2015 (8) TMI 775 - SC - Indian Laws

Challenge the permission granted by the Collector, Bhuj, to sell certain parcels of agricultural land situated in district Kutch, which were said to have been purchased earlier by the respondent No.4 herein, one Indigold Refinery Limited of Mumbai, for industrial purpose in favour of respondent No.5 i.e. one Alumina Refinery Limited, Navi Mumbai, as being impermissible under the provisions of the Gujarat Tenancy and Agricultural Lands (Vidarbha Region and Kutch Areas) Act, 1958 - Held that - land is supposed to have been purchased in 2003 at a price of ₹ 70 lakhs, it is said to have been sold at ₹ 1.20 crores in 19.1.2010. It is very clear that even before the letter of 16.6.2009 proposing to sell the land to respondent No.5, in December 2008 itself respondent No.4 had written to the Collector that they were no more interested in putting up the industrial project, and therefore they wanted to dispose off the piece of land to their prospective clients. That being the position, it was mandatory for the Collector at that stage itself to act under sub-Section 5 of Section 89A to issue notice, conduct the necessary enquiry, determine the compensation and pass the order vesting the land in the State Government. It is very clear that Collector has done nothing of the kind. In any case he should have taken the necessary steps in accordance with law at least after receiving the letter dated 16.6.2009. Inspite of the Secretaries repeating their advice, the Minister of Revenue Smt. Anandiben Patel has insisted on treating this case as a special case for which she has recorded no justifiable reasons whatsoever, and orders were issued accordingly. Under Section 89A(3), the Government is the appellate authority where the Collector does not grant a certificate for purchase of bonafide industrial purpose. Thus what has happened, thereby is that the powers of the statutory authority have been exercised by the Government which is an appellate authority. - The Government must defend its action on the basis of the order that it has passed, and it cannot improve its stand by filing subsequent affidavits as laid down by this Court long back in Commissioner of Police, Bombay vs. Gordhandas Bhanji reported in 1951 (11) TMI 17 - SUPREME COURT . There is nothing in the statutory scheme to suggest that a second sale, inter se parties, after the failure of a purchaser to set up an industry is permissible. In such an event, the statute requires an enquiry to be conducted by the collector. If he is satisfied that there is a failure to set up the industry, the compensation to be paid to the purchaser is determined. After this stage the land vests in the Government. It is thus clear that the condition No 4 in the permission obtained by Respondent No. 4 is bad in law, not having its basis in any statutory provision. Even assuming that the Collector had that power to lay down such a condition, the authority to permit the sale as per the said condition had to be exercised by him in the manner contemplated under Section 89 A (5) viz. after holding the enquiry as prescribed. Here the enquiry itself was dispensed with. Rule 45(b) of the Bombay Tenancy and Agricultural Lands Rules, 1959 also cannot be pressed into service for the reason that, neither under Section 89 nor under Section 89A, a sale inter- se parties is contemplated or permitted. It is for the protection and preservation of the agricultural land that the bar against conversion is created under Section 89. Thereafter, as an exception, only a bonafide use for industrial purpose is permissible under section 89A. Ownership of respondent No.4 was subject to the conditions of utilization for bonafide industrial purpose, and it was clear on record that respondent No.4 had failed to utilize the land for bonafide industrial purpose. The reliance on Sections 7 and 10 of the Transfer of Property Act is also misconceived in the present case, since the Tenancy Act is a welfare enactment, enacted for the protection of the agriculturists. It is a special statute and the sale of agricultural land permitted under this statue will have to be held as governed by the conditions prescribed under the statute itself. The special provisions made in the Tenancy Act will therefore prevail over those in the Transfer of Property Act to that extent. Secretaries had given advice in accordance with the statute and yet the Minister has given a direction to act contrary thereto and permitted the sale which is clearly in breach of the statute. - land which was purchased by respondent No.4 for ₹ 70 lakhs is permitted by the Government of Gujarat to be sold directly to respondent No.5 at ₹ 1.20 crores to set up an industry which could not have been done legally. It is undoubtedly not a case of loss of hundreds of crores as claimed by the appellants, but certainly a positive case of a loss of a few crores by the public exchequer by not going for public auction of the concerned property. It is true that in a given case the state may invite an entrepreneur and give an offer. However, in the instant case, the sale of the land for industrial purpose is controlled by the statutory provisions, and the State was bound to act as per the requirements of the statute. The minister s direction as seen from the record clearly indicates an arbitrary exercise of power. The orders passed by the Government cannot therefore be sustained. State could have acquired the land, and then either by auction or by considering the merit of the proposal of respondent No.5 allotted it to respondent No.5. Assuming that the application of the Respondent No 5 was for a bona-fide purpose, the same had to be examined by the industrial commissioner, to begin with, and thereafter it should have gone to the collector. After the property vests in the Government, even if there were other bidders to the property, the collector could have considered the merits and the bona-fides of the application of Respondent No. 5, and nothing would have prevented him from following the course which is permissible under the law. It is not merely the end but the means which are of equal importance, particularly if they are enshrined in the legislative scheme. - The Ministers are not expected to act in this manner and therefore, this particular route through the corridors of the Ministry, contrary to the statute, cannot be approved. The present case is clearly one of dereliction of his duties by the Collector and dictation by the Minister, showing nothing but arrogance of power. Impugned judgment and order passed by the High Court is set- aside - sale of the concerned land by Indigold to Alumina is held to be bad in law. The land involved in the present case is held to have vested in the State of Gujarat free from all encumbrances, and the amount of ₹ 1.20 crores paid by Alumina to Indigold is treated as full payment towards the compensation payable by the State to Indigold. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Legality of the permission granted by the Collector for the sale of agricultural land for industrial purposes.
2. Compliance with the provisions of the Gujarat Tenancy and Agricultural Lands Act, 1958.
3. Role and duties of the revenue officers and senior administrative officers.
4. Allegations of mala-fide actions and loss to the public exchequer.
5. Delay in initiating the Public Interest Litigation (PIL) and suppression of material facts.
6. Validity of the direct sale of land from one industrial purchaser to another.
7. Impact of ministerial directions on statutory decisions.

Detailed Analysis:

1. Legality of the Permission Granted by the Collector:
The appellants challenged the permission granted by the Collector, Bhuj, to sell agricultural land for industrial purposes, arguing it was impermissible under the Gujarat Tenancy and Agricultural Lands Act, 1958. The Act requires that agricultural land can only be sold for industrial purposes if the proposed use is bona fide. If the land is not utilized for the intended industrial purpose within the stipulated period, the Collector must conduct an inquiry and potentially vest the land in the State Government with appropriate compensation to the purchaser. The appellants contended that there was no provision for further transfer of agricultural land from one industrial purchaser to another if the first purchaser defaulted in setting up the industry.

2. Compliance with the Provisions of the Tenancy Act, 1958:
The Court examined whether the decision taken by the Government to permit the transfer of agricultural land was legal and justified under Sections 89 and 89A of the Tenancy Act. Section 89 prohibits the sale of agricultural land to non-agriculturists, with certain exceptions, while Section 89A allows for the sale of land for bona fide industrial purposes under specific conditions. The Court found that the Collector had not conducted the required inquiry under Section 89A(5) when Indigold expressed its inability to set up the industry, which was a mandatory requirement.

3. Role and Duties of Revenue Officers and Senior Administrative Officers:
The Court highlighted the importance of the duties of revenue officers, such as the Collector, and senior administrative officers in ensuring compliance with statutory provisions. It criticized the bypassing of statutory authority due to ministerial directions, which led to the violation of the statutory mandate. The Court emphasized that statutory powers must be exercised in good faith, fairly, and for the purpose for which they were conferred.

4. Allegations of Mala-Fide Actions and Loss to the Public Exchequer:
The appellants alleged that the transaction was against public interest and resulted in a serious loss to the public exchequer. The Court found that the State exchequer had suffered a loss by not conducting a public auction for the disposal of the land, which could have fetched a higher price. The Court noted that the direct sale of land from Indigold to Alumina was not permissible under the statutory scheme and was influenced by ministerial directions without justifiable reasons.

5. Delay in Initiating the PIL and Suppression of Material Facts:
The High Court had dismissed the PIL on the grounds of delay and suppression of material facts. However, the Supreme Court found that the environmental clearance for the project was granted in February 2012, and the PIL was filed in March 2012. The Court held that the delay was not significant and that the appellants could not be criticized for the alleged suppression of facts.

6. Validity of the Direct Sale of Land from One Industrial Purchaser to Another:
The Court held that the direct sale of land from Indigold to Alumina was bad in law and inoperative. The statutory provisions did not permit such a transfer without the necessary inquiry and determination of compensation by the Collector. The Court emphasized that the statutory process must be followed, and the land should have been vested in the State Government before any further disposal.

7. Impact of Ministerial Directions on Statutory Decisions:
The Court criticized the ministerial directions that influenced the statutory decisions of the Collector. It held that the Minister's direction to treat the case as a special case without justifiable reasons was arbitrary and violated the statutory mandate. The Court reiterated that statutory authorities must act independently and not be influenced by external directions.

Conclusion:
The Supreme Court set aside the impugned judgment and order of the High Court, holding that the permission granted by the Collector and the subsequent sale of land were arbitrary and in violation of the statutory provisions. The land was ordered to vest in the State Government, and the sale to Alumina was invalidated. However, considering the investment made by Alumina and the industrial development policy, the Court allowed Alumina to retain the land upon payment of additional compensation to the State Government.