Cancellation of Industrial Land Lease Under Rule 7 of Allotment Rules Requires Proof of Non-Establishment of Unit, Transfer Without Permission Under Rule 9 Remains Illegal: Rajasthan High Court - 2025-04-05

Rajasthan High Court Upholds Order Against Industrial Land Lease Cancellation, But Flags Illegal Transfer

Jodhpur, Rajasthan – In a recent judgment, a Division Bench of the Rajasthan High Court, comprising Chief Justice Mr. Manindra Mohan Shrivastava and Justice Munnuri Laxman , addressed a dispute concerning the cancellation of an industrial land lease. While ultimately disposing of the appeal without granting relief to the appellant, the court clarified crucial aspects of the Rajasthan Land Revenue (Industrial Areas Allotment) Rules, 1959, particularly concerning Rule 7 (Setting up of industry) and Rule 9 (Lessee debarred from sale of land etc.).

Background of the Case

The appeal was filed by Kamla Bai against the State of Rajasthan, challenging an order by a Single Judge of the High Court. The Single Judge had overturned a decision by the Board of Revenue, which had previously ruled in favour of Kamla Bai . The core issue revolved around a land lease initially granted to Babu Lal Nagori in 1987 for establishing an industrial unit under the Allotment Rules of 1959. Nagori subsequently sold the land to Kamla Bai in 1996.

The District Collector, Udaipur, initiated proceedings in 2006 to cancel the lease, alleging non-establishment of the industrial unit within two years, violating Rule 7. This led to a protracted legal battle involving multiple appeals and remands between the District Collector, Revenue Appellate Authority, and the Board of Revenue. Ultimately, the Board of Revenue sided with Kamla Bai , but this was reversed by the Single Judge, prompting the present appeal.

Arguments Presented

Appellant ( Kamla Bai ): Senior Counsel Mr. Manoj Bhandari argued that the Board of Revenue correctly assessed the factual evidence, particularly a spot inspection report. He contended that the report, while noting the unit was closed, also indicated the presence of a shed, machines, and boundary wall, suggesting the unit was established within the stipulated time. He emphasized that Rule 7 mandates proof of non-establishment of the unit, which was lacking. Furthermore, he argued that even if the transfer from Nagori to Kamla Bai lacked prior permission under Rule 9, it could be regularized under Rule 13-A. As an alternative, he requested the court to direct the State to grant a fresh lease to Kamla Bai , considering her long possession since 1997.

Respondents (State of Rajasthan): The State, represented by counsel Mr. Ravindra Jala and Mr. Deepak Suthar , supported the Single Judge's order. They argued that the Collector and Revenue Appellate Authority correctly interpreted the inspection report, and the Board of Revenue erred in overturning their findings. They highlighted the violation of Rule 9, as no permission was obtained for the transfer to Kamla Bai , rendering the transaction itself illegal. They refuted the applicability of Rule 13-A for regularization in this case.

Court's Analysis and Decision

The High Court Bench meticulously examined the provisions of Rule 7 and Rule 9 of the Allotment Rules of 1959 and reiterated the principles governing judicial review under Article 226 concerning certiorari jurisdiction, referencing the Supreme Court's decision in Central Council for Research in Ayurvedic Sciences & Ors. Vs. Bikartan Das & Ors. The court underscored that certiorari jurisdiction is supervisory, not appellate, and does not permit re-evaluation of facts unless there is a jurisdictional error or an error of law apparent on the face of the record.

The Bench agreed with the Appellant's contention that Rule 7 cancellation requires proof of non-establishment of the industrial unit within two years of the lease. It found that the spot inspection report, relied upon by the Collector and Revenue Appellate Authority, did not conclusively prove that no unit was ever established. The report merely indicated closure and subsequent sale, not initial non-establishment.

Key Excerpt from the Judgment:

> "The contents of the report, as it is, do not lead to a conclusion that no industrial unit was established. The report on facts stated as it is, only shows that the unit was closed somewhere around 1994-1996. Moreover, existence of machines and shed as also construction of boundary wall only lead to an inference that Babu Lal Nagori had established a unit which was sold to the appellant."

However, the court also addressed the crucial issue of the illegal transfer under Rule 9. It firmly stated that the transfer from Babu Lal Nagori to Kamla Bai in 1996 was indeed in violation of Rule 9 as prior permission from the allotting authority was mandatory. The court rejected the argument for regularization under Rule 13-A, clarifying that Rule 13-A is a one-time measure for government agricultural land used for industrial purposes without allotment up to 1994, and not applicable to the present case where land was duly allotted and subsequently transferred illegally.

Key Excerpt from the Judgment:

> "Therefore, it is a condition precedent for transfer that permission of competent authority should be obtained. It being a mandatory requirement of law, any transfer of land in violation of provisions of law would be void and incapable of transferring any legally enforceable right on the strength of the lease of transfer."

Final Verdict and Implications

Ultimately, while the High Court found the Single Judge's reversal of the Board of Revenue's order to be "not proper" regarding the Rule 7 aspect, it declined to grant relief to the appellant due to the illegal transfer under Rule 9. The appeal was disposed of, modifying the Single Judge's order to the extent discussed.

The court, however, acknowledged Kamla Bai 's long possession and permitted her to approach the competent authority for a fresh lease application, which the authority could consider on appropriate terms, acknowledging her past possession.

This judgment clarifies that while cancellation under Rule 7 requires demonstrable proof of non-establishment within the stipulated timeframe, transferring industrial leasehold land without prior permission under Rule 9 is a fundamental legal infirmity that cannot be easily rectified through regularization provisions like Rule 13-A. It underscores the importance of adhering to procedural mandates in land revenue laws in Rajasthan.