2013 (3) TMI 596 - SC - Companies Law

Deemed vesting of surplus land with the State government under Section 10(3) of the Urban Land (Ceiling and Regulation) Act, 1976 - De facto possession depriving the land holders of the benefit of the saving Clause under Section 3 of the Urban Land (Ceiling and Regulation) Repeal Act, 1999 - Non serving of notice - Legislature is competent to create a legal fiction, for the purpose of assuming existence of a fact which does not really exist - Held that - We notice even after the coming into force of the Repeal Act, the competent authority under the Act 33 of 1976 vide its letter dated 10th June, 1999 informed the Bandobast Chakbandi Adhikar that the surplus land declared as per the notification issued under the Act had vested in the State Government free from all encumbrances and, therefore, in the revenue records the name of State Government be entered and name of the respondent be mutated. The competent authority vide its notice dated 19.6.1999 issued under Section 10(5) of the Act directed the respondent to handover possession of the land declared as surplus to duly authorized persons on behalf of the Collector. Legislature is competent to create a legal fiction, for the purpose of assuming existence of a fact which does not really exist. Sub-section (3) of Section 10 contained two deeming provisions such as deemed to have been acquired and deemed to have been vested absolutely . Let us first examine the legal consequences of a deeming provision . In interpreting the provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created and after ascertaining this, the Court is to assume all those facts and consequences which are incidental or inevitable corollaries to the giving effect to the fiction. This Court in Delhi Cloth and General Mills Company Limited 1996 (1) TMI 431 - SUPREME COURT held that what can be deemed to exist under a legal fiction are facts and not legal consequences which do not flow from the law as it stands. The expression deemed to have been acquired used as a deeming fiction under sub-section (3) of Section 10 can only mean acquisition of title or acquisition of interests because till that time the land may be either in the ownership of the person who held that vacant land or to possess such land as owner or as a tenant or as mortgagee and so on as defined under Section 2(1) of the Act. The word vested has not been defined in the Act, so also the word absolutely . What is vested absolutely is only the land which is deemed to have acquired and nothing more. The word vest has different meaning in different context; especially when we examine the meaning of vesting on the basis of a statutory hypothesis of a deeming provision. Vest/vested, therefore, may or may not include transfer of possession the meaning of which depends on the context in which it has been placed and the interpretation of various other related provisions. What is deemed vesting absolutely is that what is deemed to have acquired . In our view, there must be express words of utmost clarity to persuade a court to hold that the legislature intended to divest possession also, since the owners or holders of the vacant land is pitted against a statutory hypothesis. Vacant land, it may be noted, is not actually acquired but deemed to have been acquired, in that deeming things to be what they are not. Acquisition, therefore, does not take possession unless there is an indication to the contrary. It is trite law that in construing a deeming provision, it is necessary to bear in mind the legislative purpose. The purpose of the Act is to impose ceiling on vacant land, for the acquisition of land in excess of the ceiling limit thereby to regulate construction on such lands, to prevent concentration of urban lands in hands of few persons, so as to bring about equitable distribution. For achieving that object, various procedures have to be followed for acquisition and vesting. We are of the view that so far as the present case is concerned, the word vesting takes in every interest in the property including de jure possession and, not de facto but it is always open to a person to voluntarily surrender and deliver possession, under Section 10(3) of the Act. Requirement of giving notice under sub-sections (5) and (6) of Section 10 is mandatory. Though the word may has been used therein, the word may in both the sub-sections has to be understood as shall because a court charged with the task of enforcing the statute needs to decide the consequences that the legislature intended to follow from failure to implement the requirement. Effect of non-issue of notice under sub-section (5) or sub-section (6) of Section 11 is that it might result the land holder being dispossessed without notice, therefore, the word may has to be read as shall . Above reasoning is in consistence with the Directions 1983 which has been issued by the State Government in exercise of powers conferred under Section 35 of the Act. Directives make it clear that sub-section (3) takes in only de jure possession and not de facto possession, therefore, if the land owner is not surrendering possession voluntarily under sub-section (3) of Section 10, or surrendering or delivering possession after notice, under Section 10(5) or dispossession by use of force, it cannot be said that the State Government has taken possession of the vacant land. The mere vesting of the land under sub-section (3) of Section 10 would not confer any right on the State Government to have de facto possession of the vacant land unless there has been a voluntary surrender of vacant land before 18.3.1999. State has to establish that there has been a voluntary surrender of vacant land or surrender and delivery of peaceful possession under subsection (5) of Section 10 or forceful dispossession under subsection (6) of Section 10. On failure to establish any of those situations, the land owner or holder can claim the benefit of Section 3 of the Repeal Act. The State Government in this appeal could not establish any of those situations and hence the High Court is right in holding that the respondent is entitled to get the benefit of Section 3 of the Repeal Act. No documents have been produced by the State to show that the respondents had been dispossessed before coming into force of the Repeal Act and hence, the respondents are entitled to get the benefit of Section 3 of the Repeal Act. - Decided against the appellant.

Summary

Issues Involved:
1. Interpretation of "deemed vesting" under Section 10(3) of the Urban Land (Ceiling and Regulation) Act, 1976.
2. Whether "deemed vesting" amounts to taking de facto possession.
3. Impact of the Urban Land (Ceiling and Regulation) Repeal Act, 1999 on the possession of surplus land.
4. Procedures for taking possession under Sections 10(5) and 10(6) of the Act.
5. Effect of non-compliance with the notice requirements under Sections 10(5) and 10(6).

Detailed Analysis:

Interpretation of "Deemed Vesting" under Section 10(3):
The primary issue was whether the "deemed vesting" of surplus land under Section 10(3) of the Urban Land (Ceiling and Regulation) Act, 1976, implies taking de facto possession. The court clarified that the expressions "deemed acquisition" and "deemed vesting" in Section 10(3) refer to the acquisition of title and not physical possession. The court emphasized that the legal fiction created by the statute should not be extended beyond its intended purpose, which is to assume the acquisition of title rather than actual possession.

Whether "Deemed Vesting" Amounts to Taking De Facto Possession:
The court held that "deemed vesting" under Section 10(3) results in the State acquiring title to the land but does not equate to taking physical possession. The court reasoned that if physical possession were assumed under Section 10(3), there would be no need for the procedures outlined in Sections 10(5) and 10(6), which specifically address the surrender and forcible taking of possession.

Impact of the Urban Land (Ceiling and Regulation) Repeal Act, 1999:
The court examined the effect of the Repeal Act, which contains a saving clause under Section 3. The Repeal Act stipulates that the repeal of the principal Act does not affect the vesting of any vacant land under Section 10(3) if possession has been taken over by the State Government or an authorized person. The court concluded that mere vesting under Section 10(3) does not confer de facto possession unless there is evidence of voluntary surrender, peaceful delivery under Section 10(5), or forcible dispossession under Section 10(6).

Procedures for Taking Possession under Sections 10(5) and 10(6):
The court emphasized the mandatory nature of the notice requirements under Sections 10(5) and 10(6). Section 10(5) requires the competent authority to issue a notice in writing to the person in possession, ordering them to surrender or deliver possession. If the person refuses or fails to comply, Section 10(6) allows the authority to take possession using necessary force. The court highlighted that these provisions ensure due process and prevent arbitrary dispossession.

Effect of Non-Compliance with Notice Requirements:
The court held that non-issuance of notice under Sections 10(5) or 10(6) results in the landholder not being legally dispossessed. The word "may" in these sections was interpreted as "shall," making the issuance of notice mandatory. The court referred to the Uttar Pradesh Urban Land Ceiling (Taking of Possession, Payment of Amount and Allied Matters) Directions, 1983, which further support the need for compliance with the notice requirements.

Conclusion:
The court dismissed the appeals, affirming the High Court's judgment that the State Government had not taken de facto possession of the land before the Repeal Act came into force. Consequently, the landholders were entitled to the benefits of Section 3 of the Repeal Act. The court underscored the importance of following statutory procedures for taking possession and the legislative intent behind the legal fiction of "deemed vesting."