Case: State Bank of India Vs. Special Secretary Land and Land Revenue and Reforms and Land and Land Utilisation Deptt. of W.B. and Others

1. These two appeals are filed on a certificate granted by the High Court of Calcutta under Articles 133 and 134-A of the Constitution, certifying that the question whether a vacant land held by a bank under a private trust is entitled to exemption under Section 19 of the Urban Land (Ceiling and Regulation) Act, 1976, for short the Act involved in the cases, needs to be decided by this Court 2. Facts in Civil Appeal No. 3573 of 1988 areThat certain David Platt Sunderdale (to be called David) held and possessed property No. 350, Netaji Subhash Chandra Bose Road, Tollygunge, Calcutta Comprised a total extent of 4208.04 square metres. The competent authorities under the Act found that extent to be in excess of ceiling area by 1933.02 square metres. State Bank was an executor/trustee under a will of David for that property, was issued a notice by the competent authorities on 20-5-1981 calling for the filing of a draft statement under Section 8(1) of the Act. But, the State Bank filed an application before the competent authority claiming exemption of the property under Section 19(1)(iv) and Section 20 of the Act. However, when that application was rejected and the order of rejection was upheld by Higher Forums under the Act, the same were impugned in a writ petition filed by the State Bank in the High Court of Calcutta. That writ petition was allowed by a learned Single Judge of that High Court by his order dated 21-3-1986 because of his view that the State Bank was entitled to exemption under Section 19 of the Act. The appeal, preferred against that order of learned Single Judge was allowed by the Division Bench of the same Court and dismissed the writ petition. The judgment of the Division Bench made in appeal has given rise to Civil Appeal No. 3573 of 1988 filed by the State Bank by obtaining a certificate therefor from High Court3. Facts in Civil Appeal No. 3574 of 1988 areCertain Ajit Kumar Banerjee (to be called Banerjee) owned a property bearing No. 23A/102-H, Diamond Harbour Road of a total area of 4208.0 square metres. The competent authority under the Act when found that the vacant land of the property exceeded the permitted ceiling area, it issued a notice under Section 8(1) of the Act, calling upon the State Bank which was an executor/trustee in respect of that property under a will of Banerjee, to file draft statement. But the State Bank made an application claiming exemption under Section 19(1)(iv) and Section 20 of the Act. However, when that application was rejected by the competent authority, the order of rejection was challenged by the State Bank in a writ petition filed in the High Court. The said writ petition was allowed by a learned Single Judge of the High Court finding that the State Bank since held the lands as a trustee, exemption in Section 19(1)(iv) of the Act was attracted. But appeal No. 375 of 1986 filed against the orders of the learned Single Judge, were allowed by the Division Bench of the High Court by its judgment dated 12-4-1988. The Division Bench found that the lands held by the Bank for the benefit of either a residuary legatee or for beneficiaries-certain private individuals, did not attract the exemption. Therefore, the State Bank, the trustee under private trust, was not entitled to claim exemption in respect of vacant lands of the Trust under Section 19(1)(iv), inasmuch as acceptance of such claim, could lead to ridiculous and anomalous situation. That judgment of the Division Bench of the High Court rendered in appeal of the State has given rise to Civil Appeal No. 3574 of 1988 filed by State Bank by obtaining a certificate therefor from the High Court 4. Dr Shankar Ghosh, the learned Senior Counsel for the common appellant, the State Bank, contended that Section 19, which envisages exemption of the public properties held by the public institutions, private properties held by the public institutions and private properties held for public purposes also envisages exemption of private properties held for private trusts. The instant cases, according to him, fall under the last category. The State Bank, it was his contention, although held lands as an executor for the benefit of certain private beneficiaries; in law it held the lands as trustee-owner and as such the exemption under Section 19(1)(iv) was attracted. In support thereof he sought to place reliance on a judgment of this Court in W.O. Holdsworth v. State of U.P. Shri R.F. Nariman, the learned Senior Counsel, who sought to support the contentions of learned counsel for the State Bank, urged that the land, if held by a private trust for a public charitable purpose, it attracts the exemption envisaged under provisions of Section 19(1) of the Act. That being so, it was submitted that the trust created by Banerjee for a public charitable purpose attracts the exemption 5. The question which, in the light of the said arguments, arises is, whether any of the exemptions provided for under Section 19 of the Act attracted to vacant land of a trust created by a private individual, if a bank accepts administration of such trust and becomes a Trustee in the course of carrying on its permitted commercial activity. Section 19 which bears on the question reads "19. (1) Subject to the provisions of sub-section (2), nothing in this chapter shall apply to any vacant land held by - (i) the Central Government or any State Government, or any local authority or any Corporation established by or under a Central or Provincial or State Act or any government company as defined in Section 617 of the Companies Act, 1956;(ii) any military, naval or air force institution; (iii) any bank Explanation. - In this clause, "bank" means any banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949, and includes - (a) the Reserve Bank of India constituted under the Reserve Bank of India Act, 1934; (b) the State Bank of India constituted under the State Bank of India Act, 1955; (c) a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959; (d) a corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970; (e) the Industrial Finance Corporation of India, established under the Industrial Finance Corporation Act, 1948, the Life Insurance Corporation of India, established under the Life Insurance Corporation Act, 1956, the Unit Trust of India, established under the Unit Trust of India, Act, 1963, the Industrial Development Bank of India, established under the Industrial Development Bank of India, Act, 1964, the Industrial Credit and Investment Corporation on India, the Industrial Reconstruction Corporation of India and any other financial institution which the Central Government or the State Government concerned may, by notification in the Official Gazette, specify in this behalf; (iv) any public charitable or religious trust (including wakf) and required and used for any public charitable or religious purposes Provided that the exemption under this clause shall apply only so longer as such land continues to be required and used for such purposes by such trust; (v) any cooperative society, being a land mortgage bank or a housing cooperative society, registered or deemed to be registered under any law relating to cooperative societies for the time being in force;Provided that the exemption under this clause, in relation to a land mortgage bank, shall not apply to any vacant land held by it otherwise than in satisfaction of its dues; (vi) any such educational, cultural, technical or scientific institution or club not being a Corporation established by or under a Central or Provincial or State Act referred to in clause (i) or a society referred to in clause (vii) as may be approved for the purposes of this clause by the State Government by general or special order, on application made to it in this behalf by such institution or club or otherwise Provided that no approval under this clause shall be accorded by the State Government unless that Government is satisfied that it is necessary so to do having regard to the nature and scope of the activities of the institution or club concerned, the extent of the vacant land required bona fide for the purposes of such institution or club and other relevant factors; (vii) any society registered under the Societies Registration Act, 1860, or under any other corresponding law for the time being in force and used for any non-profit and non-commercial purpose; (viii) a foreign State for the purpose of its diplomatic and consular missions or for such other official purposes as may be approved by the Central Government or for the residence of the members of the said missions; (ix) the United Nations and its specialised agencies for any official purpose or for the residence of the members of their staff; (x) any international organisation for any official purpose or for the residence of the members of the staff of such organisation Provided that the exemption under this clause shall apply only if there is an agreement between the Government of India and such international organisation that such land shall be so exempted(2) The provisions of sub-section (1) shall not be construed as granting any exemption in favour of any person, other than an authority, institution or organisation specified in sub-section (1), who possesses any vacant land which is owned by such authority, institution or organisation or who owns any vacant land which is in the possession of such authority, institution or organisation Provided that where any vacant land which is in the possession of such authority, institution or organisation, but owned by any other person, is declared as excess vacant land under this Chapter, such authority, institution or organisation shall, notwithstanding anything contained in any of the foregoing provision of this Chapter, continue to possess such land under the State Government on the terms and conditions subject to which it possessed such land immediately before such declaration Explanation. - For the purposes of this sub-section, the expression to possess vacant land means to possess such land either as tenant or as mortgagee or under a hire-purchase agreement or under an irrevocable power of attorney or partly in one of the said capacities and partly in any other of the said capacity or capacities." "To hold" is defined under Section 2(l) thus - "(l) to hold with its grammatical variations, in relation to any vacant land, means - (i) to own such lands; or (ii) to possess such land as owner or as tenant or as mortgagee or under an irrevocable power of attorney or under a hire-purchase agreement of partly in one of the said capacities and partly in any other of the said capacity or capacities Explanation. - Where the same vacant land is held by one person in one capacity and by another person in another capacity, then, for the purposes of this Act, such land shall be deemed to be held by both such persons." * The said provisions in Section 19 if read with definition of "to hold", makes it clear that the vacant land owned or possessed as owner or in certain other capacities by Central Government or others specified in sub-section (1) of the section are exempt from the applicability of the provisions in Chapter III of the Act. While clause (i) in sub-section (1) mentions Central Government or State Government or local authority or corporation established by or under a statute or a government company under Companies Act, 1956 as those falling in exempted categories, clause (ii) thereof mentions military, naval or air force institutions as those falling in exempted categories. So also, clause (iii) thereof mentions banks falling within the meaning of the explanation given thereto as those which fall in exempted categories 6. Under sub-section (1) of Section 3 of the State Bank of India Act, 1955 (SBI Act for short) the State Bank of India is constituted to carry on the business of banking and other business in accordance with the provisions of that Act and for the purpose of taking over the undertaking of the Imperial Bank. Under sub-section (1) thereof, the State Bank is empowered to acquire and hold property, whether movable or immovable, for the purpose for which it is constituted and to dispose of the same. Section 33 thereof states that, subject to the other provisions contained in this Act, SBI may carry on and transact the business of banking as defined in clause (b) of Section 5 of the Banking Regulation Act, 1949, and may engage in one or more of the other forms of business specified in sub-section (1) of Section 6 of that Act. However, sub-section (6) of Section 34 of SBI Act declares that, save as otherwise provided in this Act, the State Bank shall not own or acquire and immovable property except for the purpose of providing buildings or other accommodation in which to carry on the business of the State Bank or for providing residence for its officers and other employees. It may be mentioned here that the business in which State Bank could, as any other bank, engage itself as specified in clauses (h) and (e) of sub-section (1) of Banking Regulation Act, 1949 is, respectively of undertaking and executing trusts and of undertaking the administration of estates as executor, trustee and otherwise. In the context of the said provisions in several enactments, the question needing our decision, as indicated in the certificate granted by the High Court, is whether the vacant land possessed by the SBI in executing trusts or for administering estates as executor, trustee or otherwise attracts any of the exemptions envisaged under Section 19 of the Act. It is true, as held by this Court, in W.O. Holdsworth case , that whatever be the position of a trustee or a Trust under English law, under Section 3 of the Indian Trusts Act (Trusts Act for short) a trust is an obligation annexed to the ownership of property and arising out of confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another or of another or the owner, and puts the trustee thereof under an obligation of executing (sic) the person who reposes or declares the confidence is called the "trustee" (sic); the person for whose benefit the confidence is accepted is called the "beneficiary", the subject-matter of the trust called "trust property" or "trust money" and the "beneficial interest" or "interest" of the beneficiary is his right against the trustee as owner of the trust property, and the instrument, if any, by which the trust is declared, is called the "instrument of trust". The provisions in Section 3 of the Trusts Act, as seen, emphasise the fact that the beneficiary has a right to obtain his beneficial interest or interest against the trustee as owner of the trust property. The trustee, therefore, would, no doubt, become trust propertys owner for the purpose of effectively executing or administering the trust for the benefit of the beneficiaries and for due administration thereof but not for any other purpose. The question which, therefore, arises for our consideration is, whether the owning by State Bank of India of vacant land - the trust property as a trustee for the purpose of discharging the obligations annexed to that property as envisaged under Trusts Act, in the course of executing the trust of administering trust properties, for the benefit of beneficiaries - is to hold such vacant land, i.e., to own such land or to possess such land as owner, as envisaged under Section 19 of the Act, so as to attract the exemption given thereunder 7. Vacant land held under Section 19 of the Act by the State Bank of India must be vacant land owned or possessed as owner thereof because of the definition clause (l) of Section 2 of Act. However, it is difficult for us to think that such owning or possessing as owner of the vacant land by the State Bank of India, could be regarded as referable to any land other than that vacant land to be owned or acquired by it under sub-section (6) of Section 34 of State Bank of India Act for the purpose of providing buildings or other accommodation in which to carry on the business of the State or for providing residences for its officers and other employees. It is equally difficult for us to think that the vacant land held, that is, owned or possessed as owner by any other bank specified in Section 19 of the Act is not its owner with all the rights of ownership including the right of disposal vested in it. Therefore, when the Bank holds the trust properties in due course of executing and administering the trust for the benefit of beneficiaries, it does not hold such property "as the owner" or "possess as owner" envisaged under the Act. In our considered view, no bank holds trust properties as owner envisaged under Section 19 of the Act or possess vacant land as envisaged under Section 19 of the Act. Thus, a bank even though regarded under Trusts Act as the owner of trust property-vacant land for the purpose of executing or administering a trust, it cannot hold a trust property-vacant land as its owner or possessed as owner as could make that land eligible for the benefit of exemption envisaged under Section 19 of the Act. However, it was urged by Dr Shankar Ghosh that if a property held by a public charitable or religious trust is exempted under Section 19 of the Act so long it is required or used for such purpose, private trust also becomes entitled to such exemptions, if the property held by it is used for a charitable purpose. This argument has to be considered in the light of the object sought to be achieved by the Act and not independently of it. The object of the Act is to take over the urban land found in excess of the ceiling area and to utilise the same for public good. The vacant lands found in excess of ceiling areas which become entitled to the benefit of exemption under Section 19 or Section 20, as seen therefrom are those vacant lands which are meant to serve public purposes and not private purpose. Therefore, anyone who is entrusted under a private trust to discharge certain duties as trustee thereof, cannot claim exemption respecting the property of that trust under Section 19(1)(iv). When a bank, which in the course of carrying on its commercial activities under Section 6 of the Banking Regulation Act is required to discharge its duties as the executor or trustee under a will in administering an estate, it does not hold the trust property-vacant land as an executor or trustee of a public charitable or religious trust as would entitle it to claim exemption under Section 19 of the Act, inasmuch as, such trust property-vacant land cannot be that which is required or used for public or charitable purpose. If the provisions of the State Bank of India Act, the Banking Regulation Act and the Trusts Act, to which we have adverted, are understood as pointed out, in their right perspective, the property-vacant land held by a bank as a trustee or executor under a will in the course of carrying on its business cannot get the benefit of exemption envisaged under Section 19(1)(iv) of the Act. The question considered by us is answered, accordingly, though for reasons different from those given by the High Court

Decision reasoning: 0[ds]It is true, as held by this Court, in W.O. Holdsworth case , that whatever be the position of a trustee or a Trust under English law, under Section 3 of the Indian Trusts Act (Trusts Act for short) a trust is an obligation annexed to the ownership of property and arising out of confidence reposed in and accepted by the owner or declared and accepted by him, for the benefit of another or of another or the owner, and puts the trustee thereof under an obligation of executing (sic) the person who reposes or declares the confidence is called the "trustee" (sic); the person for whose benefit the confidence is accepted is called the "beneficiary", theof the trust called "trust property" or "trust money" and the "beneficial interest" or "interest" of the beneficiary is his right against the trustee as owner of the trust property, and the instrument, if any, by which the trust is declared, is called the "instrument of trust". The provisions in Section 3 of the Trusts Act, as seen, emphasise the fact that the beneficiary has a right to obtain his beneficial interest or interest against the trustee as owner of the trust property. The trustee, therefore, would, no doubt, become trust propertys owner for the purpose of effectively executing or administering the trust for the benefit of the beneficiaries and for due administration thereof but not for any other purpose. The question which, therefore, arises for our consideration is, whether the owning by State Bank of India of vacant landthe trust property as a trustee for the purpose of discharging the obligations annexed to that property as envisaged under Trusts Act, in the course of executing the trust of administering trust properties, for the benefit of beneficiariesis to hold such vacant land, i.e., to own such land or to possess such land as owner, as envisaged under Section 19 of the Act, so as to attract the exemption given thereunderour considered view, no bank holds trust properties as owner envisaged under Section 19 of the Act or possess vacant land as envisaged under Section 19 of the Act. Thus, a bank even though regarded under Trusts Act as the owner of trustland for the purpose of executing or administering a trust, it cannot hold a trustland as its owner or possessed as owner as could make that land eligible for the benefit of exemption envisaged under Section 19 of the Act. However, it was urged by Dr Shankar Ghosh that if a property held by a public charitable or religious trust is exempted under Section 19 of the Act so long it is required or used for such purpose, private trust also becomes entitled to such exemptions, if the property held by it is used for a charitable purpose. This argument has to be considered in the light of the object sought to be achieved by the Act and not independently of it. The object of the Act is to take over the urban land found in excess of the ceiling area and to utilise the same for public good. The vacant lands found in excess of ceiling areas which become entitled to the benefit of exemption under Section 19 or Section 20, as seen therefrom are those vacant lands which are meant to serve public purposes and not private purpose. Therefore, anyone who is entrusted under a private trust to discharge certain duties as trustee thereof, cannot claim exemption respecting the property of that trust under Section 19(1)(iv). When a bank, which in the course of carrying on its commercial activities under Section 6 of the Banking Regulation Act is required to discharge its duties as the executor or trustee under a will in administering an estate, it does not hold the trustland as an executor or trustee of a public charitable or religious trust as would entitle it to claim exemption under Section 19 of the Act, inasmuch as, such trustland cannot be that which is required or used for public or charitable purpose. If the provisions of the State Bank of India Act, the Banking Regulation Act and the Trusts Act, to which we have adverted, are understood as pointed out, in their right perspective, theland held by a bank as a trustee or executor under a will in the course of carrying on its business cannot get the benefit of exemption envisaged under Section 19(1)(iv) of the Act. The question considered by us is answered, accordingly, though for reasons different from those given by the High Court