Back
1999 Supreme(SC) 430
1999(4) Supreme 43
Supreme Court of India
(From Madhya Pradesh High Court)
M. Jagannadha Rao & S.N. Phukan, JJ.
Steel Authority of India Ltd. -Appellant
versus
State of M.P. & Ors. -Respondents
Civil Appeal No. 5518 of 1993
Decided on 5-4-1999
Counsel for the Parties :
For the Appellant : C.S. Vaidyanathan, Additional Solicitor General, Vijay Hansaria, Sunil Kumar Jain, Advocates.
For the Respondents : B.S. Banthia and S.K. Agnihotri, Advocates.
Important Points
1. Once the Government received one time payment of capitalised value of land revenue u/s 58 of the M.P. Land Revenue Code, the Government thereafter cannot demand land revenue on the very same land.
2. Article 299 applies only to contracts to be executed in exercise of “executive power” and not to those executed by virtue of statutory.
Headnote:(i) Madhya Pradesh Land Revenue Code, 1959-Section 58-Constitution of India-Article 285 and 299-Land revenue-Land acquired for Central Government project and assigned to Government Company -State Government writing letter to Central Government that the Central Government put a condition for allotment of land that Central Govt. should pay one time payment of capitalized value of land revenue at 25 times of amount of land revenue-N reply from Central Government-By conduct both Governments agreed with terms mentioned in letter-Non-execution of contract in the form required under Article 299 not material-In view of agreement between both Governments by virtue of Section 58, after collecting 25 times of capitalised land revenue prevailing at the time of acquisition of land subsequent years land revenue exempted-State Government cannot demand land revenue for succeeding years.
Held : In the letter of the Madhya Pradesh Government dated 25.9.58 which was referred to above, the salient features of the rules framed by the Secretary to the Madhya Pradesh Government in 1925 were referred to. The condition No. a clearly lays down that the capitalised value of the land revenue has to be assessed and paid to the State Governments towards loss of land revenue as no land revenue can be recovered from the Central Government later on. From paragraph 10 of the letter which has been quoted above we also find that land revenue in respect of land held by the private persons has to be capitalised at 25 times and capitalised value of land revenue shall be payable by the Central Government to the Government of Madhya Pradesh. A memorandum dated 17th July, 1958 from the Government of Madhya Pradesh was issued to the Commissioner of Raipur division raising a query as to whether capitalised value of land revenue had been recovered or not and if not, the amount to be reported to the Government so that it could be claimed from the Central Government. According to the Black’s Law Dictionary (Fifth Edition) the word ‘capitalize’ means...”To convert a periodical payment into an equivalent capital sum or sum in hand. To compute the present value of an income extended over a period of time...” According to the Oxford English Dictionary’ (Being a Corrected Re-issue with an Introduction, Supplement, and Bibliorgraphy of A New English Dictionary on Historical Principles, Volume II-C) the word ‘Capitalize’ means.....2 “To convert (a periodical income or payment) into an equivalent capital sum; to compute or realize the present value of such a payment for a definite or indefinite length of time...” The object of the Rules framed by the Secretary of State in 1925 is clear that land revenue was to be capitalised and collected once for all and that no land revenue could be further recovered thereafter. Land revenue had to be paid periodically and in view of the above dictionary meanings and in view of the above dictionary meanings and in view of the rules framed in 1925, once land revenue was capitalized and paid, no further amount could be realised by the State Government for the land transferred. Thereafter the case falls under sub-clause (1) of Section 58 which states that by virtue of provisions in a rule made, land revenue could become exempt. (Para 19 to 23)
Article 299 applies only to contracts to be executed in exercise of “executive power” and not to those executed by virtue of statutory power like Section 58 of the Code. (Para 24)
Section 58 of the Code provides that land revenue is payable in respect of all land unless it is exempted from such liability by special grant or contract with the State Government. In view of the agreement between both the Governments and in view of the above provisions of Section 58 of the Code we hold that no land revenue is payable for the land in question more particularly as it has been capitalized at 25 times of the land revenue prevailing at that time. Thus, whether it is because of the 1925 Rules or the Contract, Central Government was not liable to pay land revenue once it had paid the 25 times land revenue as a one time payment. (Paras 25 & 26)
(ii) Constitution of India-Art. 299-Contract by or with Government - Execution of-Article 299 applies only to contracts to be executed in exercise of ‘executive power’ and not to those executed by virtue of statutory power. (Para 24)
Judgment
S.N. Phukan, J.-This appeal is directed against the Judgment and Order passed by the Madhya Pradesh High Court at Jabalpur in Misc. Petition No. 1826 of 1993.
2. A few facts leading to this appeal deserve to be noted at the outset for highlighting the grievance of the appellant in the present appeal.
3. The Central Government, Ministry of Production wrote a letter dated 8th January, 1955 to the Chief Secretaries of the States of West Bengal, Bihar and Madhya Pradesh. In this letter it was indicated that it was under consideration of the Central Government to establish Russian technical assistance steel plants at three places in the three States. For this purpose a piece of land measuring about 50 sq. miles, would be required. Therefore, the Central Government by letter dated the 8th January, 1955 wanted to know from the State Governments whether the Governments would be prepared to accord facilities. The said three facilities are stated below:-
“(1) 50 sq. miles of land, free to the extent it is the property of the State Government, and guarantee of a ceiling cost for the acquisition of privately owned land it being understood that any cost in excess of the guaranteed ceiling would be borne by the State Government concerned.
(2) A guarantee of adequate and continuous water supply, as required for the steel plant, associated projecteds and the town, at rates to be mutually agreed upon between the State Government and the Government of India and/or an autonomous State Co. to be registered for the purpose.
(3) Guarantee of prior claim on all unleased mining concessions in respect of iron-ore, coal, limestone, dolomite and any other raw material discovered or to be discovered within the territory of the State concerned and required for the steel project.”
4. By letter dated 11th of January, 1955 the Government of Madhya Pradesh informed the Central Government that the State Government was prepared to accord all the above facilities.
5. Another letter was sent dated 25th of September, 1958 by the Government of Madhya Pradesh bringing to the notice of the Central Government the rules framed by the Secretary of State in 1925. Two salient features of the rules particularly A and B were stated in the said letter. These features are:
“(A) When any land is required by the Central Government that Government are required to pay (i) cost of acquisition, if the land is occupied and market value of land, if the land belongs to the State Government and (ii) capitalised value of land revenue at the assessment to the State Government the loss of land revenue, as no land revenue can be recovered from the Central Government.
(B) When any land is not required by the Central Government for the purpose for which it was acquired, the State Government are given the first option to take it back on payment of its market value. Should the State Government exercise the option and pay the market value of the land then they are at liberty to dispose it of in such a manner as they deem fit.”
6. By this letter Central Government was informed that the land for the Bhilai Steel Plant might be classified in two categories namely land belonging to private persons and land belonging to State. It was brought to the notice of the Central Government that the Central Government agreed to pay the cost of acquisition of land and that the State Government was also entitled to claim the amount awarded, that is, market value plus 15% on account of compulsory nature of acquisition from the Central Government. It was further brought to the notice of the Central Government that the State Government would be entitled to recover capitalised value of land revenue at 25 times the amount of land revenue in accordance to above 1925 rules.
7. Regarding land which belonged to State Government as per earlier agreement it was agreed to transfer such land free of cost.
8. We may like to quote paragraph 10
