{"id":42348,"date":"2004-02-20T00:00:00","date_gmt":"2004-02-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/escorts-farms-ltd-previously-vs-the-commissioner-kumaon-on-20-february-2004"},"modified":"2017-11-25T12:20:11","modified_gmt":"2017-11-25T06:50:11","slug":"escorts-farms-ltd-previously-vs-the-commissioner-kumaon-on-20-february-2004","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/escorts-farms-ltd-previously-vs-the-commissioner-kumaon-on-20-february-2004","title":{"rendered":"Escorts Farms Ltd., Previously … vs The Commissioner, Kumaon … on 20 February, 2004"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Escorts Farms Ltd., Previously … vs The Commissioner, Kumaon … on 20 February, 2004<\/div>\n
Bench: Shivaraj V. Patil, D.M. Dharmadhikari<\/div>\n
           CASE NO.:\nAppeal (civil)  1584 of 1998\n\nPETITIONER:\nESCORTS FARMS LTD., PREVIOUSLY KNOWN AS M\/S. ESCORTS FARMS (RAM GARH) LTD.\n\nRESPONDENT:\nTHE COMMISSIONER, KUMAON DIVISION, NAINITAL, U.P. AND ORS.\n\nDATE OF JUDGMENT: 20\/02\/2004\n\nBENCH:\nSHIVARAJ V. PATIL & D.M. DHARMADHIKARI\n\nJUDGMENT:\n<\/pre>\n
JUDGMENT<\/p>\n
2004(2)SCR 543<\/p>\n
The Judgment of the Court was delivered by<\/p>\n
DHARMADHIKARI, J. These appeals are directed against a common judgment
\ndated 15th May, 1995 of the High Court of Allahabad passed in a batch of
\nwrit petitions arising out of proceedings under the UP Imposition of
\nCeiling on Land Holdings Act, 1960 (shortly hereinafter referred to as ‘the
\nCeiling Act’).\n<\/p>\n
The lands, which were subjected to imposition of ceiling of Villages
\nDohrivakil, Kharmasa, Pachwala, Ramnagar of Tehsil Kashipur, District
\nNainital in Uttar Pradesh, now form part of new State of Uttranchal. The
\nlands in the aforesaid villages were owned by the Ruler of erstwhile estate
\nof Kashipur. Sometime before the year 1950, the lands were acquired by the
\nGovernment of Uttar Pradesh from the Ruler of Kashipur. On a representation
\nsubsequently made by the Ruler of Kashipur, the Government of UP decided to
\nrelease the land to the ruler on lease under the Govt. Grants Act, 1895 as
\namended in its application to the State of UP by Govt. Grants (UP
\nAmendment) Act, 1960 (Shortly referred to as ‘the Govt. Grants Act’).\n<\/p>\n
The lands were released to the ruler for its development and for making it
\ncultivable within the prescribed period. The terms of the Govt. Grant are
\ncontained in letter dated 26.1.1950 of the Deputy Secretary to the Govt. of
\nUP addressed to the Director of Colonization, Lucknow, U.P. Consequent to
\nthe release of the lands in favour of the ruler, no formal lease containing
\nthe terms and conditions of the Govt. Grant came to be executed between the
\nerstwhile ruler and the Government of U.P. but it is not in dispute that
\nthe possession of the lands under the grant was taken on the basis of the
\nproposal of the government, contained in the letter dated 29.8.1950. The
\nrights and liabilities of the parties are governed by the terms of the said
\nGovt. Grant.\n<\/p>\n
As the contesting parties before us are at issue on the legal effect of the
\nGrants for application of the provisions of the Ceiling Act, the contents
\nof the letter containing the terms and conditions of the Grants are
\nrequired to be reproduced in full:-\n<\/p>\n
“No. C-4599\/XII-A-26.1.1950<\/p>\n
From<\/p>\n
Shri H.W. Ward-Jones, IAS
\nDy. Secretary to Government of Uttar Pradesh<\/p>\n
To
\nThe Director of Colonisation, Uttar Pradesh, Lucknow.\n<\/p>\n
Dated, Lucknow August 29, 1950.\n<\/p>\n
Sir,<\/p>\n
I am directed to say that on representation being made to Government by
\nshri Hari Chand Raja Singh, Raja of Kashipur, Nainital about the release of
\nhis land acquired for the colonisation schemes, government have been
\npleased to decide that an area of land aggregating 2,688 acres viz., 597
\nacres in village Bhagwantpur, 264.36 acres in Ramnagar, 1,022.64 acres in
\nKundeshri and 804 acres in Dearhivakil should be released in the favour and
\na lease granted under the Crown Grants Act. Out of” the released land the
\nRaja will take a hereditary lease of 597 acres of land lying in village
\nBhagwantpur and the remaining area of 2,091 acres is to be leased to M\/s
\nRamgarh Farms and Industries Ltd., in which the Raja is also a Shareholder,
\nother conditions of the lease will be as follows :-\n<\/p>\n
1.      The lease will be granted under the Crown Grants Act under which
\nthe lessees will enjoy hereditary rights with certain restrictions and
\nlimitations.\n<\/p>\n
2.      The lessees will have to reclaim the lands within one year of the
\ncommencement of the next agricultural operations. The agricultural
\noperations will start some time in November.\n<\/p>\n
3.      The lessees shall use the land granted to them for the purposes of
\ncultivation, horticulture, pasture, poultry and dairy farming and ancillary
\nobjects and for no other purpose.\n<\/p>\n
4.      The lessees shall not parcel out land granted to them and their
\nrights shall be heritable but the succession will be regulated according to
\nthe law governing impartible estates.\n<\/p>\n
5.      The lessees may sublet land permissible under the UP Tenancy Act
\nbut may not transfer or otherwise alienate the land except with the written
\npermission of the State Government.\n<\/p>\n
6.      The rent payable will be the same as obtaining in the Tarai and
\nBhabar Government Estates.\n<\/p>\n
7.      The lessees will be permitted to exchange plots wherever necessary
\nfor consolidation of holdings.\n<\/p>\n
I am, therefore, to ask you kindly to execute a lease deed with Shri Hari
\nChand Raj Singh on the lines indicated in para 1 above.\n<\/p>\n
Yours faithfully,<\/p>\n
Sd\/- H.W. Warde Jones Dy. Secretary.\n<\/p>\n
No. C. 4599(i)XIIA.\n<\/p>\n
Copy forwarded to Shri Hari Chand Raj Singh Raja of Kashipur,<\/p>\n
Kashipur House, Nainital for information with reference to his
\nrepresentation dated June, 24 and 26, 1950.”\n<\/p>\n
[Emphasis added by underlining]<\/p>\n
As is stipulated in the terms of the Govt. Grants, the ruler and the
\ncompany in which he was a shareholder namely M\/s Ramgarh Farms and
\nIndustries Ltd. ( formerly the Co.) had to develop and make the lands
\ncultivable within a period of one year of the commencement of the next
\nagricultural operations from the date of release of the land. As the
\naforementioned company described in the grant was unable to develop the
\nland within the permissible period, they entered into an agreement with M\/s
\nEscorts (Agricultural Machines) Ltd. The two aforementioned companies
\nagreed to form a third company in the name of M\/s Escort Farms (Ramgarh)
\nLtd. (who is the main appellant in the leading appeals before us and shall
\nhereinafter be referred to as ‘the Farms’).\n<\/p>\n
The Farm was incorporated on 30.11.1951 and took possession of the lands.
\nIn revenue papers of Fasli 1361 (corresponding to 1.7.1953 to 30.6.1954)
\nthe Farm was recorded as hereditary tenant, in respect of 1386.08 acres of
\nland. The Ceiling Act was enforced in the State on 3.1.1961 with ceiling
\nlimit of 40 acres in respect of a holder of a holding defined in the
\nCeiling Act. By order passed on 28.12.961 – the prescribed authority
\ndeclared 1163.42 acres of land as surplus with the holder of the lands.\n<\/p>\n
On appeal the District Judge by order dated 15.11.1965 remanded the case to
\nthe prescribed authority. On remand the prescribed authority passed a fresh
\norder on 11.8.1967 determining 98.83 acres of land as surplus and the
\nholder of lands was allowed to retain 1208.64 acres of land which included
\n250 acres of land claimed to have been used for running Farm Mechanization
\nSchool and treated as belonging to the said school as a separate entity.
\nThe said 250 acres of land was held as not liable to be included in the
\nextent of holding of the company.\n<\/p>\n
It is not in dispute that on 11.8.1967 when the prescribed authority
\ngranted exemption to 250 acres of land allegedly in use by the holder
\ncompany for running a school of mechanized farming, such exemption was
\navailable. Record of proceedings, however, does not show that the said land
\nwas ever claimed by the Company to have been held by the school as a
\nseparate legal entity. Treating the land to have been held by the school as
\na separate legal entity, therefore, seems to be an inadvertent mistake
\ncommitted by the prescribed officer in his order dated 11.8.1967. The order
\nof the prescribed authority was varied in appeal by order dated 18.3.1968
\nof the appellate authority and instead of 93.98 acres 153.03 acres was
\ndeclared surplus.\n<\/p>\n
According to the case of the holder-company, in October 1969 it granted
\n18.75 acres of land to 50 persons on oral leases for period ending
\n30.6.1970. Since the leases, as alleged, were oral, there is no proof of
\nthe same on record.\n<\/p>\n
U.P. Zamindari Abolition and Land Reforms Act, 1950 (shortly referred to as
\nthe ‘Land Reforms Act’) was brought into force in the concerned villages of
\nKashipur on 26.1.1970. The case of the holders of land on alleged oral
\nleases is that under Section 131 of the Land Reforms Act they acquired
\nstatus of ‘Sirdar’ of the land. On 28.3.1970 registered sale\/lease
\nagreements were executed in favour of 50 persons for period up to 30.6.1974
\ncomprising 80.75 acres, on consideration of Rs. 3,000 per acre. The 50
\ntransferees among themselves constituted four partnership firms and claimed
\nto have obtained possession of the land.\n<\/p>\n
Before the reduction of ceiling limit by UP Imposition of Holdings
\n(Amendment) Act No. 18 of 1973, sale-deeds covering 12.50 acres of land
\nwere executed in favour of 70 persons between 25.9.1971 to 27.9.1971. These\n<\/p>\n
– transactions admittedly were after the cut-off date 24.1.1971 as fixed in
\nsub-section (6) of Section 5 of the Ceiling Act by U. P. (Amendment) Act
\nNo. 18 of 1973. Under sub-section (6) of Section 5, transfers of land
\neffected after 24.1.1971 are liable to be ignored in determining the
\nceiling area of the holder of land, unless, in accordance with proviso (b)
\nof the said sub-section, the holder of the land discharges the burden of
\nsatisfying the prescribed authority that the transfers, after the appointed
\ndate, were effected on good faith and for adequate consideration and were
\nnot benami. On the basis of the aforementioned sale-deeds executed in
\nfavour of 74 persons, the earlier three partnership firms formed by the
\nlessees were dissolved and four new partnership firms were formed by the
\npurchasers of the land. Shri PN Mehta was the managing partner of one of
\nthe firms.\n<\/p>\n
On 8.6.1973, by UP Amendment Act No.18 of 1973 introduced in Ceiling Act,
\nthe ceiling limit was reduced from 40 acres to 18.75 acres. Under the
\namended Ceiling Act 18 of 1973 fresh ceiling proceedings were initiated
\nproposing to declare 1123.40 acres of land in different villages under the
\nGovt. Grants as surplus. The 74 transferees of the land mentioned above
\nfiled their objections before the prescribed authority. The prescribed
\nauthority by its order dated 29.6.1991 declared 867.67 acres of land as
\nsurplus with the holder company. The land to the extent of 250 acres
\nexempted under the earlier order of the ceiling authority dated 11.8.1967
\nwas left undisturbed. In the order of the prescribed authority passed on
\n29.6.1991 under the amended Ceiling Act 18 of 1973, challenge to the
\nvalidity of exemption, even though erroneously granted in respect of 250
\nacres of land for the school, was held to be barred by the principle of res
\njudicata.\n<\/p>\n
Against the order of the prescribed authority dated 29.6.1991 the State did
\nnot prefer any appeal but the aggrieved transferees and the Farm who
\nrepresented the holder company, preferred appeals to the Commissioner,
\nKumaon Division being the appellate authority. By order dated 14.1.1992 the
\nappellate authority held that exemption in favour of the school of 250
\nacres of land was wrongly granted and plea of Res Judicata cannot be raised
\nunder the provisions of the Ceiling Act. The appellate authority also held
\nthat the grantee under the Govt. Grants Act was not competent to transfer
\nthe land and all transfers were, therefore, invalid. Taking into
\nconsideration the background and circumstances in which transfers were
\nmade, they were all held to be sham and lacking in good faith. The
\nappellate authority, therefore, directed that the surplus land inclusive of
\n250 acres of land wrongly exempted in favour of the school vested in the
\nState under the Ceiling Act. The Commissioner dismissed the appeal filed by
\nthe holder company. Appeals of the transferees and their subsequent
\ntransferees were also dismissed. The Commissioner, in reversing the
\njudgment of the prescribed authority regarding 250 acres of land exempted
\nin favour of the School of Farm Mechanization held that principle of res
\njudicata cannot be applied on the basis of the original order of the
\nprescribed authority passed in proceedings prior to the amendment of
\nCeiling Act in view of bar on plea of res judicata imposed by Section 32B
\nof the Ceiling Act and the other provisions of the Amendment No.18 of 1973.
\nThe Commissioner also held that the transfers made by the Farm out of 250
\nacres of land of the school were not bona fide being made to favoured
\nparties and with clear intention to evade the ceiling law.\n<\/p>\n
Aggrieved by the order of the Commissioner passed in appeals, the Firm, all
\nits transferees and subsequent transferees filed Writ Petitions in the High
\nCourt. The High Court considered their cases by grouping them in three
\ncategories. The Writ Petitioner – holder company and the Farm were
\ndescribed as Group No.l. 74 transferees from the Farm were described as
\nGroup No.2 and 18 transferees from the company in respect of 250 acres of
\nland of school were described as Group No. 3.\n<\/p>\n
Applications for intervention made by some parties who are subsequent
\ntransferees of parcels of land involved in this case, have been rejected by
\nthis Court by order made on 16.1.2004. We, however, granted hearing to the
\ncounsel appearing for subsequent transferees and allottees of land who
\nclaim to be in actual cultivating possession of some portions of lands
\ninvolved.\n<\/p>\n
The High Court by the impugned judgment passed in common in batch of writ
\npetitions, filed by parties representing the three groups mentioned above,
\ndismissed all the Writ Petitions by a very elaborate order containing all
\nfacts and discussion of legal contentions advanced by the contesting
\nparties. The order of the Commissioner passed in appeal was maintained by
\nthe High Court. The High Court also imposed cost of Rupees ten lacs on the
\nFarm as estimated damages for illegal use and occupation of the land made
\nby them for long more than 30 years by resorting to various unfair tactics
\nto evade ceiling law.\n<\/p>\n
We would not like to burden the record by reproducing the various findings
\nrecorded on issues of fact and law in the impugned judgment of the High
\nCourt as the same contentions have been reiterated somewhat differently
\nbefore us by the learned counsel appearing on either side. We, therefore,
\npropose to deal with the legal and factual contentions under the following
\nheads:\n<\/p>\n
1. APPLICABILITY OF THE CEILING ACT TO THE LANDS IN QUESTION AND VALIDITY
\nOF THE PROCEEDINGS AGAINST THE FARM.\n<\/p>\n
The Learned Counsel for the Farm contended that the land subjected to
\nceiling was held by the Company as a Govt. Grantee pursuant to the letter
\nof the Deputy Secretary to the Govt. of U.P. dated 26.1.1950 referred
\nabove. The tenure holder of the land, therefore, within the meaning of the
\nCeiling Act was the Company i.e. the Govt. Grantee and all proceedings
\ninitiated by notice to the Farm, submission of statement and declaration by
\nthe Farm culminating in the orders passed by the prescribed authority and
\nthe appellate authority were void and infructuous because the Govt.
\nGrantee, as holder of the land, was not at all a party before the ceiling
\nauthority.\n<\/p>\n
The aforesaid contention is misleading and misconceived. We have already
\nstated all the relevant facts above. The Govt. Grantee i.e. the Ruler was
\nallowed to keep certain portion of the land as ‘hereditary tenant’ and the
\nother portion in the name of the company in which he had share holding. The
\nRuler through the company was unable to develop and make the land
\ncultivable within the stipulated period in the terms of the grant and,
\ntherefore, they handed over possession of the land for development to the
\nFarm. The Farm came in possession of the land through the company and the
\nRuler. The possession of Farm was, therefore, for and on behalf of the
\nholder company and the ruler. The Farm was, therefore, only an ostensible
\nholder of the land and the company of which the Ruler was a share holder
\ncontinued to be the real holder. The notices issued by the ceiling
\nauthority were responded by submitting statements and returns before the
\nceiling authority by the Farm. The Company and the Ruler submitted to those
\nproceedings through the Farm. The Company and the Ruler never objected to
\nthe proceedings before the prescribed authority nor did they prefer any
\nappeals to challenge those orders either in appellate forum or in writ
\nproceedings. The proceedings therefore initiated, conducted and culminated
\nagainst the Farm have to be treated in reality to be proceedings against
\nthe company and the Ruler as the holders of the land.\n<\/p>\n
The Farm being the ostensible owner and agent of the real owners was
\ncompetent to take part in ceiling proceedings on behalf of the holder of
\nthe lands and the proceedings cannot be held to be invalid or infructuous.
\nThe learned counsel for the State is right in relying on Explanation 1 and
\nExplanation II below Section 5 of the Ceiling Act in support of his
\nsubmission that where the land is held by an ostensible holder it would be
\npresumed to have been held by the real owner. The status of the Farm on the
\nland was merely as a licensee or an agent. The possession of the Farm was
\nclearly as an ostensible owner. The proceedings initiated, conducted and
\nconcluded against the ostensible owner are binding both on ostensible and
\nthe real owner in accordance with Section 5 with Explanations 1 and II
\nthereunder which read as under:-\n<\/p>\n
” Section 5. Imposition of ceiling – (1) On and from the commencement of
\nthe Uttar Pradesh Imposition of Ceiling on Land Holdings (Amendment) Act,
\n1972, no tenure-holder shall be entitled to hold in the aggregate
\nthroughout Uttar Pradesh, any land in excess of ceiling area applicable to
\nhim.\n<\/p>\n
Explanation I: In determining the ceiling area applicable to a tenure-
\nholder, all land held by him in his own right, whether in his own name or
\nostensibly in the name of any other person, shall be taken into account.\n<\/p>\n
Explanation II: If on or before January 24, 1971, any land was held by a
\nperson who continues to be in its actual cultivatory possession and the
\nname of any other person is entered in the annual register after the said
\ndate either in addition to or to the exclusion of the former and whether on
\nthe basis of a deed of transfer or licence or on the basis of a decree, it
\nshall be presumed, unless the contrary is proved to the satisfaction of the
\nPrescribed Authority, that the first mentioned person continues to hold the
\nland and that it is so held by him ostensibly in the name of the second
\nmentioned person.”\n<\/p>\n
[Underlining to add emphasis]<\/p>\n
The Farm,, therefore even if recorded in revenue papers as hereditary
\ntenant could not have claimed independent status of being the holder of the
\nland as the land was admittedly taken possession of by the company under
\nthe Govt. Grants Act. The holder of the land for the purpose of Ceiling Act
\nwas the company which was the Govt. lessee. Even though a formal lease deed
\nwas not executed pursuant to the letter of the Govt. of the year 1950 the
\ncompany has never disputed that the possession of land was taken pursuant
\nto the proposal of the Govt. contained in its letter dated 26.1.1950 and on
\nthe terms and conditions mentioned therein. The aforementioned letter can
\nbe looked into to ascertain the nature of possession of the company which
\nwas placed in possession of the land by the Govt. The possession of the
\ncompany therefore, as a Govt. Grantee is beyond any doubt and, in fact, it
\nhas never been the stand of any of the parties before the ceiling authority
\nor before the High Court or before us that the company was not a Govt.
\nGrantee or a Govt. lessee. Clause (9) of Section 3 defines the word
\n‘holding’ to include a Govt. lessee. The definition clause (9) in Section 3
\nof holding reads thus:\n<\/p>\n
“Section 3 (9). ‘Holding’ means the land or land held by a person as a
\nBhumidar, Sildar, Asami or Gaon Sabha or an Asami mentioned in Section 11
\nof the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1950, or as a
\ntenant under the U.P. Tenancy Act 1939, other than a sub-tenant, or as
\nGovernment lessee, or as a sub-lessee of a Government lessee, where the
\nperiod of sub-lease is co-extensive with the period of the lease.”\n<\/p>\n
[Underlining to add emphasis]<\/p>\n
The public limited company holding land would be covered by definition of
\n‘tenure holder’ as contained in clause (17) of Section 3. ‘Tenure holder’
\nis defined to mean ‘a person who is the holder of a holding.’ The word
\n‘person’ has not been defined in the Ceiling Act but Section 4 (33) of U.P.
\nGeneral Clauses Act defines ‘person’ to include a ‘company’.\n<\/p>\n
Learned counsel appearing for a group of transferees placed reliance on
\nsub-section (4) of Section 5 of the Ceiling Act to contend that as in
\ndetermining the ceiling limit of firms, co-operative societies and
\nAssociations of persons, whether incorporated or not, a ‘public company, is
\nexcluded, the company cannot be held to be a holder of land to impose
\nceiling. The above argument advanced on behalf of appellants-transferees
\ndoes not stand to reason or proper interpretation of the provisions of sub-
\nsection (4) of Section 5 read with the Definition Clauses (9) and (17) of
\nSection 13. Section 5(4) reads thus:-\n<\/p>\n
“Section 5 (4). Where any holding is held by a firm or co-operative society
\nor other society or association of persons (whether incorporated or not,
\nbut not including a public company), its members (whether called partners,
\nshareholders or by any other name) shall, for purposes of this Act, be
\ndeemed to hold that holding in proportion to their respective shares in
\nthat firm, co-operative society or other society or association of persons:\n<\/p>\n
Provided that where a person immediately before his admission to the firm,
\nco-operative society, or other society or association of persons, held no
\nland or an area of land less than the area proportionate to his aforesaid
\nshare than he shall be deemed to hold no share, or as the case may be, only
\nthe lesser area in that holding, and the entire or the remaining area of
\nthe holding, as the case may be, shall be deemed to be held by the
\nremaining members in proportion to their respective shares in the firm, co-
\noperative society or other society or association of persons.”\n<\/p>\n
The limited purpose of sub-section (4) of Section 5, as is clear from the
\nlanguage employed, is to treat the land as being held in proportion to the
\nrespective shares of the shareholders in the case of firm, co-operative
\nsociety or other society and association of persons. Exclusion of public
\ncompany from sub-section (4) of Section 5 is with intention to keep out
\npublic companies from the application of the said sub-section in the matter
\nof distribution of land holdings amongst shareholders. The exclusion of
\npublic company from sub-section (4) in the matter of distribution of
\nshareholding of the land is not an indication that public company is not
\ndeemed to be a ‘holder’ of land or a legal ‘person’ as defined in Clauses
\n(9) and (17) of Section 3 of the Ceiling Act read with Clause (33) of
\nSection 4 of the U.P. General Clauses Act. The contention, therefore,
\nadvanced that the ceiling proceedings could not have been initiated and
\nconcluded against the company through the Farm and they were all invalid
\nand non est, has to be rejected.\n<\/p>\n
2. LEGAL EFFECT OF THE PROVISIONS OF GOVT. GRANTS ACT. 1895 AS AMENDED BY
\nGO IT. ( RANTS (U.P.) ACT. 1960.\n<\/p>\n
One of the most important issues, which arose in writ petition before the
\nHigh Court was regarding findings of the Appellate Authority on the
\nvalidity of the transfers of land made by company in favour of the Farm and
\nthrough the Farm in favour of the different partnership firms and
\nindividuals. We have already reproduced above the terms and conditions of
\nthe Govt. Grant contained in the letter dated 26.1.1950 of the Government
\nof Uttar Pradesh whereunder erstwhile Ruler of Kashipur was allowed to
\nlease the lands to the company for development. The terms of the grant show
\nthat 597 acres of land was allowed to be held by the ex-ruler with
\nhereditary rights and 2091 acres were allowed to be leased to the company
\nof which the Ruler was the main shareholder. In condition No.4 it is
\nclearly stipulated that the land held under the lease shall be heritable
\nbut the succession will be regulated according to law governing impartible
\nestates.\n<\/p>\n
Condition No.5 of the Grant imposes complete prohibition on transfer of the
\nland granted. The grantee was only allowed to sub-let the land in
\naccordance with U.P. Tenancy Act but was given no right to transfer or
\nalienate the land except with the permission of the State Government.\n<\/p>\n
Learned counsel on behalf of Farm and the lessees and transferees from the
\nFarm while separately addressing this Court claimed an indefeasible right
\nto continue to hold and possess the land on the ground that the Govt.
\nGrantee came to be recorded as hereditary tenant since 1953-54 and under
\nthe provisions of UP Zamindari Abolition and Land Reforms Act, 1950 read
\nwith UP Tenancy Act, 1939 the lessees have acquired the status of ‘Sirdars’
\nand thereafter on paying ten times the land revenue of the land, they have
\nbecome ‘Bhumidars’ of the lands in their possession. It is contended that
\nacceptance of ten times the land revenue for the land for conferral of
\n‘Bhumidars’ right on the tenants of the land are actions of the state which
\nare binding on them and the ceiling authorities were estopped from
\ndepriving the tenants of their status and possession of the land.\n<\/p>\n
The above claim of the lessees and transferees of having acquired status of
\nSirdars and Bhumidars cannot be accepted. The possession of the land was
\ngiven to the company admittedly under the terms and conditions of the Govt.
\nGrant which did not permit transfer of land without permission of the
\nGovernment. The position of a government grantee is of a lessee as
\ncontained in definition Clause (9) of Section 3 of the Ceiling Act. The
\nconditions of the Grant allow sub-leases of the land but contrary to the
\nterms of the Grant, the sub-lessees can claim no independent tenancy right
\nso as to frustrate the terms and tenure of the Grant. Irrespective of the
\nprovisions creating rights in favour of tenants under the UP Tenancy Act
\n1939, the terms and conditions of the Grant have been given an overriding
\neffect by provisions contained in Section 2, as inserted by UP Amendment
\nAct of 1960 to the Govt. Grants Act with retrospective effect. Section 2 as
\nintroduced to the Govt. Grants Act in its application to the State of UP
\nclearly provides that the rights and obligations inter se between
\nGovernment as granter of the land and its grantee would in no way be
\naffected by the sub-leases granted by the Govt. grantee in accordance with
\nthe provisions of the UP Tenancy Act.\n<\/p>\n
“Section 2(1). Transfer of Property Act, 1882, not to apply to Government
\nGrants – Nothing contained in the Transfer of Property Act, 1882, shall
\napply or be deemed ever to have applied to any grant or other transfer of
\nland or of any interest therein, heretofore made or hereafter to be made,
\nby or on behalf of the government to or in favour of any person whomsoever;
\nand every such grant and transfer shall be construed and take effect as if
\nthe said Act had not been passed.\n<\/p>\n
(2) UP Tenancy Act, 1939, and Agra Tenancy Act, 1926 not to affect certain
\nleases made by or on behalf of the Government – Nothing contained in the UP
\nTenancy Act, 1939, or the Agra Tenancy Act, 1926, shall affect, or be
\ndeemed to have ever affected any rights, created, conferred or granted,
\nwhether before or after the date of the passing of the Government Grants
\n(UP Amendment) Act 1960, by leases of land by, or on behalf of, the
\nGovernment in favour of any person; and every such creation, conferment or
\ngrant shall be construed and take effect notwithstanding anything to the
\ncontrary contained in the UP Tenancy Act, 1939, or the Agra Tenancy Act,
\n1926.\n<\/p>\n
(3) Certain leases made by or on behalf of the Government to take effect
\naccording to their tenor – All provisions, restrictions, conditions and
\nlimitations contained in any such creation, conferment or grant referred to
\nin Section 2, shall be valid and take effect according to their tenor; any
\ndecree or direction of a court of law or any rule of law, statute or
\nenactment of the Legislature, to the contrary -notwithstanding:\n<\/p>\n
Provided that nothing in this section shall prevent, or be deemed ever to
\nhave prevented, the effect of any enactment relating to the acquisition of
\nproperty, land reforms or the imposition of ceiling on agricultural land.”\n<\/p>\n
[Emphasis added by underlining]<\/p>\n
The recording of the names of the company or the Farm in the revenue papers
\non 5.3.1954 as hereditary tenant and deposit of ten times the land revenue
\nby the sub-lessee for acquiring Bhumidari rights were ineffectual in view
\nof the provisions of Section 2 of the Govt. Grants (UP Amendment) Act, 1960
\nwhich give an overriding effect to terms of the Grant. The High Court,
\ntherefore, rightly negatived the claim set up by the lessee\/sub-lessees of
\nthe land from the company through the Farm, to the status of ‘Sirdars’ or
\nBhumidars.’<\/p>\n
No action of the revenue authorities can, therefore, estop the ceiling
\nauthorities from ignoring the claims of tenancy rights on the land set up
\nby the lessees\/sub-lessees. The rights between the government and the
\ngrantee are strictly to be regulated by the terms of the grant and in
\naccordance with the Govt. Grants (UP Amendment) Act, 1960. The entries in
\nrevenue records and recognition of any tenancy rights of the lessee and\/or
\nsub-lessee as hereditary tenant, Sirdars or Bhumidhars under the UP Tenancy
\nAct can have no adverse legal effect on the Govt. Grant which has an
\noverriding effect under the Govt. Grants Act. No estoppel can operate
\nagainst the overriding statute so as to bind the ceiling authorities to
\naccept the tenancy rights of the lessees\/sub-lessees as indefeasible in
\napplication of Ceiling Act to the lands in question.\n<\/p>\n
The Statement of Objects and Reasons for amending Section 2 of the Govt.
\nGrants Act, 1895 by UP Amendment Act of 1960 makes it clear that the State
\nLegislature intended to apply only the provisions of Land Reforms Act and
\nCeiling Act to the lands held by persons under the Govt. Grants Act. The
\nstatements of objects and reasons read thus:\n<\/p>\n
“Provisions of Section 2 of the Government Grants (UP Amendment) Act, 1959,
\nhave the effect of saving a grant of an agricultural lease by or on behalf
\nof the Government from the operation not only on the Acts mentioned
\ntherein, but also of any other law, including the law for imposition of
\nceiling on land holdings, that might be made in future. There is also an
\napprehension that the result of the wordings of section 2 may be to undo
\nthe vesting of estates of government grantees under section 4 of the UP
\nZamindari Abolition and Land Reforms Act, 1950. With a view, therefore, to
\nremove any such apprehension and to put the UP Imposition of Ceiling on
\nLand Holdings Bill, 1959, when enacted, beyond the purview of the
\nGovernment Grants Acts, this Bill is being introduced. Vide UP Gazette
\nExtraordinary, dated February 3, 1960”.\n<\/p>\n
Land Reforms Act, 1950 being saved by sub-section (3) of Section 2 of Govt.
\nGrants Act is applicable to the govt. grants. Under Section 18 (l)(c) of
\nLand Reforms Act, a govt. grantee holding land rent-free was allowed to
\nretain possession of the land as ‘Bhumidhar.’ Section 18 of the Land
\nReforms Act with clause (c) in sub-section (1) reads thus:-\n<\/p>\n
“Section 18. Settlement of certain lands with intermediaries or cultivators
\nas Bhumidar – (1) Subject to the provisions of Sections 10,15,16 and 17,
\nall lands –\n<\/p>\n
(a) in possession of or held or deemed to be held by an intermediary as
\nsir, khudkasht or an intermediary” grove.\n<\/p>\n
(b) held as a grove by, or in the personal cultivation of a permanent
\nlessee in Avadh.\n<\/p>\n
(c)  held by a fixed-rate tenant or a rent-free grantee as such, or<\/p>\n
(d)  held as such by –\n<\/p>\n
i)     an occupancy tenant,\nPossessing the\n\nii)    a hereditary tenant,\nright to transfer\n\n iii)   a tenant on Patta\n the holding by sale\n\n\n\nDawami or Istamrari referred to in Section 17,\n\n (e) held by a grove holder.\n\n\n\n<\/pre>\n
On the dale immediately preceding the date of vesting shall be deemed to be
\nsell led by the State Government with such intermediary, [lessee, tenant,
\ngrantee or grove-holder] as the case may be, who shall, subject to the
\nprovisions of this Act. be entitled to take or retain possession as a
\nbhumidhar thereof. ”\n<\/p>\n
[Underling to add emphasis]<\/p>\n
As seen above, proviso below sub-section (3) of Section 2, of Govt. Grants
\n(UP Amendment) Act makes applicable Ceiling Act to the land held by a
\ngrantee under the Govt. Grant. It has already been noted that a ‘Govt.
\nGrantee’ or a ”lessee’ is covered within the definition of ‘tenure holder’
\ngiven in under clause (17) read with clause (9) of Ceiling Act and the
\ndefinition of ‘person’ in Section 4 (33) of the UP General Clauses Act.
\nThus conjointly reading the provisions of the Ceiling Act and the Land
\nReforms Act, the grantee of land from the government is a holder of land in
\nthe status of a Bhumidhar and the land can be subjected to ceiling limit.
\nTo the lands held by the company, which is grantee of the Govt., the
\nprovisions of Ceiling Act would be attracted. Such grantee being a lessee
\nfrom Government has no right to transfer the land without permission of the
\nGovernment. It can grant leases or sub-leases under the UP Tenancy Act but
\nthe lessees\/sub-lessees can claim no rights contrary to the terms of the
\ngrant. All the transfers made by the Company or Farm by sale or lease
\ncontrary to the terms of the Govt. Grant create no independent rights in
\nfavour of the said transferees or lessees. The claims of transferees and
\nlessees based on the provisions of UP Tenancy Act were, therefore, rightly
\nnegatived by the ceiling authority and the High Court.\n<\/p>\n
We rely on the ratio of the decision of this Court in the case of Raghubar
\nDayal v. State of U.P.,<\/a> [1995] Supp. 3 SCC 20 and particularly the
\nfollowing observations therein:\n<\/p>\n
“Thus it could be seen that though it is a grant made under the Government
\nGrants Act, it is in substance a lease of agricultural land granted by the
\nGovernment to the appellant for cultivation subject to the covenants
\ncontained thereunder, some of which have been mentioned hereinbefore.
\nSection 105 of the Transfer of Property Act defines lease as transfer of
\nright to enjoy immovable property made for a certain time, express or
\nimplied or in perpetuity, in consideration of a price paid or promised, or
\nof money etc. to the transferor by the transferee who accepts the transfer
\non such terms. The grant in substance, therefore, is a lease of the
\nagriculture land for personal cultivation on improved methods of
\ncultivation during the period of the subsistence of the lease for
\nconsideration, terminable on notice by either side. Accordingly, the
\nappellant is a holder of agriculture lands within the meaning of section
\n3(d) of the Act.\n<\/p>\n
Even otherwise, we find that the Government Grants Act itself prescribed
\nthe applicability of the Act to the lands covered by the grant. The proviso
\nto sub-section (3) of section reads thus :-\n<\/p>\n
Provided that nothing in this section shall prevent, or deemed ever to have
\nprevented the effect of any enactment relating to the acquisition of
\nproperty, land reforms or the imposition of ceiling on agricultural lands
\ni.e. UP Act 13 of 1960.\n<\/p>\n
That was inserted with retrospective effect. Thus, it could be seen even if
\nthe present is construed as a grant of the agricultural lands under the
\nGovernment Grants Act, by operation of the proviso to sub-section (3) of
\nsection 3 of the Act, the Act is clearly applied for the purpose of
\ncomputation of the ceiling area of the agricultural lands. It would appear
\nthat the Government Grants Act intended that even the grantee under that
\nAct shall not be in excess of the ceiling area prescribed under the Act.
\nThereby, the lessee of the Government land, though had a grant under the
\nGovernment Grants Act, cannot claim to have been outside the purview of the
\nAct.”\n<\/p>\n
3. BONA FIDES OF THE TRANSFEREES IN FA VOUR OF TRANSFEREES COMPRISED IN
\nGROUPS I & II.\n<\/p>\n
Section 5 (3) prescribes the ceiling limit for holders. In case of company
\nwhich is a tenure holder not having a family sub-clause (e) of the said
\nsubsection (3) of Section 5, prescribes ceiling limit of 7.30 hectares of
\nirrigated land. Sub-section (6) of Section 5 is relevant for the purpose of
\ndeciding the question of bona fides of the transactions of sale of the
\nlands. It reads as under:\n<\/p>\n
“Section 5 (6): In determining the ceiling area applicable to a tenure-
\nholder, any transfer of land made after the twenty-fourth day of January
\n1971, which but for the transfer would have been declared surplus land
\nunder this Act, shall be ignored and not taken into account:\n<\/p>\n
Provided that nothing in this sub-section shall apply to –\n<\/p>\n
(a) a transfer in favour of any person (including Government) referred to
\nin sub-section (2);\n<\/p>\n
(b) a transfer proved to the satisfaction of the Prescribed Authority to be
\nin good faith and for adequate consideration and under an irrevocable
\ninstrument not being a ‘Benami’ transaction or for immediate or deferred
\nbenefit of the tenure-holder or other members of his family.”\n<\/p>\n
Explanation I…………………\n<\/p>\n
Explanation II – The burden of proving that a case falls within clause (b)
\nof the proviso shall rest with the party claiming its benefit.\n<\/p>\n
[Emphasis added]<\/p>\n
In determining ceiling area applicable to a holder any transfer of land
\nmade after 24.1.1971 is to be ignored. In accordance with proviso (b) of
\nthe said sub-section (6) of Section 5 transfers made after 24.1.1971, can
\nbe excluded for determining the ceiling area of the holder only if it is
\nproved to the satisfaction of the prescribed authority that the transfers
\nwere made in good faith and for adequate consideration. In accordance with
\nExplanation-II the burden of proving that the transfers were bona fide and
\nfor adequate consideration is on the party claiming benefit of the
\ntransfer.\n<\/p>\n
The High Court has in great details considered the claims based on the
\ntransfers made after the cut-off date. There is no evidence of oral leases
\nalleged to have been granted to the extent of total 18.75 acres of land in
\nfavour of 50 persons, although in the recitals of the sale deeds, there is
\nmention of such oral leases. All sale-deeds admittedly have been executed
\nafter the cut off date fixed in sub-section (6) of Section 5. Prior to the
\nsales, on the basis of alleged oral leases three partnership firms were
\nsaid to have been formed and later on increased to four, which it is
\nalleged, have taken possession of the lands transferred to them.\n<\/p>\n
The Managing Partner of one of the partnership firms was Mr. P.N. Mehta who
\nwas invited in the meeting of the Board of Directors of the company. The
\nresolution of the Board of Directors quoted and heavily relied by the
\nappellate authority and the High Court in their orders clearly shows that
\nthe sale-deeds were executed in anticipation of Amendment Act of 1973 and
\nat a time when proposed reduction of ceiling limit had already been made
\npublic. The High Court has also found that the alleged oral leases followed
\nby sale-deeds were mostly in favour of persons closely connected with Shri
\nPN Mehta and Shri HP Handa. Shri HP Handa was also nominated as an
\narbitrator in the event of disputes in the firms. The High Court also found
\nthe consideration received was not duly accounted for in the balance sheet
\nof the company. It is on these facts that the High Court confirmed the
\nconclusion of the appellate authority that all transfers were made to
\nrelated parties and only to evade the effect of impending amendment to
\nceiling law. The concurrent findings in the judgment of appellate authority
\nand of the High Court of lack of good faith on the part of the Company and
\nthe Firm in executing the sale-deeds after the cut off date 24.1.1971 are
\nnot vitiated by consideration of any irrelevant circumstances and being
\nessentially a finding of fact is not liable to be interfered with, in these
\nappeals under Article 136 of the Constitution.\n<\/p>\n
4. LAND TO THE EXTENT OF 250 ACRES HELD FOR RUNNING A MECHANISED FARMING
\nSCHOOL.\n<\/p>\n
Various contentions advanced by private parties with regard to 250 acres of
\nschool land are being considered under following sub-heads :-\n<\/p>\n
Res Judicata<\/p>\n
The transferees of parcels of land described as held by the school for farm
\nmechanisation constitute Group No.III and their case has been separately
\nconsidered in the impugned judgment of the Commissioner in appeal and of
\nthe High Court in the writ petition. On behalf of such transferees of
\nportions of school land, the contention advanced by the learned counsel on
\ntheir behalf is that in the original Ceiling Act which came into force on
\n3.1.1961 under clause (ix) of Section 6, land held for the purposes of an
\neducational institution either by a society registered under the Societies
\nRegistration Act, 1860 or by any corporate body was exempt from the
\noperation of the Ceiling Act. It is pointed out that in the earliest order
\nof the prescribed authority Kashipur passed on 2.7.1964 and the second
\norder passed on 11.8.1967 after remand of the case by the appellate
\nauthority, 250 acres of land, used in Farm Mechanization for school was
\nheld to be exempt from being included in the ceiling area of the Company or
\nthe Farm. The order of the prescribed authority dated 11.8.1967 excluding
\n250 acres of land as not includible in the ceiling area of Company or the
\nFarm was not challenged by the State in appeal. The learned counsel
\ncontends that the said order of the prescribed authority had become final
\nwhich could not have been interfered with or upset by the appellate
\nauthority in its order dated 14.1.1992 in ceiling proceedings initiated
\nafresh after the ceiling limit was further curtailed by Amendment Act of
\n1973 with effect from 05.6.1973. In this respect, the argument advanced is
\nthat the bar of res judicata in respect of 250 acres of land held to be
\nexempt as belonging to the school, would operate in subsequent proceedings
\ntaken under the Amendment Act of 1973. The contention is that it was not
\nopen to the appellate authority to take a different view and hold that 250
\nacres of school land should be included within the ceiling limit of the
\nCompany or the Farm.\n<\/p>\n
The argument on the face of it seems plausible but on closer scrutiny of
\nthe finding on the aforesaid 250 acres of school land, in the light of the
\nprovisions of the original Act and the Amendment Act of 1973, is
\nunacceptable. Section 6(ix) of the original Act before its deletion and
\nsubstitution of new Section 6 in the Amendment Act of 1973 reads thus :-\n<\/p>\n
“Section 6. Notwithstanding anything contained in this Act, land falling in
\nany of the categories mentioned below shall not be taken into consideration
\nfor the purposes of determining the ceiling area applicable to, and the
\nsurplus land of, a tenure holder –\n<\/p>\n
(ix) land held for the purposes of an educational institution by a society
\nregistered under the Societies Registration Act, 1860, or by any body
\ncorporate”.\n<\/p>\n
[Underlining for pointed attention]<\/p>\n
We have looked into the order of the prescribed authority dated 11.8.1967
\npassed under the Original unamended Act. In excluding 250 acres of land of
\nthe school, the finding reads thus :-\n<\/p>\n
“It is to be noted that the resolutions Ex. Ka-13 to Ex. Ka-20, passed by
\nthe two corporate bodies i.e. Escorts Limited, and Escorts Farms (Ramgarh)
\nLtd., as far back as 1953-54 relates to the transfer of the land
\npermanently to the Escorts School of Farm Mechanization. The heavy
\nexpenditure shown in Ex. Ka-3 1 supported with the entries in the balance-
\nsheet Ex. Ka-29 to Ex. Ka-53 of the years 1962 to 1966 duly audited by
\nChartered Accountants and filed with the Registrar of Companies all go to
\nshow that this school of Farm Mechanization has a separate and independent
\nentity, other than the objector company. The school owns 250 acres of land
\nas its own property. 1, therefore, exclude this area from the holding of
\nthe tenure-holder.\n<\/p>\n
[Underlining for pointed attention]<\/p>\n
From the above part of the order of the prescribed authority, it becomes
\nclear that 250 acres of land was found to be held by the school as a
\nseparate legal entity. Exemption clause (ix) of Section 6 as it stood in
\noriginal section 6 was deleted by re-substitution of new Section 6 by
\nAmendment Act No. 18 of 1973 with effect from 8.6.1973. By insertion of new
\nSection 6, the exemption earlier available to land held by educational
\ninstitution has been done away with effect from 8.6.1973.\n<\/p>\n
It is true that the above order of the prescribed authority dated 11.8.1967
\nexcluding 250 acres of land as belonging to the school was not questioned
\nby the State in appeal. The finding that the land was held by the school as
\na separate legal entity is obviously a mistake because in all subsequent
\nproceedings before the ceiling authorities, the High Court and in this
\nCourt the land is stated to be held by the company or Farm for running the
\nschool as one of its activities. The land was in use for the purposes of
\neducational institution run by the Company or the Farm. It qualified for
\nexemption under clause (ix) of Section 6, as it stood then. It is to be
\nnoted that when the ceiling limit was reduced by Amendment Act of 1973,
\nwhich was brought into force with effect from 5th June, 1973, the land
\nmeasuring 250 acres, although excluded from ceiling limit of the holder, in
\nlaw and in reality continued to be held and recorded in the name of the
\nFarm which was its agent. Under the Amendment Act of 1973, the exemption of
\nland held by an educational institution was taken away by substitution of
\nnew Section 6 to the Act. Under Section 5, ceiling limit was reduced and
\nunder sub-Section (6) of Section 5, as inserted by Amendment Act of 1973,
\nthe cut-off date fixed was 24.1.1971. It was provided that all transfers
\nmade by the holder of a land after the above date would be ignored unless,
\nas provided in clause (b) of the sub-section 6 of Section 5 read with the
\nexplanation thereunder, the holder discharges his burden of proving to the
\nsatisfaction of the Prescribed Authority, that the transfers made after
\n24.1.1971 were in good faith, for adequate consideration and were not
\nBenami transactions.\n<\/p>\n
It is not disputed that all the 74 transfers of parcels of land from 250
\nacres of school land were made after the cut-off date 24.1.1971. The named
\ntransferor in all the transfer-deeds or sale-deeds is the holder company
\nand not the school which has, in reality, no separate existence in law. The
\nschool was not registered as a Society and was not a separate legal entity.
\nAlthough, the prescribed authority in its order made under the original Act
\n(prior to the Amendment Act of 1972) held the land to be belonging to the
\nschool as a separate legal entity and such a finding was not challenged by
\nway of appeal by the State. The factual and legal position admittedly
\nexisting on 5.6.1973, when the Amendment Act, 1973 was brought in force,
\nwas that the land was held by the Company. It is evident from the fact that
\nall transfers or sale-deeds have been executed in favour of 75 transferees,
\nafter the cut-off date 24.1.1971 by the Company to which the provisions of
\nsub-section (6) of Section 5, as introduced by the Amendment Act of 1973,
\nwere clearly attracted. A finding of fact has been recorded by the
\nCommissioner and confirmed by the High court in the Writ Petition that
\ntransfers of the land used for school have been made with full knowledge of
\nthe impending legislation proposing reduction of ceiling limit and intent
\nto evade the effect of ceiling law. In our considered opinion, on the above
\nadmitted legal and factual premise, the bar of res judicata is not
\navailable to the holder Company or the Farm. Their own subsequent conduct
\nof effecting transfers of school land estops them from raising a plea of
\nres judicata on an apparently erroneous finding recorded in the order of
\nPrescribed Authority in the course of proceedings under the original
\nunamended Act.\n<\/p>\n
For determining the ceiling limit and the surplus area of a holder, in
\nproceedings under the Amer Iment Act of 1973, it was competent for the
\nprescribed authority to accept the admitted position of the land used for
\nschool as being owned and held throughout by the holder Company through the
\nFarm and ignore the apparently erroneous statement of the earlier
\nPrescribed Authority recorded in the order passed on 11.8.67 in original
\nproceedings under the Ceiling Act that the land belonged to the school as a
\nseparate legal entity. The land excluded from the holding of the company or
\nthe Farm, treating it to have been held by the school as a separate legal
\nentity, even otherwise was entitled to be exempted from determination of
\nthe ceiling limit of the holder company or the Farm because, in accordance
\nwith clause (ix) of Section 6 of the original unamended Act, the said land
\nwas in use for purposes of an educational institution. The inaction of the
\nState in not filing appeal against the erroneous exclusion of the land from
\nthe holding of the company and treating it to be of the school as separate
\nentity, cannot debar, in law, the State in subjecting such land to the
\nceiling limit in the proceedings initiated under the Amendment Act of 1973
\nwhereby the ceiling limit was further reduced. On the date of enforcement
\nof the Amendment Act No. 18 of 1973, school land was held by the company
\nand not by the school which had no separate legal existence as an entity.
\nOn the cut-off date 24.1.1971 as fixed in sub-section (6) of Section 5 of
\nthe Amendment Act of 1973, admittedly the school land was claimed to be
\nheld by the company and its exclusion was sought on the basis of its
\ntransfer in various portions to different parties by the company on the
\npremise that, having been excluded in the earlier proceedings from the
\nholding of the company, it was so transferable and the transfers were,
\ntherefore, bona fide.\n<\/p>\n
The learned counsel for the State seems to be right in his submission that
\non the aforesaid admitted facts the finding in the original proceeding
\nregarding 250 acres of land to be belonging to the school as separate legal
\nentity, was apparently a mistake which is clear from the holder company s
\nown action of transferring separate portions of that land in its own name.\n<\/p>\n
On behalf of the State, it is submitted that with the purpose of giving
\nfull effect to the ceiling provisions, in Amendment Act of 1973 by
\nsubsequent Amendment Act of 1976, which was brought into force with effect
\nfrom 10.10.1975, Sections 38-A and 38-B were introduced for creating a bar
\non raising plea of res judicata based on proceedings concluded under the
\noriginal unamended Act existing prior to 1973.\n<\/p>\n
“38-A. Power to call for particulars of land from tenure-holders. –\n<\/p>\n
(1)  Where the prescribed authority or the appellate court considers it
\nnecessary for the enforcement of the provisions of this Act, it may, at any
\nstage of the proceedings under this Act, require any tenure-holder to
\nfurnish such particulars by affidavit in respect of the land held by him
\nand members of his family as may be prescribed.\n<\/p>\n
(2)  The particulars of land filed under sub-section (1) may be taken into
\nconsideration in determining the surplus land of such tenure-holder.\n<\/p>\n
38-B. Bar against res judicata. – No finding or decision given before the
\ncommencement of this section in any proceeding or on any issue (including
\nany order, decree or judgment) by any court, tribunal or authority in
\nrespect of any matter governed by this Act, shall bar the re-trial of such
\nproceeding or issue under this Act, in accordance with the provisions of
\nthis Act as amended from time to time.”\n<\/p>\n
[Emphasis added ]<\/p>\n
Res judicata is a plea available in civil proceedings in accordance with
\nSection 11of the Code of civil Procedure It is a doctrine applied to give
\nfinality to lis in original or appellate proceedings. the doctrine in
\nsubstance means that an issue or a point decided and attaining finality
\nshould not be allowed to be reopened and re-agitated twice over. The
\nliteral meaning of rex is ‘everything that may form an object of rights and
\nincludes an object, subject-matter or status’ and res judicata literally
\nmeans: a matter adjudged; a thing judicially acted upon or decided: a thing
\nor matter settled by judgement.’ Section 11 of CPC engrafts this doctrine
\nwith a purpose that ‘a final judgment rendered by a court of competent
\njurisdiction on the merits is conclusive as to the rights of the parties
\nand their privies, and. as to them, constitutes an absolute bar to a
\nsubsequent action involving the same claim, demand or cause of action.’
\n[See : Black’s Law Dictionary at pages 1304-1305]<\/p>\n
Proceedings under the Ceiling Act, are not adversarial as are proceedings
\nin suit. The Ceiling Act is a legislation to give effect to the Directive
\nPrinciples contained clauses (b) and (c) of Article 39 of the Constitution.
\nThe State is advised by the Directive Principles contained in the
\nConstitution to take necessary legislative measures so as to ensure social
\njustice by equitable distribution of ownership and control of material
\nresources and avoid concentration of wealth and means of production in few
\nhands. The laudable social objectives sought to be achieved by the ceiling
\nlegislation is to take surplus land from the holders and distribute the
\nsame to the landless agricultural labourers and peasants surviving on
\nagriculture. In applying the principles of res judicata, therefore, to the
\nceiling proceedings, the object of the Act cannot be lost sight of. All
\nprinciples of res judicata contained in Section 11 of the CPC cannot be
\nstrictly and rigorously made applicable to ceiling proceedings. Section 38-
\nB introduced by Amendment Act of 1976 with the transitory provisions made
\nboth in the Amendment Act No. 18 of 1973 and Act No. 20 of 1976 is a
\ndeparture from the provisions of Section 11 of the Code of Civil Procedure
\nand indicate non-applicability of bar of res judicata in ceiling
\nproceedings under the Act.\n<\/p>\n
Plea of res judicata is also not available where there is no contest on an
\nissue between the parties and there is no conscious adjudication of an
\nissue. In the original order dated 11.8.67 of the prescribed authority
\npassed under the unamended Ceiling Act. the school land to the extent of
\n250 acres, under an obvious mistake, was treated to be land held, not by
\nthe holder Company but by the school treating the latter to be a separate
\nlegal entity. It was never the case of the holder Company or the Farm that
\n250 acres of land was held not by company but by the school as a separate
\nlegal entity. Their claim with regard to the school land was for exemption
\nunder clause (ix) of Section 6, as it stood prior to the Act of 1973. The
\ncompany was claiming exemption for 250 acres of land being the land held by
\nthe holder Company for educational purposes and such claim for exemption
\ncould be laid on behalf of the company in accordance with clause (ix) of
\nSection 6, as it stood in the original Amendment Act. The Prescribed
\nAuthority, it appears, by an inadvertent mistake, instead of considering
\nthe claim of the holder company for exemption of land under clause (ix) of
\nSection 6, as it stood then, excluded the land as belonging to the school
\nas separate legal entity. This exclusion of 250 acres of land of the school
\nfrom the extent of holding of the holder company was not a decision or a
\nfinding on an issue arising between the parties but it was a clear mistake
\nwhich is apparent from the fact that this land was throughout treated by
\nthe holder company as its own land and was transferred by the company by
\ndifferent sale-deeds to 75 persons after the cut-off date 24.1.1971. On the
\ndate of second ceiling introduced by the Amendment Act of 1973, the so
\ncalled land belonging to the school is claimed to be held by the holder
\nCompany as the Company had transferred it to various persons. On these
\nadmitted facts and nature of title of the land, plea of res judicata cannot
\nbe allowed to be raised. The case initiated and proceeded with in Ceiling
\nLaw is not an adversarial litigation between the State and the land owners.
\nIt is enforcement of a social welfare legislation enacted in accordance
\nwith the Directive Principles of the State Policy enshrined in Article 39
\nof the Constitution.\n<\/p>\n
The plea of res judicata has been held to be barred in proceedings under
\nCeiling Law in the decisions of Allahabad High Court reported in Ram Lal v.
\nState of U.P. and Ors., (1978) All. L. J. 1197; Kedar Singh v. Addl.
\nDistrict Judge, Varanasi and Ors., [1980] All. L.J. 36 which have held the
\nfield in the State of UP as a settled legal position.\n<\/p>\n
Ambit and effect of provisions of Section 38-B imposing bar on plea of res
\njudicata in civil proceedings came up before this Court in State of U.P. v.
\nBudh Singh and Ors.,<\/a> [1995] 6 SCC 146 and State of U.P. v. Budh Singh
\n(Dead)<\/a> by Lrs., [1997] 2 SCC 181. The decision of Division Bench of
\nAllahabad High Court in Krishan Kumar’s case was considered . It was held
\nthat amendments made to the Ceiling Act justify reopening of proceedings
\nundertaken under the Act prior to the amendment and Section 38-B bars plea
\nof res judicata to the parties on the basis of findings and decisions in
\nthe earlier ceiling proceedings. The relevant part of the judgment of this
\nCourt in the second case of Budh Singh (Dead) by LRs (supra) reads thus :-\n<\/p>\n
“This appeal was once heard earlier and in the order passed on 25.9.1995,
\nit was stated that as the High Court in the impugned judgment has relied on
\nthe earlier pronouncement by the Division Bench of the same High Court in
\nKrishan Kumar case it would be appropriate to peruse that judgment, which
\nbeing not on record a direction was given to place the same for our
\nperusal. It has been so done. We have gone through the judgment and,
\naccordance to us, the learned Single Judge who rendered the impugned
\njudgment misread the view taken by the Division Bench in Krishan Kumar
\ncase. In that judgment, the Division Bench has really held that Section 38-
\nB was wide enough to “capture findings or decisions given under the Ceiling
\nAct as well as prior to the commencement of section 38-B”. It has really
\nnot been held in that case that “in the subsequent ceiling proceedings, the
\nearlier finding would be binding unless it can be shown that after the
\nearlier ceiling proceedings there occurred some amendments in the Ceiling
\nAct which justified that reopening of a finding recorded in the earlier
\nceiling proceedings” as observed in the impugned judgment. No doubt in
\nKrishan Kumar case an argument was advanced to cut down the width of
\nsection 38-B by inviting the attention of the Bench of Section 31(5); the
\nBench, however, held that that section had no impact on the applicability
\nof Section 38-B.”\n<\/p>\n
In view of our above discussion on the issue of applicability of the
\ndoctrine of res judicata, it is not necessary for us to deal and discuss
\ncases cited by the counsel for the parties on the power of the Appellate
\nAuthority, by invoking provisions of Order 41 Rule 33 of the Code of Civil
\nProcedure, to hold the land of school as includible for determination of
\nceiling area, in the appeals instituted against the order of the Prescribed
\nAuthority by the holder of the land and the transferees and without any
\nappeal by the State.\n<\/p>\n
5. Denial of opportunity of hearing to the transferees of land\/Breach of
\nPrinciples of Natural Justice.\n<\/p>\n
A serious grievance has been raised on behalf of the transferees from 250
\nacres of land earlier exempted in favour of the school that they were
\nneither made parties to the appellate proceedings nor were heard before
\ndenying exemption from ceiling to such lands and nullifying the transfers
\nin their favour by describing them as lacking in bona fides. Learned
\ncounsel appearing for the State contended that as the transferor i.e. the
\ncompany through the Farm were parties before the Appellate Authority and
\nwere heard, the transferee who derived title from the transferors were not
\nnecessary but only proper parties. Their interest was protected by the
\ntransferor. It is also submitted that the burden of proof that the
\ntransfers were bona fide was on the transferor who failed in successfully
\ndischarging the said burden of proof to the satisfaction of the ceiling
\nauthorities and the High Court.\n<\/p>\n
Reading the provision of sub-section (6) of Section 5 with proviso (b)
\nExplanation II thereunder, it is difficult to accept the contention
\nadvanced on behalf of the State that the transferees were merely proper
\nparties and were not entitled to be arrayed, noticed and heard in the
\nproceedings under the Ceiling Act. The transfer made after the cut-off date
\ncould have been saved only on proof of good faith and payment of adequate
\nconsideration for the transfers. This burden of proof can be discharged
\njointly or singly either by the transferor or transferee. The transferee is
\nthe party likely to be adversely affected by the order nullifying the
\ntransfer if found to be lacking in good faith. The transferee is clearly
\ncovered by the expression “the party claiming its benefit” as used in
\nExplanation II of sub-section (6) of Section 5.” The burden of proof in
\nrespect of bona fides of transfers is also on the person or ‘party claiming
\nits benefit.’ It was therefore necessary to make transferees as parties in
\nthe appeal and grant them opportunity of hearing by the Appellate
\nAuthority. To that extent the order of the Appellate Authority can be said
\nto have been vitiated for not following the required procedure.\n<\/p>\n
For a different reason, however, we decline to set aside the appellate
\norder of the Commissioner which has been confirmed by the High Court. Non-
\njoinder of transferees as parties and denial of opportunity of hearing to
\nthem, in the facts and circumstances found here, cannot be said to be fatal
\nto the entire ceiling proceedings.\n<\/p>\n
The transferees of the school land were not parties and were not heard by
\nthe appellate authority but when on being aggrieved by the order of the
\nAppellate Authority, they preferred writ petitions in the High Court, a
\nvery detailed hearing with full opportunity to them to prove good faith and
\npayment of adequate consideration for the transfers made in their favour
\nwas granted to them by the High Court. All necessary information showing
\nthe background of the sales and their claims of bona fides, as furnished
\nboth by the transferor and transferees have been fully gone into by the
\nHigh Court and a definite finding has been reached that the transfers
\nlacked in good faith and were obviously effected to evade ceiling law. All
\npossible pleas available to the transferees, were projected before the High
\nCourt in the writ petition preferred by the transferees. Thus, all
\navailable material facts and evidence were placed and considered by the
\nHigh Court. The High Court has in great detail critically examined all the
\nrelevant evidence produced by the transferees before arriving at an adverse
\nconclusion against them. This Court would have been inclined and justified
\nin making a remand of the case to the Appellate Authority to make all
\ntransferees as parties and give them another opportunity of hearing in
\nrespect of the portions of land purchased by them from out of 250 acres of
\nland held in the name of the school. Since, however, the High Court has
\nalready given full opportunity of hearing to the transferees on this aspect
\nwe refrain from making any order of remand just for the sake of completing
\na formality of granting them similar opportunity of hearing by the
\nAppellate Authority with no likelihood of any conclusion different from the
\none reached by the High Court and this Court on merits of the case.\n<\/p>\n
In similar case, involving large scale sales effected to defeat provision
\nof ceiling law, this Court took recourse to Article 142 of the Constitution
\nand observed in the case of State of Andhra Pradesh v. S. Vishwanatha Raju
\nand Ors.,<\/a> [1995] 3 SCC 327 thus:-”\n<\/p>\n
“……….. It cannot be said that in appropriate cases, this Court is
\nprevented to take suo motu judicial notice of glaring injustice having
\nrecourse to Article 142 of the Constitution for serving the ends of
\njustice. The very purpose of the Land Reforms (Ceiling on Agricultural
\nHoldings) Act, 1973 is to prescribe the maximum holding so that the excess
\nland becomes available for distribution among the landless persons so as to
\nserve the object of socio-economic justice envisaged in the Preamble to the
\nConstitution and its Directive Principles of State Policy. When a large
\nextent of land of about 900 acres is sought to be taken out of the purview
\nof the Act by the device of agreements of sale and the officers overlook
\nthe same because of their negligence or otherwise in not carrying the
\norders of authorities in revision and when the facts came to the notice,
\nthis Court having taken suo motu notice of the same, mete out justice.
\nAccordingly suo motu notice is taken of the cases concerned and they are
\ntreated as special leave petitions against the orders passed by the
\nappellate authority and considered its legality by granting leave. Hence,
\nwe hold that the lands covered under Ex. A-l and Ex. A-4 should be treated
\nas lands held by the vendor and the vendee. The Land Reforms Tribunal
\nconcerned is, therefore, directed to reopen the CCs filed by the respective
\npartners and the managing partners of the company and determine the surplus
\nlands according to law and then pass the appropriate orders according to
\nlaw”.\n<\/p>\n
Similarly in the instant case, it has been found that large scale transfers
\nwere effected to defeat Ceiling Law. We, therefore, decline to upset the
\nconcurrent findings of the Appellate Authority and the High Court in our
\ndiscretionary powers under Article 136 of the Constitution. We have also
\ncome to the same conclusion that the transfers made after the cut-off date
\nwere not in good faith hence liable to be ignored for determining the
\nextent of surplus land with the holder. That apart we have also recorded a
\nconclusion that the entire land being held under a Govt. Grant the lands
\nwere not transferable without permission of the government and the
\ntransfers were invalid being in clear breach of the conditions of the
\nGrant.\n<\/p>\n
Right of hearing to a necessary party is a valuable right of Denial such
\nright is serious breach of statutory procedure prescribed and violation of
\nrules of natural justice. In these appeals preferred by the holder of lands
\nand some other transferees, we have found that the terms of Govt. Grant did
\nnot permit transfers of land without permission of the State as grantor.
\nRemand of cases of a group of transferees who were not heard, would,
\ntherefore, be of no legal consequence, more so, when on this legal question
\nall affected parties have got full opportunity of hearing before High Court
\nand in this appeal before this Court. Rules of natural justice are to be
\nfollowed for doing substantial justice and not for completing a mere ritual
\nof hearing without possibility of any change in the decision of the case on
\nmerits. In view of the legal position explained by us above, we, therefore,
\nrefrain from remanding these cases in exercise of our discretionary powers
\nunder Article 136 of the Constitution of India.\n<\/p>\n
6. Costs imposed as damages.\n<\/p>\n
The High Court has imposed heavy costs of rupees ten lacs on the Farms and
\nhas further directed its deposit within one month. In case of default its
\nrecovery is directed to be made from the Farm or Shri P.N. Mehta. The
\njustification given by the High Court for imposing such heavy cost is that
\nby maneuvering and manipulating transactions the Farm, with the help of
\nShri P.N. Mehta and the Company, were able to retain possession of the land
\nand take its advantage and usufruct for long period of seventeen years. We
\nfind that in the name of imposing costs, the High Court has, in effect,
\nawarded lump sum damages for unauthorized use and occupation of surplus
\nland. Section 16 of the Ceiling Act empowers levy of damages for use and
\noccupation of surplus land and reads thus :-\n<\/p>\n
“Section 16. Damages for use and occupation of surplus land where any
\ntenure holder holds any land on or after the commencement of the Uttar
\nPradesh Imposition of Ceiling on Land Holdings (Amendment) Act 1972, in
\nexcess of the ceiling area applicable to him, he shall be liable to pay to
\nthe State Government for the period commencing from the first day of July
\n1973, until the date on which the Collector takes possession of such
\nsurplus land under Section 14, or the date in which the tenure holder
\nvoluntarily delivers possession to the Collector under the said sub-
\nsection, whichever is earlier, such compensation for use and occupation as
\nmay be prescribed.”\n<\/p>\n
The quantification of damages payable to the State for use and occupation
\nof surplus land under Section 16 is required to be done in accordance with
\nthe principles laid down in Rule 18A of the rules framed under the Ceiling
\nAct. The provisions of Section 16 read with Section 18-A require separate
\nproceedings to be undertaken for determination and quantification of amount
\nof damages for use and occupation of the surplus land. The said exercise
\nought to have been left to the Ceiling authorities. The High Court, in our
\nopinion, should not have awarded lump sum damages by imposing heavy costs.
\nShri P. N. Mehta was found to have taken active part in formation of
\npartnership firms and obtaining the transfers for favoured parties. He did
\nit not in his individual capacity but as a managing partner of one of the
\npartnership firms and on being invited by the holder Company in the meeting
\nof the Board of Directors to help out the company from the effect of
\nceiling law. In the event of default of payment of costs by the company,
\nthe direction made by the High Court to Shri P. N. Mehta to pay the cost is
\nnot justified. This part of the order of the High Court imposing Rupees Ten
\nLacs as costs on the Farm and directing its payment by the Farm or by Shri
\nP.N. Mehta is liable to be set aside.\n<\/p>\n
Before parting with the case, only mention has to be made of the
\nsubmissions made by the learned counsel appearing for subsequent
\ntransferees of the lands involved and by some of the intervenes who claim
\nto have been allotted some lands. In our opinion the subsequent transferees
\nand such interveners deserve no indulgence in this appeal. The subsequent
\ntransferees have stepped into the shoes of the original transferees. They
\ncan claim no different or better rights than their transferors. The
\ncontentions raised on their behalf are, therefore, not entertained. No
\nrelief can be granted to them. The intervenors have to work out their
\nindependent rights and remedies, if any, and can claim no right of hearing
\nin these appeals.\n<\/p>\n
In the result, all the appeals are dismissed. The order of the High Court
\nunder appeal, which confirms the order of the appellate authority, is
\nmaintained except to the extent of imposition of costs of rupees ten lacs.
\nThe costs imposed in the impugned order is hereby set aside. Taking into
\nconsideration the nature of the controversy involved and the acts and
\nomissions both on the part of the State Authorities and the private
\nparties, we leave them all to bear their own costs and expenses in these
\nappeals.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Escorts Farms Ltd., Previously … vs The Commissioner, Kumaon … on 20 February, 2004 Bench: Shivaraj V. Patil, D.M. Dharmadhikari CASE NO.: Appeal (civil) 1584 of 1998 PETITIONER: ESCORTS FARMS LTD., PREVIOUSLY KNOWN AS M\/S. ESCORTS FARMS (RAM GARH) LTD. RESPONDENT: THE COMMISSIONER, KUMAON DIVISION, NAINITAL, U.P. AND ORS. DATE OF […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-42348","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nEscorts Farms Ltd., Previously ... vs The Commissioner, Kumaon ... on 20 February, 2004 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/escorts-farms-ltd-previously-vs-the-commissioner-kumaon-on-20-february-2004\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Escorts Farms Ltd., Previously ... vs The Commissioner, Kumaon ... on 20 February, 2004 - 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