The grant of land retained government ownership, with limited rights conferred to the grantee, who remained subject to resumption powers due to violation of conditions.

JUDGMENT :

D.K. SINGH, J.

BRIEF FACTS OF THE CASE :

1. Erstwhile State of Mysore, now the State of Karnataka, had made a grant of 75 acres of land in Sy.Nos.597/B-1 A2-B4 to M/s. Bellary Spinning and Weaving Company Limited (hereinafter referred to as 'the respondent-Company') at the rate of Rs.500/- per acre, sub-division fee of Rs.3/- and annual ground rent of Rs.6.25 per acre. The grant was also subject to payment of other levies as per the Rules and the general and special conditions to be imposed by the Deputy Commissioner, Bellary District. The general and special conditions of grant of 75 acres of land in Sy.No.597/B-1 A2-B4 in Bellary to the respondent-Company inter alia would provide as under:-

i. The land was to be used for the purpose of constructing the spinning and weaving mill and for no other purpose.

ii. No other building was to be constructed without the previous permission of the Deputy Commissioner, Bellary.

iii. The Government would have the right to resume the land wholly or in part with any building thereon in the event of infringement of any terms and conditions of grant. In the event of such resumption, no compensation would be paid for any improvements that could have been effected or other works that could have been executed on the land by the allottee or the grantee.

iv. The grantee would not be entitled to repayment of any amount that might have been paid to the Government for the grant.

v. The direction could be issued by the competent authority to remove the buildings/structures on the land in the event of resumption.

vi. The Government could resume the land wholly or in part with any building thereon if, in the opinion of the Government, the land was required for public purpose or for conducting mining operations. In the event of such resumption for any reason, the compensation payable for the land and trees shall, in no case exceed the amount paid for them by the grantee or their value at the time of resumption or acquisition whichever could be less, if the land was not to be alienated without the previous permission of the Deputy Commissioner, Bellary.

vii. The Government would have the liberty/right to resume the land and re-enter on it and the whole land would thereupon vest absolutely in the Government. In case of violation of the terms and conditions of the grant, the grantee would not be entitled to any compensation whatsoever.

2. In terms of Condition No.10 of the grant, the respondent-Company sought permission to mortgage the entire land of 75 acres. By the order dated 30.11.1963, permission was granted by the erstwhile State of Mysore for mortgaging the land to the Canara Industrial and Banking Syndicate Limited, Udupi (Now, Canara Bank) for raising loan of Rs.20,00,000/- for establishment of spinning mill. The mortgage of the land was with respect to only whatever the limited rights the respondent- Company had over the land in pursuance to the grant dated 16.01.1963.

3. The permission for mortgage of 75 acres of land in Sy.No.597/B-1 A2-B4 of Bellary Village, inter alia, reads as under:

"1. The Government of Mysore in their order second cited above, have sanctioned the alienation and grant of 75-00 acres of land in S.No. 597 B1-A2- B4A of Bellary Village in favour of the Bellary Spinning and Weaving Company Ltd., Bellary at an upset price of Rs. 500/- per acre Sub-Division Fee of Rs. 3/- and annual ground rent of Rs. 6-25 Np. s. acre for the construction of a Spinning and Weaving Mill. The land was handed over possession by the Thasildar, Bellary on 28.1.1963 to the said company.

2. The Chairman, Board of Directors of the said Company in his letter first cited above has applied for permission to mortgage without possession the land alongwith the fixed assets of the Company with the Canara Industrial and Banking Syndicate Ltd., Udupi, for raising a loan of Rs. 20 (Twenty) lakhs for the establishment of the Spinning Mill."

Thus, it is evident that the limited rights of the respondent - Company over the