Appeal No 1718 of 1984
From the Order dated 171183 of the Customs Excise and Gold Control Appellate Tribunal New Delhi in Appeal No ED SB T 33878 D Order No 69883 D
AK Ganguli B Sen AK Chitale BRL Iyengar J Ramamurti Mrs Radha Rangaswami P Parmeswaran CV Subba Rao C Ramesh Virender Kaushal Praveen Kumar Vivek Gambhir SK Gambhir PH Parekh BN Agarwal AV Phadnis Kh
Nobin Singh M Veerappa Ashok Sagar Ravinder Narain DN Misra For JBD  Co EC Vidyasagar for LR Singh R Vaigai and RK Maheshwari for the appearing parties
The Judgment of the Court was delivered by BP JEEVAN REDDY J
With a view to induce the Sugar Factories in the country to produce more and also to commence their operations early in the year the Government of India have been issuing notifications from time to time providing for rebate in the Excise Duty in certain circumstances
These notifications were issued by the Central Government 763 in exercise of the power conferred by Sub Rule 1 of Rule 8 of the Central Excise Rules 1944
We are concerned in these appeals with four such notifications namely 1 the Notification dated 28972 applicable to the Sugar Year 1972 73 2 Notification dated 41073 applicable to the Sugar Year 1973 74 3 Notification dated 121074 applicable to the Sugar Year 1974 75 and 4 the Notification dated 30976 applicable to the Sugar Year 1976 77 Sugar year  means the year commencing on and with 1st October and ending with the 30th of September of the following year
The interpretation of these notifications is involved in this batch of appeals
In so far as it is material the notification dated 28972 and the notification dated 41073 are similar
So are the notifications dated 121074 and 30976
It would be appropriate if we set out the notification dated 28972 in its entirety Notification No 203172 dated 2891972 In exercise of the powers conferred by sub rule 1 of rule 8 of the Central Excise Rules 1944 the Central Government hereby exempts sugar described in column2 of the Table below and failing under sub item 1 of Item No1 of the First Schedule to the 1 of 1944 from so much of the duty of excise leviable thereon as is specified in the corresponding entry in column 3 of the said Table
TABLE section No Description of Sugar Duty of Excise 1 2 3 1
Sugar produced in a factory during the Rupees period commencing from the 1st day of forty per October 1972 and ending with the 30th quintal day of November 1972 which is in excess of the quantity of sugar produced during the corresponding period in 1971
764 2Sugar produced in a factory during the period commencing from the 1st day of December 1972 and ending with the 30th day of April 1973 Rupees which is in excess of 115 of the quantity twenty of suggar produced during the period commencing per from the 1st day of Decmber 1971 and ending with quintal the 30th day of April 1972
3Sugar produced in a factory during the period commencing from the 1st day of May 1973 and Rupees ending with 30th day of June 1973 which is in twenty excess of the quantity of sugar produced per during the corresponding period in 1972
quintal 4Sugar produced in factory during the period commencing from the 1st day of July 1973 and ending with the 30th day of September 1973 Rupees which is in excess of the quantity of sugar twenty produced during the corresponding period in 1972
per quintal Provided that the exemption under this notification shall not be admissible to a factory a which did not work during the base period or b which had only a trial run in the base period or c which commences production for the first time on or after the 1st day of October 1972  Provided further that in computing the production of sugar during the periods mentioned in column 2 of the said Table a the data as furnished in Form RG 1 prescribed in Appendix I to the Central Excise Rules 1944 or in such other record as the Collector may prescribed under rule 53 or rule 173G of the said rules shall be adopted  765 b any sugar obtained from reprocessing of sugarhouse products left over in process at that end of the base period or earlier shall b e taken into account  and c any sugar obtained by refining gur or Khandasari sugar or any sugar obtained by reprocessing of defective or damaged sugar or brown sugar if the same has already been included in the quantity of sugar produced shall not be taken into account
Explanation I A factory shall be deemed to have had a trial run during the base period only if on first going into production the period during which actual crushing was done during the base period was less than 40 per cent of the average duration of the season in the State in which the factory is situated
Explanation 11 In this notification the expression base period  means the period commencing from the 1st day of October 1971 and ending with the 30th day of September 1972
 Though the Sugar Year extends over a period of twelve months commencing from 1st of October the period commencing with 1st December and ending with 30th April is said to be the peak production period
Most of the sugar factories were commencing their operations only in the month of December
Either with a view to induce these sugar factories to produce more or with a view to induce them to commence their operation early in the sugar year the rebate provided for producing sugar in the months of October and November in excess of the corresponding period in the previous sugar year was kept relatively high
The scheme of the notification dated 28972 appears to be this 1 If during the months of October and November 1972 in the Sugar Year 1972 73 a factory produced sugar in excess of the quantity of sugar produced by it during the months of October November 1971 such factory was granted rebate in the Excise Duty at the rate of rupees forty per quintal in so far as the excess production is concerned
2 Rebate for the period 1st December 1972 to 30th April 1973 was 766 available at the rate of rupees twenty per quintal provided the production of sugar during the said period was in excess of 115 of the quantity of sugar produced by the said factory during the corresponding period in the previous Sugar Year in so far as the excess production is concerned
3 For the months of May and June 1973 rebate at the rate of rupees twenty per quintal was available provided the factory produced more sugar than it produced during the corresponding months in the previous Sugar Year
The said rebate was available again only with respect to the excess production
4 For the period commencing from 1st July 1973 and ending with 30th of September 1973 rebate was available at the rate of rupees twenty per quintal provided the factory produced sugar in excess of the quantity produced during the corresponding period in the previous Sugar Year
This rebate too was confined to the excess production
However the benefit of the rebate mentioned in any of the clauses aforesaid was not available to a factory which inter alia did not work during the base period 
The expression base period  was defined in Explanation 11
It meant the period commencing from the 1st day of october 1971 and ending with the 30th day of September 1972 Previous Sugar Year
The sugar factories concerned with the sugar year 1972 73 did not produce any sugar in one or the other of the four blocks mentioned in the table contained in the Notification in the base year previous sugar year
During the current sugar year however they produced certain quantity of sugar during that block period
To be more precise take factory A
It produced 1000 quintals of sugar in the months of October November 1972 Block period 1 but had not produced any sugar whatsoever in the corresponding period October November  1971 in the base year
The question arose whether in such a situation Factory A was entitled to the benefit of rebate provided in Clause 1 of the Table contained in the aforesaid notification with respect to the said 1000 quintals  The contention of the factory was that it was so entitled whereas according to the Revenue it was not
It is brought to our notice that even before the controversy actually arose between the parties the Committee of the Sugar Mill Owners  Association addressed a letter to the Ministry of Finance Government of 767 India seeking a clarification as to the meaning and purport of the aforesaid notification
The letter written by the Committee read as follows I am to refer to the Notification No GSR dated 28th September 1972 issued by the Union Ministry of Finance Department of Revenue  Insurance New Delhi on the above subject copy enclosed for ready reference
In this connection the Government had issued a similar Notification on 13th Oct 1971 on the same subject
On this Notification in response to an enquiry made by the Committee of the Association the Board had clarified as per their letter No F No1433 71CX 1 dated 26th November 1971 that a factory which had worked during the base period ie during the period commencing from 1st day of October 1970 and ending with 30th day of September 1971 though it had not worked during the period from 1st October 1970 to 30th November 1970 and the production during this period was nil would be entitled to the excise rebate at the notified rate on its entire production achieved during the month of October and November 1971
As th e Notification issued this year is also on similar lines the Committee presume that the clarification given by the Board last year will apply to the Notification issued this year also ie where a factory has worked in the base period 1st October 1971 to 30th September 1972 it will be entitled to the full rebate on its entire production during the various periods mentioned in the Notification although during the corresponding periods in the last season the production may be nil
The Committee shall be glad if you kindly confirm whether their above presumption is correct
Thanking you for a line in reply 
In this letter dated 1st November 1972 the Ministry of Finance intimated the Committee that the presumption made by the Committee is confirmed in respect of the established factories only
Later on however the Government of India revised their opinion which has led to the present controversy
768 It is brought to our notice that the sugar factories are governed by and follow the procedure prescribed by Rule 173 G of the Central Excise Rules which rule occurs in Chapter VII A Removal of Excisable Goods on Determination of Duty by producers Manufacturers or Private WareHouse Licencees
 Rule 173 G requires every assessee to keep an accountcurrent with the Collector separately for each excisable goods in the suc form and manner as the Collector may require
The rule requires the assessee to make credit periodically in such account current by cash payment into the treasury so as to keep the balance in such account cumrent sufrent to cover the duties due on the goods intended to be removed at any time
Every such assessee has to pay the duty determined for each consignment by debit to such account current before removal of goods
The Rules further require every assessee to furnish a monthly return in the prescribed form on the basis of which assessment is completed by the appropriate officer
Coming back to the facts of these appeals the claim for rebate made by these factories was allowed in the first instance but later proceedings were initiated to recover back or re adjust as the case may be the benefit already allowed
This was the phenomenon all over the country
These disputes were carried to High Courts
The main dispute was the same as indicated hereinabove
The factory has produced a certain quantity of sugar in block period i or for that matter any other block period in the sugar year 1972 73 but had not produced any sugar whatsoever in the corresponding period in the base year previous sugar year but has produced some quantity of sugar during the base year as such whether such factory is entitled to the rebate prescribed in clause i or such other clause as may be applicable of the said Notification  Since the Notifications for 1972 73 and 1973 74 are more or less similar disputes raised before High Courts pertained to both these years
Indeed the said issue is common to the other two notifications concerned herein as well with some difference as we shall indicate at the proper stage
It appears that almost all the High Courts except Karnataka have held in favour of the factories
In Patna High Court there appears to be a conflict of opinion
Karnataka High Court has however held in favour of the Union of India
The first of the reported decisions is of the Andhra Pradesh High Court Chinnappa Reddy J as he then was in Etikoppaka Co operative 769 Agricultural Society vs Union of Inida The reasoning in the said Judgment has been followed by most of the other High Courts
See  1982 59 ELT 409 AHahabad   Haryana and Shri Ganguli learned counsel for the Union of India contends as follows  Language of the Notifications pertaining to the year 1972 73 and 1973 74 is quite clear and unambiguous
The benefit of rebate is available only where the sugar produced in a factory during the period commencing from the 1st day of October 1972 and ending with the 30th day of November 1972 which is in excess of the quantity of sugar produced during the corresponding period in 1971 to take clause i of the Notification relating to 1972 73
The clause contemplates and is based on the premise that sugar is produced during October November 1972 as well as October November 1971
If no sugar was produced during the corresponding period in the previous sugar year October November 1971 the very clause is inapplicable
The contention of the factory owners which has no doubt been accepted by a majority of High Court does voilence to the plain language of the clause
The interpretation placed by the factoryowners leads to certain absurd consequences
Learned counsel gave more than one illustration to emphasise his submission
Take a case where a factory has produced one thousand quintals of sugars in October November 1971 and has also produced one thousand quintals in October November 1972
In such a situation the factory would not get any rebate in terms of the notification dated 28972 whereas another factory which may not have produced any sugar whatsoever in October November 1971 but has produced one thousand quintals of sugar in October November 1972 gets the rebate at the rate of rupees forty per quintal
This would really amount to says the counsel punishing the first factory more efficient factory for producing the sugar in the previous year And to rewarding the second one the indolent factory which did not produce any sugar during OctoberNovember 1971
Another illustration given by the learned counsel is this a factory had produced five thousand quintals of sugar during the period 1st December 1971 to 30th April 1972 it produces the very some quantity again during the period 1st December 1972 to 30th April 1973 such a factory would not be entitled to any rebate under clause 2 of the said notification but another factory which had produced say just 1000 quintals during the period December 1 1971 to April 30 1972 but produces 770 five thousand quintals during the period December 1 1972 to April 30 1973 would get the benefit of rebate on 4000 quintals
This again amounts to says the counsel rewarding the inefficient and indolent and punishing the efficient
The learned counsel seeks to reinforce his argument by referring to clause 2
It relates to the period 1st December 1972 to 30th April 1973
Rebate in the sugar produced during this period is available only if it is in excess of 115 per cent of the quantity of sugar produced during the period December 1 1971 to April 30 1972
If the production is nil during the corresponding period in the previous sugar year asks the counsel how is one to work out 115 of it
What is 115 of zero  asks he
For all these reasons counsel says nil production cannot be equated to the quantity of sugar produced  in clause 1
Counsel also says that Clause 1 of the first Proviso in the said notification should be harmonised with the several clauses mentioned in the Table and that no interpretation should be adopted which renders any part of the said notification superfluous
We find ourselves unable to agree with the learned counsel for the Union of India
While we agree that the several clauses in the Notification must be read together harmonised and reasonably understood we cannot also ignore the underlying object and purpose of the notification
We Also agree that an interpretation which leads to absurd consequences should be avoided
Even so we are afraid we cannot agree with the learned counsel
The object behind the notification was evidently not only to induce the factories to produce more sugar but also to induce them to start their production early in the sugar year
The object appears to be also to induce the factories to keep on producing the sugar all the year round which they may perhaps not have done otherwise
Running the factories during the off season we are told off season means October November period and then again the period from May June to September may have its own problems which may increase the cost of production
Be that as it may the main issue is whether the words  the quantity of sugar produced during the corresponding period  do not take in the case of a factory which has not produced any sugar whatsoever during the relevant corresponding period  On a consideration of the rival points of view we are of the opinion that it does take in
Holding otherwise would have this absurd consequence  a factory which has produced say just one quintal of sugar during the relevant corresponding period and has produced 1000 quintals during October November 1972 would qualify for the rebate on 999 quin 771 tals while another factory which has not produced any sugar nil production but has produced 1000 quintals during October November 1972 would not qualify
How does this interpretation advance the purpose of the notification is difficult to appreciate
Coming to the second illustration given by the learned counsel we must say that the idea behind the said notification is to induce the manufacturers to produce more in the current sugar year than what they have produced in the previous sugar year or during the previous corresponding period in the previous sugar year as the case may be
If this is the object there is nothing absurd in saying that a factory which has produced five thousand tons during December 1 1971 to April 30 1972 and produces the
very same quantity during the period December 1 1972 to April 30 1973 does not qualify for rebate under clause 2
There is no reason or occasion for granting him any rebate
But where a factory has not produced any sugar or has produced a particular quantity of sugar during the said period in the previous sugar year but produces a larger quantity during the said period in the current sugar year it must be rewarded
It may be remembered that no manufacturer produces sugar merely for the sake of rebate
Rebate is an inducement an additional attraction
It is not as if without rebate provided by these notifications no one would have produced sugar
We are also unable to see any difficulty in operating clause 2 of the said notification
There is no arithmetical difficulty in working out 115 of zero it is zero
What applies to clause 1 applies equally to clauses 2 3 and 4
Our understanding is reinforced and supported by clause a of the first proviso
It says that the benefit of the said rebate would not be available to a factory which did not work during the base period
 Why does it say so What is its meaning and implication It is only that the factory need not necessarily have worked during each of the corresponding periods in the base year it is enough if it has worked in the base year
We may point out that a majority of the High Courts in the country have adopted the very same interpretation as has been placed by us
It is then argued by the learned counsel for the appellant that exemption notifications should be strictly concluded
There is no quarrel with the proposition but there is another equally valid principle that such notifications should be given their due effect keeping in view the purpose 772 underlying
We must reiterate that no factory owner would keep his factory idle during a particular period only with a view to produce sugar during the same period in the next sugar year and earn rebate in the next year
More particularly it can not reasonably be expected that a factory owner would deliberately keep his factory idle during the peak production period December to April only with a view to produce sugar during that period next year and earn rebate in such next year
It would be unrealistic to say so
Actually these notifications were being issued every year confined to that year
They were being issued just on the eve of the sugar year or a few days after the commencement of the sugar year and there were variations in the relevant clauses from year to year
Construed realistically we see no room for any absurdity resulting from our interpretation  The case of October November appears to be rather an exception
Normally it appears no factory owner commenced the production of sugar in these months because of several unfavorable factors
Indeed these unfavorable factors appear to be present to a large extent even during the months June to September
These notifications were evidently meant to compensate the factory owners for producing during these months as well
As stated already one must proceed on the assumption that every industrialist and businessman would ordinarily like to produce as much more as possible since normally speaking more production means more profits
For the above reasons we are of the opinion that the interpretation placed upon the said notifications by the majority of the High Courts is the correct one
We do not agree with the view taken by the Karnataka High Court in its Judgment under appeal in Civil Appeal Nos 3831 32 of 1988
For the same reason we do not also agree with the view taken by the Patna High Court in Civil Writ Jurisdiction Case No 865 of 1966
Now coming to the Notifications for the years 1974 75 and 1976 77 the concept of base year is not to be found here otherwise they are similar to those relating to 1972 73 and 1973 74
In the notification dated 121074 relating to the sugar year 1974 75 the sugar year is divided into two blocksperiods
The first block comprises October and November 1974 whereas the second block takes in December 1974 to September 1975
Here too the question is identical to that arising in the years 1972 73 and 1973 74
The answer too will naturally be the same
773 In view of the aforesaid conclusion it is not necessary for us to go into the other questions raised by the factory owners except the following There is a minor controversy with respect to the working of Clause 2 in Notification No 14674 dated 121074 relating to the sugar year 1974 75
Clause 2 the table contained in the notification reads as follows TABLE No Description of Sugar Duty of excise 1 2 Free Sale Levy of Sugar Sugar 3 4 1     2
Sugar produced in a factory during the period commencing on the 1st day of December 1974 and ending with the 30th day of September 1975 which is in excess of the average production of the corresponding period of the preceding five sugar years that is a on excess production upto Rs 20 per Rs 5 per 75 quintal quintal b on excess production on the Rs 40 per Rs 10 per next 10 quintal quintal c on excess production on the Rs501 per Rs 14 per next 10 quintal quintal d on excess production on the Rs60 per Rs 18 per next 10 quintal quintal e on excess production beyond Rs 82 per Rs 22 per 375 quintal quintal  Mr Ganguli learned counsel for the Union of India says that some of the Courts have applied the percentages mentioned in sub clauses a to e to the excess production and not to the average production of the preceding five sugar years
We may take an illustration to explain what the learned counsel says
Take a case
where the average production of a factory during the corresponding period December 1 to September 30 of 774 the preceding five sugar years is 1000 quintals
That factory produces 2500 quintals during the period December 1 1974 to September 30 1975
In such a case the ascending percentages mentioned in sub clauses a to e of clause 2 have to be applied for working out the rebate
According to us it must be done in the following manner keeping in mind that the basis for these percentages in the average production of the previous five years and not the excess production
Out of 2500 quintals produced during the said period in the current sugar year December 1 1974 to September 30 1975 the average of the five previous sugar years ie 1000 quintals should be deducted first which means the excess production during the current year is 1500 quintals
75 of 1000 quintals is 75 quintals
On this quantity of 75 quintals the rate of rebate as per sub clause a will be Rs 20 per quintal in the case of free sale sugar and Rs 5 per quintal in the case of levy sugar
Next 10 of excess production means 100 quintals which would be eligible for rebate under sub clause b at the rate of Rs 40 per quintal in the case of free sale sugar and Rs 10 per quintal in the case of levy sugar
The next 100 quintals would be eligible for rebate under sub clause c at the rate of Rs50 per quintal in the case of free sale sugar and Rs 14 per quintal in the case of levy sugar
Then again the next 100 quintals would be eligible for rebate under sub clause d at the rate of Rs 60 per quintal in the case of free sale sugar and Rs 18 per quintal in the case of levy sugar
The balance of 1125 quintals would qualify for rebate under sub clause e at the rate of Rs 82 per quintal in the case of free sale sugar and Rs 22 per quintal in the case of levy sugar
This is the interpretation and understanding contended for by Shri Ganguli and we must say that none of the counsel for the factory owners  disputed the same
It is accordingly directed that the above method shall be followed in working out clause 2 of the notification dated 121074
Accordingly all the civil appeals except Civil Appeal Nos
3831 32 of 1988 fail and are dismissed
Civil Appeals No 3831 32 of 1988 are allowed
The authorities will take action in accordance with this judgment
There will be no order as to costs
VPR CA Nos 3831 3288 allowed
Rest of the appeals dismissed


Summary:
The second respondent a partnership firm was carrying on the business of manufacturing and selling polished granites
It was running its factory in a small portion of the land owned by it and the rest of the land was vacant when the Urban Land Ceiling  Regulation Act 1976 was made applicable to that area
The firm made an application to
the State Government for exemption of the vacant land from the provisions of 715 716 the said Act and the exemption was granted subject to certain conditions
The Competent Authority under the Act came to the conclusion that there was some excess vacant land and directed the publication of a notification us 101 of the Act for acquisition of the same
Later the firm made an application to the State Government for permission to sell the vacant land to the third respondent builders mainly on the ground that the firm had been incurring huge losses in its business
On 631987 the State Government permitted the firm to sell the land to the builders only to the extent of 16194 sq mtrs
Again the firm riled another application to transfer the remaining 3444 sq mtrs
of land to the builders and on 1841987 the State Government permitted the same subject to certain conditions
Consequently by a sale deed dated 3091987 the firm entered into a deed of absolute sale with the builders for sale of the entire vacant land
Writ Petitions by way of Public Interest Litigation were riled in the High Court challenging the exemptions granted by the State Government for declaring the sale deed void and inoperative and for acquiring the land for the weaker sections
A Single Judge allowed the Writ Petitions and gave certain directions including sale of plots to be carved out from the land and only such number of plots as would be necessary to discharge the debts of the firm were to be sold and the remaining portion of the vacant land was to be acquired under the Act
He also held that there were no mala fides in the State Government granting exemptions by its orders date 631987and 1841987
Against the decision of the Single Judge appeals were preferred before the Division Bench of the High Court and the Division Bench set aside the findings as well as the direction given by the Single Judge
Aggrieved by the Judgment of the Division Bench the appellants preferred the present appeals
Allowing the appeals this Court HELD BY THE COURT
IIThe provisions of Section 201b of the Urban Land Ceiling and Regulation Act 1976 do not permit the State Government to give exemption to the vacant land in excess of the ceiling limit for the purposes 717 of transferring the same
757 C 12The orders dated 631987 and 1841987 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 invalid and inoperative as the respondent firm had no legal right to transfer the land in favour of the builders
757 F G 13In view of the above conclusions it is not necessary to go into the questionsas to whether the State Government has the power to grant exemption thecircumstances in which 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 the date on which such indebtedness is to be assessed and in what manner and whether in the present case the said aspects of the indebtedness were properly investigated or not for this very reason there is no need to go into the other question regarding the mala fide on the part of the authorities while granting permission to the firm to sell the land to the builders in question
757 D E Per Sawant J 1The provisions of Section 201b of the Urban Land Ceiling  Regulation Act 1976 do not permit the State Government to exempt vacant land in excess of the ceiling limit for the purposes of transfer
753 B 2The 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 Government under the Section is only to exempt certain excess vacant lands from the operation of the provisions of Sections 3 to 19 of Chapter 111 none of which refers to the subject of transfer or 718 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 26 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 condition s laid down there
It cannot be suggested that in defiance of the said provisions Section 201b vests power in the State Government to sanction sales of excess vacant lands with or without building thereon
Under Section 201 b the State Government can only exempt such excess vacant land from being acquired by it
The Government cannot permit its transfer when the Act does not even by implication authorise 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
746 C H 747 A 3
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 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
747 E F Maharao Sahib Shri Bhim Singhji vs Union of India  referred to
Since as per the definition of person in Section 2i the said provision viz S201 a 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
One is left only to speculate on the subject
The 719 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 201 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 disproportionateto 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
The classification of the owners of land for this purpose between debtors and 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
748 B H 749 Al Thakorbhai Dajibhai Desai vs State of Gujarat AIR 1980 Guj
1891 overruled
5The exemption which is granted under Section 201b has to be supported by reasons to be recorded in writing
This requirement also contemplates an exemption which is related to and promoted by the use or better use of the land
If it is the financial hardship which was under the contemplation of the legislature them 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
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 720 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
749 E G 6It cannot be said that the legislature which places restrictions on the transfer of the land within the ceiling limit would at the same time give a carte blanche for the sale of the land in excess of the ceiling limit
For it would mean that the State Government cannot have an option to purchase such land and that the sale can be made by the holder of the excess land at any price that he chooses
Such a reading of Section 20ib would militate against one of the objects of the Act viz to prevent speculation and profiteering in the sale and purchase of land
Moreover 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 201b do not in any way mitigate the discrimination
When the statute itself places specific restrictions under Section 26 on the sale of land within the ceiling limit it is not possible to reach a conclusion 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 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 201b 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
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 201b itself for the first option of the State Government to purchase it
It cannot be said that by not making such provision either in Section 201b 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 721 speculation and profiteering the very evils which the Act intended to curb A 750 E H 751 A C 7The 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
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 that the legislature did not want the 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 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 accept that there are two provisions viz Section 201b and Section 27 operating at the same time in the same area
Also there is nothing either in Section 201b or Section 27 to exclude the operation of Section 27
751 G H 752 A Maharao Sahib Shri Bhim Singhji etc
vs Union of India 8Section 28 does not make any reference to the transfer permitted by the State Government under Section 201 b
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 201b whereas the holder of similar land 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
752 E G 9If 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 722 place such conditions as are inconsistent with the provisions of Sections 29 and 30 it would create two sets of lands one where no restrictions are applicable to the 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 Section 29 and 30 would be applicable
752 G H 753 A Per NP Singh J Concurring 1The 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 that object will be defeated if the power under Section 201 of the Act is 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
753 C D 2Under Indian conditions the 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
When different provisions take into consideration the lands already transferred by the holder between the period 17th February 1975 as specified in sub
4 of S4 and the appointed day 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 201 b permission should be granted to holders of such excess lands to transfer such lands to third parties in order to meet their financial liabilities
753 G H 754 A F 3If 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 for the construction of dwelling units for weaker section to 723 serve a public cause the framers of the Act could not have conceived the grant of exemption under Section 201b to the holder of the excess land only to serve his interest by selling such excess lands
754 H 755 A F 4If 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 cannot be said that even in such transfers the dominant purpose of the legislation to prevent the concentration of urban land in hands of few persons is nonetheless 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
755 B D 5If the vacant lands which have vested in the State are also to be disposed of as stipulated under S23 strictly keeping in view the spirit and object or the Act exemption us201b cannot be granted to holders of such lands to dispose of the lands in the manner they like to the persons they prefer at 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
756 D E 6This Court has already 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 was struck down being unconstitutional
Section 26 of the Act also imposes certain restrictions on transfer of vacant land even within ceiling limit
It can therefore be stated that Section 261 suffers from the same vice
But neither in that case nor in this case this court was or is concerned with Section 26
As such 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
756 G H 757 A B Maharao Sahib Shri Bhim Singhji etc
vs Union of India  Ors  referred to