PETITIONER: STATE OF KARNATAKA Vs. RESPONDENT: SHANKARA TEXTILES MILLS LTD. DATE OF JUDGMENT18/10/1994 BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. AGRAWAL, S.C. (J) CITATION: 1995 AIR 234 1995 SCC (1) 295 JT 1994 (6) 567 1994 SCALE (4)559 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
SAWANT, J.- The respondent is a public limited company and
owned a total land of 49 acres and 38.25 guntas in
Davanagere Village. At the relevant time, it had its
factory in an area of 13 acres and 32.25 guntas which was
converted into non-agricultural land under Section 95(2) of
the Karnataka Land Revenue Act (hereinafter referred to as
the ‘Revenue Act’). The remaining land, viz., 36 acres and
6.5 guntas was not converted into non-agricultural land
(hereinafter referred to as the ‘disputed land’) with the
result that for the purposes of the Revenue Act, it
continued to be considered as agricultural land.
2.Improvement Board, Davanagere, sought to acquire land
to the extent of 28 acres and 14 guntas from the disputed
land for the purpose of ‘Devraj Urs Layout’. The
acquisition proceedings were started under the provisions
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of Karnataka Improvement Boards Act, 1976. In pursuance of
the final notification issued in the year 1977, the
possession of the land was taken by the Improvement Board on
9-8-1978. Since the Land Acquisition Officer did not make
the award in respect of the acquired land, the respondent-
Company approached the High Court for relief by a writ
petition in which an order was passed on 4-2-1983 directing
the Land Acquisition Officer to pass the award. The appeal
filed by the Improvement Board against the said order was
dismissed on 13-11-1983. Thereafter, the Land Acquisition
Officer made his award. Since, however, the amount payable
under the Award exceeded Rs one lakh, the award was referred
to the Divisional Commissioner, Bangalore for approval as
provided under the rules on the subject. The Divisional
Commissioner did not approve of the award. Hence the
Company filed another writ petition seeking a direction to
the Divisional Commissioner to deal with the award in
accordance with law. That writ petition was allowed on
19-7-1984 and the Divisional Commissioner was directed to
dispose of the proceedings arising out of the award within a
period of two months from the date of receipt of the order
of the Court. In spite of this direction, the Divisional
Commissioner did not pass any order in the said proceedings.
3.During the pendency of these proceedings, the respondent-
Company filed a declaration under Section 79-B(2)(a) of the
Karnataka Land Reforms Act, 1961 (for short ‘the Act’)
stating therein that it held the entire disputed land as
agricultural land. It further appears that the respondent-
Company claimed exemption from the provisions of the said
Section 79-B, under Section 81(1)(b)(ii) of the Act on the
ground that the disputed land was mortgaged to the Mysore
State Financial Corporation on 3-6-1982. The Special Deputy
Commissioner passed an order exempting the disputed land
from the provisions of Section 79-B. Against the said
order, the State preferred an appeal before the Appellate
Tribunal which was allowed with the direction to take action
under Section 79-B of the Act.
4.Against the said order of the Appellate Tribunal, the
respondent Company approached the High Court by way of a
writ petition. The High Court by the impugned decision
allowed the writ petition by holding that the Improvement
Board as an agency of the Government having taken possession
of the land under Section 16 of the Land Acquisition Act, in
the acquisition proceedings, the land had vested in the
Government free from all encumbrances. Hence the question
of the Government exercising its power to withdraw from
acquisition of the land did not arise. The Court further
held that there was no automatic vesting of the disputed
land in the State under Section 79-B of the Act, since the
vesting under the said provision could take place only upon
a declaration by notification under Section 79-B(3) of the
Act. For this purpose, the Court relied upon its earlier
decision in Mysore Feeds Ltd. v. State of Karnataka1. The
Court held, relying upon the said decision, that the land
which is agricultural may cease to be agricultural by
1 (1988) 1 Kar LJ 310 (Kant)
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its usage for a non-agricultural purpose although there is
no order under the Revenue Act permitting the conversion of
the agricultural land into nonagricultural land. The Court,
therefore, held that looking to the usage of the entire land
which was in the possession of the respondent-Company, even
the disputed land had no longer remained agricultural within
the meaning of Section 2(18) of the Act and hence the
direction given by the Appellate Tribunal to the Special
Deputy Commissioner to take action under Section 79-B of the
Act, could not be sustained. It is aggrieved by the said
decision that the State has preferred the present appeal.
5.Two questions arise in this appeal. The first is whether
the land can be deemed to have been permitted to be
converted for non-agricultural use merely because it was
used for non-agricultural purposes although, admittedly, no
permission under Section 95(2) of the Revenue Act was taken,
to do so. The second question is whether under Section 79-B
of the Act, the land vests in the State Government
prospectively from the date of the notification or
retrospectively from the date of the coming into operation
of the Act. The first question has been answered by the
High Court in the affirmative while on the second question,
the High Court has taken the view that the land vests in the
Government from the date of the notification. According to
us, both the answers are wrong in law.
6. Section 95(2) of the Revenue Act at the relevant time
read as follows:
“95. Uses of agricultural land and the
procedure for use of
agricultural land for other purposes.-(1)
(2)If any occupant of land assessed or held
for the purpose of agriculture wishes to
divert such land or any part thereof to any
other purpose, he shall apply for permission
to the Deputy Commissioner who may, subject to
the provisions of this section and the rules
made under this Act, refuse permission or
grant it on such conditions as he may think
fit:”
7. The obvious purpose of this section is to prevent
indiscriminate conversion of agricultural land for non-
agricultural use and to regulate and control the conversion
of agricultural land into non-agricultural land. Section 83
of that Act provides for different rates of assessment for
agricultural and non-agricultural land. That provision
strengthens the presumption that agricultural land is not to
be used, as per the holder’s sweet will, for nonagricultural
purposes. This is also clear from the absence of any
provision under that Act requiring permission to convert
non-agricultural land into agricultural land. In a country
like ours, where the source of livelihood of more than 70
per cent of the population, is agriculture, the restriction
placed by the Revenue Act is quite understandable. Such
provisions and restrictions are found in the Revenue Acts of
all the States in the country. The provision has,
therefore, to be construed as mandatory and given effect to
as such.
8. The High Court has obviously ignored the mandatory
nature of the said provision. On this point, after
referring to an earlier decision of the same Court in Mysore
Feeds Ltd. case1 the Court has held as follows:
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“As held in the above case, land which is
agricultural may cease to be agricultural for
various reasons. Theoretically such land may
fall within the definition of ‘Land’ in
Section 2(18) of the Act. However, in the
absence of any specific finding regarding the
nature or usage of the land as agricultural,
the Special Deputy Commissioner cannot treat
it to be an agricultural land merely on
account of the fact that permission for
conversion of the land under Section 95(2) of
the Karnataka Land Revenue Act was sought.
Even otherwise, admittedly, the land in
question does not satisfy any of the
characteristics as required under aforesaid
definition investing Respondent 2 with the
jurisdiction to take proceedings under Section
79-B of the Act. Furthermore, since vesting
could take place only on a declaration being
made as provided under sub-section (3) of
Section 79-B of the Act, a declaration by the
holder at some earlier point of time in
respect of the land cannot vest the authority
with the jurisdiction to pass an order of
vesting notwithstanding the fact that the land
by then had ceased to be an agricultural land
and treated as such since long. This view is
also in conformity with the scheme of the Act,
inter alia, regarding disposal of surplus land
vesting in the State as provided under Section
77 of the Act.”
9.Thus the High Court has proceeded on the basis that
there is no specific finding regarding the nature and usage
of the land as agricultural and hence, the Special Deputy
Commissioner could not treat it to be an agricultural land
merely on account of the fact that permission for conversion
of the land under Section 95(2) of the Revenue Act was
sought (but admittedly not given). Secondly, it has
proceeded on the footing that the land in question does not
satisfy any of the characteristics as required under the
definition of ‘land’ in Section 2(18) of the Act, i.e.,
Karnataka Land Reforms Act investing the authorities with
the jurisdiction to take proceedings under Section 79-B of
the Act. We are afraid that the High Court has misread the
facts on record. The consistent stand taken by the
authorities is that the land was never converted for non-
agricultural use as required by the provisions of Section
95(2) of the Revenue Act. The mere fact that at the
relevant time, the land was not used for agricultural
purpose or purposes subservient thereto as mentioned in
Section 2(18) of the Act or that it was used for non-
agricultural purpose, assuming it to be so, would not
convert the agricultural land into a non-agricultural land
for the purposes either of the Revenue Act or of the Act,
viz., Karnataka Land Reforms Act. To hold otherwise would
defeat the object of both the Acts and would, in particular,
render the provisions of Section 95(2) of the Revenue Act,
nugatory. Such an interpretation is not permissible by any
rule of the interpretation of statutes. What is further,
the respondent-Company had itself filed a declaration under
Section 79-B(2)(a) of the Act stating therein that the
entire disputed land was agricultural land and had claimed
exemption from the provisions of the said Section 79-B under
Section 109 of the Act on the ground that the land was
mortgaged to the Mysore State Financial Corporation. We
are, therefore, unable to agree with the view taken by the
High Court on the point.
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10.It is for these reasons that we do not approve of the
decision in Mysore Feeds Ltd. case1 which stands expressly
overruled.
11.Coming now to the second question, here again, the High
Court has missed the wood for the tree. The object of the
Act, viz., the Karnataka Land Reforms Act which came into
force on 2-10-1965 is, among other things, to confer
ownership on tenants, to place ceiling on land holdings and
to distribute the surplus land among the members of the
Scheduled Castes and Scheduled Tribes, dispossessed tenants
unregistered as occupants, displaced tenants having no land,
landless agricultural labourers, landless persons whose
gross annual income does not exceed Rs 4800 and ex-military
personnel whose gross annual income does not exceed Rs
12,000, and among the released bonded labourers and other
persons residing in villages, whose gross annual income does
not exceed Rs 2000.
12.Chapter V relating to “Restrictions on (Holding or)
Transfer of Agricultural Lands” was inserted in the Act by
Act 1 of 1974 and came into effect from 1-3-1974. It
contains Sections 79-A, 79-B and 79-C, among others.
Section 79-A, inter alia, prohibits acquisition of land by
certain persons. It states that on and from the
commencement of the Amendment Act, i.e. Act 1 of 1974, no
person who or a family or a joint family which have an
assured annual income of not less than Rs 50,000 (earlier Rs
12,000) from sources other than agricultural lands shall be
entitled to acquire any land whether as landowner, landlord,
tenant or mortgagee with possession or otherwise or partly
in one capacity and partly in another.
13.Sub-section (3) of Section 79-A states that every
acquisition of land otherwise than by way of inheritance or
bequest in contravention of the section shall be null and
void.
14.Section 79-B which falls for consideration in the present
case reads as follows:
“79-B. Prohibition of holding agricultural
land by certain persons.- (1) With effect on
and from the date of commencement of the
Amendment Act, except as otherwise provided in
this Act,-
(a) no person other than a person
cultivating land personally shall be entitled
to hold land; and
(b) it shall not be lawful for,
(i)an educational, religious or charitable
institution or society or trust, other than an
institution or society or trust referred to in
sub-section (7) of Section 63, capable of
holding property;
(ii)a company;
(iii)an association or other body of
individuals not being a joint family, whether
incorporated or not; or
(iv)a cooperative society other than a
cooperative farm, to hold any land.
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(2)Every such institution, society, trust,
company, association, body or cooperative
society,-
(a) which holds lands on the date of
commencement of the Amendment Act and which is
disentitled to hold lands under sub-section
(1), shall, within ninety days from the said
date furnish to the Tahsildar within whose
jurisdiction the greater part of such land is
situated a declaration containing the
particulars of such land and such other
particulars as may be prescribed; and
(b) which acquires such land after the said
date shall also furnish a similar declaration
within the prescribed period.
(3)The Tahsildar shall, on receipt of the
declaration under subsection (2) and after
such enquiry as may be prescribed, send a
statement containing the prescribed
particulars relating to such land to the
Deputy Commissioner who shall, by
notification, declare that such land shall
vest in the State Government free from all
encumbrances and take possession thereof in
the prescribed manner.
(4)In respect of the land vesting in the
State Government under this section an amount
as specified in Section 72 shall be paid.
Explanation.- For purposes of this section it
shall be presumed that a land is held by an
institution, trust, company, association or
body where it is held by an individual on its
behalf.”
15.Section 79-C provides for penalty for failure to
furnish a declaration under Section 79-A or Section 79-B and
for furnishing a false declaration. Section 80 bars
transfer of agricultural land to non-agriculturists.
Section 81 states that the provisions of Sections 79-A, 79-B
and 80 shall not apply to (a) the sale, gift, or mortgage of
any land or interest therein in favour of the Government (b)
the mortgage of any land or interest therein in favour of
(i) a cooperative society and (ii) a financial institution,
among others. It is not necessary to refer to the other
provisions of the said Chapter.
16. It will thus be clear from these provisions that no
person is permitted to acquire or hold agricultural land
except as provided in the Act with effect from 1-3-1974.
There is no dispute in the present case that the respondent
Company filed a declaration, as required under Section 79-
B(2)(a), stating therein that the disputed land which was an
agricultural land was in its possession.
17.A reading of the provisions of sub-section (3) of
Section 79-B shows that after a declaration is received by
the Tahsildar, he has to make an enquiry and send a
statement containing the prescribed particulars relating to
the land in question, to the Deputy Commissioner, and it is
the Deputy Commissioner who thereupon issues a notification
declaring that the land shall vest in the State Government
and takes possession thereafter of such land. The enquiry
to be held by the Tahsildar, the act of sending of the
statement pertaining to the land to the Deputy Commissioner
and the issuance of notification by the Deputy Commissioner
thereafter, are all acts
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consequent upon the filing of the declaration by the
landholder. Where no declaration is made by the holder of
the land or the declaration made by him is false, the
Tahsildar has to issue under Section 79-C a notice to him to
show cause as to why the penalty specified in the notice
should not be imposed upon him. If the Tahsildar, after
considering the reply, if any, comes to the conclusion that
the failure to furnish the declaration was without any
reasonable cause, or that the false declaration was made
knowingly, he is empowered to impose a penalty and also to
require such person to furnish the declaration within a
period of one month from the date of his order. If tile
person fails to comply with the said order of the Tahsildar,
his right, title and interest in the land concerned is
liable to be forfeited to the State Government as and by way
of penalty. A combined reading of Sections 79-B and 79-C,
therefore, shows that the crucial date of vesting of the
land in the State Government is the date on which Sections
79-B and 79-C came into operation, i.e., 1-3-1974.
Otherwise, the date of vesting in the Government would vary
according to the acts and omissions of the holder of the
land in making the declaration and the consequent acts and
omissions of the Tahsildar and the Deputy Commissioner. In
cases where the holder of the land files a declaration
within the initially stipulated time and where the Tahsildar
and the Deputy Commissioner act promptly, the. land would
vest in the State Government on a date earlier than in cases
where either the holder of the land or the Tahsildar or the
Deputy Commissioner commits defaults or delays in their
obligations and duties at the relevant stages. It is
against the scheme of the Act to hold that the date of the
vesting of the land in the State Government should be
variable according to the acts or omissions of the
individuals concerned. That would make nonsense of the
relevant provisions of the Act. It is, therefore, both in
conformity with the object of the Act as well as the true
intent of the provisions of Section 79-B(3) to hold that
whatever the date of notification of the Deputy
Commissioner, the date of vesting of the land will be the
date on which the said provision came into operation, viz.,
1-3-1974. It is necessary in this connection to remember
that the relevant expression in sub-section (3) of Section
79-B reads as “… the Deputy Commissioner … shall, by
notification, declare that such land shall vest in the State
Government…… The section does not leave it to the Deputy
Commissioner to mention the date from which the land shall
vest in the State Government. That is as it should be. If
the intention was otherwise, nothing prevented the
legislature from providing that the Deputy Commissioner
would by notification declare that the land shall vest in
the State Government “from such date as may be stated in the
notification”. There is no such provision in the said sub-
section (3).
18.Shri Javali, the learned counsel for the respondent-
Company invited our attention to certain provisions in the
Act to contrast the language of the said provisions with
that of Section 79-B(3). We find that far from helping his
contention, the language of the said provisions militate
against it.
19.Section 15(6) of the Act provides for resumption of
land by soldier or seaman. Sub-section (6) thereof states:
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“Where the Tahsildar on application by the
tenant or otherwise and after such enquiry …
is satisfied … he shall, by notification
declare that with effect from such date as may
be specified in the notification, the land
leased shall stand transferred to and vest in
the State Government (emphasis supplied)
20.Section 44 provides for vesting of land of the tenants
in the State Government for conferment of ownership on them.
Sub-section (1) thereof provides that:
“All lands held by or in the possession of
tenants … immediately prior to the date of
commencement of the Amendment Act, … with
effect on and from the said date, stand
transferred to and vest in the State
Government.” (emphasis supplied)
21.Section 67 provides for surrender of lands in certain
cases. Subsection (3) thereof states that:
“If the person concerned files declaration …
the Tribunal may … pass an order approving
the surrender and the said land shall,
thereupon be deemed to have been surrendered
by such person.” (emphasis supplied)
22.Section 68 provides for vesting of land surrendered by
limited owner. It reads as follows:
“Where the land surrendered under Section 67
is by an owner (other than a limited owner),
the State Government may take over such land
on the service of the order under Section 67
and such land shall thereupon vest in the
State Government…..” (emphasis
supplied)
23.Section 71 provides for vesting of land surrendered by
tenant. Sub-section(3) thereof reads as follows:
“In cases where possession of the land
surrendered by a tenant does not revert to the
owner … the State Government may take over
the land on the publication of the
notification under Section 73 and the land
shall thereupon vest in the State Government
(emphasis supplied)
24.Section 79-A, as stated earlier, provides for
prohibition of acquisition of landby certain persons. Sub-
section (5) thereof reads as follows:
“The Tahsildar shall … send a statement
containing … to the Deputy Commissioner who
shall, by notification, declare that with
effect from such date as may be specified in
the notification, such land shall stand
transferred to and vest in the State
Government. … From the date specified in
such notification the Deputy Commissioner may
take possession of such land in such manner as
may be prescribed.”
25.It will thus be noticed that the Legislature had taken
pains to mention in the other provisions the specific dates
from which the consequences in question will follow. There
is a reason for doing so. Unless the land to be vested in
the State Government is first ascertained, no date of
vesting of such land could be fore-determined. That is not
the case under Section 79-B, since it provides for the
vesting in the Government of all agricultural lands held by
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certain persons like the respondent-Company. This is apart
from the fact that the provisions of the other sections
cannot help the interpretation of Section 79-B(3) the
language of which is self-evident and is in conformity with
the intent of Section 79-B and the Act.
26.It is for this reason that we are unable to agree with
the decision of the High Court in Mysore Feeds Ltd. case1 on
which the impugned decision of the High Court has also kept
reliance and the said decision stands overruled on this
point as well.
27.In the result, we set aside the impugned decision of
the High Court, restore that of the Appellate Tribunal and
allow the appeal. In the circumstances, there will be no
order as to costs.
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