Case: Steel Authority of India Ltd Vs. State of M.P

To compute the present value of an income extended over a period of time...." 22. According to the Oxford English Dictionary (Being a Corrected Re-issue with an Introduction, Supplement, and Bibliography of a New English Dictionary on Historical Principles, Volume II-C) the word Capitalize means ....2" To Convert (a periodical income or payment) into an equivalent capital sum; to compute or realise the present value of such a payment for a definite or indefinite length of time...." 23. The object of the Rules framed by the Secretary of State in 1925 is clear that land revenue was to be capitalized and collected once for all and that no land revenue could be further recovered thereafter. Land revenue had to be paid periodically and in view of the above dictionary meanings and in view of the rules framed in 1925, once land revenue was capitalized and paid, no further amount could be realised by the State Government for the land transferred. Thereafter the case falls under sub-clause (1) of Section 58 which states that by virtue of provisions in a rule made land revenue could become exempt. 24. Though Mr. Banthia has urged that as no reply was sent to the letter of the State Government dated 25th September, 1958, therefore, there was no contract under Article 299 of the Constitution of India between the Central Government and the State Government regarding the non-payment of land revenue, we are unable to accept the contention of the learned counsel inasmuch as by the conduct of the parties it is very clear that both the Governments agreed with the terms mentioned in the letter of the State Government dated 25th September, 1958 and, therefore, there was also a contract between the parties regarding the exemption from payment of land revenue, if 25 times of the land revenue was paid once for all. The contention that such a contract is not executed in the form required under Article 299 cannot be accepted. This point was not raised inthe High Court. Apart from that it is clear that Article 299 applies only to contracts to be executed in exercise of "executive power" and not to those executed by virtue of statutory power like Section 58 of the Code. (See State of Haryana v. Lal Chand, 1984(3) SCC 634; Lalji Khimji v. State of Gujarat, 1993 Suppl. (3) SCC 567 . In the latter case, Anand, J. (as he then was) observed as follows :- "There is a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made which are statutory in nature .......In State of Haryana v. Lal Chand, this Court considered a contract granting exclusive privilege of liquor vending, in exercise of the statutory powers referable to Punjab Excise Act, 1914 and Punjab Liquor Licence Rules, 1956, and held that the grant of the exclusive privilege gave rise to a contract of a statutory nature, distinguished from the one executed under Article 299(1) and, therefore, compliance with Article 299(1) was not required in such a case." 25. Section 58 of the Code provides that land revenue is payable in respect of all land unless it is exempted from such liability by special grant or contract with the State Government. In view of the agreement between both the Governments and in view of the above provisions of Section 58 of the Code we hold that no land revenue is payable for the land in question more particularly as it has been capitalized at 25 times of the land revenue prevailing at that time. 26. Thus, whether it is because of the 1925 Rules or the Contract, Central Government was not liable to pay land revenue once it had paid the 25 times land revenue as a one time payment. 27. The next question is whether after the land was transferred to the Company, the company would be liable to pay any land revenue under the Code ? 28. Two deeds of assignment were executed on consideration for transferring shares by the Company to the Central Government. We may refer to relevant portions of the assignment deeds : "......the Government both hereby grant convey transfer assign and assure unto the Company all those several pieces or parcels of lands and hereditariness situate....." "......rights, liberties, privileges, easements, advantages, and opportunas whatsoever to the said lands, hereditaments and premises appertaining to or with the same or any part thereof now or hereto have or may hereafter be occupied or enjoyed or reported or known as part and parcel or member thereof or appertaining thereto (hereinafter called "the said lands and buildings"). ".......and all the estate, right, title and interest, claim and demand of the Government into and upon the lands and buildings, the plant or every part thereof and also all the deeds and other evidences of title in any way relating to the said lands and hereditaments and all receipts and documents and other evidence of title to the plant and the component parts thereof an installed or brought in by the Government in connection with the said "Bhilai Steel Project...." 29. thus it is clear from the above clauses of the deeds of assignment that while transferring the land to the Company rights, liberties, privileges etc. to the said land were also transferred. Therefore, the privileges of or right to exemption accrued to the Central Government not to pay land revenue to the State Government under Section 58 of the Code would also be available to the appellant-company, as a successor in interest to the Central Government. 30. Another point has been urged on behalf of the appellant that assessment of land revenue is barred by limitation. We need not entertain into this aspect as we have held that the appellant company is not liable to pay any land revenue. 31. We may mention that the State Government was also were that no land revenue was payable but the proceedings were started in view of the audit objection.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]19. It will be noticed that in the letter of the Madhya Pradesh Government dated 25.9.58 which was referred to above, the salient features of the rules framed by the Secretary to the Madhya Pradesh Government in 1925 were referred to. The condition No. A clearly lays down that the capitalized value of the land revenue has to be assessed and paid to the State Government towards loss of land revenue as no land revenue can be recovered from the Central Government later on. From paragraph 10 of the letter which has been quoted above we also find that land revenue in respect of land held by the private persons has to be capitalized at 25 times and capitalized value of land revenue shall be payable by the Central Government to the Government of Madhya Pradesh.The object of the Rules framed by the Secretary of State in 1925 is clear that land revenue was to be capitalized and collected once for all and that no land revenue could be further recovered thereafter. Land revenue had to be paid periodically and in view of the above dictionary meanings and in view of the rules framed in 1925, once land revenue was capitalized and paid, no further amount could be realised by the State Government for the land transferred. Thereafter the case falls under(1) of Section 58 which states that by virtue of provisions in a rule made land revenue could become exempt.Section 58 of the Code provides that land revenue is payable in respect of all land unless it is exempted from such liability by special grant or contract with the State Government. In view of the agreement between both the Governments and in view of the above provisions of Section 58 of the Code we hold that no land revenue is payable for the land in question more particularly as it has been capitalized at 25 times of the land revenue prevailing at that time.Thus, whether it is because of the 1925 Rules or the Contract, Central Government was not liable to pay land revenue once it had paid the 25 times land revenue as a one time payment.thus it is clear from the above clauses of the deeds of assignment that while transferring the land to the Company rights, liberties, privileges etc. to the said land were also transferred. Therefore, the privileges of or right to exemption accrued to the Central Government not to pay land revenue to the State Government under Section 58 of the Code would also be available to theas a successor in interest to the Central Government.Though Mr. Banthia has urged that as no reply was sent to the letter of the State Government dated 25th September, 1958, therefore, there was no contract under Article 299 of the Constitution of India between the Central Government and the State Government regarding theof land revenue, we are unable to accept the contention of the learned counsel inasmuch as by the conduct of the parties it is very clear that both the Governments agreed with the terms mentioned in the letter of the State Government dated 25th September, 1958 and, therefore, there was also a contract between the parties regarding the exemption from payment of land revenue, if 25 times of the land revenue was paid once for all. The contention that such a contract is not executed in the form required under Article 299 cannot be accepted. This point was not raised inthe High Court. Apart from that it is clear that Article 299 applies only to contracts to be executed in exercise of "executive power" and not to those executed by virtue of statutory power like Section 58 of the Code. (See State of Haryana v. Lal Chand, 1984(3) SCC 634; Lalji Khimji v. State of Gujarat, 1993 Suppl. (3) SCC 567 . In the latter case, Anand, J. (as he then was) observed as followsis a marked distinction between contracts which are executed in exercise of the executive powers and agreements or orders made which are statutory in nature .......In State of Haryana v. Lal Chand, this Court considered a contract granting exclusive privilege of liquor vending, in exercise of the statutory powers referable to Punjab Excise Act, 1914 and Punjab Liquor Licence Rules, 1956, and held that the grant of the exclusive privilege gave rise to a contract of a statutory nature, distinguished from the one executed under Article 299(1) and, therefore, compliance with Article 299(1) was not required in such aneed not entertain into this aspect as we have held that the appellant company is not liable to pay any land revenue.We may mention that the State Government was also were that no land revenue was payable but the proceedings were started in view of the audit objection.