1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. J U D G M E N T State of Rajasthan Vs. Uka & Ors. (1)D.B. SPECIAL APPEAL (WRIT) No.158/2004 Alongwith State of Rajasthan Vs. Bhav Singh & Ors. (2)D.B. SPECIAL APPEAL (WRIT) No.236/2001 State of Rajasthan Vs. Ranchhod Lal & Ors. (3)D.B. SPECIAL APPEAL (WRIT) No.257/2001 State of Rajasthan Vs. Hem Singh & Ors. (4)D.B. SPECIAL APPEAL (WRIT) No.258/2001 Date of Judgment :: 10th May, 2010 P R E S E N T HON'BLE MR.JUSTICE GOVIND MATHUR HON'BLE MR.JUSTICE GOPAL KRISHAN VYAS HON'BLE DR.JUSTICE VINEET KOTHARI Mr. RL Jangid, Additional Advocate General, for the appellant. Mr. KN Joshi ] Mr. Rajesh Joshi] Amicus Curiae supporting the appellant. Mr. Vijay Bishnoi with Mr. Laxman Bishnoi, Mr. RR Nagori and Mr. MC Bishnoi, for the respondents. Mr. JL Purohit, Mr. JR Beniwal and Mr. RS Shekhawat, Amicus Curiae supporting the respondents. .... PER HON'BLE MATHUR,J. These appeals are before us being referred by a Division Bench of this Court for reconsideration of the judgment given in Asuram v. Tehsildar, Sanchore, reported in AIR 2000 Rajasthan 345. 2 To understand the issue under consideration, it may be useful to notice certain relevant statutes and the facts associated. THE RAJASTHAN TENANCY ACT, 1955 On 30.3.1949, the State of Rajasthan was formed on integration of several independent Princely States and Chief-ships with varying levels of political, economic and social developments. At the time of formation of State, the Jagirdari system was prevailing over a huge part of available agricultural land and the tenants were not having any security of tenure and fairness of rent. The agriculture being a key factor of economic and national reconstruction, the newly formed State felt it necessary to introduce and accelerate the process of land reforms, thus, on 10.10.1955 a bill to enact the Rajasthan Tenancy Act, 1955 was placed before the floor of the Rajasthan State Legislative Assembly with following statements of objects and reasons:- “Since the integration of various Sates into Rajasthan, the need for uniform Tenancy law for the whole state is being keenly felt. Very few of the integrating units had enacted tenancy laws and the diversity of conditions prevailing in different parts of Rajasthan in respect of land tenures and relations of tenants and land holders have been causing serious difficulting in administration. A 3 bill was introduced in 1952 to remove these difficulties and to save the path of agricultural progress in the State. But as the Bill had several drafting drawbacks and public opinion received on the subject required several changes in the Bill the said was withdrawn. A new Bill has been drafted and is now introduced for consideration.” On 14th day of March, 1956, the Rajasthan Tenancy Act, 1955 (hereinafter referred to as “the Act of 1955”) received assent of the President. As per preamble of the Act, it was enacted to consolidate and amend the law relating to tenancy of the agricultural lands and to provide for certain measures of land reforms and matters connected therewith. By the Act of 1955 several radical changes in the agrarian field, specially about relationship of land and tenant were introduced and those changes had their own socio economic effects, including that, every person, who was tenant of land otherwise than a sub-tenant or tenant of 'khudkasht' became khatedari tenant with heritable and transferable rights. The Rajasthan Tenancy Act abolished all payments in the form of 'lag-bag' and other cesses, prohibited premium for grant of lease, prohibited force labour on the land, made surrender of land valid only if possession is accompanied by a written application, attested by a competent authority, fixed rent in cash to be charged from sub-tenant as not more than twice the cash rent 4 payable by the tenant in chief, fixed 1/6th of gross produce as rent in kind and made ejectment possible only through the procedure established by the Act. A unique feature of the Act of 1955 is to safeguard the interest of weaker sections of the society. Sections 42, 46-A and 49-A of this Act restrict transfer of land i.e. under tenancy of Scheduled Castes and Scheduled Tribes. Looking to the nature of controversy involved in this appeal, it would be worth to quote the provisions referred above. “Section 42.- General restrictions on sale, gift and bequest – The sale, gift or bequest by a Khatedar tenants of his interest in the whole or part of his holding shall be void, if (a) ... daleted -w.e.f 11.11.1992. (b)such sale, gift or bequest is by a number of Scheduled Caste in favour of a person who is not a member of the Scheduled Caste, or by a member of a Scheduled Tribe in favour of a person who in not a member of the Scheduled Tribe. (bb)such sale, gift or bequest, notwithstanding anything contained in clause (b), is by a member of Saharia Scheduled Tribe in favour of a person who is not a member of the said Saharia tribe. 5 Section 46-A. Special provision for letting or sub- letting by members of scheduled castes and scheduled tribes- Notwithstanding anything contained in sections 44, 45 and 46, no person who is a member of a scheduled caste or a scheduled tribe shall let or sub- let the whole or any part of his holding under the said sections to any person who is not a member of a scheduled caste or a scheduled tribe. Section 49-A . Special provision for exchange by members of scheduled castes or scheduled tribes— Notwithstanding anything contained in section 48 and 49, no tenant who is a member of a scheduled caste or scheduled tribe shall have the right to exchange his holding under any of those sections for land which is included in the holding of a person who is not a member of a scheduled caste or scheduled tribe and an application under section 49 shall be rejected if it contravenes the provisions of this section.” The provisions above quoted were included under the Act of 1955 with a view to protect the tenants belonging to scheduled castes and scheduled tribes from social injustice and all forms of exploitation and i.e. for fulfilment of directive principles enshrined under Article 46 of the Constitution of India. 6 This enactment being enlisted under Schedule IXth is also having protection as per Article 31-B of the Constitution. Section 43 of the Act of 1955 provides that a usufructuary mortgage of agricultural land would stand automatically redeemed on expiry of the period mentioned therein and consideration will be deemed to have been satisfied in full without any payment whatsoever by the mortgagor. An obligation has been caste on the mortgagor to deliver possession of the mortgaged land free from all encumbrances. As regards mortgage made prior to coming into force of the Tenancy Act, provisions have been made that usufructuary mortgage of such a land shall upon the expiry of the period mentioned in the mortgage deed or 20 years from the date of execution thereof, whichever period is less to be deemed to have been satisfied in full without any payment whatsoever by the mortgagor. Sub-section (4E) of Section 43 of the Act of 1955 provides that if a mortgage, without sufficient cause, fails to put the mortgagor in possession of the property within a period of three months as specified in sub-section (4D), he, on conviction, would be punishable with imprisonment for a term which may extend to one year or fine which may extend to Rs.1000/- or both. 7 The Rajasthan Agriculture Credit Operations (Removal of Difficulties) Act, 1974 An act to make provisions to facilitate adequate flow of credit for agricultural production and development through banks and other institutional credit agencies and for matter connected therewith and/or institutional thereto came into force on 21.9.1974 in the name of “Rajasthan Agricultural Credit Operations (Removal of Difficulties) Act, 1974” (hereinafter referred to as “the Act of 1974”) with statement of objects and reasons, as follows:- “One of the main objectives of the legislation relating to social control of Banks in 1968 and the nationalisation of fourteen major Indian commercial Banks in 1969 was to ensure that adequate proportion of commercial Bank credit goes to the agricultural sector and other priority sectors. An examination of State Laws has shown that there are certain provisions therein which inhibit the entry of commercial Banks into the field of financing of agriculture. It will, therefore, be necessary to modify these laws for the purpose of enabling commercial banks to undertake financing of agriculture on a large scale. An expert group of constituted by the Reserve Bank of India to study the enactments have a hearing on commercial banks lending to agriculture suggested the modification of certain provisions in the State laws to facilitate the smooth and efficient operation 8 of commercial Banks in the sphere of agriculture credit. The expert group also suggested that instead of amending the various State laws, it would be preferable if a single consolidated legislation incorporating the various amendments suggested by it is enacted. This approach not only facilitates expeditious action but also provides for laying down a clear and unambiguous statutory frame work for the agricultural credit business of commercial Banks. Further, facilities available to the cooperatives and or Land Development Banks could be extended to other institutional credit agencies too through a separate legislation. The proposed Bill is therefore being enacted to enable commercial banks and other institutional credit agencies to serve expeditiously as an effective instrument of national policy.” The Act of 1974 undergone certain important amendments under the Rajasthan Agricultural Credit Operations (Removal of Difficulties)(Amendment) Act, 1985 with additional statement of objects and reasons, as follows:- “In order to facilitate adequate flow of credit by commercial banks to the agriculturists, Rajasthan Agricultural Credit Operations (Removal of Difficulties) Act, 1974 was enacted by the State Legislature on the basis of recommendations of the Talwar Committee constituted by the Central Government. 9 In the definitions of terms “Agriculture” and “Agriculturist”, as given in clauses (a) and (b) of Sec.2 of the said Act, landless labourers and rural artisans have been included on account of which a difficulty is being faced in getting the loans sanctioned to these categories of persons. There is also no provision at present in Sec. 13 of the Act, for the recovery of loans by the banks from the guarantors of agriculturist and through sale of his movable or immovable properties which are not charged or mortgaged. It is causing difficulty in recovering the loans. Further, there is a provision in Sec. 16 of the Act for giving loans by the commercial banks through co- operative societies, which causes obstruction to some extent in the process of giving loans by the banks. In order to overcome the above difficulties, it was felt necessary to amend the Act.” Chapter II of the Act of 1974 prescribes rights of agriculturists to alienate land/interest in land in favour of banks while obtaining financial assistance. As per Section 3 of the Act aforesaid, notwithstanding anything contained in any law for the time being in force or any custom or tradition, it shall be lawful for an agriculturist, whose rights of alienation of land or of any interest therein are restricted, to alienate the land or his interest therein, including by creation of a charge or mortgage on such land or interest in favour of a bank for the 10 purpose of obtaining financial assistance from that bank. Section 13 of the Act of 1974 relates to recovery of dues of a bank through a prescribed authority and that reads as follows:- “13.Recovery of dues of a bank through a prescribed authority.--(1)Notwithstanding anything contained in any law for the time being in force, an official of the State Government notified by the State Government as the prescribed authority for the purpose of this section may, on the application of a bank, make an order on or any agriculturist or his heir or legal representative or his guarantor, directing the payment of any sum due to the bank on account of financial assistance availed of by the agriculturist, by the sale of any land or interest therein or any other immovable property, upon which the payment of such money is charged or mortgaged or any other property in his possession: Provided that no order shall be made by the prescribed authority under this sub-section for the sale of any land or any interest therein or any other immovable property upon which the payment of money is charged or mortgaged or any other property in his possession, as the case may be, unless the agriculturist or the heir or legal representative or his guarantor of the agriculturist, as the case may be, has been given an opportunity of being heard and has 11 been served with a notice by the prescribed authority calling upon him to pay the amount due and default has been made in payment thereof for three months after the determination of liabilities by such authority. (2)Every order passed by the prescribed authority in term of sub-sec.(1) shall be deemed to be a decree of a civil court and shall be executed by him in the same manner as a decree of such court. Explanation.--For the purpose of exercising powers conferred by this sub-section, the prescribed authority shall be deemed to be a civil court. (3)Nothing in this section shall debar a bank from seeking to enforce its rights in any other manner under any other law for the time being in force.” Section 14 of the Act of 1974 vests a right with a bank to acquire and dispose of immovable property to satisfy the money due to it. In extenso, Section 14 aforesaid is quoted below:- “14.Right of a bank to acquire and dispose of immovable property.--(1)Notwithstanding anything contained in any law for the time being in force, a bank shall have power to itself acquire agricultural land or interest therein or any other immovable property which has been charged or mortgaged to it by an agriculturist in respect of any financial 12 assistance availed of by him, provided the said land or interest therein or any other immovable property has been sought to be sold by public auction and no person has offered to purchase it for a price which is sufficient to pay to the bank the money due to it. (2)A bank which acquires land or interest therein or any other immovable property in exercise of the power vested in it under sub- sec.(1) shall dispose it of by sale, within a period to be specified by the State Government in this behalf. (3)If the bank has to lease out any land acquired by it under sub-sec.(1) pending sale thereof as indicated in sub-sec.(2), the period of lease shall not exceed one year at a time and the lessee shall not acquire any interest in that property notwithstanding any provisions to the contrary in any other law for the time being in force. (4)A sale by a bank of land or interest therein in terms of sub-sec.(2) shall be in favour of persons as may be prescribed by the State Government under Sec.30 of this Act and shall be subject to any provisions of any law in force which may place restrictions on purchase of land by non-agriculturists or ceiling for acquisition of land or by a person not belonging to a scheduled caste or scheduled tribe or fragmentation of land.” The State Government while exercising the powers conferred by Section 30 of the Act of 1974, 13 framed the Rajasthan Agricultural Credit Operations (Removal of Difficulties) Rules, 1976 (hereinafter referred to as “the Rules of 1976”) and as per clause (2) of sub-section (14) of Section 5, the land acquired from a person who is a member of scheduled caste or scheduled tribe shall not be sold to persons who are not members of scheduled caste or scheduled tribe. In view of the provisions of Section 14(4) of the Act of 1974 read with Rule 5(14)(2) of the Rules of 1976, no land acquired from a member of scheduled caste/scheduled tribe can be sold to a person who is not a member of scheduled castes/scheduled tribes and further that all checks and restrictions on purchase of land by a person not belonging to scheduled castes or scheduled tribes shall be applicable. This provision under the Rules is in consonance to Section 14(4) of the Act of 1974, and also makes that workable. THE FACTS PERTAINING TO ASURAM'S CASE (AIR 2000 RAJASTHAN 345) In the case of Asuram (supra), a prayer was made to declare sub-section (4) of Section 14 of the Act of 1974 ultravires of sub-section (1) of Section 14 of the Act which restricts the sphere of transfer of land acquired by creditor of land from debtors who are members of scheduled castes/scheduled tribes to the members of scheduled castes/scheduled tribes 14 only. In the case aforesaid the argument advanced was that there is a distinction between the sales carried out under Section 13 and under Section 14 of the Act which comes within the ambit of hostile discrimination in the matters of disposal of same land on the basis of methodology adopted by the bank. While there is no provision like sub-section(4) of Section 14 in Section 13 of the Act, there is no prohibition in the sphere of transfer of property under Section 13 of the Act. The Division Bench, after considering the argument, negatived the same and held as follows:- “4.The scrutiny of two provisions makes it clear that in a sale conducted under S.13 of the Act, no proprietary interest is acquired by the creditor-Bank in the land in question and the sale conducted under S.13 of the Act is like a sale conducted by the Court in execution of a decree in which interest of the judgment-debtor involved is transferred through the agency of the Court but such transfers are governed by the rights and obligations attached to the land of the judgment-debtor which are attached under the general law. Therefore, if the interest of the judgment-debtor is transferred under S.13 of the Act by the agency of the Bank upon obtaining an order from the Tehsildar, which is executed like a decree of Civil Court, what is really transferred through auction is the interest of the judgment-debtor though there is involvement of the Bank or the auctionee (auctioneer) and in that event, the provisions of the Rajasthan Tenancy Act, 1955 15 affecting restrictions on the persons on whom interest of judgment-debtors can be transferred are automatically attracted. In contrast, a sale under S.14 of the Act takes place where the Bank being of a opinion that proper market price is not being achieved/obtained in the sale executed under S.13 of the Act, it can acquire the land itself and, thereafter, it can dispose of the land of the debtor-mortgagee. Such sale by the Bank as a matter of law is transfer of Bank's own property which has been acquired by it under S.14 of the Act. However, keeping in view the basic scheme and the constitutional mandate which protracts the interests of weaker sections of the society particularly members of SC/ST and the provisions of the Rajasthan Tenancy Act, 1955 which puts restrictions on the alienation of the interest of the members of the SC/ST alone so that the sources of such weaker sections remains within such community and it does not go out of them, therefore, by dint of sub-section (4) of S.14 of the Act, the legislative policy is maintained that interest of members of SC/ST should continue to remain with that community and it does not go out of them. In this view of the matter, we do not find anything which goes contrary to the constitutional mandate in making the provisions like S.14(4) of the Act.” THE FACTS PERTAINING TO THE PRESENT APPEAL AND THE REFERENCE MADE THEREIN A view absolutely in conflict with Division Bench judgment in the case of Asuram (supra) was taken 16 by learned Single Bench of this Court, in SBCivil Writ Petition No.1499/2002, State of Rajasthan v. Uka & Ors., decided on 14.5.2002. In this case Uka, a person belonging to Scheduled Tribes borrowed a loan from the Land Development Bank, Branch Raniwada by mortgaging 1.28 hectares of land in khasra No.339/378. He failed to pay the loan advanced, therefore, proclamation for sale of mortgaged land was issued by the bank and the land was put to auction on 19.3.1994. A person, not belonging to Scheduled Tribes, purchased the land in auction. The land was redeemed from mortgage and was entered in the name of purchaser. The Tehsildar, Raniwada moved a reference application as per provisions of Section 82 of the Rajasthan Land Revenue Act, 1956 to the Collector, Jalore on the ground that the sale aforesaid was in violation of the provisions of Section 42(b) of the Act of 1955. The Collector made a reference to the Board of Revenue by order dated 6.9.2000, but the Board of Revenue dismissed the same on 24.1.2002. A petition for writ, preferred by the State to challenge the order dated 24.1.2002 too was rejected by learned Single Judge under the judgment dated 14.5.2002. Learned Single Judge, while doing so, held as under:- “In the matter in hand, no such sale was conducted by the Khatedar tenant himself but he took some loan from the respondent No.3 which he could not pay. Consequently his land was put to for open auction by the Bank. In 17 such an open auction anybody could have participated and the highest bider was entitled to get the land. The object under Section 42 was to put an embargo by sale of Khatedar tenant of Scheduled Caste/Scheduled Tribe in favour of a person who is not a member of Scheduled Caste/Scheduled Tribe. No such embargo has been put with regard to open auction. Learned counsel relied upon Section 14 of the Rajasthan Agricultural Credit Operations (Removal of Difficulties) Act, 1974 by which also if in some open auction Bank itself purchases the interest of the agriculturist and subsequently, sells it itself then also it shall be subject to any provisions of any law in force which may place restrictions on purchase of land by non-agriculturist or ceiling for acquisition of land or by a person not belonging to Scheduled Caste/Scheduled Tribe or fragmentation of land. In the matter at hand, these provisions are not applicable because in the open auction Bank has not purchased the interest of respondent No.1.” The State of Rajasthan assailed validity, correctness and propriety of the judgment dated 14.5.2002 and also of the order dated 24.1.2002 by way of an appeal, i.e. under consideration. By the order dated 5.5.2005, the Division Bench hearing the appeal considered it appropriate to refer the matter to Larger Bench for reconsideration of the judgment 18 rendered in Asuram's case (supra), in view of the following arguments raised by learned counsel for the Land Development Bank:- (i) Sub-section(1) of Section 43 of the Act of 1955 provides that a Khatedar tenant may hypotheticate or mortgage his interest in the whole or part of his holding, for the purpose of obtaining loan from the Land Development Bank of the State Government or Development Bank or Cooperative Societies or any scheduled bank or any other institution notified by the State Government on its behalf. A Khatedar belonging to Scheduled Castes or Scheduled Tribes, thus, can hypotheticate or mortgage his holding in favour of the bank or financial institutions for the purpose of obtaining financial assistance and if such Khatedar tenant fails to repay the loan, the bank or the financial institution possess every right to realise the loan amount by putting the land in question for sale through public auction. Such land can be sold to any person irrespective of the category of his belonging.