Supreme Court Upholds Land Vesting Despite Repeal of Urban Land Ceiling Act: Madhusudan Bhanuprasad Pandya vs. State of Gujarat (2019)

Date of the Judgment: August 01, 2019

Citation: (2019) INSC 798

Judges: Dr. Dhananjaya Y Chandrachud, J and Indira Banerjee, J

Can the State retain land acquired under the Urban Land (Ceiling and Regulation) Act, 1976, after the Act’s repeal, if possession was taken before the repeal? The Supreme Court of India addressed this question in a case concerning land in Gujarat. The court examined whether the vesting of land was complete before the Act’s repeal, focusing on the validity of possession taken by the State. The judgment was delivered by a two-judge bench comprising Dr. Dhananjaya Y Chandrachud, J and Indira Banerjee, J.

Case Background

The appellant, Madhusudan Bhanuprasad Pandya, claimed leasehold rights over land in Ahmedabad, where he operated a cement pipe manufacturing business through M/s General Cement Pipe Company Limited. The land, bearing Survey No 288/4, was subject to the Urban Land (Ceiling and Regulation) Act, 1976. Following the enactment of the Act on September 12, 1976, the company declared the land as leased from the original owners. However, the land was later deemed to be used for non-agricultural purposes without permission, and thus considered “vacant land” under the Act.

On August 26, 1985, the competent authority declared 4160 sq m of the land as excess vacant land. This was followed by a final statement on September 17, 1985, and subsequent notifications under Section 10 of the Act. On July 6, 1990, the authority issued a notice that possession of the excess land would be taken over. The appellant then filed an application for exemption under Section 20 on July 19, 1990.

The appellant claimed that despite a status quo order from a civil court on July 23, 1990, the State took possession of the land on July 24, 1990. The appellant also challenged the declaration of excess land before the Urban Land Tribunal, which was dismissed on December 31, 1990, due to delay. The appellant then filed multiple petitions before the High Court of Gujarat, seeking various reliefs including the grant of alternative land and challenging the rejection of the exemption application under Section 20.

Timeline:

Legal Framework

The case revolves around the interpretation and application of the Urban Land (Ceiling and Regulation) Act, 1976, and its subsequent repeal. Key provisions include:

• Section 2(q) of the Urban Land (Ceiling and Regulation) Act, 1976: Defines “vacant land” as land not being used for agriculture, with certain exceptions. In this case, the land was deemed vacant as it was used for non-agricultural purposes without permission.
• Section 6(1) of the Urban Land (Ceiling and Regulation) Act, 1976: Requires individuals holding excess vacant land to file a statement specifying the location, extent, value, and nature of their land.
• Section 8(1) of the Urban Land (Ceiling and Regulation) Act, 1976: Mandates the competent authority to prepare a draft statement regarding excess vacant land.
• Section 8(4) of the Urban Land (Ceiling and Regulation) Act, 1976: Empowers the competent authority to declare land as excess vacant land.
• Section 9 of the Urban Land (Ceiling and Regulation) Act, 1976: Requires the competent authority to issue a final statement regarding the excess vacant land.
• Section 10 of the Urban Land (Ceiling and Regulation) Act, 1976: Outlines the procedure for the acquisition of excess vacant land by the State Government. It includes provisions for publishing notifications, taking possession, and vesting of the land in the State.
• Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976: Allows the State Government to grant exemptions from the provisions of the Act.

The Repealing Act of 1999, which repealed the Urban Land (Ceiling and Regulation) Act, 1976, included a saving clause in Section 3(1) of the Repealing Act, which states:

“3. Saving.— (1) The repeal of the principal Act shall not affect— (a) the vesting of any vacant land under sub-section (3) of Section 10, possession of which has been taken over by the State Government or any person duly authorised by the State Government in this behalf or by the competent authority; (b) the validity of any order granting exemption under sub-section (1) of Section 20 or any action taken thereunder, notwithstanding any judgment of any court to the contrary; (c) any payment made to the State Government as a condition for granting exemption under sub-section (1) of Section 20.”

Arguments

Appellant’s Arguments:

• The appellant argued that the possession of the excess land was not validly taken by the State on July 24, 1990, because a civil court had passed a status quo order on July 23, 1990.
• The appellant contended that since possession was not validly taken, the proceedings under the Urban Land (Ceiling and Regulation) Act, 1976, should have lapsed upon the repeal of the Act in 1999.
• The appellant sought the grant of alternative land and challenged the rejection of their application under Section 20 of the Act.
• The appellant submitted that the authorities were duty-bound to comply with the status quo order, irrespective of the suit’s maintainability.

State of Gujarat’s Arguments:

• The State argued that the civil suit was collusive and not maintainable.
• The State submitted that the status quo order was not served on the competent authority before possession was taken on July 24, 1990.
• The State contended that the land was validly declared as excess vacant land and possession was taken as per the provisions of the Act.
• The State argued that upon the repeal of the Act, proceedings under Section 20 would not survive, and the vesting of land was protected by the saving clause in the Repealing Act.
• The State relied on the panchnama as proof of taking possession and referred to the decision in M/s. Larsen and Toubro Ltd. etc. v/s State of Gujarat and ors. [AIR 1998 SC 1608], where the validity of panchnama was upheld.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether the possession of the excess land was validly taken by the State on 24 July 1990, despite the order of status quo passed by the Civil Court on 23 July 1990.
2. Whether the proceedings under the Urban Land (Ceiling and Regulation) Act, 1976, lapsed upon the repeal of the Act in 1999, if possession was not validly taken.

The court also examined, as a sub-issue, whether the civil suit was collusive and not maintainable.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Case Laws:

• M/s. Larsen and Toubro Ltd. etc. v/s State of Gujarat and ors. [AIR 1998 SC 1608] (Supreme Court of India): This case was cited by the State to support the validity of the panchnama as proof of taking possession. The Supreme Court had upheld the validity of panchnama of taking possession even when the panchas had subsequently filed an affidavit, with their signatures obtained on blank papers and they had not gone to the site.
• State of Gujarat v Gyanaba Dilavarsinh Jadeja [(2013) 11 SCC 486] (Supreme Court of India): This case was cited to clarify that the saving clause in the Repealing Act only protects actions explicitly mentioned and does not extend to claims of acquiring a right. It was held that a claim of acquiring a right is not an enforcement of an accrued right.

Legal Provisions:

• Section 2(q) of the Urban Land (Ceiling and Regulation) Act, 1976: To define “vacant land” and determine whether the land in question fell under the purview of the Act.
• Section 6(1) of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the submission of statements of holding excess vacant land.
• Section 8(1) of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the preparation of draft statements for excess vacant land.
• Section 8(4) of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the declaration of excess vacant land.
• Section 9 of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the issuance of a final statement for excess vacant land.
• Section 10 of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the acquisition of excess vacant land by the State.
• Section 20 of the Urban Land (Ceiling and Regulation) Act, 1976: Regarding the power of the State to grant exemptions.
• Section 3(1) of the Repealing Act of 1999: The saving clause that protects certain actions taken under the Urban Land (Ceiling and Regulation) Act, 1976, despite its repeal.

Authorities Table

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Supreme Court followed M/s. Larsen and Toubro Ltd. etc. v/s State of Gujarat and ors. [AIR 1998 SC 1608]* to uphold the validity of the panchnama as proof of taking possession.
• The Supreme Court followed State of Gujarat v Gyanaba Dilavarsinh Jadeja [(2013) 11 SCC 486]* to clarify that the saving clause in the Repealing Act only protects actions explicitly mentioned.

The Court reasoned that the appellant’s claim that possession was not taken due to the civil court’s status quo order was not valid. The Court noted that the status quo order was not served on the competent authority, and the civil suit appeared to be a collusive attempt to prevent the State from taking possession. The Court also relied on the panchnama and the appellant’s own pleadings in SCA No 9057 of 1998, which confirmed that possession was taken on July 24, 1990.

The Court further held that the repeal of the Urban Land (Ceiling and Regulation) Act, 1976, did not affect the vesting of land where possession had already been taken. The saving clause in Section 3(1)(a) of the Repealing Act of 1999 protected such vesting. The Court also clarified that the saving clause in Section 3(1)(b) only applied to orders granting exemption under Section 20, which was not the case here.

The Court stated, “Once we have come to the conclusion that possession was taken over prior to the date of repeal i.e. 31 March 1999, we find no reason to interfere with the judgment of the High Court.”

The Court also observed, “In the present case, there was no order for the grant of an exemption under Section 20 on the date on which the repeal was brought into force.”

The Court further noted, “The appellant has not placed in issue either the order of vesting or the consequences which followed under the terms of the Act of 1976.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following:

• Collusive Nature of the Civil Suit: The court found that the civil suit filed by the appellant was a collusive attempt to prevent the State from taking possession of the land. This finding significantly undermined the appellant’s claim that the status quo order prevented the State from taking possession.
• Validity of Possession: The court emphasized that the State had validly taken possession of the land on July 24, 1990. This was supported by the panchnama and the appellant’s own pleadings in SCA No 9057 of 1998. The court rejected the appellant’s argument that the status quo order prevented the State from taking possession, as the order was not served on the competent authority.
• Saving Clause in the Repealing Act: The court relied on the saving clause in Section 3(1)(a) of the Repealing Act of 1999, which protected the vesting of land where possession had already been taken. The court clarified that the saving clause in Section 3(1)(b) only applied to orders granting exemption under Section 20, which was not the case here.
• Lack of Challenge to Vesting: The court noted that the appellant had not challenged the order of vesting or the consequences that followed under the Act of 1976. This lack of challenge further weakened the appellant’s case.

Sentiment Analysis of Reasons

Fact:Law Ratio

The court’s reasoning was heavily influenced by the factual aspects of the case, particularly the validity of possession and the collusive nature of the civil suit. The legal considerations, such as the saving clause in the Repealing Act, also played a significant role in the court’s decision.

Logical Reasoning:

Key Takeaways

• Valid Possession is Crucial: The judgment emphasizes that for the vesting of land under the Urban Land (Ceiling and Regulation) Act, 1976, to be protected after its repeal, valid possession must have been taken by the State before the repeal.
• Collusive Suits are Not Favored: The court’s rejection of the appellant’s claim due to the collusive nature of the civil suit highlights that courts will not support attempts to circumvent legal processes through collusive actions.
• Saving Clauses are Strictly Interpreted: The judgment clarifies that saving clauses in repealing acts are to be interpreted strictly. They only protect actions explicitly mentioned and do not extend to claims of acquiring a right.
• Importance of Proper Challenge: The appellant’s failure to challenge the order of vesting and its consequences weakened their case. It underscores the importance of raising all relevant issues in litigation.

Potential Future Impact:

• This judgment reinforces the importance of valid possession in land acquisition cases, particularly when dealing with repealed legislation.
• It sets a precedent for how saving clauses in repealing acts should be interpreted, emphasizing that they should be strictly construed.
• It serves as a caution against collusive litigation and the importance of proper legal challenges.

Directions

No specific directions were given by the Supreme Court in this judgment.

Development of Law

The ratio decidendi of this case is that the vesting of land under the Urban Land (Ceiling and Regulation) Act, 1976, is valid even after the Act’s repeal if possession was taken before the repeal. This is protected by the saving clause in Section 3(1)(a) of the Repealing Act of 1999. The court also clarified that the saving clause in Section 3(1)(b) only applies to orders granting exemption under Section 20.

There is no change in the previous position of law. The Supreme Court followed the previous positions of law as laid down in M/s. Larsen and Toubro Ltd. etc. v/s State of Gujarat and ors. [AIR 1998 SC 1608] and State of Gujarat v Gyanaba Dilavarsinh Jadeja [(2013) 11 SCC 486]. The Court reiterated that the saving clause in the Repealing Act only protects actions explicitly mentioned and does not extend to claims of acquiring a right. The court emphasized that a claim of acquiring a right is not an enforcement of an accrued right.