Full Judgment
Shivashankar Bhat, J.
1. Petitioner challenges the validity of notification Annexure-Ewhereby the Special Deputy Commissioner declared certain lands to vestin the State Government under Section 79B of the Karnataka LandReforms Act. Petitioner firm was incorporated under the IndianCompanies Act in the year 1963 and has been carrying on themanufacture of cattle feed, poultry feed and pig feed in its factoryat Pantharapalya village, Bangalore South Taluk. To expand itsactivities, it purchased about six acres 19 guntas of agriculturallands which were adjacent to its factory under a sale deed dated17-1-1973 out of which, about 19.15 1/4 guntas are stated to have beenacquired from it by the Water Board.
2. In August 1973, petitioner applied under Section 95(2) of theKarnataka Land Revenue Act, seeking permission to divert the user ofthese lands for non-agricultural purposes. The papers seem to havebeen returned and a fresh application was filed by the petitioner on30-6-1975. By an order dated 21-1-1976 the authority concerned issueda conversion certificate permitting the petitioner to utilise theselands for non-agricultural purposes as per Annexure-B. It is clearfrom this order that the Special Deputy Commissioner had orderedpermission as per his proceedings dated 18-11-1975.
3. On coming into force of the Urban Land (Ceiling and Regulation)Act, 1976 (ULCR Act for short), petitioner applied to the StateGovernment seeking exemption under Section 20 of the said Act, whichwas granted on 10-3-1977. Petitioner states that it obtained a loan ofRs. 6.28 lakhs from Karnataka State Financial Corporation byhypothecating the lands to the said Corporation in the year 1978. Byan additional statement, petitioner has averred that it has obtainedsanction for its proposed construction of factory buildings from theBangalore Development Authority for industrial purposes. StateGovernment has also issued utilisation certificate under the ULCR Actbased on the report of the Director of Industries. It is clear thatvast sums of money has been expended by petitioner for thesedevelopmental activities involved in the establishment of itsfactory.
4. The Karnataka Land Reforms Act 1961 (L.R. Act for short) wasdrastically amended by Karnataka Act 1 of 1974 to be effective from1-3-1974. Inter alia, in Chapter-V, Sections 79A to 79C wereintroduced. For the first time, certain disabilities were created tohold agricultural land. One such disability or ineligibility wasagainst a Company. By virtue of Section 79-B(1)(b)(ii), it was enactedthat it was not to be lawful for a company to hold any agriculturalland. A company holding,agricultural land as on 1-3-1974 is required,within 90 days from the said date, to furnish to the Tahsildar certainparticulars who, after an enquiry, has to send a statement to theDeputy Commissioner. The Deputy Commissioner as per Section 79-B(3)shall by notification declare that such land shad vest in the StateGovernment free from all encumbrances and take possession of the land.Sub-section (4) provides for payment of an amount to the owner, inlieu of the vesting of land in the State.
5. Main scheme of the L.R. Act is to vest all tenanted lands in theState Government under Section 44, impose a ceiling on the landholdings and compel the owner himself to cultivate the land. Toachieve these objectives, legislature has thought it fit to introduceother provisions such as Section 79A to 79C. But such provisions arebound to result in hardship to those who acted bona fide and purchasedlands during the transitional period, as happened in this case.
6. A disabling provision requires strict construction, so thatundue hardship could be avoided. A literal or technical constructionof the provisions of a statute leading to the deprivation of one'sproperty and affecting adversely trade, industry, commerce and thelivelihood of many, has to be avoided, unless such a construction isinevitable. Here, the action taken by the Deputy Commissioner underthe impugned order, by recourse to Section 79B of L.R. Act affects anindustrial activity of the petitioner and deprives it of its lands,which in turn, also would result in unemployment of severalindividuals.
7. By the impugned order dated 7-6-1978, purporting to act underSection 79-B(3) of the L.R. Act, the Special Deputy Commissionerdeclared that the lands in question 'shall be vest' in the StateGovernment, since the petitioner, a company, could not holdagricultural lands with effect from 1-3-1974.
8. A perusal of Section 79B of the L.R. Act shows that it does notdeem the land to have vested in the State Government with effect from1 -3-1974. Vesting provided under Section 79-B(3) is the consequenceof an enquiry and declaration made by the Deputy Commissioner underthe said provision. The fact that the State is required to paycompensation to the land owner under Section 79-B(4) shows that, thetitle of the disabled person like the present petitioner-companycontinues till the date of the declaration under Section 79-B(3). Whenthe statute says that the Deputy Commissioner shall declare that land'shall vest' in the State Government, it can only be prospective, tobe operative on making the declaration.
9. There is no specific finding that as on 1-3-1974 lands inquestion were agricultural lands, as a fact. Petitioner purchased themon 17-1-1973. Petitioner was already carrying on industrial activitiesin the locality nearby these lands. Being a non-agriculturist byvocation, it can be assumed that the petitioner did not carry on anyagricultural operations on those lands (assuming, that, earlier suchoperations were being carried on by the previous owner) and thus theselands were, in a sense, ceased to be agricultural lands, de facto.Thus viewed, the disability created as on 1-3-1974 by Section 79B ofthe L.R. Act cannot apply to the petitioner.
10. The learned Government Advocate contended that the DeputyCommissioner has proceeded on the assumption that the lands inquestion are agricultural, because, the owner sought permission todivert the user of these lands for non-agricultural purposes underSection 95(2) of the Karnataka Land Revenue Act (Revenue Act forshort). Relevant part of Section 95(2) reads :-
'95 : Use of agricultural land and the procedure foruse of agricultural land for other purposes -
(1) xx xx (omitted)(2) If any occupant of land assessed or held for the purpose ofagriculture wishes to divert such land or any part thereof to anyother purpose, he shall apply for permission to the DeputyCommissioner who may, subject to the provisions of this Section andthe rules made under this Act, refuse permission or grant it on suchconditions he may think fit;
(Proviso omitted as unnecessary)'
11. Section 95(2) of the Revenue Act governs the case of a land,(i) assessed for the purpose of agriculture or (ii) which is held forpurposes of agriculture. Therefore, the application seeking conversionunder Section 95(2), at the most, can lend support to the inferencethat the land in question was assessed for purposes of agriculture orheld for purposes of agriculture. But it is not possible to hold thatthe said land was actually an agricultural land in the sense,agricultural operations were being carried on normally. Further,Section 83 of the said Revenue Act also leads to the conclusion that,the land revenue is assessed or deemed to have been assessed withreference to the use of the land for purpose of agriculture. It alsoprovides that in case a non-agricultural land is diverted to be usedfor agriculture, the land revenue assessed on it is to be modifiedwith reference to its use for purposes of agriculture. However it hasto be noted that there is no provision like Section 95(2) requiringpermission to divert a non-agricultural land into agriculturalland.
12. A reading of Sections 83 and 95(2) of the Revenue Act indicatesthat levy of land revenue on a land does not necessarily lead to theinference that it is agricultural land. A land not used for anypurpose, may still be levied with land revenue and in case such a landis sought to be used for non-agricultural purposes, Section 95(2)operates, requiring permission.
13. A land which is agricultural may cease to be used foragriculture for various reasons. Theoretically, such a land may becapable of being used for agriculture and may fall within thedefinition of 'land' defined in Section 2A(18) of the Karnataka LandReforms Act. But, the definitions are always subject to context andshould be read in a practical mariner.
14. In the absence of any specific finding that these lands werebeing used as agricultural lands, the Special Deputy Commissionererred in assuming them to be agricultural lands by the sole fact thatthe petitioner sought permission for using the lands fornon-agricultural purposes under Section 95(2) of the Land RevenueAct.
15. There is another aspect of the case to be noted. The StateGovernment acted under Section 20 of ULCR Act by an order dated10-3-1977 which is 15 months prior to the impugned order of the DeputyCommissioner. Exemption under Section 20 of ULCR Act is to enableholding of Vacant land as defined under the ULCR Act.
16. Definitions of Vacant land' under Section 2(q) of ULCR Act andthe definition of 'Urban land' under Section 2(o) clearly shows that,it is a land, other than land mainly used for agriculture. Scheme of ULCR Act is to regulate holding of Urban lands. Its aim is not toaffect agricultural lands. When the State Government grants exemptionunder Section 20 of ULCR Act, 'the vacant land' to which exemption isgranted can be only in respect of non-agricultural land. Exemption tohold such a land is given to the person who has title to hold such aland. In this case, admittedly. State Government granted exemption tothe petitioner under Section 20 of ULCR Act on 10-3-1977. Inference isirresistable from this fact that as on 10-3-1977 :- (1) petitioner washolding the lands and this fact was recognised by the State Governmentand (2) the lands held by the petitioner in respect of which theexemption was granted, were non-agricultural.
17. If the State Government, has, thus recognised the petitioner'spossession of these lands and accepted the lands to benon-agricultural, is it open to the Special Deputy Commissioner to gobehind these postulates on which the competence of State Governmentrests to make the order? Special Deputy Commissioner is a subordinateofficer of the State Government, He may have an independent statutoryexecutive function to discharge. But, while discharging his executivefunctions under any statute, he cannot ignore the facts recognised asin existence by the State Government. Otherwise, the very basis of thehierarchical system in which the executives are to discharge theirduties will be in jeopardy, That is why, it is observed in STATE OFKARNATAKA v. SRI KUMARESHWAR SAHAKARI GRUHA NIRMAN ABHIVRIDDI SANGHALTD. & ANOTHER thus :-
'Special Deputy Commissioner is a subordinate officerof the State Government. He has certain implied disabilities flowingout of his subordination to the State Government. He cannot nullifywhat the State Government permitted. It is not open to him to assume afact, contrary to the assumptions of the StateGovernment.'
The basic facts involved in that case are similar to the oneinvolved in this case, and we are told that the State Government hasnot filed any appeal against the said decision.
18. There is also no dispute that already another DeputyCommissioner had made an order under Section 95(2) of the Revenue Actpermitting conversion of land-use, in respect of these lands inNovember 1975 and the petitioner had acted upon it. This is completelyignored by the Deputy Commissioner who made the impugned order in theyear 1978.
19. Hence, we hold that, - (i) a notification under Section 79-B(3) of the Karnataka Land Reforms Act is prospective from the date of itsissuance ; (ii) while issuing an order/or notification under Section79-B(3), the Deputy Commissioner has to take note of any order of theState Government made under Section 20 of the ULCR Act and the basicfacts assumed for the validity of such an order of the StateGovernment ; and (iii) it cannot be assumed straight-away that whenpermission for conversion is sought under Section 95(2) of the RevenueAct the land in question was factually used as an agriculturalland.
20. In the result, for the aforesaid reasons, we allow thispetition and the impugned notification issued by the second respondentin LRC.FR. 1292/77-78 dated 7-6-78 (Annexure-E) is quashed. Rule ismade absolute.
In the circumstances of the case, there will be no order as tocosts.