent authority as the case may be. If those conditions are not
complied with or are contravened, the State Government or the competent
authority is given power to withdraw the exemption or to declare the land as
excess. This power given to the State Government and the competent authority
itself negatives either power to permit the transfer or the right to transfer.
What is more, Chapter IV which alone makes provisions for transfer and use of
urban property, makes provision for transfer of vacant land within the ceiling
limit subject to certain conditions. It also makes provisions for the transfer
of land in excess of the ceiling limit with a building thereon or with a
portion of such building. It makes, however, no provision for transfer of land
in excess of the ceiling limit without a building or a portion of a building
thereon. That is consistent with the object of the Act since the Act does not
contemplate transfer of the vacant land in excess of the ceiling limit.
It
only provides for exemption of such land from being acquired and vested in the
State` Government or for non- declaration of it as an excess land or for the
retention of the same with the holder and that too subject to certain
conditions which may be prescribed, as stated earlier.
16.It
is against the background of the aforesaid provisions of the Act that we have
to consider whether the two permissions given by the State Government to the
firm on 6.3.1987 and 18.4.1987 to sell land admeasuring 16194 sq.mtrs. and 3444
Sq. mtrs. respectively under Section 20 (1), are legal.
17.Taking,
first, the order dated 6.3.1987, it does not mention under which provision of
Section 20 (1) the exemption is granted, viz., whether under clause (a) or (b)
thereof It is, however, conceded before us on behalf of the respondents that
the exemption is not under clause (a) but. is under clause (b). We have,
therefore, to examine the said exemption with reference to the provisions of
clause (b). Section 20 (1)(b), as stated earlier, permits the State Government
to exempt the vacant land from the provisions of Chapter III of the Act, if
either on its own motion or otherwise, it is satisfied that the application of
the said Chapter "would cause undue hardship to such person". The
order of exemption may further 742 be subject to such conditions, if any, as in
any be specified in it. The reasons for passing the order have further to be
recorded in writing. The preamble of the present order states that by the
earlier order dated 17.7.1985, the firm was granted exemption of the very same
land for locating industry on conditions contained in it.
One of
the conditions was that the declarant shall not transfer the land in question
without prior permission of the Government. The order then proceeds to refer to
a letter dated 20.1.1987 of the Special Deputy Commissioner, Bangalore recommending the grant if
permission to sell the said land on certain conditions. The order states that
the Government has considered the undue hardship of the applicants and agrees
to grant permission to sell the said land. The order does not discuss the undue
hardship of the applicants. It is possible that the Government for that purpose
relied upon the report of the Special Deputy Commissioner. It appears from the
record that the report of the Special Deputy Commissioner is of 29.1.1987 and
not of 20.1.1987. It is possible that there is a typographical error either in
the record or in the order. Be that as it may. The said report of the Special
Deputy Commissioner refers to the application made by the firm for grant of
permission for the sale of the land "for their undue hardship'. The report
then mentions the properties declared by the firm. All the properties, which
are four in number and one of which is the land in dispute, are situate in Bangalore. There is no mention of the
properties which admittedly the appellants had in Madras. What is necessary to note here is
that it is also stated in the report that the land in dispute has a building of
dwelling units and non-dwelling units over a plinth area of 1618.80 sq. mtrs. constructed
prior to the commencement of the Act. It also states that there is a factory
on. the land running since 50 years which manufactures the polished stones. exported
to foreign countries. The report then refers to what the firm had stated in its
application for permission to sell the land. The application had mentioned
among other things, as follows "[a] due to lot of competition and nationalisation
of the black and pink granites by southern States including Karnataka, the firm
had been suffering losses in the abovesaid business;
[b]
the partners of this firm are the partners of a firm known as
"Woodlands" which has been carrying business in hoteliers and the
said hotel is not making profits due 743 to the fact that the buildings are
very old and due to paucity of funds;
[el
that firm has constructed twin-theatres on the front side of the hotel just to
diversify the business.
[d] that
they have incurred heavy loans from banks and private parties for the purpose
of construction of theaters and the partners who are the partners of the
applicant firm are responsible to liquidate the loans;
[e] the
Madras firm has suffered heavy loss to a
tune, of Rs. 22,23,016.26 as on 31.3.1986." [The firm has under this head
shown term loan (if Rs. 57.57 lakhs from the Andhra Bank and Rs. 19.03 lakhs
from the Bank of India and Rs. 17.29 lakhs from the State Bank of Mysore.
They
have also mentioned Rs. 51.80 lakhs from private parties but their names are
not disclosed. They have also mentioned other liabilities to the tune of Rs.
3.87 lakhs but their details are not given.] "[f] that the net capital and
current accounts show a debit balance of Rs. 47.94 lakhs".
[They
also further state that if the loan from 1.4J986 to 31.12.1986 is taken into
account, the debit balance of the partners would b e about Rs. 68 lakhs.]
"[g] that the bank-authorities have filed suits in the High Court of
Madras to attach their properties both in Bangalore and Madras;
[h]
that a private party by the name of Sri P.L. Narayanaswamy Reddivar has also
filed a suit in the Karnataka High Court to recover the loan due to them from,
the Madras firm;" The application had further stated that the Madras firm
is not able even to pay the interest as it is running at a huge loss. It had
also been stated that it had become a mental torture to clear the liabilities
and to 744 face the court cases pending for attachment. It had then gone on to
state that there was no other way to dispose of the property in Bangalore,
i.e., the disputed property to clear the above debts and that even the amount
derived from the sale of the land in question would not be sufficient to
liquidate the liabilities.
The report
further states that the firm had produced the statement of profit and loss
account and balance sheet as on 31.3.1986 and copies of suits filed by the Bank
of India in Madras and by the said Sri P.D. Narayanaswamy Reddiyar in the High
Court of Karnataka. After only reciting the above facts but without mentioning
even the price at which the land in dispute was proposed to be sold, the
Special Deputy Commissioner has proceeded to recommend the permission to sell
the land to the builders under Section 20 of the Act.
The
application for permission itself had not mentioned the price. The
recommendation is in respect of not only 16194 sq. mtrs. but also in respect of
3444 sq. mtrs. It may be mentioned here that the firm had not made any
application for exemption or permission to sell the said 3444 sq. mtrs.
till
at least 24th March,
1987. Yet, the Special
Deputy Commissioner recommended in his report of 20/29.1.87 that the earlier
exempted land of 16194 sq. mtrs. may be permitted to be sold along with the said
3444 sq. mtrs. He has of course recommended conditions to be imposed while
granting the permission to sell.
The
State Government has also not independently enquired into the genuineness of
the debts, the value of all the assets of the firm held by it in Bangalore,
Madras or elsewhere, and whether the debts were as on the date of the
commencement of the Act and whether any of the debts were incurred subsequent
to the said date, what was the price at which the land was proposed to be sold,
whether the assets other than the land in question could not have been sold to
meet the debts and if at all it was necessary to sell the land in question,
whether the sale only of a part of the land would not have relieved the firm of
its obligations.
Without
such inquiry, the Government by its order in question granted permission to
sell 16194 sq. mtrs. of land.
Close
on the heels, however, followed another order dated 18.4.1987 by which the
balance of 3444 sq. mtrs. was permitted to be sold relying upon another report
of the Special Deputy Commissioner. The record before us shows that the said
report is of 27.3.1989. We may, however, presume a typographical error and
construe it as a report of 27.3.1987.However, what is worth nothing is that the
application for 745 permission to sell the said 3444 sq. mtrs. was filed by the
firm allegedly on 24.3.87. It seems that with commendable alacrity the Special
Deputy Commissioner made his report on the said application, on 27.3.1987 [if
we are to read the year as 1987 instead of 1989 as the document shows]. What he
has stated in his report may be summarised as under:
That
the Government by its order dated 6.3.1987 had already accorded permission to
sell excess vacant land admeasuring 16194 sq. mtrs. The remaining excess vacant
land held by the firm is 3444 sq. mtrs. Orders had been passed as required
under Section 8(4) of the Act on 9.1.1987 confirming the said excess vacant
land. In the meanwhile, the firm presented another application on 24.3.1987 to
the Government requesting for grant of exemption under Section 20 with
permission to sell the said excess land admeasuring 3444 sq. mtrs. and another
land admeasuring 5,648 sq. mtrs. which consisted of land with building as per
Section 4 (1)(b) of the Act, to the builders.
That
the firm stated that they had got the liabilities to the private parties [who
were for the first time named there]. They are 13 in number. The liabilities
were shown as having arisen between 20.1.1975 and 7.12.1977 with a specific
mention that the liabilities were from a date prior to the coming into force of
the Act. These liabilities to the private parties amounted to Rs. 4,11,279.56.
In addition to 13 private creditors, Dena Bank is the 14th and the last editor
shown there to whom Rs. 65,420.44 were owed from 15.4.1969. The firm had
produced certificates from the creditors and a certificate from the auditors in
support of the said liabilities. The report ends by stating that "in the
cir- cumstances explained above, the requests of the firm to grant exemption
under Section 20 with permission to sell the said balance vacant land of 3444
sq. mtrs. to the builders may be considered." It is not known when the
reference of the said application was made to the Special Deputy Commissioner
for giving his report. All that is known is that on 18.4.1987, the Government
passed an order permitting the firm to sell the land admeasuring 3444 sq. mtrs.
on the conditions mentioned therein. This order also does not discuss, like the
earlier order of 6.3.1987, the various factors which need to be considered
while granting permission to sell. It is, however, not necessary to discuss
this aspect of the matter since we are allowing the appeals on the primary
ground that the State Government had no power to grant permission to the firm
to sell the land in question. If, however, it was necessary to go into the said
question, it must be stated that there is much force in the contention of the
appellants that the State Government had 746 not applied its mind to the
relevant factors relating to the alleged indebtedness of the firm and hence the
permission granted to the firm to sell the land was liable to be struck down on
that ground also.
18.The
first question that arises is whether the provisions of Section 20111 (b)
permit the State Government to permit the sale of the excess vacant land to a
third party.
According
to us, the answer has to be in the negative for reasons more than one.
In the
first instance, the central object of the Act, as is evident both from the
preamble as well as the statement of objects and reasons, is to acquire vacant
land in excess of the ceiling area and to prevent speculation and profiteering
in the same and also to distribute the land equitably to subserve the common
good. It is, therefore, per se against the said object to permit the sale of
the excess vacant land for whatever reasons, including the undue hardship of
the' land-holder. To construe the provisions of Section 20 [1] (b) so as to
read in them the conferment of such power on the State Government for whatever
reasons, is to distort and defeat the whole purpose of the legislation.
Further, neither the plain language of the clause nor its context and
intendment merit such construction. Section 20 itself is titled "Power to
exempt". The power given to the State Governments under the Section is
only to exempt certain excess vacant lands from the operation of the provisions
of Sections 3 to 19 of Chapter III, none of which refers to the subject of
transfer or restrictions on transfer. Those provisions relate to the
calculation, declaration, acquisition and vesting of the excess vacant land. It
is Chapter IV which relates to the transfers of vacant lands and the
restrictions thereon. Further, from the scheme of the Act, it is evident that
the transfers of the vacant land were to be regulated by the specific
provisions made in it.
They
were not to be left to be governed by the unguided discretion of any authority
including the State Government.
The
specific provisions for regulating the transfer have been incorporated in
Sections 20 to 28 of the Act. Those provisions permit transfer of only vacant
lands within the ceiling limit but without buildings, and of vacant lands in
excess of the ceiling limit but with buildings thereon and subject to the
conditions laid down there. It cannot be suggested that in defiance of the said
provisions, Section 20 [1](b) vests power in the State Government to sanction
sales of excess vacant lands with or without building thereon. Under Section 20
[1](b), the State Government can only exempt such excess vacant land from being
acquired by it. The Government 747 cannot permit its transfer when the Act does
not even by implication authorises it to do so but permits the transfer subject
only to the conditions prescribed by Section 27.
The
legislature cannot be presumed to have prescribed different conditions for
transfer of the same or similar lands.
Secondly,
Section 20 begins with the non-obstante clause "notwithstanding anything
contained in any of the foregoing provisions of this Chapter", meaning
thereby Chapter III of the Act. The foregoing provisions of Chapter III viz..,
Sections 3 to 19, as stated earlier, do not contain any provision permitting or
restricting the transfer of the vacant land in excess of the ceiling limit. The
provisions relating to the transfer of the vacant land are contained in
Sections 26 to 28 of Chapter IV. Section 26 lays down restrictions on the
transfer of the vacant land even if it is within the ceiling limit, while
Section 27 places restriction on the transfer of any urban or urbanisable land
with a building or portion of such building thereon for a period of ten years
from the commencement of the Act or from the date on which the building is
constructed, whichever is later, except with the previous permission of the
competent authority. Section 27 as couched is wide in its implication and hence
this Court by its decision in Bhuimsinghji's case Supral restricted its
operation to lands with buildings which are above the ceiling limit. However,
the court has upheld the validity of the rest of the Act including that of
Section 26. The result is, the restriction on transfer even of vacant land
within the ceiling limit but without building is deemed to be valid. Thus the
transfer of the vacant land without building even if it is within the ceiling
limit and of the vacant land in excess of the ceiling limit with a building or
a portion of the building are subject to the restrictions placed by the Act.
Section 20, as pointed out earlier, is subject to the provisions of sections
which follow it including Sections 26 to 28. Hence no construction can be
placed on clause (b) of sub-section [1] thereof which will be in conflict with
the provisions of Sections 26 to 28.
Thirdly,
the provisions of clauses (a) and (b) of sub- section [1] of Section 20 make it
clear that what the legislature has in mind is an exemption for the purposes of
the use- of the land and not for the purposes of selling it.
Sub-section
Ill (a) speaks of exemption of such
land having regard to its location, the purposes for which the land is being or
is proposed to be used and such other relevant factors as the circumstances of
the case may require. The said provisions further require that even after
taking into consideration the said circumstances, the State Government has to
examine, before giving ex- 748 emption, whether it is necessary or expedient in
the public interest to do so. The Government is also empowered under the said
provisions to grant such exemption conditionally.
Sub-section
[1] (b) similarly, speaks of the undue hardship caused on account of the
application of the provisions of Chapter III. Since as per the definition of
"person" in Section 2 [i], the said provision is applicable not only
to individuals, but also to a family, a firm, a company or an association or
body of individuals whether incorporated or not, the hardship spoken of there
is obviously one related to the user of the land. In fact, it is difficult to
understand the precise purpose for which clause (b) has been enacted and the
meaning of the expression "undue hardship" there. We are left only to
speculate on the subject. The speculation itself may not be valid. The lands
are held by companies, trusts and associations for industrial and commercial
use, for the use of medical and educational institutes, sports, clubs, cultural
activities, gardens, exhibitions etc. There is no special provision made in the
Act to protect or take care of such users. The only provision under which a
relief can be given to preserve and safeguard such user is Section 20 [1] (a).
But that provision can be pressed into service only on the basis of the
location of the land and its present or prospective user and only if it passes
the test of public interest. However, all lands in excess of the ceiling limit
may not strictly be necessary for such user, even if the user is in the public
interest. Nevertheless, the withdrawal of a part of the land found to be in
excess may cause an avoidable hardship to the land-holder which may be
disproportionate to the benefit that is to accrue to the public on account of
such withdrawal. The excess of land may be meager or the severance of such
excess land itself may result in unnecessary hardship. The hardship further has
to be undue and not merely an ordinary hardship which is bound to be caused on
account of the application of the Act to every holder of the excess vacant
land. The undue hardship must be one which cannot be avoided except by granting
a relief of exemption as contemplated by the said provision. The relief from
financial hardship or from indebtedness to the land- holder of such land is
alien both to the object and the scheme of the Act. Even the debates in the
Parliament do not refer to financial hardship or to the power of the State
Government to exempt the land to permit its transfer on that account. To hold
that indebtedness and financial hardship would entitle the landholder to get
exemption for sale of the excess vacant land in his possession is to place the
holders of land with debts in an advantageous position as against those who
were unwise enough to manage their affairs with financial discipline. The
classification of the owners of land for this purpose between debtors and 749
non-debtors is itself irrational and has no plausible nexus with the object of
the Act. Such a classification is, therefore, discriminatory and violative of
Article 14 of the Constitution. It is not, therefore, possible to agree with
the view taken by the Gujarat High Court in Thakorbhai Dajibhai Desai v. State
of Gujarat, AIR 1980 Guj. 189 that the
indebtedness of the land-holder on the date of the commencement of the Act can
be a ground for exemption under Section 20 [1] (b). Much less can such a ground
vest the State Government with the power to permit the sale of the land. As has
been explained earlier, under the Act no transfer of vacant land in excess of
the ceiling limit is permitted whether with or without condition, if it is not
encumbered with a building or a portion of a building. It can either be acquired
by the State Government under Section 10 [3] of the Act or exempted from being
acquired or permitted to be retained under Sections 20, 21 and 22 respectively.
It can in no case be transferred. However, if it is so encumbered, the
provisions of Section 27 become ap- plicable to the transfer of the land and no
transfer of such land can be effected in contravention of the provisions of the
said section. There is nothing either in Section 20 or Section 27 which exempts
the transfer of such land from the operation of the provisions of Section 27,
assuming that Section 20 (1) (b) gives power to the State Government to permit
the sale of such land.
Fourthly,
the exemption which is granted under Section 20 [1] (b) has to be supported by
reasons to be recorded in writing. This requirement also contemplates an
exemption which is related to and prompted by the use or better use of the
land. If it is the financial hardship which was under the contemplation of the
legislature, there was nothing easier than to make a reference to the same in
clause (b) itself and to lay down guidelines for the inquiry into such
hardship.
Fifthly,
the provisions of sub-section [2] of Section 20, directly negative either
exemption on account of financial hardship or for the purpose of the transfer
of the land, since that sub-section empowers the State Government to withdraw
the exemption already granted if the State Government is satisfied that any of
the conditions subject to which the exemption is granted either under clause
(a) or clause (b) of sub-section [1] is not complied with. It is inconceivable
that the legislature had in mind the cancellation of the transfer including
sale, which cannot be done when it has already taken place.
Sixthly,
as pointed out earlier, when the legislature wanted to provide 750 for sale or
transfer of the vacant land, it has done so specifically in Chapter IV which
exclusively deals with the "Regulation of transfer and use of urban
property'.
Sections
26,27 and 28 of the said Chapter together provide for sales of vacant land and
for the registration of such sales. Section 26 restricts the sale of land even
if it is within the ceiling limit except after giving notice in writing of the
intended transfer to the competent authority.
When
such notice is given, the competent authority has the first option to purchase
the land on behalf of the State Government and at a price calculated in
accordance with the provisions of the Land Acquisition Act, 1894 or of any
other corresponding law for the time being in force. It is only when the
competent authority does not exercise its option to purchase the land within
sixty days from the date of receipt of the notice, that it is lawful for the
holder of the land to transfer the same to whomsoever he may like. The
provisions of Section 26 further show that the price to be calculated for the
purchase of the land when the competent authority exercises its option is on
the basis that the notification under sub-section [1] of Section 4 of the Land
Acquisition Act or under the relevant provision of any other corresponding law
had been issued on the date on which the notice was given of the intended
transfer by the holder of the land, to the competent authority. This provision
makes it abundantly clear that the exemption to be granted under Section 20 1
11 (b) is not for the sale of the excess vacant land. It is difficult to hold
that the legislature which places restrictions on the transfer of the land
within the ceiling limit would at the same time give a carte blanch for the sale
of the land in excess of the ceiling limit. For it would mean, firstly, that
the State Government cannot have an option to purchase such land and secondly
the sale can be made by the holder of the excess land at any price that he
chooses. In the first instance, such a reading of Section 20 Ill (b) would
militate against one of the objects of the Act, viz., to prevent speculation
and profiteering in the sale and purchase of land. Secondly, it would be
patently discriminatory. Whereas the holder of vacant land within the ceiling
limit would have to suffer the restrictions placed by Section 26, the holder of
the vacant land in excess of the ceiling limit has not to do so. He would in
fact be in a better position. The provisions with regard to granting such exemption
subject to certain conditions contained in Section 20 [1] (b) do not in any way
mitigate the discrimination. Firstly, when the statute itself places specific
restrictions under Section 26 on the sale of land within the ceiling limit, it
is not possible to hold that the conditions on which the State Government is
empowered to permit the sale can be left to the discretion of the State
Government. In fact, such discretion given to the State Government 751 would
itself be violative of Article 14 of the Constitution the same being unguided
and untrammeled. This also shows that the legislature has not given power to
the State Government under Section 20 ill (b) to permit exemption for sale of
the land. Otherwise it would have provided in the section itself for the
conditions on which the permission to sell can be given and such conditions
could not be less onerous than those provided under Section 26 of the Act.
Secondly,
if the power to permit sale of the land was intended to be given only for
relieving the land-holder of his financial hardship, the section could very
well have provided for sale of such land under Section 26 of the Act or made
provision in Section 20 ill (b) itself for the first option of the State
Government to purchase it. It is not suggested that by not making such
provision either in Section 20 111 (b) or Section 26, the legislature intended
to permit the sale of such land at a price above the fair market price payable
under the Land Acquisition Act, 1894 or the corresponding law and thereby
encourage speculation and profiteering, the very evils which the Act intended
to curb.
Seventhly,
section 27 in Chapter IV is another provision which prohibits the transfer of
any urban or urbanisable land with a building whether constructed before or
after the commencement of the Act or a portion only of such building, for a
period of ten years from the commencement of the Act or from the date on which
the building is constructed, whichever is later, except with the previous
permission of the competent authority. Sub-section 151 thereof again gives the
first option to the competent authority to purchase such land and at a price
either as agreed upon between the competent authority and the land-holder or
where there is no such agreement at a price to be calculated in accordance with
the provisions of the Land Acquisition Act, 1894 or any other corresponding law
for the time being in force. It is only if the option is not exercised within
sixty days or the competent authority has not refused permission to sell the
land that the holder of the land can legally transfer the same to whomsoever he
may like. These provisions of Section 27 also militate against the conferment
of the power on the State Government to permit exemption of land for the
purpose of its transfer for the same 'reasons as are based on the provisions of
Section 26 discussed above. The provisions of Section 27 refer to any urban or urbanisable
land with a building. The vacant land in excess of the ceiling limit may be
with or without a building. In fact, the provisions of Section 27 directly
negative the conferment of such power, for the said provisions show, firstly,
that the legislature did not want the 752 sale of any urban or urbanisable land
with a building whether it is within or without the ceiling limit except in
accordance with the provisions of Section 27. For Section 27 speaks of transfer
of any urban or urbanisable land with a building or a portion only of such
building, only with the permission of the competent authority and on the terms
mentioned therein. This Court, as stated earlier, has invalidated the
provisions of the said section to the extent they apply to the vacant land with
a building when the land is within the ceiling limit. But it does apply to land
in excess of the ceiling limit and with a building or a portion of it thereon.
It is not possible to hold that there are two provisions, viz. Section 20 ill
(b) and Section 27 operating at the same time in the same area. For the land
permitted to be transferred under Section 20 [1] (b) may also be a land with a
building or a portion of a building thereon. In one case the restriction
imposed by Section 27 on the transfer would not apply and the State Government
will be deemed to have been given power to permit the sale even in
contravention of the provisions of Section 27. In another case, the holder of
similar land will have to suffer the restrictions placed by Section 27. There
is nothing either in Section 20 [1] (b) or Section 27 to exclude the operation
of the section, as pointed out earlier.
Eighthly,
the provisions of Section 28 require a special procedure to be followed by the
registering officer under the Registration Act, 1908 while registering
documents under Section 17 [1] (a) to (e) of that Act when the transfer of the
land is either under Section 26 or Section 27. Section 28 does not make any
reference to the transfer permitted by the State Government under Section 20
[1] (b). In other words, the holder of the vacant land in excess of the ceiling
limit has not to face the restriction on the registration of the document of
transfer of his land provided under Section 28 when such transfer is permitted
by the State Government under Section 20 [1] (b), whereas the holder of similar
lend who does not approach the State Government has to suffer the same when he
transfers the land held by him. The discrimination between the transfers under
the different provisions is irrational and has no nexus with the object ought
to be achieved by the classification.
Lastly,
if the power to exempt the land for sale is read in Section 20 [1] (b) with
such conditions as the State Government may choose to place and if either the
State Government chooses not to place any conditions or to place such
conditions as are inconsistent with the provisions of Sections 29 and 30, it
would create two sets of lands-one where no restriction are applicable to the
753 construction thereon or only such restrictions as the State Government may
choose to impose, and the other where the restrictions on constructions as
provided by Sections 29 and 30 would be applicable.
It is,
therefore, more than clear that the provisions of Section 20 (11 (b) do not
permit the State Government to exempt vacant land in excess of the ceiling
limit for the purposes of transfer.
N.P.
SINGH, J. I agree with brother Sawant, J. that it is not possible to hold that
State Government can grant exemption under Section 20 [1] (b) of the Act, to
the holder of the excess vacant land, so that he may transfer the same in the
manner he desires. The object of the Act being imposition of ceiling on vacant
land in urban agglomerations and for acquisition of such land in excess of
ceiling limit, with a view to prevent the concentration of urban land in the
hands of a few persons, speculations and profiteering therein, will that object
be not defeated if it is held that power under Section 20(1) of the Act can be
exercised by the State Government to exempt the excess vacant lands, from the
application of Chapter III of the Act, so that the holder thereof can transfer
such lands? Sub-section (1) of section 20 is in two parts. The exemption under
clause (a) of the said sub-section is to be granted in the public interest
whereas under clause (b) the exemption is to be granted taking into
consideration the "undue hardship" of the holder of the land in
excess of the ceiling limit. Both the expressions "public interest"
and "undue hardship" are com- prehensive in nature. But at the same
time, it is not easy even for courts to say as to whether under different
circumstances the exemption was in the "public interest" or was
necessary in the interest of the holder of the .land because of his "undue
hardship".
Under
Indian conditions expression "undue hardship" is normally related to
economic hardship. That is why from time to time many holders of lands in
excess of the ceiling limit, while claiming exemption under clause (b) put
forth their bad economic condition and indebtedness to claim exemption along
with permission to sell such excess lands.
In the
modern set up many holders of such excess lands having undertaken commercial or
industrial ventures with the help of the loans from the Banks and other
financial institutions, put the plea of repayment of such loans as undue
hardship for claiming exemption under clause (b) of section 20(1) aforesaid.
How the holders of excess lands having incurred losses or having failed to
discharge their debts can 754 claim exemption on the ground of "undue
hardship" in such a situation? Section 4 while fixing the ceiling limit,
under subsection (3) takes note of the fact that "where in respect of any
vacant land any scheme for group housing has been sanctioned by an authority
competent in this behalf immediately before the commencement of this Act, then,
the person holding such vacant land at such commencement shall be entitled to
continue to hold such land for the purpose of group housing". But at the
same time under sub-section (4) of section 4 it has been specified that
"if on or after the 17th day of February, 1975, but before the appointed
day, any person has made any transfer by way of sale, mortgage, gift, lease or
otherwise (other than a bona fide sale under a registered deed for valuable
consideration) of any vacant land held by him and situated in such State to any
other person, whether or not for consideration, then, for the purposes of
calculating the extent of vacant land held by such person the land so
transferred shall be taken into account, without prejudice to the rights or
interests of the transferee in the land so transferred". Similarly in
section 5 it has been provided that "where any person who had held vacant
land in excess of the ceiling limit at any time during the period commencing on
the appointed day and ending with the commencement of this Act, has transferred
such land or part thereof by way of sale, mortgage, gift, lease or otherwise,
the extent of the land so transferred shall also be taken into account in
calculating the extent of vacant land held by such person". When different
provisions take into consideration the lands already transferred by the holder,
(i) between the period 17th February, 1975 and the appointed day; (ii) as well
as between the period commencing from the appointed day and ending with the
commencement of the Act, it should not be easily inferred that the framers of
the Act desired that after the commencement of the Act while exercising the
power of exemption under section 20(1)(b) permission should be granted to
holders of such excess lands to transfer such lands to third parties in order
to meet their financial liabilities.
Section
21 is yet another provision in the Act under which excess vacant land is not to
be treated as excess. Under the said Section exemption is to be granted in
respect of such excess vacant land, if the holder undertakes to utilise the
same for the constructions of dwelling units for accommodation of the weaker
sections of the society in accordance with the scheme approved by the competent
authority or the State Government subject to such terms and conditions as may
be prescribed. If Section 21 provides for granting exemption in respect of
excess land held by the holder only on a specific condition that the holder
shall utilise the same 755 for the construction of dwelling units for weaker
section, to serve a public cause, how the framers of the Act could have
conceived the grant of exemption under Section 20(1) (b) to the holder of the
excess land, only to serve his interest, by selling such excess lands.
If it
is held that the State Government can exempt the vacant land held by the land
holder in excess of the ceiling limit, from the applicability of the provisions
of Chapter III of the Act, in order that the said holder sells such land to
liquidate his debts which amounts to an "undue hardship", then there will
be an apparent conflict between the interest of the land holder and the public
interest. In the interest of the land holder the maximum price fetched by sale
of such land will be the solution of his hardship, whereas that will run
counter to the object of the Act to prevent " speculations and
profiteering". It is futile to urge that even in such transfers the
dominant purpose of the legislation to prevent "the concentration of urban
land in hands of few persons" is none the less served. The concentration
of urban land in hands of few persons has to be prevented with a view to bring
about "an equitable distribution of land in urban agglomerations to subserve
the common good". Section 23 prescribes the priorities for disposal or
distribution of excess vacant lands after such lands vest in the State under
the provisions of the Act. In the case of Bhim Singhji v. Union of India,
[1981] 1 SCC 166, it has been said:- "The definition of the word
'industry' in clause (b) of the Explanation to that section is undoubtedly
unduly wide since it includes "any business, profession, trade,
undertaking or manufacture". If sub-section (1) of Section 23 were to
stand alone, no doubt could have arisen that the Urban Land Ceiling Act is a
facade of a social welfare legislation and that its true, though concealed,
purpose Is to benefit favored private individuals or associations of
individuals. But the preponderating provision governing the disposal of excess
vacant land acquired under the Act is the one contained in sub-section (4) of
Section 23 whereby all vacant lands deemed to have been acquired by the State
Government under the Act "shall be disposed of ... to subserve the common
good". The provisions of sub-section (4) are "subject to the
provisions of sub-sections (1), (2) and (3)" but the provisions of
sub-section (1) 756 are enabling and not compulsive and those of sub-sections
(2) and (3) are incidental to the provisions of sub-section (1). The disposal
of excess vacant lands must therefore be made strictly in accordance with the
mandate of sub-section (4) of Section 23, subject to this, that in a given case
such land may be allotted to any person, for any purpose relating to, or in
connection with, any 'industry' or for the other purposes mentioned in
sub-section (1), provided that by such allotment, common good will be subserved.
The
governing test of disposal of excess land being 'social good', any disposal in
any particular case or cases which does not subserve that purpose will be
liable to be struck down as being contrary to the scheme and intendment of the
Act." If the vacant lands which have vested in the State are also to be
disposed of strictly keeping in view the spirit and object of the Act, how
under section 20(1)(b) exemption can be granted to holders of such lands to
dispose of such lands in the manner they like, the persons they prefer, the
price they dictate, for clearing their debts? If it is conceded that
indebtedness amounts to an undue hardship, then it may cover the debts incurred
even after the commencement of the Act. The ceiling limit has been fixed by
section 3 with reference to the date of the commencement of the Act, but
exception can be granted till such excess lands vest in the State Government
under sub-section (3) of section 10, after publication of the notification, in
terms of the said sub- section. Although it was not possible even for the
framers of the Act to exhaustively indicate as to what shall be deemed to be
"undue hardship" within the meaning of section 20(1)(b) but it would
have been better, if it had been illustratively indicated, leaving the rest for
the courts to decide.
20.1
have made no reference to Section 26 or Section 27 of the Act, while
considering the question whether on the ground of "undue hardship"
the holder of the excess vacant land can be granted exemption and then
permission to sell such excess land, because he is financially crippled or
burdened with liabilities. In the case of Blim Singhji v.
Union
of India (supra) this court held that Section 27(1) in so far as it imposes
restriction on transfer of any urban or urbanisable land with a building or of
a portion of such building which is within ceiling area, was invalid. The said
sub-section (1) of Section 27 757 was struck down being unconstitutional.
Section 26 of the Act also imposes certain restrictions on transfer of vacant
land even within ceding limit. It can be urged that Section 26(1) suffers from
the same vice which was pointed out in respect of sub-section (1) of Section 27
of Act, in the aforesaid case of bhim Singhji v. Union of India (supra) by this
Court. But neither in the aforesaid case nor in this case this court was or is
concerned with Section 26 and as such, according to me, it is not necessary to
express any opinion in respect of Section 26 of the Act, while considering the
issue involved in the present appeals.
ORDER
21.For the reasons given by us above, we are of view that the provisions of
Section 20 [1] (b) of the Act do not permit the State Government to give
exemption to the vacant in excess of the ceiling limit for the purposes of
transferring the same.
22.In
view of our conclusion as above, it is not necessary to go into the further
question, viz., if the State Government has such power, in which circumstances
it can be exercised and whether financial hardship such as the indebtedness of
the land-holder is sufficient to warrant such exemption or not and with respect
to which date such indebtedness is to be assessed and in what manner, and
whether in the present case, the said aspects of the indebtedness were
investigated or properly investigated or not. For this very reason, we also do
not propose to go into the other question regarding the mala fides on the part
of the authorities while granting permission to the firm to sell the land to
the builders in question.
23, Since
we have come to the conclusion that the State Government has no power to grant
permission to sell the land under Section 20 [1] (b), the orders dated 6.3.87
and 18.4.87 granting exemption and permission to the firm for sale of the land
are void ab initio having been passed without jurisdiction. Accordingly, the
sale-deed dated 30.9.1987 executed by the 2nd respondent firm in favour of the
3rd respondent-builders is held invalid and inoperative, as the respondent-firm
had no legal right to transfer the land in favour of the builders. We accordiigly
allow the appeals and set aside the impugned order of the High Court.
The respondents State of Karnataka, M/s. Narayanaswamy & Sons and M/s. Reevajethu,
Builders & Developers will pay the costs to the appellants in one set.
G.N.
Appeals allowed.
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