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TMI Blog2004 (2) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Ruler of Kashipur, the Government of UP decided to release the land to the ruler on lease under the Govt. Grants Act, 1895 as amended in its application to the State of UP by Govt. Grants (UP Amendment) Act, 1960 (Shortly referred to as 'the Govt. Grants Act'). The lands were released to the ruler for its development and for making it cultivable within the prescribed period. The terms of the Govt. Grant are contained in letter dated 26.1.1950 of the Deputy Secretary to the Govt. of UP addressed to the Director of Colonization, Lucknow, U.P. Consequent to the release of the lands in favour of the ruler, no formal lease containing the terms and conditions of the Govt. Grant came to be executed between the erstwhile ruler and the Government of U.P. but it is not in dispute that the possession of the lands under the grant was taken on the basis of the proposal of the government, contained in the letter dated 29.8.1950. The rights and liabilities of the parties are governed by the terms of the said Govt. Grant. As the contesting parties before us are at issue on the legal effect of the Grants for application of the provisions of the Ceiling Act, the contents of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Shri Hari Chand Raj Singh Raja of Kashipur, Kashipur House, Nainital for information with reference to his representation dated June, 24 and 26, 1950." [Emphasis added by underlining] As is stipulated in the terms of the Govt. Grants, the ruler and the company in which he was a shareholder namely M/s Ramgarh Farms and Industries Ltd. ( formerly the Co.) had to develop and make the lands cultivable within a period of one year of the commencement of the next agricultural operations from the date of release of the land. As the aforementioned company described in the grant was unable to develop the land within the permissible period, they entered into an agreement with M/s Escorts (Agricultural Machines) Ltd. The two aforementioned companies agreed to form a third company in the name of M/s Escort Farms (Ramgarh) Ltd. (who is the main appellant in the leading appeals before us and shall hereinafter be referred to as 'the Farms'). The Farm was incorporated on 30.11.1951 and took possession of the lands. In revenue papers of Fasli 1361 (corresponding to 1.7.1953 to 30.6.1954) the Farm was recorded as hereditary tenant, in respect of 1386.08 acres of land. The Ceiling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained possession of the land. Before the reduction of ceiling limit by UP Imposition of Holdings (Amendment) Act No. 18 of 1973, sale-deeds covering 12.50 acres of land were executed in favour of 70 persons between 25.9.1971 to 27.9.1971. These- transactions admittedly were after the cut-off date 24.1.1971 as fixed in sub-section (6) of Section 5 of the Ceiling Act by U. P. (Amendment) Act No. 18 of 1973. Under sub-section (6) of Section 5, transfers of land effected after 24.1.1971 are liable to be ignored in determining the ceiling area of the holder of land, unless, in accordance with proviso (b) of the said sub-section, the holder of the land discharges the burden of satisfying the prescribed authority that the transfers, after the appointed date, were effected on good faith and for adequate consideration and were not benami. On the basis of the aforementioned sale-deeds executed in favour of 74 persons, the earlier three partnership firms formed by the lessees were dissolved and four new partnership firms were formed by the purchasers of the land. Shri PN Mehta was the managing partner of one of the firms. On 8.6.1973, by UP Amendment Act No.18 of 1973 introduced in Ceil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ceiling Act and the other provisions of the Amendment No.18 of 1973. The Commissioner also held that the transfers made by the Farm out of 250 acres of land of the school were not bona fide being made to favoured parties and with clear intention to evade the ceiling law. Aggrieved by the order of the Commissioner passed in appeals, the Firm, all its transferees and subsequent transferees filed Writ Petitions in the High Court. The High Court considered their cases by grouping them in three categories. The Writ Petitioner - holder company and the Farm were described as Group No.l. 74 transferees from the Farm were described as Group No.2 and 18 transferees from the company in respect of 250 acres of land of school were described as Group No. 3. Applications for intervention made by some parties who are subsequent transferees of parcels of land involved in this case, have been rejected by this Court by order made on 16.1.2004. We, however, granted hearing to the counsel appearing for subsequent transferees and allottees of land who claim to be in actual cultivating possession of some portions of lands involved. The High Court by the impugned judgment passed in common in batch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was, therefore, only an ostensible holder of the land and the company of which the Ruler was a share holder continued to be the real holder. The notices issued by the ceiling authority were responded by submitting statements and returns before the ceiling authority by the Farm. The Company and the Ruler submitted to those proceedings through the Farm. The Company and the Ruler never objected to the proceedings before the prescribed authority nor did they prefer any appeals to challenge those orders either in appellate forum or in writ proceedings. The proceedings therefore initiated, conducted and culminated against the Farm have to be treated in reality to be proceedings against the company and the Ruler as the holders of the land. The Farm being the ostensible owner and agent of the real owners was competent to take part in ceiling proceedings on behalf of the holder of the lands and the proceedings cannot be held to be invalid or infructuous. The learned counsel for the State is right in relying on Explanation 1 and Explanation II below Section 5 of the Ceiling Act in support of his submission that where the land is held by an ostensible holder it would be presumed to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is beyond any doubt and, in fact, it has never been the stand of any of the parties before the ceiling authority or before the High Court or before us that the company was not a Govt. Grantee or a Govt. lessee. Clause (9) of Section 3 defines the word 'holding' to include a Govt. lessee. The definition clause (9) in Section 3 of holding reads thus: "Section 3 (9). 'Holding' means the land or land held by a person as a Bhumidar, Sildar, Asami or Gaon Sabha or an Asami mentioned in Section 11 of the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1950, or as a tenant under the U.P. Tenancy Act 1939, other than a sub-tenant, or as Government lessee, or as a sub-lessee of a Government lessee, where the period of sub-lease is co-extensive with the period of the lease." [Underlining to add emphasis] The public limited company holding land would be covered by definition of 'tenure holder' as contained in clause (17) of Section 3. 'Tenure holder' is defined to mean 'a person who is the holder of a holding.' The word 'person' has not been defined in the Ceiling Act but Section 4 (33) of U.P. General Clauses Act defines 'per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person' as defined in Clauses (9) and (17) of Section 3 of the Ceiling Act read with Clause (33) of Section 4 of the U.P. General Clauses Act. The contention, therefore, advanced that the ceiling proceedings could not have been initiated and concluded against the company through the Farm and they were all invalid and non est, has to be rejected. 2. LEGAL EFFECT OF THE PROVISIONS OF GOVT. GRANTS ACT. 1895 AS AMENDED BY GO IT. ( RANTS (U.P.) ACT. 1960. One of the most important issues, which arose in writ petition before the High Court was regarding findings of the Appellate Authority on the validity of the transfers of land made by company in favour of the Farm and through the Farm in favour of the different partnership firms and individuals. We have already reproduced above the terms and conditions of the Govt. Grant contained in the letter dated 26.1.1950 of the Government of Uttar Pradesh whereunder erstwhile Ruler of Kashipur was allowed to lease the lands to the company for development. The terms of the grant show that 597 acres of land was allowed to be held by the ex-ruler with hereditary rights and 2091 acres were allowed to be leased to the company of which the Ruler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of UP clearly provides that the rights and obligations inter se between Government as granter of the land and its grantee would in no way be affected by the sub-leases granted by the Govt. grantee in accordance with the provisions of the UP Tenancy Act. "Section 2(1). Transfer of Property Act, 1882, not to apply to Government Grants - Nothing contained in the Transfer of Property Act, 1882, shall apply or be deemed ever to have applied to any grant or other transfer of land or of any interest therein, heretofore made or hereafter to be made, by or on behalf of the government to or in favour of any person whomsoever; and every such grant and transfer shall be construed and take effect as if the said Act had not been passed. (2) UP Tenancy Act, 1939, and Agra Tenancy Act, 1926 not to affect certain leases made by or on behalf of the Government - Nothing contained in the UP Tenancy Act, 1939, or the Agra Tenancy Act, 1926, shall affect, or be deemed to have ever affected any rights, created, conferred or granted, whether before or after the date of the passing of the Government Grants (UP Amendment) Act 1960, by leases of land by, or on behalf of, the Government in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment Act of 1960 makes it clear that the State Legislature intended to apply only the provisions of Land Reforms Act and Ceiling Act to the lands held by persons under the Govt. Grants Act. The statements of objects and reasons read thus: "Provisions of Section 2 of the Government Grants (UP Amendment) Act, 1959, have the effect of saving a grant of an agricultural lease by or on behalf of the Government from the operation not only on the Acts mentioned therein, but also of any other law, including the law for imposition of ceiling on land holdings, that might be made in future. There is also an apprehension that the result of the wordings of section 2 may be to undo the vesting of estates of government grantees under section 4 of the UP Zamindari Abolition and Land Reforms Act, 1950. With a view, therefore, to remove any such apprehension and to put the UP Imposition of Ceiling on Land Holdings Bill, 1959, when enacted, beyond the purview of the Government Grants Acts, this Bill is being introduced. Vide UP Gazette Extraordinary, dated February 3, 1960". Land Reforms Act, 1950 being saved by sub-section (3) of Section 2 of Govt. Grants Act is applicable to the govt. grants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Company or Farm by sale or lease contrary to the terms of the Govt. Grant create no independent rights in favour of the said transferees or lessees. The claims of transferees and lessees based on the provisions of UP Tenancy Act were, therefore, rightly negatived by the ceiling authority and the High Court. We rely on the ratio of the decision of this Court in the case of Raghubar Dayal v. State of U.P., [1995] Supp. 3 SCC 20 and particularly the following observations therein: "Thus it could be seen that though it is a grant made under the Government Grants Act, it is in substance a lease of agricultural land granted by the Government to the appellant for cultivation subject to the covenants contained thereunder, some of which have been mentioned hereinbefore. Section 105 of the Transfer of Property Act defines lease as transfer of right to enjoy immovable property made for a certain time, express or implied or in perpetuity, in consideration of a price paid or promised, or of money etc. to the transferor by the transferee who accepts the transfer on such terms. The grant in substance, therefore, is a lease of the agriculture land for personal cultivation on improved meth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er an irrevocable instrument not being a 'Benami' transaction or for immediate or deferred benefit of the tenure-holder or other members of his family." Explanation I..................... Explanation II - The burden of proving that a case falls within clause (b) of the proviso shall rest with the party claiming its benefit. [Emphasis added] In determining ceiling area applicable to a holder any transfer of land made after 24.1.1971 is to be ignored. In accordance with proviso (b) of the said sub-section (6) of Section 5 transfers made after 24.1.1971, can be excluded for determining the ceiling area of the holder only if it is proved to the satisfaction of the prescribed authority that the transfers were made in good faith and for adequate consideration. In accordance with Explanation-II the burden of proving that the transfers were bona fide and for adequate consideration is on the party claiming benefit of the transfer. The High Court has in great details considered the claims based on the transfers made after the cut-off date. There is no evidence of oral leases alleged to have been granted to the extent of total 18.75 acres of land in favour of 50 persons, alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention advanced by the learned counsel on their behalf is that in the original Ceiling Act which came into force on 3.1.1961 under clause (ix) of Section 6, land held for the purposes of an educational institution either by a society registered under the Societies Registration Act, 1860 or by any corporate body was exempt from the operation of the Ceiling Act. It is pointed out that in the earliest order of the prescribed authority Kashipur passed on 2.7.1964 and the second order passed on 11.8.1967 after remand of the case by the appellate authority, 250 acres of land, used in Farm Mechanization for school was held to be exempt from being included in the ceiling area of the Company or the Farm. The order of the prescribed authority dated 11.8.1967 excluding 250 acres of land as not includible in the ceiling area of Company or the Farm was not challenged by the State in appeal. The learned counsel contends that the said order of the prescribed authority had become final which could not have been interfered with or upset by the appellate authority in its order dated 14.1.1992 in ceiling proceedings initiated afresh after the ceiling limit was further curtailed by Amendment Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... school as a separate legal entity. Exemption clause (ix) of Section 6 as it stood in original section 6 was deleted by re-substitution of new Section 6 by Amendment Act No. 18 of 1973 with effect from 8.6.1973. By insertion of new Section 6, the exemption earlier available to land held by educational institution has been done away with effect from 8.6.1973. It is true that the above order of the prescribed authority dated 11.8.1967 excluding 250 acres of land as belonging to the school was not questioned by the State in appeal. The finding that the land was held by the school as a separate legal entity is obviously a mistake because in all subsequent proceedings before the ceiling authorities, the High Court and in this Court the land is stated to be held by the company or Farm for running the school as one of its activities. The land was in use for the purposes of educational institution run by the Company or the Farm. It qualified for exemption under clause (ix) of Section 6, as it stood then. It is to be noted that when the ceiling limit was reduced by Amendment Act of 1973, which was brought into force with effect from 5th June, 1973, the land measuring 250 acres, although ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n subsequent conduct of effecting transfers of school land estops them from raising a plea of res judicata on an apparently erroneous finding recorded in the order of Prescribed Authority in the course of proceedings under the original unamended Act. For determining the ceiling limit and the surplus area of a holder, in proceedings under the Amer Iment Act of 1973, it was competent for the prescribed authority to accept the admitted position of the land used for school as being owned and held throughout by the holder Company through the Farm and ignore the apparently erroneous statement of the earlier Prescribed Authority recorded in the order passed on 11.8.67 in original proceedings under the Ceiling Act that the land belonged to the school as a separate legal entity. The land excluded from the holding of the company or the Farm, treating it to have been held by the school as a separate legal entity, even otherwise was entitled to be exempted from determination of the ceiling limit of the holder company or the Farm because, in accordance with clause (ix) of Section 6 of the original unamended Act, the said land was in use for purposes of an educational institution. The inaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencement of this section in any proceeding or on any issue (including any order, decree or judgment) by any court, tribunal or authority in respect of any matter governed by this Act, shall bar the re-trial of such proceeding or issue under this Act, in accordance with the provisions of this Act as amended from time to time." [Emphasis added ] Res judicata is a plea available in civil proceedings in accordance with Section 11of the Code of civil Procedure It is a doctrine applied to give finality to lis in original or appellate proceedings. the doctrine in substance means that an issue or a point decided and attaining finality should not be allowed to be reopened and re-agitated twice over. The literal meaning of rex is 'everything that may form an object of rights and includes an object, subject-matter or status' and res judicata literally means: a matter adjudged; a thing judicially acted upon or decided: a thing or matter settled by judgement.' Section 11 of CPC engrafts this doctrine with a purpose that 'a final judgment rendered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid on behalf of the company in accordance with clause (ix) of Section 6, as it stood in the original Amendment Act. The Prescribed Authority, it appears, by an inadvertent mistake, instead of considering the claim of the holder company for exemption of land under clause (ix) of Section 6, as it stood then, excluded the land as belonging to the school as separate legal entity. This exclusion of 250 acres of land of the school from the extent of holding of the holder company was not a decision or a finding on an issue arising between the parties but it was a clear mistake which is apparent from the fact that this land was throughout treated by the holder company as its own land and was transferred by the company by different sale-deeds to 75 persons after the cut-off date 24.1.1971. On the date of second ceiling introduced by the Amendment Act of 1973, the so called land belonging to the school is claimed to be held by the holder Company as the Company had transferred it to various persons. On these admitted facts and nature of title of the land, plea of res judicata cannot be allowed to be raised. The case initiated and proceeded with in Ceiling Law is not an adversarial litigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings" as observed in the impugned judgment. No doubt in Krishan Kumar case an argument was advanced to cut down the width of section 38-B by inviting the attention of the Bench of Section 31(5); the Bench, however, held that that section had no impact on the applicability of Section 38-B." In view of our above discussion on the issue of applicability of the doctrine of res judicata, it is not necessary for us to deal and discuss cases cited by the counsel for the parties on the power of the Appellate Authority, by invoking provisions of Order 41 Rule 33 of the Code of Civil Procedure, to hold the land of school as includible for determination of ceiling area, in the appeals instituted against the order of the Prescribed Authority by the holder of the land and the transferees and without any appeal by the State. 5. Denial of opportunity of hearing to the transferees of land/Breach of Principles of Natural Justice. A serious grievance has been raised on behalf of the transferees from 250 acres of land earlier exempted in favour of the school that they were neither made parties to the appellate proceedings nor were heard before denying exemption from ceiling to such lands and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court, a very detailed hearing with full opportunity to them to prove good faith and payment of adequate consideration for the transfers made in their favour was granted to them by the High Court. All necessary information showing the background of the sales and their claims of bona fides, as furnished both by the transferor and transferees have been fully gone into by the High Court and a definite finding has been reached that the transfers lacked in good faith and were obviously effected to evade ceiling law. All possible pleas available to the transferees, were projected before the High Court in the writ petition preferred by the transferees. Thus, all available material facts and evidence were placed and considered by the High Court. The High Court has in great detail critically examined all the relevant evidence produced by the transferees before arriving at an adverse conclusion against them. This Court would have been inclined and justified in making a remand of the case to the Appellate Authority to make all transferees as parties and give them another opportunity of hearing in respect of the portions of land purchased by them from out of 250 acres of land held in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the High Court in our discretionary powers under Article 136 of the Constitution. We have also come to the same conclusion that the transfers made after the cut-off date were not in good faith hence liable to be ignored for determining the extent of surplus land with the holder. That apart we have also recorded a conclusion that the entire land being held under a Govt. Grant the lands were not transferable without permission of the government and the transfers were invalid being in clear breach of the conditions of the Grant. Right of hearing to a necessary party is a valuable right of Denial such right is serious breach of statutory procedure prescribed and violation of rules of natural justice. In these appeals preferred by the holder of lands and some other transferees, we have found that the terms of Govt. Grant did not permit transfers of land without permission of the State as grantor. Remand of cases of a group of transferees who were not heard, would, therefore, be of no legal consequence, more so, when on this legal question all affected parties have got full opportunity of hearing before High Court and in this appeal before this Court. Rules of natural justice are to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages by imposing heavy costs. Shri P. N. Mehta was found to have taken active part in formation of partnership firms and obtaining the transfers for favoured parties. He did it not in his individual capacity but as a managing partner of one of the partnership firms and on being invited by the holder Company in the meeting of the Board of Directors to help out the company from the effect of ceiling law. In the event of default of payment of costs by the company, the direction made by the High Court to Shri P. N. Mehta to pay the cost is not justified. This part of the order of the High Court imposing Rupees Ten Lacs as costs on the Farm and directing its payment by the Farm or by Shri P.N. Mehta is liable to be set aside. Before parting with the case, only mention has to be made of the submissions made by the learned counsel appearing for subsequent transferees of the lands involved and by some of the intervenes who claim to have been allotted some lands. In our opinion the subsequent transferees and such interveners deserve no indulgence in this appeal. The subsequent transferees have stepped into the shoes of the original transferees. They can claim no different or better rights ..... X X X X Extracts X X X X X X X X Extracts X X X X
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