2004 Supreme(SC) 225

SUPREME COURT OF INDIA
Shivaraj V.Patil : D.M.Dharmadhikari
Escorts Farms Ltd., Previously Known As M/s.Escorts Farms (Ramgarh) Ltd.
Versus
Commissioner, Kumanon Division, Nainital, U.P.And Others
Case No. : 1584 of 1998 (with c.a. nos. 1581-83, 1585-88, 1589-1606, 1607-1626, 1627-39, 1640-54 and 1726 of 1998)
Date of Decision : 2/20/04
Advocates Appeared: Subodh Markandeya : Dinesh Dwivedi : Rakesh Dwivedi : Chitra Markandeya : Manoj Swarup : Lalita Kohli : Anubhav Kumar : Manoj Swarup : Anubhav Kumar : Rachna Srivastava : Jatinder Kumar Bhatia : Niranjana Singh : Rohit Singh : Abhishek Chaudhary : Goodwill Indeevar

Headnote:

A. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Section 5(1), Explanation I and II (as amended by U.P. Act 18 of 1973 ) - Govt. Grant Act 1895- U. P. Zamindari Abolition and Land Reforms Act, 1950-

Effect of Grant on ceiling of land- Land in question owned by the Ruler of of Kashipur was acquired by the Government of Uttar Pradesh - The prescribed authority declared 1163.42 acres of land as surplus - On appeal District Judge declared 98.83 acres of land as surplus and 250 acres was given for running Farm Mechanisation School which was exempted from ceiling- The Appellat Authority declared 153.03 acre as surplus- It was contended that that under Section 131 of the Land Reforms Act they acquired status of 'Sirdar' of the land- Registered sale/lease agreements were executed in favour of 50 persons who constituted four partnership firms- Before reduction of ceiling limit 70 transfer deeds executed but transfers were after the cut-off date 24-1-1971 as fixed in sub-section (6) of Section 5 of the Ceiling Act - Under sub-section (6) of Section 5, transfers of land effected after 24-1-1971 were liable to be ignored in determining the ceiling area- By UP Amendment Act of 1973 the ceiling limit was reduced from 40 acres to 18.75 acres-Under the amended Ceiling Act 18 of 1973 fresh ceiling proceedings were initiated- On the objections of transferees 867.67 acres of land declared as surplus - Objection regarding 250 acre of land of school -The Commissioner held that exemption in favour of the school of 250 acres of land was wrongly granted and that the grantee under the Govt. Grants Act was not competent to transfer the land and all transfers were, therefore, invalid- Held the Farm, even if recorded as hereditary tenant could not have claimed independent status of being the holder of the land as the land was taken by the company under the Govt. Grants Act- Para 22 and 23

B. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Sections 3 and 5(1)- Exclusion of Public Company-The exclusion of public company from sub-section (4) in the matter of distribution of shareholding of the land was not an indication that public company is not deemed to be a 'holder' of land or a legal 'person' as defined in Clauses (9) and (17) of Section 3 of the Ceiling Act read with Clause (33) of Section 4 of the U.P. General Clauses Act-The contention, that the ceiling proceedings could not have been initiated and concluded against the company through the Farm and they were all invalid and non est, and rejected- para26

C. Govt. Grants Act 1895 as amended by Govt. Grants (u.p.) Act 1960- Legal effect of- Conjointly reading the provisions of the Ceiling Act and the Land Reforms Act, the grantee of land from the Government is a holder of land in the status of a Bhumidhar and the land can be subjected to ceiling limit- Such grantee being a lessee from Government has no right to transfer the land without permission of the Government- It can grant leases or sub-leases under the UP Tenancy Act but the lessees/sub-lessees can claim no rights contrary to the terms of the grant. All the transfers made by the Company or Farm by sale or lease contrary to the terms of the Govt. Grant create no independent rights in favour of the said transferees or lessees. The claims of transferees and lessees based on the provisions of UP Tenancy Act were, therefore, rightly negatived by the ceiling authority and the High Court.-Paras 34 to 36

D. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Section 5(1)- Bona Fides Of the transferees- High Court rightly confirmed the conclusion of the appellate authority that all transfers were made to related parties and only to evade the effect of impending amendment to ceiling law-The concurrent findings in the judgment of appellate authority and of the High Court of lack of good faith on the part of the Company and the Firm in executing the sale-deeds after the cut-off date 24-1-1971 were not vitiated by consideration of any irrelevant circumstances and being essentially a finding of fact was not liable to be interfered with, in appeals under Article 136 of the Constitution.- Paras 37 to 40

E. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Section 5 and 6 ( as stood prior to amendment by 1973 Act- The prescribed authority passed under the unamended Ceiling Act, the school land to the extent of 250 acres, under an obvious mistake, was treated to be land heed, not by the holder Company but by the school treating the latter to be a separate legal entity- The Prescribed Authority, by an inadvertent mistake, instead of considering the claim of the holder Company for exemption of land under Clause (ix) of Section 6, as it stood then, excluded the land as belonging to the school as separate legal entity- On the date of second ceiling introduced by the Amendment Act of 1973, the so called land belonging to the school is claimed to be held by the holder Company as the Company had transferred it to various persons-On these admitted facts and nature of title of the land, plea of res judicata could not be allowed to be raised- paras 50 to 56

F. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Section 5- Non-joinder of transferees of land/Breach of Principles of Natural Justice.- Principles of res judicata-Reading the provision of sub-section (6) of Section 5 with proviso (b), Explanation (II) thereunder, the contention of the State that the transferees were merely proper parties and were not entitled to be arrayed, noticed and heard in the proceedings under the Ceiling Act, not accepted- However order of the Commissioner which has been confirmed by the High Court,not interfered- Non- joinder of transferees as parties and denial of opportunity of hearing to them in the facts and circumstances found here, cannot be said to be fatal to the entire ceiling proceedings paras 57 to 60

G. U.P. Imposition of Ceiling on Land Holdings Act, 1961, Section 16- Imposing of damages and costs-The quantification of damages payable to the State for use and occupation of surplus land under Section 16 is required to be done in accordance with the principles laid down in Rule 18-A of the Rules framed under the Ceiling Act-The provisions of Section 16 read with Section 18-A require separate proceedings to be undertaken for determination and quantification of amount of damages for use and occupation of the surplus land-The said exercise ought to have been left to the Ceiling Authorities-The High Court erred in awarded lump sum damages by imposing heavy costs-para 67