IN THE COURT OF HIGH COURT OF JAMMU AND KASHMIR AT JAMMU OWP No. 292 of 2008 K. P. Paper petitioner State of J&K and Ors. Respondent
! Mr. Rohit Kapoor, Advocate
^ M/s A.H.Naik, AG Advocate with Mr. A.H.Qazi, AAG.
JUSTICE J. P. SINGH, JUDGE
Date : 10/10/2008
: Judgment :
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Petitioner has filed this writ petition seeking issuance of a writ of
mandamus against the respondents commanding them to grant it
Permanent Registration and all those benefits as may be available to
Industrial Units under the Industrial Policy of the State of Jammu and
Kashmir.
M/s K.P.Paper, initially a sole proprietorship concern, which later
came to be constituted as a partnership firm, applied to the respondents
seeking permission to set up an Industrial Unit for manufacturing paper
as Medium and Large Scale Industry. Its proposal to set up an Industrial
Unit was approved by the Apex Project Clearance Committee (APCC for
short) constituted in terms of the Industrial Policy of the State, and a
Provisional Certificate was issued to it by the Jammu and Kashmir State
Industrial Corporation Limited, the Nodal Officer notified as such under
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the Single Window Clearance System contemplated by the Industrial
Policy of the State.
The petitioner had initially taken land on lease hold basis in village
Barwal of District Kathua. It, however, with the permission of the
respondents-authorities and APCC, shifted its project site from Barwal to
village Chak Ramchand in District Kathua. Provisional Registration
Certificate for setting up a Medium and Large Scale Industry was,
accordingly, granted to it for the changed location.
Toll tax exemption on import of building material needed for
setting up the Unit too was granted to the petitioner by the Deputy Excise
Commissioner, Lakhanpur on the recommendations of Director
Industries and Commerce, J&K Government, Exhibition Ground Jammu.
Petitioner is stated to have invested approximately Thirty One
Crores of rupees in setting up the Unit and has been paying an amount of
Rupees Twenty Lacs per month as interest thereon.
According to the petitioner, the Unit stands registered with the
Sales Tax and other authorities and all requisite formalities to set up and
commission the Medium and Large Scale Industrial Unit for manufacture
of paper thus stands completed. The Jammu and Kashmir State Pollution
Control Board too had granted its consent under Sections 25/26 of the
Water (Prevention and Control of Pollution) Act, 1974 and Section 21 of
the Air (Prevention and Control of Pollution) Act, 1981 to establish the
Unit at village Chak Ramchand Tehsil and District Kathua. The
respondents, according to the petitioner had, however, refused Permanent
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Registration to it thereby stalling the whole process of commissioning the
Unit.
Aggrieved by the refusal of the respondents to grant it Permanent
Registration for setting up and commissioning its Medium and Large
Scale Industry, petitioner has approached this Court invoking its extra
ordinary civil writ jurisdiction to issue a command to the respondents to
grant it Permanent Registration and all those benefits which may be
available to it under the Industrial Policy of the State.
Contesting petitioner’s case for providing it Permanent
Registration and making it available all those benefits which are
available to Industrial Unit under the Industrial Policy of the State, the
State-respondents have opposed the grant of reliefs to the petitioner on
twin grounds, viz.
(1) Being a non-permanent resident of the State, the petitioner was
required to approach the State Government to seek allotment of
land through State Industrial Development Corporation Limited
(SIDCO for short), in case it had intended to set up an Industrial
Unit in the State. Having opted to get land from private persons on
lease, it cannot be allowed Permanent Registration of its Unit,
regardless of the grant of provisional registration to it which,
according to the respondents, had been obtained by
misrepresentation of facts in indicating the proprietor of the
petitioner a resident of village Barwal-Kathua; and
(2) Land obtained from private persons on lease by the petitioner,
who is a Non State Subject, is invalid transfer of immovable
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property which disentitles the petitioner to set up his Industrial
Unit on such property and seek Permanent Registration therefor.
I have heard Mr. Rohit Kapoor, learned counsel for the petitioner
and Mr. Altaf Naik, learned Advocate General appearing for the
respondents.
Projecting petitioner’s case and meeting the defence set up by the
respondents to oppose petitioner’s writ petition, Mr. Kapoor urged that
the laws in force in the State of Jammu and Kashmir do not prohibit lease
of immovable property in favour of Non Residents of the State which
position in law was well settled in view of the law laid-down by this
Court in Estate Officer vs. K. K. Amla, reported as SLJ 1989 J&K, 105.
Learned counsel submitted that the respondents had granted Permanent
Registration to various similarly situated Units such as Komal Paper Mill
Jagatpur, District Kathua, T.K.Paper Mill Saktachak Kathua, besides
Jammu Pigment, Makhan Alloy & Bharat Box, which had obtained land
on lease from private persons to set up their Industrial Units and the
petitioner had been discriminated against for no valid reasons.
Disputing petitioner’s entitlement to seek Permanent Registration
of its Unit by Director Industries and Commerce, Mr. Naik initially
argued that Provisional Registration obtained by the petitioner from
SIDCO would not provide it any right to seek Permanent Registration
because SIDCO had no authority to grant Provisional Registration to its
Unit, which power, according to the learned Advocate, vested in Director
Industrial and Commerce, Jammu and Kashmir Government, respondent
No.2, but on being confronted with Government Order no. 94-Ind of
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2004 dated 31.03.2004, issued pursuant to Government Order no. 21-Ind
of 2004 dated 27.01.2004, in terms of Cabinet Decision No. 19/1 dated
23.01.2004 pertaining to New Industrial Policy, 2004 and Package of
incentives for development of industries in the State of Jammu and
Kashmir, indicating in its clause 4.13 that the Managing Director SIDCO
would be the Nodal Officer for Medium and Large Scale Industrial Units
and all applications for registration of Medium and Large Scale Industrial
Units shall be submitted to the Managing Director SIDCO at his office at
Jammu and Srinagar in the same manner as provided for Small Scale
Units, learned Advocate General had nothing to say to support his
submission that the Provisional Registration of the petitioner’s Unit was
unauthorized.
Supporting respondents’ second plea that the petitioner, being a
Non-permanent resident of the State of Jammu and Kashmir was not
entitled to seek Permanent Registration for its Unit, learned Advocate
General submitted that the provisions of the Transfer of Property Act,
1977 ( 1920 A.D) specifically prohibit lease of private land(s) to Non-
State subjects and in that view of the matter, petitioner being a Non State
Subject cannot be permitted to set up its Unit on land obtained by it on
lease hold basis in violation of the provisions of the Transfer of Property
Act and seek Permanent Registration for setting up an Industrial Unit.
According to Mr. Naik “Transfer of property”, as defined in
Section 5 of the Transfer of Property Act includes in its ambit, Lease of
immovable property too, and in view of the prohibition contained in the
commands and Irshads mentioned in Section 139 of the Act, lease hold
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rights obtained by the petitioner, a Non State Subject, in immovable
property, for setting up and commissioning its Medium and Large Scale
Unit was illegal and impermissible and the land covered by the lease was
liable to be escheated to the State.
Referring to the amendment introduced in Section 140 of the Act
vide Act No. VII of 2004, learned Advocate General submitted that the
Legislature had demonstrated its intention in clear terms that Transfer of
property in terms of Section 5 of the Act would include Lease of
immovable property also.
I have considered the submissions of learned counsel for the
parties.
Petitioner’s case seeking Permanent Registration for its Unit by
Director Industries and Commerce, has been contested by the
respondents on the remaining solitary ground that it is not entitled to seek
its Permanent Registration because Lease of land obtained by it for
setting up its Unit was illegal and impermissible, in that, being a Non
Permanent Resident of the State, it cannot acquire any immovable
property on Lease in the State of Jammu and Kashmir in view of the laws
in force in the State.
The question that, therefore, falls for consideration, in this petition
is, as to whether or not there exists any law in the State of Jammu and
Kashmir which prohibits Lease of immovable property in favour of Non-
Permanent residents of the State?
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To answer the question and deal with the submissions raised at the
Bar, regard needs to be had to the provisions of Sections 5, 105, 139 &
140 of the Transfer of Property Act, 1977 (1920 A.D).
Provisions of the Transfer of Property Act do not create any
specific bar, as such, prohibiting lease of immovable property in favour
of Non State Subjects. It is only Section 139 of the Act which saves
certain Regulations, Hidayats, Resolutions, Ailan, Rule and valid custom,
which regulate transfer of immoveable property or any right therein, in
any part of the Jammu and Kashmir State.
The question as to whether the Regulations, Hidayats, Resolutions,
Ailans etc., enact any bar for Transfer of property in favour of Non State
Subjects, does not appear to be res integra in view of the Full Bench
decision of this Court in Lala Devi Dass versus Panna Lal, reported as
AIR 1959 J&K, 62 where their lordships had held as follows:
“Our attention has been drawn to another Irshad of
29th Magh 1943 and Irshad dated 23rd Magh 1962
by which sales and mortgages of land in favour of
residents of British India have been prohibited and it
is argued that as it had been the consistent policy of
the State not to transfer immovable property in
favour of non-State Subjects either by sale or
mortgage, therefore, the alienation of the property by
will also by implication should be deemed to have
been prohibited.
The learned counsel has not been able to show any
authority or law for the proposition that disposal by
will of immovable property consisting of a house in
favour of a non-State Subject is prohibited. He has,
however, referred toS.4 of the Land Alienation Act
which prohibits the transfer of land in favour of any
person who is not a State Subject. The word
“transfer” is not specifically defined in the Land
Alienation Act but a definition of “permanent
alienation” is given in sub-sec. (3) of S.2 of the Act
which is as follows:-
“The expression “permanent alienation” includes
sale gift, bequest, grant of occupancy rights and
exchange other than an exchange made for the
purpose of consolidation of holdings”.
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The expression “land” is defined by Sub-clause (2)
of S.2 as land which is not occupied as the site of
any building in a town or village and is occupied or
let for agricultural purposes or for purposes subservient
to agriculture or for pasture.
As bequest is specifically included in “permanent
alienation” which is synonymous to the term
transfer, so the permanent alienation of land as
defined in the Land Alienation Act by bequest is
prohibited under the provisions of the Land
Alienation Act. But there is no law prohibiting
disposal of immovable property other than land as
defined in the Land Alienation Act by will in favour
of a non-State Subject. The mere fact that transfer by
sale or mortgage of immovable property in favour of
non-State Subjects is prohibited cannot be
considered to be a bar to the disposal of immovable
property other than land as defined in the Land
Alienation Act by will. There must be a clear and
unambiguous provision of law prohibiting the
disposal of all kinds of immovable property by will
and in the absence of such a provision the Courts
will not interpret the latent intention of the
legislature which is not embodied in express
provisions of law.”
In view of the legal position settled by the Full Bench Judgment
(supra), it may be concluded that the prohibition on transfer of land
which is provided in the Irshads mentioned in Section 139 of the Act is
only on the Sale and Mortgage of lands in the State of Jammu and
Kashmir.
The next issue which needs to be considered is as to whether
Transfer of a right to enjoy property by way of lease would attract the
provisions of the Commands/ Irshads prohibiting Transfer of Immovable
Property by Sale or Mortgage, And whether Transfer of right to enjoy
property, by way of Lease would be Transfer of Property in terms of
Section 5 of the Act.
Transfer of Property has been defined in Section 5 of the Act to
mean, an act by which a living person conveys property, in present or in
future, to one or more persons, whether living or unborn or to himself, or
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to himself and one or more other such persons; and “to transfer property”
is to perform such act.
Living persons, in terms of the definition, include a Company or
Association or body of individuals, whether incorporated or not. It has
been explained in Section 5 of the Act that nothing contained in it would
affect any law for the time being in force relating to transfer of property
to or by companies, associations or bodies of individuals.
Lease of immovable property, as defined in Section 5 of the Act, is
a transfer of a RIGHT TO ENJOY such property, made for a certain
term, express or implied, or in perpetuity, in consideration of a price paid
or promised, or of money, a share of crops, service or any other thing of
value, to be rendered periodically or on specified occasions to the
transferor by the transferee, who accepts the transfer on such terms.
Perusal of the definitions of ‘Transfer of Property’ appearing in
Section 5 and ‘lease’ in Section 105 of the Transfer of Property Act
unambiguously demonstrates a well defined distinction.
Whereas Lease is a transfer, only of a “right to enjoy” the property,
which is one of various rights which the owner or authorized occupier
thereof possesses therein, the ownership remaining vested in the
transferor-lessor, the “transfer of property” on the other hand, is the
“transfer of ownership of the property itself” vesting it absolutely and
exclusively in the Vendee(s) thereby divesting Owner-Vendor of all his
rights in the property.
The above view gets support from the intention of the legislature
expressed as such in enacting Section 8 of the Transfer of Property Act
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which indicates about the effects post transfer of immovable property,
which one may not find in case of “transfer of right” alone in the
property, as in case of lease of the immovable property. Section 8 of the
Act, is reproduced hereunder, for facility of reference:-
“Operation of transfer
Unless a different intention is expressed or
necessarily implied, a transfer of property passes
forthwith to the transferee all the interest which the
transferor is then capable of passing in the property, and
in the legal incidents thereof.
Such incidents include, where the property is land,
the easements annexed thereto, the rents and profits
thereof accruing after the transfer, and all things
attached to the earth;
and, where the property is machinery attached to the
earth, the moveable parts thereof;
and, where the property is a house, the easements
annexed thereto, the rent thereof accruing after the
transfer, and the locks, keys, bars, doors, windows, and
all other things provided for permanent use therewith;
and, where the property is a debt or other actionable
claim, the securities therefor (except where they are also
for other debts or claims not transferred to the
transferee), but not arrears of interest accrued before the
transfer;
and, where the property is money or other property
yielding income, the interest or income thereof accruing
after the transfer takes effect.”
In view of the marked distinction in the expression “transfer of
property” appearing in Section 5 and “transfer of right to enjoy” the
property appearing in Section 105 of the Transfer of Property Act, it may
be concluded that lease of immovable property cannot, by any stretch of
reasoning, be construed as transfer of property in terms of Section 5 of
the Transfer of Property Act which may in turn attract the prohibition on
transfer of immovable property to Non State Subjects.
Merely because the legislature has by Act No. 7 of 2004
introduced, by way of amendment to Section 140 of the Act, which refers
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to exemptions of certain instruments from restriction imposed on transfer
of immovable property, lease of immovable property in favour of (1) Shri
Mata Vaishno Devi University established under the Jammu and Kashmir
Shri Mata Vaishno Devi University Act, 1999 and (2) Baba Ghulam Shah
Badshah University established under the Jammu and Kashmir Baba
Ghulam Shah Badshah University Act, 2002, would not even remotely
suggest that lease of immovable property in favour of Non State Subjects
had been intended to be prohibited. This is so because introduction of
“leases in favour of Shri Mata Vaishno Devi University and Baba
Ghulam Shah Badshah University” in Section 140 of the Transfer of
Property Act, requires to be viewed in the context of any restriction on
transfer of immovable property in favour of a person who is not a
Permanent Resident of the State, as contemplated by Irshad dated 29th
Maghar 1943 or any Law, Rule, Order, Notification, Regulation, Hidayat,
Alian, Circular, Robkar, Yadasht, Irshad, State Council Resolution or any
other instrument having the force of law.
As already held in the earlier part of this judgment that none of
these commands as mentioned hereinabove had created any bar on lease
of immovable property in favour of Non State Subjects and the bar
created therein pertained only in respect of Sale and Mortgage of
immovable property, so introduction of “leases in favour of Shri Mata
Vaishno Devi University and Baba Ghulam Shah Badshah University” in
Section 140 of the Transfer of Property Act, would not in any way
change the settled position of law that lease of immovable property
would not amount to transfer of property itself so as to attract the bar
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enacted by the above commands for transfer of property in favour of Non
State Subjects.
In view of the above discussion, it, therefore, needs to be
concluded that the Transfer of Property Act, 1977 (1920 A.D), does not
as such enact any bar prohibiting lease of immovable property in favour
of Non State Subjects.
Submissions made by learned Advocate General are thus rejected
as utterly frivolous.
Learned Advocate General had not referred to any other law in
force in the State which prohibited Lease of immovable property in
favour of Non State Subjects and rightly so because even the Jammu and
Kashmir Alienation of Land Act, 1995 (1938 A.D), does not provide any
prohibition for lease of land as defined in the Jammu and Kashmir
Alienation of Land Act in favour of Non State Subjects. Prohibition
contained in Section 4 of the Jammu and Kashmir Alienation of Land Act
on transfer of land in favour of Non State Subjects applies only to
permanent alienation of land and not to transfer of right to enjoy the land
by way of lease.
I am, therefore, inclined to hold that the laws in force in the State
of Jammu and Kashmir do not prohibit lease of immovable property in
favour of Non Permanent Residents of the State.
Plea of the petitioner that similarly situated Non State Subject
Owners of the Units had been allowed Permanent Registration by the
respondents, has not been denied by them in their response to the writ
petition.
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The State and its functionaries are thus found to have grossly erred
in refusing Permanent Registration to petitioner’s Unit on absurd
interpretation of the provisions of the Transfer of Property Act and in
raking up an unnecessary issue which stood concluded by a Full Bench
Judgment of this Court which had been later followed in Estate Officer
versus K.K.Amla, reported as SLJ, 1989 J&K, 105, when there was no
legal impediment in the registration of petitioner’s Unit and similarly
situated Units, like the petitioner had been allowed Permanent
Registration.
Petitioner has, therefore, succeeded in establishing its case for
issuance of command to the respondents to consider according it
Permanent Registration and allow it all those benefits to which it may be
entitled to under law and the Industrial Policy of the State.
Before concluding, it needs to be observed that a welfare State like
ours and its functionaries whose duty it is to serve people and act
bonafide, cannot afford to permit contest of litigation on vexatious and
frivolous pleas. It is because of such type of defence of the respondents
that the petitioner had to suffer in business for its no fault. The
respondents are, therefore, liable to be burdened with exemplary costs for
refusing registration to petitioner’s Unit and contesting their case on
misconceived and vexatious grounds whereas in other similar cases they
had granted Permanent Registration to the Units which though owned by
Non State Subjects had obtained lease hold rights in land from private
owners.
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A command shall accordingly issue to the respondents to consider
petitioner’s case for its Permanent Registration and pass appropriate
orders thereon in accordance with law within a period of one month.
They are further directed to provide the petitioner’s Unit all those
benefits which may be available to it under the Industrial Policy of the
State and the laws in force in the State.
This petition, therefore, succeeds and is allowed with exemplary
costs of Thirty Thousand Rupees.
(J. P. Singh)
Judge
JAMMU:
10.10.2008:
Pawan Chopra
