Case: State of Karnataka Vs. Shankara Textiles Mills Limited

SAWANT, J. 1. The respondent is a public limited company and owned a total land of 49 acres and 38.25 guntas in Davanagere Village. At the relevant time, it had its factory in an area of 13 acres and 32.25 guntas which was converted into non-agricultural land under Section 95(2) of the Karnataka Land Revenue Act (hereinafter referred to as the Revenue Act). The remaining land, viz., 36 acres and 6.5 guntas was not converted into non-agricultural land (hereinafter referred to as the disputed land) with the result that for the purposes of the Revenue Act, it continued to be considered as agricultural land. 2.Improvement Board, Davanagere, sought to acquire land to the extent of 28 acres and 14 guntas from the disputed land for the purpose of Devraj Urs Layout. The acquisition proceedings were started under the provisions of Karnataka Improvement Boards Act, 1976. In pursuance of the final notification issued in the year 1977, the possession of the land was taken by the Improvement Board on 9-8-1978. Since the Land Acquisition Officer did not make the award in respect of the acquired land, the respondent-Company approached the High Court for relief by a writ petition in which an order was passed on 4-2-1983 directing the Land Acquisition Officer to pass the award. The appeal filed by the Improvement Board against the said order was dismissed on 13-11-1983. Thereafter, the Land Acquisition Officer made his award. Since, however, the amount payable under the Award exceeded Rs one lakh, the award was referred to the Divisional Commissioner, Bangalore for approval as provided under the rules on the subject. The Divisional Commissioner did not approve of the award. Hence the Company filed another writ petition seeking a direction to the Divisional Commissioner to deal with the award in accordance with law. That writ petition was allowed on 19-7-1984 and the Divisional Commissioner was directed to dispose of the proceedings arising out of the award within a period of two months from the date of receipt of the order of the Court. In spite of this direction, the Divisional Commissioner did not pas s any order in the said proceedings. 3.During the pendency of these proceedings, the respondent-Company filed a declaration under Section 79-B(2)(a) of the Karnataka Land Reforms Act, 1961 (for short the Act) stating therein that it held the entire disputed land as agricultural land. It further appears that the respondent-Company claimed exemption from the provisions of the said Section 79-B, under Section 81(1)(b)(ii) of the Act on the ground that the disputed land was mortgaged to the Mysore State Financial Corporation on 3-6-1982. The Special Deputy Commissioner passed an order exempting the disputed land from the provisions of Section 79-B. Against the said order, the State preferred an appeal before the Appellate Tribunal which was allowed with the direction to take action under Section 79-B of the Act. 4.Against the said order of the Appellate Tribunal, the respondent Company approached the High Court by way of a writ petition. The High Court by the impugned decision allowed the writ petition by holding that the Improvement Board as an agency of the Government having taken possession of the land under Section 16 of the Land Acquisition Act, in the acquisition proceedings, the land had vested in the Government free from all encumbrances. Hence the question of the Government exercising its power to withdraw from acquisition of the land did not arise. The Court further held that there was no automatic vesting of the disputed land in the State under Section 79-B of the Act, since the vesting under the said provision could take place only upon a declaration by notification under Section 79-B(3) of the Act. For this purpose, the Court relied upon its earlier decision in Mys ore Feeds Ltd. v. State of Karnataka1. The Court held, relying upon the said decision, that the land which is agricultural may cease to be agricultural by 1 1988 (1) Kar(LJ) 310 (Kant) its usage for a non-agricultural purpose although there is no order under the Revenue Act permitting the conversion of the agricultural land into nonagricultural land. The Court, therefore, held that looking to the usage of the entire land which was in the possession of the respondent-Company, even the disputed l and had no longer remained agricultural within the meaning of Section 2(18) of the Act and hence the direction given by the Appellate Tribunal to the Special Deputy Commissioner to take action under Section 79-B of the Act, could not be sustain ed. It is aggrieved by the said decision that the State has preferred the present appeal. 5.Two questions arise in this appeal. The first is whether the land can be deemed to have been permitted to be converted for non-agricultural use merely because it was used for non-agricultural purposes although, admittedly, no permission under Section 95(2) of the Revenue Act was taken, to do so. The second question is whether under Section 79-B of the Act, the land vests in the State Government prospectively from the date of the notification or retrospectively from the date of the coming into operation of the Act. The first question has been answered by the High Court in the affirmative while on the second question, the High Court has taken the view that the land vests in the Government from the date of the notification. According to us, both the answers are wrong in law. 6. Section 95(2) of the Revenue Act at the relevant time read as follows: "95. Uses of agricultural land and the procedure for use of agricultural land for other purposes.-(1) (2)If any occupant of land assessed or held for the purpose of agriculture wishes to divert such land or any part thereof to any other purpose, he shall apply for permission to the Deputy Commissioner who may, subject to the provisions of this section and the rules made under this Act, refuse permission or grant it on such conditions as he may think fit:" * 7. The obvious purpose of this section is to prevent indiscriminate conversion of agricultural land for non- agricultural use and to regulate and control the conversion of agricultural land into non-agricultural land. Section 83 of that Act provides for different rates of assessment for agricultural and non-agricultural land. That provision strengthens the presumption that agricultural land is not to be used, as per the holders sweet will, for nonagricultural purposes. This is also clear from the absence of any provision under that Act requiring permission to convert non-agricultural land into agricultural land. In a country like ours, where the source of livelihood of more than 70 per cent of the population, is agriculture, the restriction placed by the Revenue Act is quite understandable. Such provisions and restrictions are found in the Revenue Acts of all the States in the country. The provision has, therefore, to be construed as mandatory and given effect to as such. 8. The High Court has obviously ignored the mandatory nature of the said provision. On this point, after referring to an earlier decision of the same Court in Mysore Feeds Ltd. case1 the Court has held as follows: "As held in the above case, land which is agricultural may cease to be agricultural for various reasons. Theoretically such land may fall within the definition of Land in Section 2(18) of the Act. However, in the absence of any specific finding regarding the nature or usage of the land as agricultural, the Special Deputy Commissioner cannot treat it to be an agricultural land merely on account of the fact that permission for conversion of the l and under Section 95(2) of the Karnataka Land Revenue Act was sought. Even otherwise, admittedly, the land in question does not satisfy any of the characteristics as required under aforesaid definition investing Respondent 2 with the jurisdiction to take proceedings under Section 79-B of the Act. Furthermore, since vesting could take place only on a declaration being made as provided under sub-section (3) of Section 79-B of the Act, a declaration by the holder at some earlier point of time in respect of the land cannot vest the authority with the jurisdiction to pass an order of vesting notwithstanding the fact that the land by then had ceased to be an agricultural land and treated as such since long. This view is also in conformity with the scheme of the Act, inter alia, regarding disposal of surplus land vesting in the State as provided under Section 77 of the Act." * 9.Thus the High Court has proceeded on the basis that there is no specific finding regarding the nature and usage of the land as agricultural and hence, the Special Deputy Commissioner could not treat it to be an agricultural land merely on account of the fact that permission for conversion of the land under Section 95(2) of the Revenue Act was sought (but admittedly not given). Secondly, it has proceeded on the footing that the land in question does not satisfy any of the characteristics as required under the definition of land in Section 2(18) of the Act, i.e., Karnataka Land Reforms Act investing the authorities with the jurisdiction to take proceedings under Section 79-B of the Act. We are afraid that the High Court has misread the facts on record. The consistent stand taken by the authorities is that the land was never converted for non- agricultural use as required by the provisions of Section 95(2) of the Revenue Act. The mere fact that at the relevant time, the land was not used for agricultural purpose or purposes subservient thereto as mentioned in Section 2(18) of the Act or that it was used for non-agricultural purpose, assuming it to be so, would not convert the agricultural land into a non-agricultural land for the purposes either of the Revenue Act or of the Act, viz., Karnataka Land Reforms Act. To hold otherwise would defeat the object of both the Acts and would, in particular, render the provisions of Section 95(2) of the Revenue Act, nugatory. Such an interpretation is not permissible by any rule of the interpretation of statutes. What is further, the respondent-Company had itself filed a declaration under Section 79-B(2)(a) of the Act stating therein that the entire disputed land was agricultural land and had claimed exemption from the provisions of the said Section 79-B under Section 109 of the Act on the ground that the land was mortgaged to the Mysore State Financial Corporation. We are, therefore, unable to agree with the view taken by the High Court on the point.

Decision reasoning: 1[ds]The first question has been answered by the High Court in the affirmative while on the second question, the High Court has taken the view that the land vests in the Government from the date of the notification. According to us, both the answers are wrong in law9.Thus the High Court has proceeded on the basis that there is no specific finding regarding the nature and usage of the land as agricultural and hence, the Special Deputy Commissioner could not treat it to be an agricultural land merely on account of the fact that permission for conversion of the land under Section 95(2) of the Revenue Act was sought (but admittedly not given). Secondly, it has proceeded on the footing that the land in question does not satisfy any of the characteristics as required under the definition of land in Section 2(18) of the Act, i.e., Karnataka Land Reforms Act investing the authorities with the jurisdiction to take proceedings under Section 79-B of the Act. We are afraid that the High Court has misread the facts on record. The consistent stand taken by the authorities is that the land was never converted for non- agricultural use as required by the provisions of Section 95(2) of the Revenue Act. The mere fact that at the relevant time, the land was not used for agricultural purpose or purposes subservient thereto as mentioned in Section 2(18) of the Act or that it was used for non-agricultural purpose, assuming it to be so, would not convert the agricultural land into a non-agricultural land for the purposes either of the Revenue Act or of the Act, viz., Karnataka Land Reforms Act. To hold otherwise would defeat the object of both the Acts and would, in particular, render the provisions of Section 95(2) of the Revenue Act, nugatory. Such an interpretation is not permissible by any rule of the interpretation of statutes. What is further, the respondent-Company had itself filed a declaration under Section 79-B(2)(a) of the Act stating therein that the entire disputed land was agricultural land and had claimed exemption from the provisions of the said Section 79-B under Section 109 of the Act on the ground that the land was mortgaged to the Mysore State Financial Corporation. We are, therefore, unable to agree with the view taken by the High Court on the point25.It will thus be noticed that the Legislature had taken pains to mention in the other provisions the specific dates from which the consequences in question will follow. There is a reason for doing so. Unless the land to be vested in the State Government is first ascertained, no date of vesting of such land could be fore-determined. That is not the case under Section 7 9-B, since it provides for the vesting in the Government of all agricultural lands held by certain persons like the respondent-Company. This is apart from the fact that the provisions of the other sections cannot help the interpretation of Section 79-B(3) the language of which is self-evident and is in conformity with the intent of Section 79-B and the Act