Supreme Court Upholds Statutory Cancellation of Leases for Agricultural Land Belonging to Religious Institutions: Gulf Oil Corporation Ltd. vs. State of Telangana (2022)

Date of the Judgment: 13 September 2022

Citation: 2022 INSC 738

Judges: Hemant Gupta, J., Vikram Nath, J.

Can a lease of land granted to a company be canceled if the land is classified as agricultural, even if it’s used for industrial purposes? The Supreme Court of India recently addressed this question, focusing on the interpretation of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987. This case revolves around a dispute over land leased by a religious institution to Gulf Oil Corporation Limited. The core issue is whether the lease was statutorily cancelled because the land was classified as agricultural, regardless of its current use. The judgment was delivered by a bench comprising Justice Hemant Gupta and Justice Vikram Nath.

Case Background

The case involves a land dispute concerning 540 acres and 30 guntas in Kukatpally, Hyderabad, originally granted as inam land to Sri Udasin Mutt (the Mutt) in 1873 by the Nizam of Hyderabad. The Mutt entered into multiple lease agreements with M/s Indian Detonators, the predecessor of Gulf Oil Corporation Limited (the Lessee), starting in 1964. These leases covered various portions of the land.

The initial lease agreement was executed on 23 July 1964, for 143 acres of land. Subsequently, on 14 September 1966, another lease agreement was made for 257 acres and 19 guntas, followed by a supplementary lease on 21 March 1969, for 2 acres and 32 guntas. In 1978, a lease deed was executed for 137 acres and 19 guntas for a period of 99 years. The Lessee, claiming to be the successor-in-interest of M/s Indian Detonators, relied on a permission granted by the Government on 24 February 1964.

The dispute arose when the Mutt issued a notice to the Lessee on 24 August 2007, claiming the Lessee was an encroacher and demanding vacant possession. The Mutt also alleged a violation of the lease terms due to the development of a graveyard on 20 acres of the land. The Assistant Commissioner (Endowments) conducted an inspection and reported on 29 January 2008, that the lease deeds, except the one from 1978, lacked prior government approval and were therefore void under the Andhra Pradesh Charitable and Hindu Religious Institutions & Endowments Act, 1966 and the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987.

Timeline:

Course of Proceedings

The Deputy Commissioner, Endowments Department, Hyderabad, issued a show cause notice on 20 December 2008, to the Lessee, initiating proceedings for encroachment. The Endowments Tribunal, later assigned Original Application No. 579 of 2010, ordered the eviction of the Lessee, holding that the leased land was agricultural and the lease was void under Section 82 of the 1987 Act. The High Court upheld this decision in a writ petition filed by the Lessee.

The Lessee argued that the land was not agricultural and that the Tribunal’s finding was illegal as no such issue was framed. The Mutt, on the other hand, contended that the land was indeed agricultural and the lease was statutorily cancelled under Section 82(1) of the 1987 Act. The High Court relied on the report of the Assistant Commissioner (Endowments) which stated that the land was agricultural land.

Legal Framework

Several legal provisions are central to this case:

✓ Section 70 of the Andhra Pradesh Charitable and Hindu Religious Institutions & Endowments Act, 1966: This section states that any lease exceeding six years of inam land granted for the support of a charitable or religious institution is void unless sanctioned by the Government. The section reads as follows:

“70. Lease, sale, etc., of inams to be void in certain cases:-
(1)Any lease for a term exceeding six years and any gift,
sale, exchange or mortgage of an inam land granted
for the support or maintenance of a charitable or
religious institution or endowment or for the
performance of a religious or public charity or service,
shall be null and void unless any such transaction, not
being a gift, is effected with the prior sanction of the
Government.”

✓ Section 82 of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987: This section cancels leases of agricultural land belonging to religious institutions, except those held by landless poor persons. It reads:

“82. Lease of Agricultural Lands:-
(1)Any lease of agricultural land belonging to or given or
endowed for the purpose of any institution or
endowment subsisting on the date of commencement
of this Act shall, notwithstanding anything in any other
law for the time being in force, held by a person who is
not a landless poor person stands cancelled.”

✓ Section 75 of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987: This section declares that any lease and any gifts, sale, exchange or mortgage of an inam land, granted for the support or maintenance of charitable or religious institution, or endowment or for the performance of a religious or public charity or service shall be null and void, unless such transaction, not being a gift, is affected with prior sanction of the Government.

✓ The Hyderabad Abolition of Inams Act, 1955: This Act initially excluded inams held by religious institutions but was later amended to include them, with a provision that the institution alone shall be registered as an occupant.

These provisions aim to protect the interests of religious institutions and ensure that their lands are not exploited. The 1987 Act specifically targets leases of agricultural land to non-landless poor persons.

Arguments

Lessee’s Arguments:

• The Lessee argued that the land was not agricultural but was used for industrial purposes, thus Section 82 of the 1987 Act did not apply. They relied on an order by the Joint Collector under the Telangana Abolition of Inams Act, 1955, stating that the land was converted to non-agricultural use before 1973.
• It was contended that the Endowments Tribunal’s finding that the land was agricultural was made without any evidence or specific plea. They cited that the issue of the land being agricultural was first raised in the written arguments of the Mutt.
• The Lessee argued that the lease deeds were for 99 years and could not be terminated without a 5-year notice period. They also stated that the termination notice was based on the wrong grounds.
• They also contended that the report of the Assistant Collector, Endowments was an inquiry and not evidence before the Tribunal.
• The Lessee relied on the communication from the Hyderabad Urban Development Authority to show that the land was earmarked as an industrial area.
• The Lessee also argued that the land had become urban land with the enactment of the Urban Land (Ceiling and Regulation) Act, 1976.
• The lessee argued that the lease deeds were entered into with the prior permission of the Government.

Mutt’s Arguments:

• The Mutt argued that the nature of the land was agricultural, and therefore, the lease was statutorily canceled under Section 82(1) of the 1987 Act, irrespective of its current use.
• They relied on Khasra Pahanis and other revenue records to show that the land was classified as dry agricultural land.
• The Mutt contended that the Endowments Tribunal and the High Court had correctly concluded that the lease was terminated under Section 82(1).
• They also argued that the 1987 Act had an overriding effect, canceling any leases of agricultural land belonging to religious institutions.
• The Mutt relied on a report by the Assistant Commissioner stating that the land in question was agricultural.
• The Mutt argued that the order of the Joint Collector under the Inams Abolition Act was not binding as the issues were different.
• The Mutt also contended that the lessee had not made any application for use of the land for non-agricultural purpose without prior permission.

The State argued that the term ‘agricultural land’ as mentioned in Section 82(1) of the 1987 Act has nothing to do with the purpose for which the leased lands were being used. The object and purpose of the 1987 Act is to safeguard the interests of the charitable and religious institutions and to revert and resume the agricultural lands of the religious institutions to them for their own benefit and well-being.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. What is the effect of the order dated 25.8.2007 passed by the Joint Collector under the Inams Abolition Act?
2. Whether the land in question is agricultural land to which the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987 is applicable and the lease in favor of the lessee stands canceled in terms of Section 82(1) of the Act?
3. Whether the parties went to trial with the knowledge that the land in question was agricultural land in the proceedings before the Endowments Tribunal?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

Legal Provisions:

• Section 70 of the Andhra Pradesh Charitable and Hindu Religious Institutions & Endowments Act, 1966
• Section 82 of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987
• Section 75 of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987
• The Hyderabad Abolition of Inams Act, 1955
• Section 3 of the Andhra Pradesh Non-Agricultural Assessments Act, 1963
• Rule 331 of Hyderabad State Endowment Rules and Regulations
• Andhra Pradesh (T elangana Area) Land Revenue Act, 1317 Fasli

Judgment

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

How each authority was viewed by the Court?

• Hope Plantations Ltd. v. Taluk Land Board, Peermade and Anr. [(1999) 5 SCC 590]* was distinguished as the proceedings under the Inams Abolition Act were not between the same parties.
• Bachhaj Nahar v. Nilima Mandal & Anr. [(2008) 17 SCC 491]* was distinguished as the lessees were aware of the nature of the land and its statutory cancellation.
• Ram Sarup Gupta (Dead) by Lrs. v. Bishun Narain Inter College & Ors. [(1987) 2 SCC 555]* was distinguished as the lessees were aware of the nature of the land and its statutory cancellation.
• Commissioner of Wealth Tax v. Officer in Charge (Court of Wards) [(1976) 3 SCC 864]*, Sarifabibi Mohmed Ibrahim (SMT) v. Commissioner of Income Tax, Gujrat [(1993) Supp 4 SCC 707]* and ITC Limited v. Blue Coast Hotels Limited [(2018) 15 SCC 99]* were referred to for the definition of agricultural land in the context of tax laws.
• Union of India v. Ibrahim Uddin & Anr. [(2012) 8 SCC 148]* and Biraji alias Brijraji & Anr. v. Surya Pratap & Ors. [(2020) 10 SCC 729]* were distinguished as the lessees were aware of the controversy.
• Mahesh Dattatray Thirthkar v. State of Maharashtra [(2009) 11 SCC 141]* was referred to, but the Court found that the lessee was aware of the report.
• Siddartha Academy of General and Technical Education v. Deputy Commissioner of Endowments [2010 SCC Online AP 461]* was followed to hold that the use of land for non-agricultural purpose is immaterial for the purpose of statutory cancellation of lease deed.
• State of A.P. v. Nallamilli Rami Reddy & Ors. [(2001) 7 SCC 708]* was followed to state that the object of Section 82 of the 1987 Act is to protect the interests of the religious institutions.
• Swamy Atmananda & Ors. v. Sri Ramakrishna Tapovanam & Ors. [(2005) 10 SCC 51]* and Nedunuri Kameswaramma v. Sampati Subba Rao [AIR 1963 SC 884]* were followed to hold that if parties went to trial knowing the real issues, non-framing of a particular issue is not fatal.
• Nagubai Ammal & Ors. v. B. Shama Rao & Ors. [AIR 1956 SC 593]* was referred to for the same proposition
• A.P. Punjabi Sabha, Hyderabad v. Joint Collector, Hyderabad [2004 SCC OnLine AP 689]* was distinguished as the issues under the Inams Abolition Act are different.
• Nareshbhai Bhagubhai v. Union of India [(2019) 15 SCC 1]* was referred to, to hold that the note dated 24.02.1964 is not a decision which can be said to be effective and binding.

Decision

The Supreme Court dismissed the appeals, upholding the decision of the High Court and the Endowments Tribunal. The Court held that the leases of agricultural land belonging to religious institutions were statutorily canceled under Section 82(1) of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987. The Court emphasized that the nature of the land as agricultural was the determining factor, regardless of its current use for industrial purposes. The Court also held that the note dated 24.02.1964 is not a decision which can be said to be effective and binding. The only approval of land measuring 173 acres and 19 guntas is dated 10.5.1976. The Court also held that the proceedings under the Inams Abolition Act were not between the same parties and therefore, the order was not binding.

Flowchart of the Case

Key Takeaways

• Statutory Cancellation: Leases of agricultural land belonging to religious institutions are statutorily canceled under Section 82(1) of the Telangana Charitable and Hindu Religious Institutions and Endowments Act, 1987, if held by a person who is not a landless poor person.
• Nature of Land: The nature of the land as agricultural is the determining factor, regardless of its current use for non-agricultural purposes.
• Overriding Effect: The 1987 Act has an overriding effect, canceling any leases of agricultural land belonging to religious institutions.
• Protection of Institutions: The primary object of the 1987 Act is to safeguard the interests of the charitable and religious institutions.
• Awareness of Issues: If parties go to trial knowing the real issues, non-framing of a particular issue is not fatal.
• Limited Scope of Inams Abolition Act: The order of the Joint Collector under the Inams Abolition Act was not binding as the issues were different.