Judgment

SHAH, J.: Kanpur Sugar Works Ltd. a public limited Company is engaged in the business of manufacturing sugar in village Marhowrah, District Saran, in the State of Bihar. Prior to 1956 it possessed a considerable zamindari property. Under a notification issued in exercise of the power under the Bihar land Reforms Act 30 of 1950 the entire zamindari vested in the State with effect from January 1, 1956. But by the provisions of the Act homestead lands and lands of the factory remained in the occupation of the Company. The Circle Officer commenced a rent assessment proceeding under the Bihar Land Reforms Act for determining the rent payable by the Company. The Company claimed to classify lands in its occupation under three heads : (i) 12 bighas 9 kathas 7 dhurs on which the factory buildings stood, and on that account assessable to rent under S. 7 of the Bihar Land Reforms Act, 1950; (ii) 50 bighas 3 kathas 13 dhurs of cultivable land under Khas cultivation of the Company liable to assessment of rent under S. 6 of the Act; and (iii) 71 bighas 2 kathas 12 dhurs as homestead land not liable to assessment under sub-s. (1) of S. 5 of the Act.

2. By order dated February 10, 1961 the Circle Officer fixed rent at the rate of Rs. 187-8-0 per acre in respect of 80 bighas 16 kathas 15 1/2 dhurs of land under S. 7 of the Act. The circle Officer rejected the contention of the Company that 71 bighas 2 kathas 12 dhurs of land on which there stood residential bungalows, quarters, garage, kitchens, clubs, dispensary, rest-house, outhouses, office buildings, tube-well and water tank, godown, cattle-shed, weighbridge house etc. was homestead and was on that account exempt from liability to pay rent. Appeal against that order was dismissed by the Collector of Saran by his order dated August 6, 1962.

3. The Company then moved a petition in the High Court of Patna for a writ quashing the order of the Circle Officer and the Collector fixing the rent under S. 7 of the Bihar Land Reforms Act, 1950, in respect of the land claimed to be homestead. The High Court rejected the petition. In the view of the High Court the expression "factory" could not mean merely the place where the machinery is installed and the process for the manufacture of sugar or distillation of liquor is carried on, but the whole area of land including the courtyard necessary for carrying on various operations. The High Court recorded the conclusion as follows:

" ... the buildings and structures used for the aforesaid ancillary purposes of the factory must also be held to form part of the factory and the land on which they stand must include not only the actual site on which the structures are erected but also the adjacent land necessary for the convenient use of the said structures and buildings. The whole of the land covered by the outer enclosure would, therefore, be, on a reasonable interpretation of S. 7 (1) of the Act, included within the words "buildings or structures" used as factories for the purpose of the said sub-section, even though that area may include some vacant land as well."

The High Court further observed that the proviso to S. 5 (1) of the Act had no application, because (1) of the staff quarters cannot be clearly demarcated from the other structures and buildings located within the outer enclosure used for the purpose of the factory, such as rest-house, outhouses, office-buildings, tube-well, water tanks, godowns, cattle-shed, weighbridge etc; and (2) though the occupants of the staff quarters pay rent to the factory, nevertheless it cannot be said that those quarters are used "for the purpose of letting out on rent". The High Court then proceeded to state that

"the mere fact that some rent is incidentally collected from the occupants will not detract from the main purpose for which the quarters are used, namely, to facilitate the proper working of the factory. The occupation by a member of the staff of the factory of those quarters is that of a servant of the