YADAIAH AND ANR. v. STATE OF TELANGANA AND OTHERS

OTHERS [SURYA KANT, J.]

and Industries Private Limited v. State of Haryana 25 where the practice of GPA sales was deprecated and it was noted that the same did not constitute ‘sale’ or ‘transfer’ as contemplated under the Transfer of Property Act, 1882.

64Copy pinpoint64. However, we must note that the term ‘transfer’ as defined under the 1977 Act is much more inclusive than the one employed in the Transfer of Property Act, 1882. The definition under the 1977 Act uses the phrase ‘any other transaction’, which, in our considered opinion, necessarily includes the GPA executed as an instrument to surrender ownership and possessory rights in favour of M.A. Baksh. The intent of `transfer’ through the said GPA by the Assignees authorizing the attorney holder to sell or transfer the subject Property without any restriction as is evident from its recitals and for which they admittedly received consideration from M.A. Baksh, is beyond any doubt. This was precisely the kind of practice deprecated by this Court in Suraj Lamp and Industries Private Limited26. We have thus no hesitation in holding that the said GPA falls within the ambit of the term ‘transfer’, especially in view of the objective of the 1977 Act, which was manifestly intended to save the landless poor persons from the clutches of the rich and the resourceful, who deprived them of the precious title assigned to them by the Government for their occupation and the source of livelihood.

65Copy pinpoint65. Our observations are in continuity with the view previously taken by this Court in Dharma Naika v. Rama Naika27 wherein an ‘agreement to sale’ was held to be included within the definition of ‘transfer’ as provided under the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act, 1978. Its pertinent to mention that the definition of ‘transfer’ in the aforesaid statute is somewhat similar to the one employed by the 1977 Act. This Court noted that:– “12. A bare reading of the definition of “transfer” as defined in Section 3(1)(e) of the Act would show that an “agreement for sale” of any “granted land” is included within the meaning of “transfer”. That being the position, the word “transfer” as defined under the Act is an inclusive definition. That is to say, it includes “sale” as

25 Suraj Lamp and Industries Private Limited v. State of Haryana (2012) 1 SCC 656 26 ibid. 27 Dharma Naika v. Rama Naika (2008) 14 SCC 517.

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well as “agreement for sale”, although an agreement for sale under the Transfer of Property Act is not a transfer and the right, title or interest in the land does not pass until the sale deed is executed and registered. “Sale” has been defined in Section 54 of the Transfer of Property Act which means “transfer of ownership in exchange for a price paid or promised or part-paid and part-promised”. As noted herein earlier, an agreement to sell does not by itself create any interest of the proposed vendee in the immovable property but only creates an enforceable right in the parties. (See Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [(2004) 8 SCC 614].) Therefore, it is clear that under the general law, that is, under the Transfer of Property Act, an “agreement for sale” is not the same as “sale” and in the case of an agreement for sale, the title of the property agreed to be sold still remains with the vendor but in the case of “sale”, title of the property is vested with the vendee. Therefore, an agreement for sale is an executory contract whereas sale is an executed contract. x-x-x-x

22. As noted hereinearlier, it is true that in this case, admittedly, the parties had entered into an agreement for sale in respect of the granted land before the commencement of the Act. It is also an admitted position that the respondents belong/ belonged to the Scheduled Caste community. As already noted hereinearlier, for the purposes of this Act, “transfer” has been defined to include an “agreement for sale” although under the general law, an “agreement for sale” will not by itself transfer the granted land automatically to the appellant purchaser. From an overall consideration of the objects and reasons for which this Act was introduced viz. to protect the right and interest of the Scheduled Castes and Scheduled Tribes in respect of the granted lands and the relevant provisions of the Act, it is pellucid that the definition of “transfer” under Section 3(1)(e) of the Act includes an agreement for sale also and “transfer” has been so defined to protect the right, title and interest of the

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OTHERS [SURYA KANT, J.]

Scheduled Castes and Scheduled Tribes so that possession of the lands could be restored to them even if they had entered into an agreement for sale.” (Emphasis Applied) We, therefore, hold that the GPA executed in favour of M.A. Baksh in the instant case constitutes a ‘transfer’ under the 1977 Act and consequently would also result in violation of Section 3 of the 1977 Act.

66Copy pinpoint66. This leads us to further consider the penal consequences in case of the violation of Section 3 of the 1977 Act, as is provided in Section 4 of the 1977 Act. The relevant part of the said provision, as amended from time to time, reads as follows:– “Section 4 – Consequence of breach of Section 3 – (1) If in any case, the District Collector or any other officer not below the rank of a Mandal Revenue Officer, authorised by him in this behalf; is satisfied that the provisions of sub-section (1) of section 3, have been contravened in respect of any assigned land, he may, by order- (a) take possession of the assigned land after evicting the person in possession after such written notice as the Collector or Mandal Revenue Officer may deem reasonable and any crop or other produce raised on such land shall be liable to forfeiture and any building or other construction erected or anything deposited, thereon shall also be forfeited, if not removed by him, after such notice, as the Collector or the Mandal Revenue Officer may direct Forfeitures under this section shall be adjudged by the Collector or Mandal Revenue Officer and any property forfeited shall be disposed of as the Collector or Mandal Revenue Officer may direct; and; (b)(i) reassign the said resumed land, other than those lands/ areas as may be notified by the Government from time to time in public interest and for public purpose, to the transferee who purchased the land in good faith and for valuable consideration on or before 29th January, 2007, subject to the condition that he/

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she is landless poor person, and is in occupation of the land by using the said land for agriculture or as house site, as on the date of taking possession by eviction: Provided that the reassignment in case of transferee shall be limited to only such an extent that the total holding of the reassignee including any other land held by him/her does not exceed 5.00 Acres dry land or 2 ½ Acres wet land: Provided further that where the transferee who has purchased the land and got reassignment of it, or his legal heir, transfers the reassigned land, the land shall be resumed for assignment to the other eligible landless poor: (ii) restore the said assigned land, other than those lands/ areas as may be notified by the Government from time to time in public interest and for public purpose, to the original assignee, subject to the condition that he or she is landless poor person as on the date of restoration for one time; or (iii) assign to other eligible landless poor person: Provided that the restoration of land shall be limited to only such an extent that the total holding including any other land held by him/her does not exceed 5.00 Acres dry land or 2 ½ Acres wet land: Provided further that where the original assignee or his legal heir, after fi rst restoration transfers the assigned land, the land shall be resumed for assignment to the other eligible landless poor: Provided also that if no eligible landless poor persons are available in the village/area, the resumed land will be utilised for public purpose. Explanation: For the purpose of this clause “Public Interest” and “Public Purpose” shall mean and include, the Weaker Section Housing, Public Utility, Infrastructure Development, promotion of industries and Tourism or for any other public purpose;

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OTHERS [SURYA KANT, J.]

(c) In the areas which may be notified by Government from time to time, time, lands resumed under clause 4(a) above, shall be utilized for public purpose. x-x-x-x (5) For the purposes of this section, where any assigned land is in possession of a person, other than the original assignee or his legal heir, it shall be presumed, until the contrary is proved, that there is a contravention of the provisions of sub-section (1) of section 3.” (Emphasis Applied)

67Copy pinpoint67. The Appellants have argued that Section 4 of the 1977 Act as it stood on the date when the resumption orders were passed, i.e. 27.01.2007, only stipulated that a breach under Section 3 would result in possession of the land being taken over from the third party to whom the land was transferred and restored back to the original assignees. In other words, the Appellants contend that the Subject Land should be re-assigned to them as they are the legal heirs of the Assignees.

68Copy pinpoint68. We have thoughtfully considered the submission. It is important at this to draw attention to the provisions of The Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Act, 2007 [Hereinafter, ‘2007 Amendment’] through which Section 4(1)(c) was introduced. The 2007 Amendment Act in its Section 1(3) expressly states that:– “Section 1 - Short title, extent and commencement – x-x-x-x (3) Section 2 shall be deemed to have come into force with effect on and from 21st, January, 1977 and the remaining provisions shall come into force from the date as the Government may, by notification, appoint.” (Emphasis Applied) It is significant to note that Section 4(1)(c) was introduced through Section 2 of the 2007 Amendment Act. The legislature explicitly gave it retrospective effect and even introduced an Ordinance on similar lines prior

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to the said amendment. The legislative intention can be further illuminated from the relevant part of the Statement of Object and Reasons in the Bill which introduced the 2007 Amendment and the same reads as follows:– “x-x-x-x On account of rapid urbanization in certain areas i.e., Hyderabad, Visakhapatnam, Ranga Reddy Districts etc., most of the assigned lands have been alienated by the original assignees and the lands were converted to non-agricultural use. It is found not possible to reassign these lands after resumption, either to the original assignee or his/her legal heir. It is also practically not possible to assign these lands to other landless poor persons, since the nature of these lands has been changed and they are not useful for agriculture purpose. Keeping in view of the above said position, Government have decided to amend clause (b) of sub-section (1) of Section 4 of the said Act empowering the Government to notify certain areas where the Government can resume the assigned lands and utilize them for public purposes such as Weaker Sections Housing, Public Utilities, Infrastructure Development or for any other public purpose in such areas as may be notified by it. The amendment also proposes that in the areas other than those notified, the land can be restored once to the original assignee or it can be assigned to other eligible persons. However, if either the original assignee or no eligible landless poor are available in the village, then it gets restored to the Government for public purpose. As the Legislative Assembly was not then in session and it has been decided to give effect to the above decision immediately, the Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Ordinance, 2006 has been promulgated by the Governor on the 5th November, 2006.” (Emphasis Applied)

69Copy pinpoint69. It deserves to be mentioned that in the Andhra Pradesh Assigned Lands (Prohibition of Transfers) (Amendment) Ordinance, 2006

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OTHERS [SURYA KANT, J.]

[Hereinafter, ‘2006 Ordinance’] also, a similar provision for resumption for certain notified lands akin to what has been provided in the 2007 Amendment Act, was incorporated. The intention of the legislature in respect of retrospective application of Section 4(1)(c) is thus crystal clear from the very inception. Furthermore, at the time of rebuttal arguments, the Respondents have produced a Notification dated 11.12.2006 whereby the village comprising the Subject Land has been notified as the area liable for resumption for violation of Section 3 of 1977 Act. Though the notification was purportedly issued for implementation of the 2006 Ordinance, but the said Ordinance having been substituted by the amendment in Section 4(1) (c) of the 1977 Act with more or less identical expressions, the Notification, referred to above, caters the legal necessity of requirement of a Notification under the Act. Hence, resumption of the Subject Land and re-transfer of its ownership rights to the State, does not suffer from any legal infirmity.

70Copy pinpoint70. It may also be relevant to mention that the High Court in Dharma Reddy28 has already upheld the retrospective application of Section 4(1)(c) of the 1977 Act. Pertinently, this Court too in Manchegowda v. State of Karnataka29 upheld the constitutional validity of retrospective application given to Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act of 1978, which is a statute whose scheme is akin to 1977 Act. These amended provisions are thus deemed to be in force at the time of violation of assignment conditions in the year 1992. The only irresistible conclusion would thus be that the resumption order dated 27.01.2007 does not suffer from any legal infirmity. C.5 COMPENSATION FOR RESUMPTION

71Copy pinpoint71. Finally, we consider the aspect of compensation in respect of the Subject Land, which has been pressed into aid by learned senior counsel Mr. Reddy by relying on the decision of the High Court in Mekala Pandu30 to contend that in case any assigned land is resumed for public purpose as sought to be done in the instant case, then market value of the said land must be paid as compensation. The relevant paragraphs of the cited decision are extensively reproduced as follows:–

28 Dharma Reddy (n 12). 29 Manchegowda v. State of Karnataka (1984) 3 SCC 301. 30 Mekala Pandu (n 10).

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“80. The question that falls for consideration is whether the terms of grant or patta enabling the State to resume the assigned lands for a public purpose without paying compensation equivalent to the market value of the land to the assignees are valid in law? Whether such restrictive conditions or covenants suffer from any constitutional infirmity?

81. The State while directing no compensation be paid equivalent to the market value of the assigned lands never took into consideration and had any regard to the length of time the land held by the grantee or assignee, the social objectives for which the assignment had been made by the State in discharge of its constitutional obligation of providing public assistance to the weaker sections of the society, the improvements or developments upon the land made by the assignees on any legitimate expectation of continuance of the assignment, heritable nature of the right under the grant, etc.

82. The question is whether the ‘no compensation clause’ imposed in the grant of assignment, in effect, requires the assignee to relinquish some constitutional right? Whether the conditions imposed at the time of assignment are “unconstitutional conditions”?

83. The assignees are constitutional claimants. The constitutional claim cannot be subjected to governmental restrictions or sanctions except pursuant to the constitutionally valid rule or law. There is no legislation enacted by the State compelling it to assign the lands to the weaker sections of the society. The State obviously assigned and granted pattas as a measure of providing public assistance to the weaker sections of the society. The proposition is that as a general rule the State may grant privilege upon such conditions as it sees fit to impose; but the power of the State in that regard is not unlimited, and one of the limitations that it may not impose conditions which require the relinquishment of constitutional rights. That whenever State is required to make laws, regulations or policies, it must do so consistently with the directive principles with a view to securing social and economic freedom so essential for establishment of an egalitarian society. The Directive Principles

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OTHERS [SURYA KANT, J.]

of State Policy reflect the hopes and aspirations of people of this great country. The fact that they are not enforceable by any Court in no manner reduces their importance. They are nevertheless fundamental in the governance of the country and the State is under obligation to apply them in making laws and framing its policies particularly concerning the weaker sections of the society. x-x-x-x

92. ‘No compensation’ clause which virtually enables the State to withdraw the privilege granted without payment of just compensation is an “unconstitutional condition” imposed by the State adversely affects the life, liberty, equality and dignity guaranteed by the Constitution. The assignment of lands to the exploited and vulnerable sections of the society is neither a formality nor a gratis. The privilege granted is with a view to ensure and protect the rights of the exploited sections of the people to live with human dignity free from exploitation. The privilege or largesse once granted acquires the status of vested interest. The policy to assign the government land by the State was obviously designed to protect the socio-economic status of a vulnerable citizenry; its deprivation would be universally perceived as a misfortune. x-x-x-x

100. The deprivation of the assignee’s right to payment of just compensation equivalent to the market value of the assigned land may amount to deprivation of right to livelihood. The denial of constitutional claim to receive just compensation after depriving the assignee of his land is impermissible except pursuant to a constitutionally valid rule or law. x-x-x-x

110. In the result, we hold that ‘no compensation’ clause, restricting the right of the assignees to claim full compensation in respect of the land resumed equivalent to the market value of the land, is unconstitutional. The ‘no compensation clause’ infringes the fundamental rights guaranteed by Articles 14 and 31-A of the

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Constitution. We are conscious that Article 21 essentially deals with personal liberty. But in cases where deprivation of property would lead to deprivation of life or liberty or livelihood, Article 21 springs into action and any such deprivation without just payment of compensation amounts to infringement of the right guaranteed thereunder. The doctrine of ‘unconstitutional conditions’ applies in all its force.

111. In the circumstances, we hold that the assignees of the government lands are entitled to payment of compensation equivalent to the full market value of the land and other benefits on par with full owners of the land even in cases where the assigned lands are taken possession of by the State in accordance with the terms of grant or patta, though such resumption is for a public purpose. We further hold that even in cases where the State does not invoke the covenant of the grant or patta to resume the land for such public purpose and resorts to acquisition of the land under the provisions of the Land Acquisition Act, 1894, the assignees shall be entitled to compensation as owners of the land and for all other consequential benefits under the provisions of the Land Acquisition Act, 1894. No condition incorporated in patta/deed of assignment shall operate as a clog putting any restriction on the right of the assignee to claim full compensation as owner of the land.

112. In such view of ours, the view taken by this Court in Bondapalli Sanyasi (2 supra) that whenever the land is taken possession of by the State invoking the terms of the grant, the right of an assignee to any compensation may have to be determined in accordance with the conditions in patta itself is unsustainable. With due respect, we are unable to agree with the view taken in this regard. We are also unable to agree with the view taken that the assignee shall be entitled to compensation in terms of the Land Acquisition Act not as owner but as an interested person for the interest he held in the property.” (Emphasis Applied)

72Copy pinpoint72. A perusal of the above extracts reveals that the real issue in those cases pertained to ‘no compensation’ clauses in the assignment and not

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OTHERS [SURYA KANT, J.]

the non-payment of compensation for violating conditions regarding non- alienability as involved in the case in hand. That apart, the High Court’s observation in respect of a constitutional right to compensation were disapproved by this Court while dismissing the Civil Appeals/Special Leave Petitions, including against the decision in Mekala Pandu31 as is discernible from the following order32 : – “1. Having regard to the peculiar facts and circumstances of the case. noted in the impugned judgment(s), we are satisfied that these are not fit cases for exercise of our jurisdiction under Article 136 of the Constitution of India.

2. Civil Appeals and Special Leave Petition are, accordingly, dismissed.

3. No costs.

4. Certain observations made in the impugned order(s) about the status of claimants as ‘constitutional claimants’ are kept open to be considered in appropriate case, if necessary.” (Emphasis Applied)

73Copy pinpoint73. Importantly, we must be cautious of the difference between the terms ‘acquisition’ and ‘resumption’ in the context of property laws. While both terms indicate deprivation of a right, there exists a significant distinction in their actual legal connotation. Acquisition denotes a positive act on behalf of the State to deprive an individual’s enjoyment of a pre-existing right in a property in furtherance of its policy whereas resumption denotes a punitive action by the State to take back the right or an interest in a property which was granted by it in the first place. The term ‘resumption’ must not therefore be conflated with the term ‘acquisition’ as employed within the meaning of Article 300- A of the Constitution so as to create a right to compensation. Keeping this mark distinction in view, it is not necessary for us to determine whether an expropriated owner has an impeachable constitutional right to compensation under Article 300A of the Constitution in lieu of his acquired property.

31 Mekala Pandu (n 10). 32 A.P. Industrial Infrastructure Corporation Ltd v Ramesh Singh and other connected appeals (Civil Appeal No. 7904-7912 of 2012, 4 August 2014).

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74Copy pinpoint74. It is also pertinent to note that serious allegations prevail against the Appellants for being involved with the land mafia to usurp the Subject Land for private interests which was the precise reason for the Government to introduce legislation in the nature of the 1977 Act. Resultantly, in the facts and circumstances of this case, we hold that the Appellants are not entitled to any compensation under the existing constitutional framework. D. CONCLUSION

75Copy pinpoint75. In light of the abovementioned discussion, we conclude that the proceedings emanating out of the Second SCN were valid; the Subject Land was non-alienable and hence was subject to the provisions of the 1977 Act. We further hold that the Appellants had transferred the Subject Land in contravention to the provisions of 1977 Act and therefore, the resultant resumption order dated 27.01.2007 is valid. The Appellants are also not entitled to any compensation on account of the resumption of the assigned land.

76Copy pinpoint76. We are not oblivious to the fact that the parties have been litigating since the year 1994. During these decades, the Subject Land has acquired enormous value. Some of the documents on record do indicate that land mafia has already ousted the gullible Assignees and now have vulture’s eyes on the land. Additionally, a security agency of paramount national importance currently occupies the Subject Land in public interest. We, therefore, deem it appropriate to invoke our powers under Article 142 of the Constitution to do complete justice to the parties and issue the following further directions/declarations:- a) The Subject Land in its entirety is declared to have vested in the State Government. On further allotment, its ownership and possessory rights, free from all encumbrances, stand transferred in favour of the Greyhounds; b) No Civil Court or High Court shall entertain any claim whatsoever on behalf of any Assignee, their legal representative, GPA holder or any other claimant under any Agreement to sell or other instruments, claiming direct or indirect interests in the Subject Land; and

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OTHERS [SURYA KANT, J.]

c) There shall be a final quietus of title and possessory dispute over the Subject Land in favour of the Respondent-State and/or the agency to whom the said land has been allotted.

77Copy pinpoint77. Consequently, these appeals stand dismissed along with any pending applications in the above terms. No order as to costs.

Headnotes prepared by: Appeals dismissed. Nidhi Jain