ON Civil Appeal Nos
1454 56 of 1993 etc
From the Judgment and Order dated 1521991 of the Karnataka High Court in Writ Appeal Nos 2083 2084 and 2085 of 1989
KMadhava Reddy PP Rao NDB Raju Guntur Prabhakar Dr Sumand Bhardwaj Yatish Mohan Verma and Ranjit Kumar for the Appellants
Soli J Sorabjee NB Shetye RN Narasimha murthy SGanesh Vineet Kumar M Veerappa Nobin Singh PR Ramasesh P Mahale NP SK Kulkarni and Surya Kant for the Respondents
The Judgment of the Court was delivered by SAWANT J
Leave granted
2These appeals arise out of the same facts and judgments of the Karnataka High Court and are being disposed of by this common judgment
For the sake of the narration of events Civil Appeal Nos 1461 72 1993 arising out of SLP Civil Nos
7230 41 of 1991 may be referred to
The 2nd respondent Ms Naryanaswamy  Sons is a partnership firm
While it was carrying on the business of manufacturing and selling of polished granites it acquired on 3091953 6 acres and 4 gunthas of land in Survey Nos 61 and 62 of Dasarahalli in the heart of Jayanagar Exten sion of the city of Bangalore
Out of the said land 1 acre and 2 gunthas had already been acquired by the 1st respondent State Government under notification dated 141948
The acquisition proceedings had culminated in an award granting compensation to the land owner on 331955
In a small portion of the said land the 2nd respondent firm hereinafter referred to as the firm  established a granite factory and the rest of the land was vacant when the Urban Land Ceiling and Regulation Act 1976 the Act  was made applicable to the Bangalore Agglomeration consisting of the area within the jurisdiction of the Bangalore City Municipal Corporation and the Trust Board and the peripheral area of 5 kms
3On 961983 the firm preferred an application to the State Government for exemption of the vacant land from the provisions of Chapter III of the Act
By an order of 1771985 the State Government granted 725 exemption under Section 20 of the Act for industrial use of a granite factory
The exemption related to 16194 sq mtrs
of land and was granted on the following conditions i The entire land utilisation shall be completed within a period of two years from the date of the order
ii The exempted land shall be exclusively used for the purpose for which the exemption was granted and for the purposes related thereto
iii The land shall not be transferred by way of sale mortgage gift lease or otherwise without prior permission of the Government and that such permission when given shall be subject to such conditions as the Government may deem fit to impose
4The 3rd respondent partnership firm Ms Reevajethu Builders and Developers the builders  was constituted on 611987 with Smt
Shobha Makhija as the major partner with 50 share and other 18 partners mainly to develop the immovable property to be acquired by the firm of an extent of 5 acres and 24 gunthas situated at Survey Nos 61 and 62 of Dasarahalli of Bangalore City and to carry on the business as builders and developers of flats shops commercial complexes and other types of buildings dealers in real estate and all other allied business and activities and to carry on any other business as may be mutually agreed upon by all the partners
It is not in dispute that Smt
Shobha Makhija is the sister of the son in law of the 4th respondent who was then the Chief Minister of the State of Karnataka 5On 911987 the competent authority under the Act came to the conclusion that the excess vacant land out of the said Survey Nos 61 and 62 after the grant of exemption by the Government Order dated 1771985 was 3444 sq mtrs
The competent authority accordingly directed the publication of a notification under Section 10 1 of the Act for the acquisition of the said excess vacant land
6On the same day ie 911987 the firm made an application to the State Government for permission to sell land to the extent of 5 acres and 24 gunthas comprised in the said Survey Nos 61 and 62 to the 726 builders
The grounds made out in the application were that due to stiff competition and nationalisation of black and pink granite by the southern States including Karnataka the firm was running under losses that its Woodlands Hotel at Madras was also not making profits since the hotel building had become very old and there were no funds for modernising it that its theaters in Madras were also not yielding profits due to unhealthy competition by the video piracy and the advent of the television that the partners of the firm individually and jointly were indebted to Andhra Bank of India State Bank of Mysore and Dena Bank that the said debts were of more than Rs 1 crore 65 lakhs that suits had been filed in the High Court of Madras against the partners that the business of the partners had been suffering huge losses specially due to continuing heavy interest burden that the families of the seven partners of the firm had no other source of income and had been over drawing from the firms for their maintenance and that one of the partners was seriously ill in a hospital at Bangalore and he had to borrow money for taking medical treatment
7On 631987 the State Government under Section 20 1 of the Act permitted the firm to sell land to the extent of 16194 sq mtrs
to the builders subject to certain conditions
8On 2331987 the firm filed another application before the State Government seeking permission to transfer the remaining 3444 sq mtrs
of vacant land from Survey Nos 61 and 62 to the builders on the ground of undue hardship since the firm had incurred debts
On 1841987 the State Government under Section 20 1a of the Act granted exemption for the said land from the purview of Chapter Ill of the Act and also permitted the firm to sell the said 3444 sq
of vacant land from Survey Nos 61 and 62 subject to certain conditions
9By a sale deed of 3091987 ie a day before the extension of Chapter XXC of the Income tax Act providing for preemptive purchase by the Central Government of immovable property in certain cases on transfer the firm entered into a deed of absolute sale for the sale of the property consisting of land to the extent of 5 acres and 24 gunthas situated in the said Survey Nos 61 and 62
10On this undisputed factual matrix writ petitions were filed by way of public interest litigation under Article 226 and 227 of the Constitution before the High Court for issue of a writ of mandamus a directing the respondent Government to take action for forfeiture of the land for con 727 travention of Section 79 of the Karnataka Land Reforms Act b for acquiring the land for the purpose of weaker sections under the provisions of the Act c for quashing the orders dated 631987
and 1841987 granting exemption to the land in question from the purview of the Act under Section 20 111a  b of the Act and for declaring the sale deeds dated 3091987 executed by the firm in favour of the builders as void and inoperative d
for directing the State Government to take action under Section 6 of the Karnataka Parks Play fields and Open Space Reservation and Regulation Act 1985 and for other reliefs
The learned Single Judge by his judgment and order dated 891989allowed the writ petition and among others 1 quashed the Group Housing Policy of the State Government as embodied in the decision of the Committee held on 22101986 and communicated under letter dated 24111986 insofar as it encouraged the Group Housing Scheme through individuals and partnership of individuals by transferring vacant land to such persons ii restrained the State Government from enforcing the said Policy through individuals and partnership of individuals against the vacant land iii declared as null and void and quashed the orders dated 631987 and 1841987 granting exemption iv declared the sale deed dated 3091987 executed by the firm in favour of the builders as nun and void so far as it related to the extent of land admeasuring 19368 Sq
covered by the exemption orders of 631987 and 1841987
The validity of the sale deed so far as it related to the remaining land mentioned therein was however saved by the said declaration v directed the State Government the Special Deputy Commissioner under the Act the Bangalore Development Authority and the Municipal Corporation of Ban galore to identify the extent of 1 acre 2 gunthas and 58 square yards which was acquired in 1948 out of the said Survey No 61 and to set them apart for the purpose of road and Boulevard and use it only for said purpose vi remitted the applications dated 911987 and 2431987 made by the firm to the State Government with the direction to consider them in accordance with law under Section 20 1b of the Act and to exempt them in the light of the extent of the debt owed by the firm to the creditors prior to the coming into force of the Act vii directed that even if after examining the application in the aforesaid light the State Government granted permission to the firm to sell the vacant land on the ground of hardship the Government should see that in the vacant land sites are formed of various dimensions not exceeding 60  x 90  keeping in view the sites already formed 728 in the locality
The learned Judge further directed that each such site should be sold by public auction by the competent authority with the condition that no person is entitled to purchase in public auction more than one site and to credit the sale proceeds in the office of the competent authority under the Act who would pay the amount to the creditors of the firm
The learned Judge also further directed that only such number of sites should be sold which are necessary to discharge the debts and the remaining portion of the vacant land should be acquired under the Act
It may be noted here that the learned Judge held that the allegations of mala fides in granting exemptions by the orders of 631987 and 1841987 against respondents 4 and 8 were not proved
12Against the said decision of the learned Single Judge appeals were preferred before the Division Bench of the High Court among others by writ petitioners as well as the firm and the builders
All the appeals were heard together and the learned Judges of the Division Bench gave separate but concurring judgments and set aside the findings as well as the directions given by the learned Single Judge and dismissed the writ petitions
13The precise questions which arise for our consideration in these appeals are i Were the permissions granted by the State Government to sell land admeasuring 16194 sq mtrs
and 3444 sq mtrs
by its orders of 631987 and 1841987 respectively valid under the Act ii Were the said orders motivated by mala fides  and iii Is the sale deed executed by the firm in favour of the builders on 3091987 void and inoperative 14In order to appreciate the answer to the first and the third question it is necessary to understand the scheme of the Act which came into force on 1721976
As the preamble of the Act states it has been placed on the statute book i to provide for the imposition of a ceiling on vacant land in urban agglomerations ii to provide for the acquisition of which vacant land in excess of the ceiling limit and iii to regulate the construction of buildings on such land and for matters connected therewith with a view to a preventing the concentration of urban land in the hands 729 of a few persons and speculation and profiteering therein and b bringing about an equitable distribution of land in urban agglomerations to subserve the common good
These objects which are otherwise clear from the preamble of the Act have been explained in the statement of objects and reasons accompanying the Bill which among other things states as follows There has been a demand for imposing a ceiling on urban property also especially after the imposition of a ceiling on agricultural lands by the State Governments 
With the growth of population and increasing urbanisation a need for orderly development of urban areas has also been felt
It is therefore considered necessary to take measures for exercising social control over the scarce resource of urban land with a view to ensuring its equitable distribution amongst the various sections of society and also avoiding speculative transactions relating to land in urban agglomerations
xx xx xx The Bill is intended to achieve the following objectives i to prevent concentration of urban property in the hands of a few persons and speculation and profiteering therein iito bring about socialisation of urban land in urban agglomerations to subserve the common good by ensuring its equitable distribution iii to discourage construction of luxury housing leading to conspicuous consumption of scarce building materials and to ensure the equitable utilisation of such materials and iv to secure orderly urbanisation
The Bill mainly provides for the following i imposition of a ceiling on both ownership and posses 730 sion of vacant land in urban agglomerations the ceiling being on a graded basis according to the classification of the urban agglomeration ii acquisition of the excess vacant land by the State Government with powers to dispose of the vacant land to subserve the common good iii payment of an amount for the acquisition of the excess vacant land in cash and in bonds iv granting exemptions in respect of certain specific categories of vacant land v regulating the transfer of vacant land within the ceiling limit vi regulating the transfer of urban or urbanisable land with any building whether constructed before or after the commencement of the proposed legislation for a period o f 10 years from the commencement of the legislation or the construction of the building whichever is later vii restricting the plinth area for the construction of future residential buildings and viii other procedural and miscellaneous matters
 It is needless to emphasise that while interpreting the various provisions of the Act the said objects will have to be kept in view constantly
However only those provisions of the Act which have a bearing on the controversy before us may be referred to
The vacant land has been defined in Section 2 q as follows vacant land  means land not being land mainly used for the purpose of agriculture in an urban agglomeration but does not include i land on which construction of a building is not permissible under the building regulations in force in the area in which such land is situated 731 iiin an area where there are building regulations the land occupied by any building which has been constructed before or is being constructed on the appointed day with the approval of the appropriate authority and the land appurtenant to such building and iii in an area where there are no building regulations the land occupied by any building which has been constructed before or is being constructed on the appointed day and the land appurtenant to such building Provided     The land appurtenant  in relation to any building has been defined in Section 2g as follows  land appurtenant in relation to any building means i in an area where there are building regulations the minimum extent of land required under such regulations to be kept as open space for the enjoyment of such building which in no case shall exceed  five hundred square metres or ii in an area where there are no building regulations an extent of five hundred square metres contiguous to the land occupied by such building and includes in the case of any budding constructed before the appointed day with a dwelling unit therein an additional extent not exceeding five hundred square metres of land if any contiguous to the minimum extent referred to in sub clause i or the extent referred to in sub clause ii as the case may be
Section 3 states that except as provided in the Act on and from the commencement of the Act no person shall be entitled to hold any vacant land in excess of the ceiling limit
The ceiling limit is prescribed in Section 4
The provisions of Section 4 so far as they are relevant for our purpose 732 may be reproduced verbatim 4
Ceeling Limit
1 Subject to the other provisions of this section in the case of every person the ceiling limit shall be a x x x x x x b where such land is situated in an urban agglomeration falling within category B specified in Schedule 1 one thousand square metres c x x x x x x x d x x x x x x x 2
x x x x x x x 3Notwithstanding anything contained in sub section 1 where in respect of any vacant land any scheme for group housing has been sanctioned by any authority competent in this behalf immediately before the commencement of this Act then the person holding such vacant land at such commencement shall be entitled to continue to hold such land for thepurpose of group housing Provided that no more than one dwelling unit in the group housing shall be owned by one single person Provided further that the extent of vacant land which such person shall be entitled to hold shall in no case exceed a the extent required under any building regulations governing such group housing or b the extent calculated by multiplying the number of dwelling units in the group housin g and the appropriate ceiling limit referred to in sub section 1 whichever is less 733 Section 53 prohibits transfer of the vacant land in excess of the ceiling limit or any part thereof by way of sale mortgage gift lease or otherwise until the land holder has furnished a statement under Section 6 of the Act and a notification regarding the excess vacant land held by him has been published under sub section 1 of Section 10
Any such transfer is deemed to be null and void
Section 61 requires every person holding vacant land in excess of the ceiling limit at the commencement of the Act to file a statement before the competent authority under the Act
Read with Section 7 it is clear that the statement to be filed under Section 61 has to include vacant land not only situate in the same State but also in other States to which the Act applies
In the present case admittedly the firm held land also in Madras in addition to the land in dispute in the city of Bangalore
It is not known whether the firm had vacant land in its possession in Madras in addition to the land in dispute and whether it had shown such land in its return
However that is not the subject matter of dispute before us
Section 8 provides for a draft statement to be prepared by the competent authority as regards the vacant land held by the person concerned and calculated on the basis of the statement filed by him under Section 6 after holding an inquiry into the matter
The draft statement is to be served on the person concerned with the notice requiring him to prefer his objections if any
Section 9 provides for the final statement with regard to the vacant land in excess of the ceiling limit to be prepared by the competent authority and to be served on the person concerned
After the service of the final statement under Section 9 on the person concerned the competent authority is required by Section 101 to cause a notification to be published in Official Gazette giving the particulars of such vacant land and stating therein i that such land is to be acquired by the concerned State Government and ii the claims of all the persons interested in such vacant land be made by them giving particulars of the nature of their interest in the land
Under Section 102 the competent authority is required to determine the nature and extent of such claims and pass such orders as it deems fit
Section 103 provides that at any time after the publication of the notification under Section 101 the competent authority may by another notification published in the Official 734 Gazette of the State concerned declare that the excess vacant land referred to in the notification published under Section 101 shall with effect from such date as may be specified in the declaration be deemed to have been acquired by the State Government
Upon the publication of such declaration the vacant land is deemed to have been vested absolutely in the State Government free from all encumbrances with effect from the date so specified
Section 10 4 then prohibits transfer of the excess vacant land and also the alteration of the use of such land between the date of notification published under Section 101 and that of the notification published under Section 103
Section 105 enables the competent authority to pass an order requiring the person in possession of the excess vacant land to surrender the same to the State Government
Section 11 requires the State Government to pay compensation to the person or persons having interest in the vacant land acquired under Section 103 at the rates mentioned therein
Section 19 exempts certain lands from the provisions of Chapter III of the Act which comprises Sections 3 to 24
Then come the provisions of Section 20 to 24 of Chapter 111
We are directly concerned in the present appeals with the said sections along with the provisions of chapter IV of the Act
Section 20 permits the State Government to give exemption to any vacant land in excess of the ceiling limit from the provisions of Chapter III for two distinct purposes
It is necessary to reproduce here the said section 20Power to exempt
1 Notwithstanding anything contained in any of the foregoing provisions of this Chapter a where any person holds vacant land in excess of the ceiling limit and the State Government is satisfied either on its own motion or otherwise that having regard to the location of such land the purpose for which such land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require it is necessary or expedient in the public interest so to do that Government may by order exempt subject to such con 735 ditions if any as may be specified in the order such vacant land from the provisions of this Chapter b where any person holds vacant land in excess of the ceiling limit and the State Government either on its own motion or otherwise is satisfied that the application of the provisions of this Chapter would cause undue hardship to such person that Government may by order exempt subject to such conditions if any as may be specified in the order such vacant land from the provisions of this Chapter Provided that no order under this clause shall be made unless the reasons for doing so are recorded in writing
2 If at any time the State Government is satisfied that any of the conditions subject to which any exemption under clause a or clause b of sub section 1 is granted is not complied with by any person it shall be competent for the State Government to withdraw by order such exemption after giving a reasonable opportunity to such person for making a representation against the proposed withdrawal and thereupon the provisions of this Chapter shall apply accordingly
It would be apparent from clause a of sub section 1 of the section that under it the State Government is given power to exempt the excess vacant land from the operation of Chapter III only if the State Government is satisfied that having regard to i the location of the land and ii the purpose for which it is being or is proposed to be used it is necessary or expedient in the public interest to exempt it
The paramount consideration is the public interest
The exemption granted under this provision may be subject to certain conditions
But it does not appear that it is obligatory to impose such conditions
Nor is it necessary to record reasons when exemption is granted under this clause
The power to exempt such land under clause b of sub section 1 can be exercised by the State Government if it is satisfied that the application of Chapter III would cause undue hardship to the landholder
The exemption may be granted under this clause subject to such conditions if 736 any as may be specified in the order
But unlike under clause a there is no obligation to prescribe the conditions
The permission given under this clause however has to be supported by reasons to be recorded in writing
Sub section 2 of the section enables the government to withdraw the exemption granted either under clause a or b if is satisfied that any of the conditions subject to which the exemption is given is not complied  with
Clauses a and b of sub section 1 read with subsection 2 make it clear that the exemption may either be conditional or absolute
Where it is conditional it may be withdrawn if any of the conditions are not complied with
The very fact however that the legislature has con templated imposition of conditions on exemptions granted under both the clauses shows that the purpose of the exemption under either of the clauses cannot be the transfer of the land
The exemption under clause a is obviously for the land being put to a particular use which use is also necessary or expedient in the public interest while exemption under clause b is for relieving the person concerned from any undue hardship which may be caused to him personally by the withdrawal of the excess land from his possession probably such as when the person may require the land for the expansion of the use to which he has already put it such as his growing business or activities or to accommodate his growing family
The clause unfortunately is completely silent on what it intends to convey by the expression undue hardship
Section 21 also contemplates exemption of the excess vacant land from the operation of the said Chapter but for a purpose other than for the use of the holder of the land
The purpose contemplated there is the construction of dwelling units of the plinth area of not more than 80 sq mtrs
for accommodation of the weaker sections of the society and in accordance with a scheme approved by such authority as the State Government may specify in that behalf
The person desiring exemption under this Section has further to declare his intention for construction of such dwelling units for weaker sections within such time in such form and in such manner as may be prescribed
Such declaration is to be made before the competent authority
The competent authority after receiving such declaration may after making such inquiry as it deems fit declare such land not to be excess land for the purposes of the said Chapter and permit such person to continue to hold such land for the aforesaid purpose subject to 737 such terms and conditions as may be prescribed
Where any such condition is contravened the competent authority has been given power to declare the land to be excess land and on such declaration the provisions of Chapter III of the Act are to apply
The distinction between Sections 20 and 21 may be noticed at this stage
In the first instance the power given under Section 20 is to the State Government and not to the competent authority
The power given is to exempt the land and the exemption is to be granted to a person
The purpose of exemption is either public interest or relief from personal undue hardship
It does not appear to be obligatory on the State Government to prescribe any conditions while granting the exemption
However if any conditions are specified and if the State Government later satisfied that there is non compliance of any of the conditions the State Government is given power to withdraw the exemption
As far as Section 21 is concerned the power conferred by it is not to exempt the land but to declare it not to be excess for the purposes of Chapter III
The power is given to the competent authority itself
It is to be exercised by it only under one circumstance
That circumstance is that the holder of the vacant land should declare before it within a specified time and in the prescribed form and manner that he desires to utilise the land for the construction of the dwelling units of not more than the particular size mentioned therein for accommodating the weaker sections and in accordance with any scheme approved by the specified authority
it is the competent authority which is required to make inquiry as it deems fit into such a declaration and if it is satisfied to declare that such land shall not be excess within the meaning of the said Chapter
However it appears that the competent authority is required to prescribe certain terms and conditions while declaring the land not to be an excess land including a condition with regard to the time limit within which such buildings are to be constructed and on the breach of any of the conditions the competent authority is also given power to declare the land to be an excess land
Section 22 enables a person to hold the vacant land on which there stood a building which he demolished or destroyed or which was demolished or destroyed on account of natural causes
The holder of such land is required to file a statement in that behalf within the specified time 738 and if the competent authority is satisfied that such land is required by the holder for the purpose of redevelopment in accordance with the master plan the authority may subject to such conditions and restrictions permit the holder to retain such land for such purpose
However if the competent authority is not so
satisfied and does not therefore give permission for redevelopment the provisions of Sections 6 to 14 of the Act become applicable even to such land
Section 23 provides for the disposal by the State Government of the vacant land acquired under the Act or acquired under any other law
The State Government may allot such land to any person for any purpose relating to or in connection with any industry or for providing residential accommodation of such type as may be approved by the State Government to the employees of any industry
The industry  is defined for the purpose to mean any business profession trade undertaking or manufacture
While making such allotment the State Government may impose such conditions as may be specified in the order of allotment
A breach of any of the conditions imposed enables the State Government to cancel the allotment and on such cancellation the land revests in the State Government free from all encumbrances
Sub section 4 thereof also enjoins the State Government to dispose of the vacant lands to subserve the common good on such terms and conditions as the State Government may deem fit to impose
Sub section 15 thereof gives the State Government an overriding power and enables it to retain or reserve any vacant land acquired under the Act for the benefit of the public notwithstanding anything contained in sub sections 1 to 4
Section 24 enables the State Government to assign a part or whole of the acquired land to those persons who had leased out or mortgaged with possession of the said land or had given such land under a hire purchase agreement and as a consequence of which they are left with no vacant land or
are left with vacant land which is less in extent than the ceiling limit
Chapter IV of the Act deals with the regulation of transfer and use of urban property
Section 26 prohibits the sale of vacant land within the ceiling limit except after giving notice in writing to the competent authority of the intended transfer
Where the notice is given the competent authority shall have the first option to purchase the land on behalf of the State 739 Government at a price calculated in accordance with the provisions of the Land Acquisition Act 1894 or of any other corresponding law for the time being in force
The option has however to be exercised within a period of sixty days from the date of the receipt of the notice and if no such option is exercised it will be presumed that the competent authority has no intention to purchase the land and it shall then be lawful for such person to transfer the land to whomsoever he may like
Section 27 prohibits transfer of any urban or urbanisable land by way of sale mortgage gift lease for a period exceeding ten years or otherwise if such land is with a building whether constructed before or after the commencement of the Act
It also prohibits a similar transfer of the land with a portion only of such building
The restriction on the transfer of Such land is for a period of ten years of the commencement of the Act or from the date on which the building is constructed whichever is later except with the previous permission of the competent authority
The competent authority is given power to grant or refuse permission to transfer after holding an inquiry
If the permission is not refused within sixty days of the receipt of the application the permission is deemed to have been granted
If the permission applied for is for the transfer of such land by way of sale the competent authority is given the first option to purchase such land with the building or a portion of the building as the case may be and if the option is not exercised within sixty days the applicant is free to sell the land to any person he may like
For the purpose of calculating the price where the purchase is made by the authority the provisions of the Land Acquisition Act 1894 or of the corresponding law are made applicable
This Section has since been struck down by this Court in Maharao Sahib Shri Bhim Singhji etc
vs Union of India  Ors
 to the extent it operates on the vacant lands within the ceiling limit
In other words as the law stands today the section applies only to transfer of the urban and urbanisable lands in excess of the ceiling limit and which have a building or a portion of building constructed thereon
Section 29 prohibit s construction of buildings with dwelling units with a plinth area exceeding particular dimensions depending upon the category to which the urban agglomerations belong
Section 30 gives power to the competent authority to stop or demolish construction which is being made or made in contravention of 740 Section 29
Section 35 gives power to the State Government to issue orders and directions of a general character as it may consider necessary in respect of any matter relating to the powers and duties of the competent authority and the competent authority has to give effect to such orders and directions
Section 36 gives power to the Central Government to
give such directions to any State as may appear to it to be necessary for carrying into execution in the State concerned any of the provisions of the Act or of any rules made thereunder
The Central Government may also under this Section require any State Government to furnish such returns statistics accounts and other information as may be deemed necessary
15The examination of the aforesaid relevant provisions of the Act shows a clear intention of the legislature and reveals a definite scheme
It has to be admitted that the provisions of the Act as are drafted have not succeeded in translating into words the clear intention of the legislature and to that extent the Act is an inelegant and confused piece of drafting
However since the intention is clear a harmonious reading of all the provisions consistent with that intention is necessary to interpret and understand each of the said provisions
The intention of the legislature is to acquire all vacant land in excess of the ceiling limit prescribed by the Act and the main purpose of the Act as stated earlier is three fold viz i to prevent concentration of the urban land in the hands of a few persons and to prevent speculation and profiteering therein ii to distribute the urban land equitably and iii to regulate the construction of buildings on the urban lands
Consistent with these objectives the Act provides for acquisition of all urban vacant land in excess of the ceiling limit and prohibits its transfer in any form absolutely
All that the Act permits in the case of such excess vacant land is either express exemption from the operation of Sections 3 to 19 of Chapter III of the Act by the State Government under Section 20 or non declaration of such land as an excess vacant land by the competent authority under Section 21 or the retention of such land with the land holder to be permitted by the competent authority under Section 22 of the Act
The effect of exemption of the land from the provisions of Sections 3 to 19 or of the non declaration of the land as excess land or of the 741 retention of the land with the land holder under Sections 20 21 and 22 respectively is not to permit the land holder to deal with it as he likes including to transfer it
In fact the exemption the non declaration an the retention permitted is on certain conditions which are required to be prescribed by the State Government or the competent authority as the case may be
If those conditions are not complied with or are contravened the State Government or the competent authority is given power to withdraw the exemption or to declare the land as excess
This power given to the State Government and the competent authority itself negatives either power to permit the transfer or the right to transfer
What is more Chapter IV which alone makes provisions for transfer and use of urban property makes provision for transfer of vacant land within the ceiling limit subject to certain conditions
It also makes provisions for the transfer of land in excess of the ceiling limit with a building thereon or with a portion of such building
It makes however no provision for transfer of land in excess of the ceiling limit without a building or a portion of a building thereon
That is consistent with the object of the Act since the Act does not contemplate transfer of the vacant land in excess of the ceiling limit
It only provides for exemption of such land from being acquired and vested in the State Government or for non declaration of it as an excess land or for the retention of the same with the holder and that too subject to certain conditions which may be prescribed as stated earlier
16It is against the background of the aforesaid provisions of the Act that we have to consider whether the two permissions given by the State Government to the firm on 631987 and 1841987 to sell land admeasuring 16194 sqmtrs
and 3444 Sq mtrs
respectively under Section 20 1 are legal
17Taking first the order dated 631987 it does not mention under which provision of Section 20 1 the exemption is granted viz whether under clause a or b thereof It is however conceded before us on behalf of the respondents that the exemption is not under clause a but
is under clause b
We have therefore to examine the said exemption with reference to the provisions of clause b
Section 20 1b as stated earlier permits the State Government to exempt the vacant land from the provisions of Chapter III of the Act if either on its own motion or otherwise it is satisfied that the application of the said Chapter would cause undue hardship to such person
The order of exemption may further 742 be subject to such conditions if any as in any be specified in it
The reasons for passing the order have further to be recorded in writing
The preamble of the present order states that by the earlier order dated 1771985 the firm was granted exemption of the very same land for locating industry on conditions contained in it
One of the conditions was that the declarant shall not transfer the land in question without prior permission of the Government
The order then proceeds to refer to a letter dated 2011987 of the Special Deputy Commissioner Bangalore recommending the grant if permission to sell the said land on certain conditions
The order states that the Government has considered the undue hardship of the applicants and agrees to grant permission to sell the said land
The order does not discuss the undue hardship of the applicants
It is possible that the Government for that purpose relied upon the report of the Special Deputy Commissioner
It appears from the record that the report of the Special Deputy Commissioner is of 2911987 and not of 2011987
It is possible that there is a typographical error either in the record or in the order
Be that as it may
The said report of the Special Deputy Commissioner refers to the application made by the firm for grant of permission for the sale of the land for their undue hardship 
The report then mentions the properties declared by the firm
All the properties which are four in number and one of which is the land in dispute are situate in Bangalore
There is no mention of the properties which admittedly the appellants had in Madras
What is necessary to note here is that it is also stated in the report that the land in dispute has a building of dwelling units and non dwelling units over a plinth area of 161880 sq mtrs
constructed prior to the commencement of the Act
It also states that there is a factory on
the land running since 50 years which manufactures the polished stones
exported to foreign countries
The report then refers to what the firm had stated in its application for permission to sell the land
The application had mentioned among other things as follows a due to lot of competition and nationalisation of the black and pink granites by southern States including Karnataka the firm had been suffering losses in the abovesaid business b the partners of this firm are the partners of a firm known as Woodlands which has been carrying business in hoteliers and the said hotel is not making profits due 743 to the fact that the buildings are very old and due to paucity of funds el that firm has constructed twin theatres on the front side of the hotel just to diversify the business
d that they have incurred heavy loans from banks and private parties for the purpose of construction of theaters and the partners who are the partners of the applicant firm are responsible to liquidate the loans e the Madras firm has suffered heavy loss to a tune of Rs 222301626 as on 3131986 The firm has under this head shown term loan if Rs 5757 lakhs from the Andhra Bank and Rs 1903 lakhs from the Bank of India and Rs 1729 lakhs from the State Bank of Mysore
They have also mentioned Rs 5180 lakhs from private parties but their names are not disclosed
They have also mentioned other liabilities to the tune of Rs 387 lakhs but their details are not given f that the net capital and current accounts show a debit balance of Rs 4794 lakhs
They also further state that if the loan from 14J986 to 31121986 is taken into account the debit balance of the partners would b e about Rs 68 lakhs g that the bank authorities have filed suits in the High Court of Madras to attach their properties both in Bangalore and Madras h that a private party by the name of Sri PL Narayanaswamy Reddivar has also filed a suit in the Karnataka High Court to recover the loan due to them from the Madras firm The application had further stated that the Madras firm is not able even to pay the interest as it is running at a huge loss
It had also been stated that it had become a mental torture to clear the liabilities and to 744 face the court cases pending for attachment
It had then gone on to state that there was no other way to dispose of the property in Bangalore ie the disputed property to clear the above debts and that even the amount derived from the sale of the land in question would not be sufficient to liquidate the liabilities
The report further states that the firm had produced the statement of profit and loss account and balance sheet as on 3131986 and copies of suits filed by the Bank of India in Madras and by the said Sri PD Narayanaswamy Reddiyar in the High Court of Karnataka
After only reciting the above facts but without mentioning even the price at which the land in dispute was proposed to be sold the Special Deputy Commissioner has proceeded to recommend the permission to sell the land to the builders under Section 20 of the Act
The application for permission itself had not mentioned the price
The recommendation is in respect of not only 16194 sq mtrs
but also in respect of 3444 sq mtrs
It may be mentioned here that the firm had not made any application for exemption or permission to sell the said 3444 sq mtrs
till at least 24th March 1987
Yet the Special Deputy Commissioner recommended in his report of 2029187 that the earlier exempted land of 16194 sq mtrs
may be permitted to be sold along with the said 3444 sq mtrs
He has of course recommended conditions to be imposed while granting the permission to sell
The State Government has also not independently enquired into the genuineness of the debts the value of all the assets of the firm held by it in Bangalore Madras or elsewhere and whether the debts were as on the date of the commencement of the Act and whether any of the debts were incurred subsequent to the said date what was the price at which the land was proposed to be sold whether the assets other than the land in question could not have been sold to meet the debts and if at all it was necessary to sell the land in question whether the sale only of a part of the land would not have relieved the firm of its obligations
Without such inquiry the Government by its order in question granted permission to sell 16194 sq
of land
Close on the heels however followed another order dated 1841987 by which the balance of 3444 sq mtrs
was permitted to be sold relying upon another report of the Special Deputy Commissioner
The record before us shows that the said report is of 2731989
We may however presume a typographical error and construe it as a report of 2731987However what is worth nothing is that the application for 745 permission to sell the said 3444 sq
was filed by the firm allegedly on 24387
It seems that with commendable alacrity the Special Deputy Commissioner made his report on the said application on 2731987 if we are to read the year as 1987 instead of 1989 as the document shows
What he has stated in his report may be summarised as under That the Government by its order dated 631987 had already accorded permission to sell excess vacant land admeasuring 16194 sq mtrs
The remaining excess vacant land held by the firm is 3444 sq
Orders had been passed as required under Section 84 of the Act on 911987 confirming the said excess vacant land
In the meanwhile the firm presented another application on 2431987 to the Government requesting for grant of exemption under Section 20 with permission to sell the said excess land admeasuring 3444 sq mtrs
and another land admeasuring 5648 sq
which consisted of land with building as per Section 4 1b of the Act to the builders
That the firm stated that they had got the liabilities to the private parties who were for the first time named there
They are 13 in number
The liabilities were shown as having arisen between 2011975 and 7121977 with a specific mention that the liabilities were from a date prior to the coming into force of the Act
These liabilities to the private parties amounted to Rs 41127956
In addition to 13 private creditors Dena Bank is the 14th and the last editor shown there to whom Rs 6542044 were owed from 1541969
The firm had produced certificates from the creditors and a certificate from the auditors in support of the said liabilities
The report ends by stating that in the cir cumstances explained above the requests of the firm to grant exemption under Section 20 with permission to sell the said balance vacant land of 3444 sq mtrs
to the builders may be considered
 It is not known when the reference of the said application was made to the Special Deputy Commissioner for giving his report
All that is known is that on 1841987 the Government passed an order permitting the firm to sell the land admeasuring 3444 sq mtrs
on the conditions mentioned therein
This order also does not discuss like the earlier order of 631987 the various factors which need to be considered while granting permission to sell
It is however not necessary to discuss this aspect of the matter since we are allowing the appeals on the primary ground that the State Government had no power to grant permission to the firm to sell the land in question
If however it was necessary to go into the said question it must be stated that there is much force in the contention of the appellants that the State Government had 746 not applied its mind to the relevant factors relating to the alleged indebtedness of the firm and hence the permission granted to the firm to sell the land was liable to be struck down on that ground also
18The first question that arises is whether the provisions of Section 20111 b permit the State Government to permit the sale of the excess vacant land to a third party
According to us the answer has to be in the negative for reasons more than one
In the first instance the central object of the Act as is evident both from the preamble as well as the statement of objects and reasons is to acquire vacant land in excess of the ceiling area and to prevent speculation and profiteering in the same and also to distribute the land equitably to subserve the common good
It is therefore per se against the said object to permit the sale of the excess vacant land for whatever reasons including the undue hardship of the  land holder
To construe the provisions of Section 20 1 b so as to read in them the conferment of such power on the State Government for whatever reasons is to distort and defeat the whole purpose of the legislation
Further neither the plain language of the clause nor its context and intendment merit such construction
Section 20 itself is titled Power to exempt
The power given to the State Governments under the Section is only to exempt certain excess vacant lands from the operation of the provisions of Sections 3 to 19 of Chapter III none of which refers to the subject of transfer or restrictions on transfer
Those provisions relate to the calculation declaration acquisition and vesting of the excess vacant land
It is Chapter IV which relates to the transfers of vacant lands and the restrictions thereon
Further from the scheme of the Act it is evident that the transfers of the vacant land were to be regulated by the specific provisions made in it
They were not to be left to be governed by the unguided discretion of any authority including the State Government
The specific provisions for regulating the transfer have been incorporated in Sections 20 to 28 of the Act
Those provisions permit transfer of only vacant lands within the ceiling limit but without buildings and of vacant lands in excess of the ceiling limit but with buildings thereon and subject to the conditions laid down there
It cannot be suggested that in defiance of the said provisions Section 20 1b vests power in the State Government to sanction sales of excess vacant lands with or without building thereon
Under Section 20 1b the State Government can only exempt such excess vacant land from being acquired by it
The Government 747 cannot permit its transfer when the Act does not even by implication authorises it to do so but permits the transfer subject only to the conditions prescribed by Section 27
The legislature cannot be presumed to have prescribed different conditions for transfer of the same or similar lands
Secondly Section 20 begins with the non obstante clause notwithstanding anything contained in any of the foregoing provisions of this Chapter meaning thereby Chapter III of the Act
The foregoing provisions of Chapter III viz  Sections 3 to 19 as stated earlier do not contain any provision permitting or restricting the transfer of the vacant land in excess of the ceiling limit
The provisions relating to the transfer of the vacant land are contained in Sections 26 to 28 of Chapter IV
Section 26 lays down restrictions on the transfer of the vacant land even if it is within the ceiling limit while Section 27 places restriction on the transfer of any urban or urbanisable land with a building or portion of such building thereon for a period of ten years from the commencement of the Act or from the date on which the building is constructed whichever is later except with the previous permission of the competent authority
Section 27 as couched is wide in its implication and hence this Court by its decision in Bhuimsinghji s case Supral restricted its operation to lands with buildings which are above the ceiling limit
However the court has upheld the validity of the rest of the Act including that of Section 26
The result is the restriction on transfer even of vacant land within the ceiling limit but without building is deemed to be valid
Thus the transfer of the vacant land without building even if it is within the ceiling limit and of the vacant land in excess of the ceiling limit with a building or a portion of the building are subject to the restrictions placed by the Act
Section 20 as pointed out earlier is subject to the provisions of sections which follow it including Sections 26 to 28
Hence no construction can be placed on clause b of sub section 1 thereof which will be in conflict with the provisions of Sections 26 to 28
Thirdly the provisions of clauses a and b of sub section 1 of Section 20 make it clear that what the legislature has in mind is an exemption for the purposes of the use of the land and not for the purposes of selling it
Sub section Ill a speaks of exemption of such land having regard to its location the purposes for which the land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require
The said provisions further require that even after taking into consideration the said circumstances the State Government has to examine before giving ex 748 emption whether it is necessary or expedient in the public interest to do so
The Government is also empowered under the said provisions to grant such exemption conditionally
Sub section 1 b similarly speaks of the undue hardship caused on account of the application of the provisions of Chapter III
Since as per the definition of person in Section 2 i the said provision is applicable not only to individuals but also to a family a firm a company or an association or body of individuals whether incorporated or not the hardship spoken of there is obviously one related to the user of the land
In fact it is difficult to understand the precise purpose for which clause b has been enacted and the meaning of the expression undue hardship there
We are left only to speculate on the subject
The speculation itself may not be valid
The lands are held by companies trusts and associations for industrial and commercial use for the use of medical and educational institutes sports clubs cultural activities gardens exhibitions etc
There is no special provision made in the Act to protect or take care of such users
The only provision under which a relief can be given to preserve and safeguard such user is Section 20 1 a
But that provision can be pressed into service only on the basis of the location of the land and its present or prospective user and only if it passes the test of public interest
However all lands in excess of the ceiling limit may not strictly be necessary for such user even if the user is in the public interest
Nevertheless the withdrawal of a part of the land found to be in excess may cause an avoidable hardship to the land holder which may be disproportionate to the benefit that is to accrue to the public on account of such withdrawal
The excess of land may be meager or the severance of such excess land itself may result in unnecessary hardship
The hardship further has to be undue and not merely an ordinary hardship which is bound to be caused on account of the application of the Act to every holder of the excess vacant land
The undue hardship must be one which cannot be avoided except by granting a relief of exemption as contemplated by the said provision
The relief from financial hardship or from indebtedness to the land holder of such land is alien both to the object and the scheme of the Act
Even the debates in the Parliament do not refer to financial hardship or to the power of the State Government to exempt the land to permit its transfer on that account
To hold that indebtedness and financial hardship would entitle the landholder to get exemption for sale of the excess vacant land in his possession is to place the holders of land with debts in an advantageous position as against those who were unwise enough to manage their affairs with financial discipline
The classification of the owners of land for this purpose between debtors and 749 non debtors is itself irrational and has no plausible nexus with the object of the Act
Such a classification is therefore discriminatory and violative of Article 14 of the Constitution
It is not therefore possible to agree with the view taken by the Gujarat High Court in Thakorbhai Dajibhai Desai vs State of Gujarat AIR 1980 Guj 189 that the indebtedness of the land holder on the date of the commencement of the Act can be a ground for exemption under Section 20 1 b
Much less can such a ground vest the State Government with the power to permit the sale of the land
As has been explained earlier under the Act no transfer of vacant land in excess of the ceiling limit is permitted whether with or without condition if it is not encumbered with a building or a portion of a building
It can either be acquired by the State Government under Section 10 3 of the Act or exempted from being acquired or permitted to be retained under Sections 20 21 and 22 respectively
It can in no case be transferred
However if it is so encumbered the provisions of Section 27 become ap plicable to the transfer of the land and no transfer of such land can be effected in contravention of the provisions of the said section
There is nothing either in Section 20 or Section 27 which exempts the transfer of such land from the operation of the provisions of Section 27 assuming that Section 20 1 b gives power to the State Government to permit the sale of such land
Fourthly the exemption which is granted under Section 20 1 b has to be supported by reasons to be recorded in writing
This requirement also contemplates an exemption which is related to and prompted by the use or better use of the land
If it is the financial hardship which was under the contemplation of the legislature there was nothing easier than to make a reference to the same in clause b itself and to lay down guidelines for the inquiry into such hardship
Fifthly the provisions of sub section 2 of Section 20 directly negative either exemption on account of financial hardship or for the purpose of the transfer of the land since that sub section empowers the State Government to withdraw the exemption already granted if the State Government is satisfied that any of the conditions subject to which the exemption is granted either under clause a or clause b of sub section 1 is not complied with
It is inconceivable that the legislature had in mind the cancellation of the transfer including sale which cannot be done when it has already taken place
Sixthly as pointed out earlier when the legislature wanted to provide 750 for sale or transfer of the vacant land it has done so specifically in Chapter IV which exclusively deals with the Regulation of transfer and use of urban property 
Sections 2627 and 28 of the said Chapter together provide for sales of vacant land and for the registration of such sales
Section 26 restricts the sale of land even if it is within the ceiling limit except after giving notice in writing of the intended transfer to the competent authority
When such notice is given the competent authority has the first option to purchase the land on behalf of the State Government and at a price calculated in accordance with the provisions of the Land Acquisition Act 1894 or of any other corresponding law for the time being in force
It is only when the competent authority does not exercise its option to purchase the land within sixty days from the date of receipt of the notice that it is lawful for the holder of the land to transfer the same to whomsoever he may like
The provisions of Section 26 further show that the price to be calculated for the purchase of the land when the competent authority exercises its option is on the basis that the notification under sub section 1 of Section 4 of the Land Acquisition Act or under the relevant provision of any other corresponding law had been issued on the date on which the notice was given of the intended transfer by the holder of the land to the competent authority
This provision makes it abundantly clear that the exemption to be granted under Section 20 1 11 b is not for the sale of the excess vacant land
It is difficult to hold that the legislature which places restrictions on the transfer of the land within the ceiling limit would at the same time give a carte blanch for the sale of the land in excess of the ceiling limit
For it would mean firstly that the State Government cannot have an option to purchase such land and secondly the sale can be made by the holder of the excess land at any price that he chooses
In the first instance such a reading of Section 20 Ill b would militate against one of the objects of the Act viz to prevent speculation and profiteering in the sale and purchase of land
Secondly it would be patently discriminatory
Whereas the holder of vacant land within the ceiling limit would have to suffer the restrictions placed by Section 26 the holder of the vacant land in excess of the ceiling limit has not to do so
He would in fact be in a better position
The provisions with regard to granting such exemption subject to certain conditions contained in Section 20 1 b do not in any way mitigate the discrimination
Firstly when the statute itself places specific restrictions under Section 26 on the sale of land within the ceiling limit it is not possible to hold that the conditions on which the State Government is empowered to permit the sale can be left to the discretion of the State Government
In fact such discretion given to the State Government 751 would itself be violative of Article 14 of the Constitution the same being unguided and untrammeled
This also shows that the legislature has not given power to the State Government under Section 20 ill b to permit exemption for sale of the land
Otherwise it would have provided in the section itself for the conditions on which the permission to sell can be given and such conditions could not be less onerous than those provided under Section 26 of the Act
Secondly if the power to permit sale of the land was intended to be given only for relieving the land holder of his financial hardship the section could very well have provided for sale of such land under Section 26 of the Act or made provision in Section 20 ill b itself for the first option of the State Government to purchase it
It is not suggested that by not making such provision either in Section 20 111 b or Section 26 the legislature intended to permit the sale of such land at a price above the fair market price payable under the Land Acquisition Act 1894 or the corresponding law and thereby encourage speculation and profiteering the very evils which the Act intended to curb
Seventhly section 27 in Chapter IV is another provision which prohibits the transfer of any urban or urbanisable land with a building whether constructed before or after the commencement of the Act or a portion only of such building for a period of ten years from the commencement of the Act or from the date on which the building is constructed whichever is later except with the previous permission of the competent authority
Sub section 151 thereof again gives the first option to the competent authority to purchase such land and at a price either as agreed upon between the competent authority and the land holder or where there is no such agreement at a price to be calculated in accordance with the provisions of the Land Acquisition Act 1894 or any other corresponding law for the time being in force
It is only if the option is not exercised within sixty days or the competent authority has not refused permission to sell the land that the holder of the land can legally transfer the same to whomsoever he may like
These provisions of Section 27 also militate against the conferment of the power on the State Government to permit exemption of land for the purpose of its transfer for the same reasons as are based on the provisions of Section 26 discussed above
The provisions of Section 27 refer to any urban or urbanisable land with a building
The vacant land in excess of the ceiling limit may be with or without a building
In fact the provisions of Section 27 directly negative the conferment of such power for the said provisions show firstly that the legislature did not want the 752 sale of any urban or urbanisable land with a building whether it is within or without the ceiling limit except in accordance with the provisions of Section 27
For Section 27 speaks of transfer of any urban or urbanisable land with a building or a portion only of such building only with the permission of the competent authority and on the terms mentioned therein
This Court as stated earlier has invalidated the provisions of the said section to the extent they apply to the vacant land with a building when the land is within the ceiling limit
But it does apply to land in excess of the ceiling limit and with a building or a portion of it thereon
It is not possible to hold that there are two provisions viz Section 20 ill b and Section 27 operating at the same time in the same area
For the land permitted to be transferred under Section 20 1 b may also be a land with a building or a portion of a building thereon
In one case the restriction imposed by Section 27 on the transfer would not apply and the State Government will be deemed to have been given power to permit the sale even in contravention of the provisions of Section 27
In another case the holder of similar land will have to suffer the restrictions placed by Section 27
There is nothing either in Section 20 1 b or Section 27 to exclude the operation of the section as pointed out earlier
Eighthly the provisions of Section 28 require a special procedure to be followed by the registering officer under the while registering documents under Section 17 1 a to e of that Act when the transfer of the land is either under Section 26 or Section 27
Section 28 does not make any reference to the transfer permitted by the State Government under Section 20 1 b
In other words the holder of the vacant land in excess of the ceiling limit has not to face the restriction on the registration of the document of transfer of his land provided under Section 28 when such transfer is permitted by the State Government under Section 20 1 b whereas the holder of similar lend who does not approach the State Government has to suffer the same when he transfers the land held by him
The discrimination between the transfers under the different provisions is irrational and has no nexus with the object ought to be achieved by the classification
Lastly if the power to exempt the land for sale is read in Section 20 1 b with such conditions as the State Government may choose to place and if either the State Government chooses not to place any conditions or to place such conditions as are inconsistent with the provisions of Sections 29 and 30 it would create two sets of lands one where no restriction are applicable to the 753 construction thereon or only such restrictions as the State Government may choose to impose and the other where the restrictions on constructions as provided by Sections 29 and 30 would be applicable
It is therefore more than clear that the provisions of Section 20 11 b do not permit the State Government to exempt vacant land in excess of the ceiling limit for the purposes of transfer
NP SINGH J
I agree with brother Sawant J that it is not possible to hold that State Government can grant exemption under Section 20 1 b of the Act to the holder of the excess vacant land so that he may transfer the same in the manner he desires
The object of the Act being imposition of ceiling on vacant land in urban agglomerations and for acquisition of such land in excess of ceiling limit with a view to prevent the concentration of urban land in the hands of a few persons speculations and profiteering therein will that object be not defeated if it is held that power under Section 201 of the Act can be exercised by the State Government to exempt the excess vacant lands from the application of Chapter III of the Act so that the holder thereof can transfer such lands Sub section 1 of section 20 is in two parts
The exemption under clause a of the said sub section is to be granted in the public interest whereas under clause b the exemption is to be granted taking into consideration the undue hardship of the holder of the land in excess of the ceiling limit
Both the expressions public interest and undue hardship are com prehensive in nature
But at the same time it is not easy even for courts to say as to whether under different circumstances the exemption was in the public interest or was necessary in the interest of the holder of the land because of his undue hardship
Under Indian conditions expression undue hardship is normally related to economic hardship
That is why from time to time many holders of lands in excess of the ceiling limit while claiming exemption under clause b put forth their bad economic condition and indebtedness to claim exemption along with permission to sell such excess lands
In the modern set up many holders of such excess lands having undertaken commercial or industrial ventures with the help of the loans from the Banks and other financial institutions put the plea of repayment of such loans as undue hardship for claiming exemption under clause b of section 201 aforesaid
How the holders of excess lands having incurred losses or having failed to discharge their debts can 754 claim exemption on the ground of undue hardship in such a situation Section 4 while fixing the ceiling limit under subsection 3 takes note of the fact that where in respect of any vacant land any scheme for group housing has been sanctioned by an authority competent in this behalf immediately before the commencement of this Act then the person holding such vacant land at such commencement shall be entitled to continue to hold such land for the purpose of group housing
But at the same time under sub section 4 of section 4 it has been specified that if on or after the 17th day of February 1975 but before the appointed day any person has made any transfer by way of sale mortgage gift lease or otherwise other than a bona fide sale under a registered deed for valuable consideration of any vacant land held by him and situated in such State to any other person whether or not for consideration then for the purposes of calculating the extent of vacant land held by such person the land so transferred shall be taken into account without prejudice to the rights or interests of the transferee in the land so transferred
Similarly in section 5 it has been provided that where any person who had held vacant land in excess of the ceiling limit at any time during the period commencing on the appointed day and ending with the commencement of this Act has transferred such land or part thereof by way of sale mortgage gift lease or otherwise the extent of the land so transferred shall also be taken into account in calculating the extent of vacant land held by such person
When different provisions take into consideration the lands already transferred by the holder i between the period 17th February 1975 and the appointed day ii as well as between the period commencing from the appointed day and ending with the commencement of the Act it should not be easily inferred that the framers of the Act desired that after the commencement of the Act while exercising the power of exemption under section 201b permission should be granted to holders of such excess lands to transfer such lands to third parties in order to meet their financial liabilities
Section 21 is yet another provision in the Act under which excess vacant land is not to be treated as excess
Under the said Section exemption is to be granted in respect of such excess vacant land if the holder undertakes to utilise the same for the constructions of dwelling units for accommodation of the weaker sections of the society in accordance with the scheme approved by the competent authority or the State Government subject to such terms and conditions as may be prescribed
If Section 21 provides for granting exemption in respect of excess land held by the holder only on a specific condition that the holder shall utilise the same 755 for the construction of dwelling units for weaker section to serve a public cause how the framers of the Act could have conceived the grant of exemption under Section 201 b to the holder of the excess land only to serve his interest by selling such excess lands
If it is held that the State Government can exempt the vacant land held by the land holder in excess of the ceiling limit from the applicability of the provisions of Chapter III of the Act in order that the said holder sells such land to liquidate his debts which amounts to an undue hardship then there will be an apparent conflict between the interest of the land holder and the public interest
In the interest of the land holder the maximum price fetched by sale of such land will be the solution of his hardship whereas that will run counter to the object of the Act to prevent  speculations and profiteering
It is futile to urge that even in such transfers the dominant purpose of the legislation to prevent the concentration of urban land in hands of few persons is none the less served
The concentration of urban land in hands of few persons has to be prevented with a view to bring about an equitable distribution of land in urban agglomerations to subserve the common good
Section 23 prescribes the priorities for disposal or distribution of excess vacant lands after such lands vest in the State under the provisions of the Act
In the case of Bhim Singhji vs Union of India  it has been said The definition of the word industry  in clause b of the Explanation to that section is undoubtedly unduly wide since it includes any business profession trade undertaking or manufacture
If sub section 1 of Section 23 were to stand alone no doubt could have arisen that the Urban Land Ceiling Act is a facade of a social welfare legislation and that its true though concealed purpose Is to benefit favored private individuals or associations of individuals
But the preponderating provision governing the disposal of excess vacant land acquired under the Act is the one contained in sub section 4 of Section 23 whereby all vacant lands deemed to have been acquired by the State Government under the Act shall be disposed of  to subserve the common good
The provisions of sub section 4 are subject to the provisions of sub sections 1 2 and 3 but the provisions of sub section 1 756 are enabling and not compulsive and those of sub sections 2 and 3 are incidental to the provisions of sub section 1
The disposal of excess vacant lands must therefore be made strictly in accordance with the mandate of sub section 4 of Section 23 subject to this that in a given case such land may be allotted to any person for any purpose relating to or in connection with any industry  or for the other purposes mentioned in sub section 1 provided that by such allotment common good will be subserved
The governing test of disposal of excess land being social good  any disposal in any particular case or cases which does not subserve that purpose will be liable to be struck down as being contrary to the scheme and intendment of the Act
 If the vacant lands which have vested in the State are also to be disposed of strictly keeping in view the spirit and object of the Act how under section 201b exemption can be granted to holders of such lands to dispose of such lands in the manner they like the persons they prefer the price they dictate for clearing their debts If it is conceded that indebtedness amounts to an undue hardship then it may cover the debts incurred even after the commencement of the Act
The ceiling limit has been fixed by section 3 with reference to the date of the commencement of the Act but exception can be granted till such excess lands vest in the State Government under sub section 3 of section 10 after publication of the notification in terms of the said sub section
Although it was not possible even for the framers of the Act to exhaustively indicate as to what shall be deemed to be undue hardship within the meaning of section 201b but it would have been better if it had been illustratively indicated leaving the rest for the courts to decide
201 have made no reference to Section 26 or Section 27 of the Act while considering the question whether on the ground of undue hardship the holder of the excess vacant land can be granted exemption and then permission to sell such excess land because he is financially crippled or burdened with liabilities
In the case of Blim Singhji vs Union of India supra this court held that Section 271 in so far as it imposes restriction on transfer of any urban or urbanisable land with a building or of a portion of such building which is within ceiling area was invalid
The said sub section 1 of Section 27 757 was struck down being unconstitutional
Section 26 of the Act also imposes certain restrictions on transfer of vacant land even within ceding limit
It can be urged that Section 261 suffers from the same vice which was pointed out in respect of sub section 1 of Section 27 of Act in the aforesaid case of bhim Singhji vs Union of India supra by this Court
But neither in the aforesaid case nor in this case this court was or is concerned with Section 26 and as such according to me it is not necessary to express any opinion in respect of Section 26 of the Act while considering the issue involved in the present appeals
ORDER 21For the reasons given by us above we are of view that the provisions of Section 20 1 b of the Act do not permit the State Government to give exemption to the vacant in excess of the ceiling limit for the purposes of transferring the same
22In view of our conclusion as above it is not necessary to go into the further question viz if the State Government has such power in which circumstances it can be exercised and whether financial hardship such as the indebtedness of the land holder is sufficient to warrant such exemption or not and with respect to which date such indebtedness is to be assessed and in what manner and whether in the present case the said aspects of the indebtedness were investigated or properly investigated or not
For this very reason we also do not propose to go into the other question regarding the mala fides on the part of the authorities while granting permission to the firm to sell the land to the builders in question
23 Since we have come to the conclusion that the State Government has no power to grant permission to sell the land under Section 20 1 b the orders dated 6387 and 18487 granting exemption and permission to the firm for sale of the land are void ab initio having been passed without jurisdiction
Accordingly the sale deed dated 3091987 executed by the 2nd respondent firm in favour of the 3rd respondent builders is held invalid and inoperative as the respondent firm had no legal right to transfer the land in favour of the builders
We accordiigly allow the appeals and set aside the impugned order of the High Court
The respondents State of Karnataka Ms Narayanaswamy  Sons and Ms Reevajethu Builders  Developers will pay the costs to the appellants in one set
GN Appeals allowed


Summary:
The appellant was selling ice sticks
The Food inspector took samples and sent one sample to the Public Analyst who opined that it contained artificial sweeteners viz saccharin and dulcin and was therefore adulterated
A complaint was filed before the Judicial Magistrate
Appellant pleaded not guilty and exercised his right to have the sample analysed by the Central Food Laboratory
According to the report of the Central Food Laboratory the sample contained artificial sweetener identified as saccharin
The Magistrate convicted the appellant for an offence under sec
161 a read with see
71 of the Act sentenced him to suffer one year rigorous imprisonment and to pay a fine of Rs 2000 and in default to undergo imprisonment for three months
The appeal preferred by the appellant was dismissed by the Sessions Judge
The Criminal Revision petition riled before the High Court was also dismissed
Hence the present appeal
On behalf of the appellant it was contended that since the report of the Public Analyst which had found the presence of dulcin in the sample stood superseded by the report of the Central Food Laboratory which had not found the presence of dulcin the consumption of which was injurious to health under the Rules the conviction of the appellant for an offence under Section 161 A of the was not justified and that the presence of artificial sweetener like saccharin which has not been declared as injurious to health could not attract the provisions of S161A of the Act
Partly allowing the appeal this Court 708 HELD1
It would be seen from Section 161 A of the that in order to maintain a conviction under the said provision the article of food which is adulterated should fall either in one of the sub clausese to 1 of clause ia of Section 2 or should contain an adulterant which is injurious to health
The adulterated article of food sold in this case admittedly does not fall in any of the sub clauses e to 1 of Section 2ia
According to the report of Central Food Laboratory it also does not contain any adulterant declared as injurious to health 
712 E F 2However keeping in view the fact that the Article of food ice stick  sold by the appellant did not conform to the standard as prescribed in Item A0704 of Appendix B and contained an artificial sweetener saccharin it is obvious that the article of food sold by the appellant was adulterated within the meaning of Section 2iam of the Act and the same would therefore be punishable under Section 161 a i of the Act
713 C 3It cannot be said that since the appellant had been charged for an offence under Section 161 A of the Act he could not be convicted for an offence under Section 161 a i of the Act
The penalty for an offence under Section 161 a i admittedly is less than the penalty prescribed for the offence under Section 161 A which is a graver offence and therefore there is no impediment in the way of the court on the findings of the fact recorded by it to convert the conviction of the appellant from the one under Section 161 A to one under Section 161 a i of the Act notwithstanding the fact that the appellant had been charge sheeted for an offence under Section 161 A of the Act
713 E F 4Judicial notice is taken of the fact that the type of adulterated article sold by the appellant is the one generally consumed by children and it is not only illegal but even immoral to serve them with articles containing artificial sweeteners use whereof has been prohibited by the statute
Just because the appeal has remained pending here since 1985 the society cannot be made to suffer for this delay by letting the criminal go unpunished as a crime of this nature being a crime against the society at large cannot be ignored
Sympathy in such cases is totally misplaced
714 B D 5The conviction of the appellant is altered from the one under Section 161 A read with Section 71 of the Act to the one under Section 161 a i read with Section 71 of the Act and the sentence is reduced from one year 709 RI and a fine of Rs 2000 to the minimum prescribed for the said offence ie
six months RI and a fine of Rs 1000 in default of which the appellant shall suffer imprisonment for one month more
714 E