| SooperKanoon Citation | sooperkanoon.com/441055 |
| Subject | Property |
| Court | Andhra Pradesh High Court |
| Decided On | Jun-28-2006 |
| Case Number | W.P. No. 26167 of 1996 |
| Judge | G.S. Singhvi, C.J. |
| Reported in | 2006(6)ALT480 |
| Acts | Urban Land (Ceiling and Regulation) Act, 1976 - Sections 3, 4, 4(4), 5, 6(1), 7, 8 to 10, 10(1), 10(3), 11, 12, 13, 14, 15, 16, 17, 18, 19, 19(1), 20, 20(1), 21, 22, 23, 24, 26 to 28, 29 and 30; Tamil Nadu Urban Land Tax Act, 1966 - Sections 27 and 29; Constitution of India - Articles 37, 38, 38(1), 39 and 226 |
| Appellant | Kilari Ayyanna Patrudu |
| Respondent | Govt. of A.P., Rep. Prl. Secretary, Revenue Dept. and ors. |
| Appellant Advocate | A.V. Sesha Sai, Adv. |
| Respondent Advocate | G.P. for Urban Land Ceiling |
| Disposition | Petition dismissed |
G.S. Singhvi, C.J.
1. Whether the State Government is required to record reasons for refusing to grant exemption under Section 20(1)(b) of the Urban Land (Ceiling and Regulation) Act, 1976 (for short 'the Act') is the question which arises for determination in these petitions filed by Kilari Ayyanna Patrudu, Kilari Venkata Chinnayya Patrudu and Kilari Satyanarayana Patrudu under Article 226 of the Constitution for quashing Memos dated 28.9.1996 issued by Deputy Secretary to Government, Revenue (U.C.I) Department.
2. The petitioners are sons of Kilari Appalaswamy Patrudu (hereinafter referred to as the 'land owner') who owned 8782 sq. mtrs. of land comprised in Survey Number 5/3 of Gullalapalem Village, which falls in the urban agglomeration area of Visakhapatnam Municipal Corporation. After coming into force of the Act, the land owner filed a declaration under Section 6(1) thereof. The Special Officer and Competent Authority, Visakhapatnam (hereinafter described as 'the Special Officer'), after making necessary enquiry, held that the land owner was having 7282 sq. mtrs. surplus land. On appeal, Commissioner of Land Reforms and Urban Land Ceiling remanded the case to the Special Officer for fresh determination of the surplus area of the land owner. After making de-novo enquiry, the Special Officer passed order dated 24.11.1983 whereby he declared that the land owner and his two major sons were having 3947.546 sq. mtrs. of surplus land. Neither the land owner nor his sons challenged that order by filing appeal or by availing appropriate legal remedy. After about 1 year 2 months, notification under Section 10(1) of the Act was issued. The same was published in A.P. Gazette dated 14.2.1985. This was followed by declaration dated 29.7.1986 issued under Section 10(3) of the Act. The land owner died in 1985. After his death, the petitioners entered into a family settlement under which each one of them got share of over 1315 Sq. mtrs. of surplus land. In July, 1987, the petitioners filed separate applications under Section 20(1)(b) of the Act for grant of exemption from the provisions of Chapter III. In his application, Kilari Ayyanna Patrudu claimed exemption by setting out the following facts:
We are three brothers. I am a Matriculation passed. My mother Smt. K. Kanakamma. She died in the year 1984. She was an Astama patient. During the course of my mother's existence my mother separately resided with me due to family dispute and as I am younger son. The entire responsibilities lie on me due to her ill-health. I to study further I have no house. I am residing in a small hut in the lands allowed by the Government. I have also to construct a permanent house and I am not married.
Owing to the heath of my parents I have to look after his landed property. I am enclosing legal heir certificate issued by the M.R.O., Visakhapatnam.
In view of the above circumstances, I request exemption of excess land in S. No. 5/3 of Gullalapalem Village which was declared in the name of my father.
In his application, Kilari Venkata Chinnayya Patrudu made the following assertions:
I am a student of Intermediate. While I was staying with my father, my father expired due to paralysis. We are three brothers divided while my father was alive. Later, I took up the entire responsibility of my family members and being looked after by me. My marriage was performed with my sister's daughter. She is not hale and healthy. I am jobless and eating on my livelihood by doing private work in a workshop. Due to ill-health of my wife and child I am incurring monthly expenditure of Rs. 500/- per month towards medical expenses. I have no pakka house and I have to construct a house which involves lot of expenditure. Since I have no other source of income, I have involved in huge debts amounting to Rs. 30,000 due to my father's sickness who was admitted at the time in K.G.H. We have no other land, other house hold properties except the surplus land. I have to clear of existence and especially during his sick period. I have to lookafter my child and wife who are persistently ill. In view of the above reason I may kindly be granted exemption for the excess land declared by the Government.
In his application, Kilari Satyanarayana Patrudu averred as under:
I have four daughters & one son aged the ground under 16, 14, 12, 9 and 10 respectively. All are which exemption is studying and they require financial sought, assistance for their higher education. All the four daughters have to be married. I am jobless but eating on my livelihood by doing private works, since I studied only upto VIII class. My wife is uora healthy woman. Hence there has been recurring expenditure of Rs. 150/- per month towards the medical expenses. Besides this, I have been incurring monthly expenditure of Rs. 250/- towards the education of my children. I have a very little tiled house. We are three brothers & one maintaining our livelihood by raising dry crops on the lands under issue there are some debts made by our father & they have to be cleared of.
3. During the pendency of the applications filed by the petitioners, Mandal Revenue Officer, Visakhapatnam directed them to deliver possession of surplus land measuring 3947.546 sq.mtrs. The petitioners challenged the same in Writ Petition No. 10716 of 1988, which was disposed of by a Division Bench of this Court on 30.7.1996. The Division Bench directed the State Government to dispose of the applications filed by the petitioners for grant of exemption within a period of three months and restrained the Mandal Revenue Officer from interfering with their possession.
4. In compliance of the aforementioned order of the Court, the State Government, after considering the reports dated 7.11.1987 and 16.6.1991 submitted by Special Officer, Urban Land Ceiling, Visakhapatnam and consulting the appellate authority rejected the applications of the petitioners. This was conveyed to them by the impugned memos.
5. The petitioners have challenged the rejection of their applications mainly on the ground that the decision of the State Government is devoid of reasons. They have relied on proviso to Section 20(1)(b) of the Act and pleaded that the failure of the State Government to apply mind to the relevant factors and assign reasons for rejecting their applications should be treated sufficient for nullifying the impugned communications.
6. The only point argued by Sri A. V. Sesha Sai, learned Counsel for the petitioners in support of his clients' challenge to the rejection of their applications for grant of exemption is that the decision of the State Government is reasonless and does not satisfy the requirement of a 'speaking order', which is ingrained in the proviso to Section 20(1)(b) of the Act. Learned Counsel emphasized that the power exercisable by the State Government under Section 20(1)(b) is quasi-judicial in nature and, therefore, it is duty bound to comply with the rules of natural justice and pass a 'speaking order' detailing the reasons for granting or refusing to grant exemption. In support of his argument, learned Counsel relied on the judgments of the Supreme Court in Siemens Engg. and Mfg. Co. v. Union of India : AIR1976SC1785 and S.N. Mukherjee v. Union of India : 1990CriLJ2148a .
7. Learned Government Pleader for Urban Land Ceiling controverted the arguments of Sri Sesha Sai and submitted that the decision of the State Government not to exempt the surplus land of the petitioners from the provisions of Chapter III of the Act cannot be faulted on the ground of absence of reasons. He submitted that power exercisable by the State Government under Section 20(1)(b) is administrative in character and reasons are required to be recorded in terms of proviso to that section only in the event of grant of exemption and not when the State Government refuses to grant exemption. In support of his arguments, learned Government Pleader relied on the judgment of the learned Single Judge in Sri Sarvaraya Sugars Limited, Chelluru v. Government of A.P. : 2003(5)ALD347 .
8. Learned Government Pleader also produced the original file containing the reports of the Special Officer, Urban land Ceiling, Visakhapatnam. The same was made available to the counsel for the petitioners for perusal and he was allowed to make further submissions with reference to the material considered by the State Government, but Sri A.V. Sesha Sai submitted that he has nothing more to add.
9. I have given serious thought to the respective arguments and carefully perused the record of the case, as also the file produced by the learned Government Pleader.
10. Part IV of he Constitution enumerates the Directive Principles of State Policy which, though not enforceable by any Court, are fundamental in the governance of the country and it is the duty of the State to keep these principles in view while enacting laws (Article 37). Article 38(1) ordains that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life. Clause (2) of Article 38 lays down that the State shall, in particular, strive to minimize the inequalities in income, and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals, but also amongst groups of people residing in different areas or engaged in different vocations. Article 39 enjoins upon the State to direct its policy towards securing to every citizen the right to an adequate means of livelihood; ensure that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment....Other Articles of this part do not have any bearing on the decision of these petitions, and, therefore, detailed reference to those Articles is being avoided.
11. With a view to achieve one of the goals set out in Articles 38 and 39 of the Constitution, the Parliament enacted the Urban Land (Ceiling and Regulation) Act, 1976 with the following main objectives:
(i) to prevent the concentration of urban property in the hands of few persons and to arrest the speculation and profiteering in the urban property;
(ii) to bring about socialization of urban land in urban agglomerations to subserve the common good by ensuring its equitable distribution;
(iii) to discourage construction of luxury housing leading to conspicuous consumption of scarce building materials and to ensure equitable distribution and utilization of such materials; and
(iv) to secure orderly urbanization.
The Act particularly provides for the following measures:
(i) imposition on ceiling on both ownership and possession of vacant land in urban agglomerations. The ceiling would be on the basis of classification of urban agglomeration.
(ii) acquisition of the excess vacant urban land by the State Governments. The Governments are conferred the powers to dispose of the vacant land to subserve common good;
(iii) payment of an amount for acquisition of land in excess, in cash and bonds;
(iv) granting exemptions in respect of certain specific categories of vacant land;
(v) regulating the transfer of vacant land within the ceiling limit;
(vi) regulating the transfer of urban land or construction of future residential buildings; and
(vii) restricting the plinth area for the construction of future residential buildings; and
(viii) other procedural matters.
12. Part III of the Act, which deals with ceiling on vacant land, contains 22 sections. Section 3 lays down that except as otherwise provided in the Act, no person shall be entitled to hold any vacant land in excess of the ceiling limit in the territories to which the Act applies. Section 4 enumerates ceiling limits for urban agglomeration falling within categories A, B, C and D specified in Schedule I. Section 5 provides for taking into consideration of the transfers effected during the period commencing on the appointed date and ending with the commencement of the Act for the purpose of determination of the surplus area. Section 6(1) requires every person holding vacant land in excess of the ceiling limit at the commencement of the Act to file a statement before the competent authority specifying the location, extent, value and such other particulars as may be prescribed of all vacant lands held by him and also specifying the vacant land within the ceiling limit which he desires to retain. Section 7 provides for filing of statement in cases where vacant land is situated within the jurisdiction of two or more competent authorities. Sections 8 - 10 regulate preparation of draft statement of the vacant land held in excess of the ceiling limit, issue of final statement and acquisition of vacant land in excess of the ceiling limit. Section 11 regulates payment of amount for the vacant land acquired by the State Government by virtue of deeming provision contained in Section 10(3) of the Act. Section 12 provides for constitution of Urban Land Tribunal for hearing appeals against the orders of the Special Officer and Section 13 provides for second appeal to the High Court. Section 14 prescribes the mode of payment of amount in terms of Section 11. Section 15 prescribes ceiling limit on future acquisition by inheritance, bequest or by sale in execution of decrees etc. Section 16 requires certain persons to file statements when the Act is adopted subsequently. Section 17 confers power on the competent authority or any person acting under the orders of the competent authority to enter upon any vacant land or building. Section 18 provides for penalty for concealment etc. of the particulars of vacant land. Section 19(1) lays down that the provisions of Chapter III shall not apply to vacant land held by Central Government etc. Section 20 confers power upon the State Government to grant exemption from the provisions of Chapter III. Section 21, which begins with anon-obstante clause, enumerates certain situations in which excess vacant land is not to be treated as excess. Section 22 provides for retention of vacant land in certain circumstances. Section 23 regulates disposal of vacant land acquired under the Act. Section 24 contains special provisions for disposal of vacant land in favour of certain persons.
13. Section 20 of the Act, the interpretation of which would determine the fate of these petitions, reads as under:
20. Power to exempt:
(1) Notwithstanding anything contained in any of the foregoing provisions of this Chapter-
(a) where any person holds vacant land in excess of the ceiling limit and the State Government is satisfied, either on its own motion or otherwise, that, having regard to the location of such land, the purpose for which such land is being or is proposed to be used and such other relevant factors as the circumstances of the case may require, it is necessary or expedient in the public interest so to do, that Government may, by order, exempt, subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this Chapter;
(b) where any person holds vacant land in excess of the ceiling limit and the State Government, either on its own motion or otherwise, is satisfied that the application of the provisions of this Chapter would cause undue hardship to such person, that Government may by order, exempt, subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this Chapter:
Provided that no order under this clause shall be made unless the reasons for doing so are recorded in writing.(2) if at any time the State Government is satisfied that any of the conditions subject to which any exemption under Clause (a) or Clause (b) of Sub-section (1) is granted is not complied with by any person, it shall be competent for the State Government to withdraw, by order, such exemption after giving a reasonable opportunity to such person for making a representation against the proposed withdrawal and thereupon the provisions of this Chapter shall apply accordingly.
14. If the above reproduced provisions are read in conjunction with other provisions of Chapter III including Sections 6, 8 and 10, it becomes clear that the exemption envisaged under Section 20(1)(b) is in the nature of a concession which the State Government can give to a person whose land is declared surplus. The exercise of power to grant exemption under Section 20(1)(b) is hedged with the condition that the State Government must feel satisfied that the application of the provisions of Chapter III would cause undue hardship to the applicant. This necessarily means that State Government cannot grant exemption under Section 20(1)(b) merely for asking. In each case, the applicant has to produce sufficient evidence to convince the State Government that application of the provisions of Chapter III will cause undue hardship to him.
15. In S. Vasudeva v. State of Karnataka (1993) (3) SCC 467, a Division Bench of the Supreme Court interpreted Section 20(1)(a) and (b) of the Act. P.B. Sawant and N.P. Singh, JJ, who constituted the Bench recorded separate opinions. P.B. Sawant, J. expressed his views in the following words:
It would be apparent from clause (a) of Sub-section (1) of the section that under it, the State Government is given power to exempt the excess vacant land from the operation of Chapter III only if the State Government is satisfied that having regard to (i) the location of the land and (ii) the purpose for which it is being or is proposed to be used, it is necessary or expedient in the public interest to exempt it. The paramount consideration is the public interest. The exemption granted under this provision may be subject to certain conditions. But, it does not appear that it is obligatory to impose such conditions. Nor is it necessary to record reasons when exemption is granted under this clause.
The power to exempt such land under clause (b) of Sub-section (1) can be exercised by the State Government, if it is satisfied that the application of Chapter III would cause undue hardship to the landholder. The exemption may be granted under this clause subject to such conditions, if any, as may be specified in the order. But, unlike under Clause (a), there is no obligation to prescribe the conditions. The permission given under this clause, however, has to be supported by reasons to be recorded in writing.
Sub-section (2) of the section enables the Government to withdraw the exemption granted either under Clause (a) or (b), if it is satisfied that any of the conditions subject to which the exemption is given, is not complied with. Clauses (a) and (b) of Sub-section (1) read with Sub-section (2) make it clear that the exemption may either be conditional or absolute. Where it is conditional, it may be withdrawn, if any of the conditions are not complied with. The very fact, however, that the Legislature has contemplated imposition of conditions on exemptions granted under both the clauses, shows that the purpose of the exemption under either of the clauses cannot be the transfer of the land. The exemption under Clause (a) is obviously for the land being put to a particular use which use is also necessary or expedient in the public interest, while exemption under Clause (b) is for relieving the person concerned from any undue hardship which may be caused to him personally, by the withdrawal of the excess land from his possession probably such as when the person may require the land for the expansion of the use to which he has already put it, such as his growing business or activities or to accommodate his growing family. The clause unfortunately is completely silent on what it intends to convey by the expression 'undue hardship'.
x x x x
The examination of the aforesaid relevant provisions of the Act shows a clear intention of the legislature and reveals a definite scheme. It has to be admitted that the provisions of the Act as are drafted have not succeeded in translating into words the clear intention of the legislature and to that extent the Act is an inelegant and confused piece of drafting. However, since the intention is clear, a harmonious reading of all the provisions consistent with that intention is necessary to interpret and understand each of the said provisions. The intention of the legislature is to acquire all vacant land in excess of the ceiling limit prescribed by the Act and the main purpose of the Act, as stated earlier, is threefold, viz. (i) to prevent concentration of the urban land in the hands of a few persons and to prevent speculation and profiteering therein; (ii) to distribute the urban land equitably and (iii) to regulate the construction of buildings on the urban lands. Consistent with these objectives, the Act provides for acquisition of all urban vacant land in excess of the ceiling limit and prohibits its transfer in any form absolutely. All that the Act permits in the case of such excess vacant land is either express exemption from the operation of Sections 3 - 19 of Chapter III of the Act by the State Government under Section 20 or non-declaration of such land as an excess vacant land by the competent authority under Section 21 or the retention of such land with the landholder to be permitted by the competent authority under Section 22 of the Act.
x x x x x
The effect of exemption of the land from the provisions of Sections 3 - 19 or of the non-declaration of the land as excess land or of the retention of the land with the landholder under Sections 20, 21 and 22 respectively, is not to permit the landholder to deal with it as he likes including to transfer it. In fact, the exemption, the non-declaration and the retention permitted, is on certain conditions which are required to be prescribed by the State Government or the competent authority as the case may be. If those conditions are not complied with or are contravened, the State Government or the competent authority is given power to withdraw the exemption or to declare the land as excess. This power given to the State Government and the competent authority itself negatives either power to permit the transfer of the right to transfer. What is more, Chapter IV which alone makes provisions for transfer and use of urban property, makes provision for transfer of vacant land within the ceiling limit subject to certain conditions. It also makes provisions for the transfer of land in excess of the ceiling limit with a building thereon or with a portion of such building. It makes, however, no provision for transfer of land in excess of the ceiling limit without a building or a portion of a building thereon. That is consistent with the object of the Act since the Act does not contemplate transfer of the vacant land in excess of the ceiling limit. It only provides for exemption of such land from being acquired and vested in the State Government or for non-declaration of it as an excess land or for the retention of the same with the holder and that too subject to certain conditions which may be prescribed, as stated earlier.
The first question that arises is whether the provisions of Section 20(1)(b) permit the State Government to permit the sale of the excess vacant land to a third party. According to us, the answer has to be in the negative for reasons more than one.
In the first instance, the central object of the Act, as is evident both from the preamble as well as the statement of objects and reasons, is to acquire vacant land in excess of the ceiling area and to prevent speculation and profiteering in the same and also to distribute the land equitably to subserve the common good. It is, therefore, per se against the said object to permit the sale of the excess vacant land for whatever reasons, including the undue hardship of the landholder. To construe the provisions of Section 20(1)(b) so as to read in them the conferment of such power on the State Government for whatever reasons, is to distort and defeat the whole purpose of the legislation. Further, neither the plain language of the clause nor its context and intendment merit such construction. Section 20 itself is titled 'Power to exempt'. The power given to the State Governments under the section is only to exempt certain excess vacant lands from the operation of the provisions of Sections 3 - 19 of Chapter III, none of which refers to the subject of transfer or restrictions on transfer. Those provisions relate to the calculation, declaration, acquisition and vesting of the excess vacant land. It is Chapter IV which relates to the transfers of vacant lands and the restrictions thereon. Further, from the scheme of the Act, it is evident that the transfers of the vacant land were to be regulated by the specific provisions made in it. They were not to be left to be governed by the unguided discretion of any authority including the State Government. The specific provisions for regulating the transfer have been incorporated in Sections 26 - 28 of the Act. Those provisions permit transfer of only vacant lands within the ceiling limit but without buildings, and of vacant lands in excess of the ceiling limit but with buildings thereon and subject to the conditions laid down there. It cannot be suggested that in defiance of the said provisions, Section 20(1)(b) vests power in the State Government to sanction sales of excess vacant lands with or without building thereon. Under Section 20(1)(b), the State Government can only exempt such excess vacant land from being acquired by it. The Government cannot permit its transfer when the Act does not even by implication authorise it to do so but permits the transfer subject only to the conditions prescribed by Section 27. The Legislature cannot be presumed to have prescribed different conditions for transfer of the same or similar lands.
x x x x x
Fourthly, the exemption which is granted under Section 20(1)(b) has to be supported by reasons to be recorded in writing. This requirement also contemplates an exemption which is related to and prompted by the use or better use of the land. If it is the financial hardship which was under' the contemplation of the Legislature, there was nothing easier than to make a reference to the same in clause (b) itself and to lay down guidelines for the inquiry into such hardship.
x x x x x
Lastly, if the power to exempt the land for sale is read in Section 20(1)(b) with such conditions as the State Government may choose to place and if either the State Government chooses not to place any conditions or to place such conditions as are inconsistent with the provisions of Sections 29 and 30, it would create two sets of lands - one where no restrictions are applicable to the construction thereon or only such restrictions as the State Government may choose to impose, and the other where the restrictions on constructions as provided by Sections 29 and 30 would be applicable.
It is, therefore, more than clear that the provisions of Section 20(1)(b) do not permit the State Government to exempt vacant land in excess of the ceiling limit for the purposes of transfer.
In his concurring opinion, N.P. Singh, J observed as under:
I agree with brother Sawant, J. that it is not possible to hold that State Government can grant exemption under Section 20(1)(b) of the Act, to the holder of the excess vacant land, so that he may transfer the same in the manner he desires. The object of the Act being imposition of ceiling on vacant land in urban agglomerations and for acquisition of such land in excess of ceiling limit, with a view to prevent the concentration of urban land in the hands of a few persons, speculations and profiteering therein, will that object be not defeated if it is held that power under Section 20(1) of the Act can be exercised by the State Government to exempt the excess vacant lands from the application of Chapter III of the Act, so that the holder thereof can transfer such lands? Sub-section (1) of Section 20 is in two parts. The exemption under Clause (a) of the said sub-section is to be granted in the public interest whereas under Clause (b) the exemption is to be granted taking into consideration the 'undue hardship' of the holder of the land in excess of the ceiling limit. Both the expressions 'public interest' and 'undue hardship' are comprehensive in nature. But at the same time, it is not easy even for courts to say as to whether under different circumstances the exemption was in the 'public interest' or was necessary in the interest of the holder of the land because of his 'undue hardship.'
Under Indian conditions the expression 'undue hardship' is normally related to economic hardship. That is why from time to time many holders of lands in excess of the ceiling limit, while claiming exemption under Clause (b) put forth their bad economic condition and indebtedness to claim exemption along with permission to sell such excess lands. In the modern set-up many holders of such excess lands having undertaken commercial or industrial ventures with the help of the loans from the banks and other financial institutions, put the plea of repayment of such loans as undue hardship for claiming exemption under Clause (b) of Section 20(1) aforesaid. How the holders of excess lands having incurred losses or having failed to discharge their debts can claim exemption on the ground of 'undue hardship' in such a situation? Section 4 while fixing the ceiling limit, under Sub-section (3) takes note of the fact that 'where in respect of any vacant land any scheme for group housing has been sanctioned by an authority competent in this behalf immediately before the commencement of this Act, then, the person holding such vacant land at such commencement shall be entitled to continue to hold such land for the purpose of group housing'. But at the same time under Sub-section (4) of Section 4 it has been specified that 'if on or after the 17lh day of February, 1975, but before the appointed day, any person has made any transfer by way of sale, mortgage, gift, lease or otherwise (other than a bona fide sale under a registered deed for valuable consideration) of any vacant land held by him and situated in such State to any other person, whether or not for consideration, then, for the purposes of calculating the extent of vacant land held by such person the land so transferred shall be taken into account, without prejudice to the rights or interests of the transferee in the land so transferred'. Similarly in Section 5 it has been provided that 'where any person who had held vacant land in excess of the ceiling limit at any time during the period commencing on the appointed day and ending with the commencement of this Act, has transferred such land or part thereof by way of sale, mortgage, gift, lease or otherwise, the extent of the land so transferred shall also be taken into account in calculating the extent of vacant land held by such persons'. When different provisions take into consideration the lands already transferred by the holder, (i) between the period February 17, 1975 and the appointed day; (ii) as well as between the period commencing from the appointed day and ending with the commencement of the Act, it should not be easily inferred that the framers of the Act desired that after the commencement of the Act while exercising the power of exemption under Section 20(1)(b) permission should be granted to holders of such excess lands to transfer such lands to third parties in order to meet theirfinancial liabilities.
16. The aforementioned judgment was over-ruled by a three Judges Bench in P.R. Thandur v. Union of India : AIR1996SC1643 and the following propositions were laid down:
(1) Clause (a) of Sub-section (1) of Section 20 empowers the State Government to grant the exemption if it is satisfied having regard to the relevant factors specified in the clause that it is necessary or expedient to grant the exemption in the 'public interest', subject to the conditions specified in the order. Clause (a) specifies certain relevant factors for the purpose of grant of exemption, namely, 'location of such land', 'the purpose for which such land is being or is proposed to be used' and such other relevant factors as the circumstances of the case may require. Apart from the location of the excess vacant land and the purpose of its use, regard must be had to the other relevant factors, which is a question of fact in each case. However, these factors must indicate that the grant of exemption under Clause (a) is necessary or expedient in the 'public interest'. The expression 'public interest' has a legal connotation. The broad guidelines for grant of exemption under Clause (a) are enacted in the provisions. A safeguard is provided by requiring conditions to be specified in the order subject to which the exemption is granted under Clause (a). Even though there is no proviso in Clause (a) of the kind enacted thereafter in Clause (b), yet the absence of such a proviso is inconsequential since the requirement of the expressly enacted proviso in Clause (b) is implict in the manner of exercise of the power under Clause (a). The requirement in Clause (a) of making an order having regard to the specified relevant circumstances and specifying the conditions attached to the exemption, ensures that the decision is reached for cogent reasons which are placed on record in writing culminating in the making of the written order. There is no scope for the view that exemption can be granted under Clause (a) by an order specifying the conditions having regard to the specified relevant factors without recording the reasons for doing so in writing. Every State action must satisfy the rule of non-arbitrariness and, therefore, recording of reasons in writing for granting the exemption under Clause (a) indicating that it is necessary or expedient in the public interest so to do, is an essential requirement of valid exercise of power under Clause (a). This is how Clause (a) must be construed and understood.
(2) In Clause (b) of Section 20(1), the power of the State Government to grant the exemption depends on its satisfaction 'that the application of the provisions of this Chapter would cause undue hardship to such person.' It is obvious that the undue hardship must be a direct consequence of the application of the provisions in Chapter III which provides for the restriction on the entitlement to hold any vacant land in excess of the ceiling limit prescribed and further prohibits the transfer of the excess vacant land which vests in the State Government in the manner provided in Section 10 and the owner is entitled only to the amount specified in Section 11 of the Act. It is clear that the 'undue hardship' caused to the owner must be the direct consequence of the provisions contained in Chapter III of the Act which disentitles the owner to hold any vacant land in excess of the prescribed ceiling limit and entitles him only to the amount payable under Section 11 of the Act. It is also clear that the expression 'undue hardship' indicates that the extent of hardship must be 'undue' and not merely any hardship which is bourn, to result from the application of the provisions of Chapter III of the Act. The direct consequence of the application of the provisions of Chapter III is economic in nature because of the compulsory acquisition of the excess vacant land in lieu of he amount payable under Section 11, apart from deprivation of the benefit of the use of the acquired land. In such a situation, even though mere economic loss could not be intended to fall within the expression 'undue hardship', yet the expression cannot be construed to exclude every adverse economic impact even if it be so great on that person as to amount to 'undue hardship' to him. This would, however. be a question of fact in each case and unless the impact of economic hardship caused to the owner is so great as to amount to 'undue hardship' resulting from the application of the provisions of Chapter III of the Act, it would not fall within the ambit of Clause (b). It appears that the enactment of the proviso in Clause (b) is to emphasise the requirement that there must be strong reasons recorded in writing to justify the satisfaction of the State Government that the hardship caused by the application of the provisions of Chapter III to such person amounts to 'undue hardship' so that the grant of exemption is judicious, and in case of a challenge can be judicially tested. Suppose the owner has to repay bona fide outstanding dues under earlier decrees of competent courts and admittedly he has no other means of satisfying those decrees out of the amount payable under Section 11. It may be possible to grant exemption under Clause (b) on the ground of undue hardship to enable him to satisfy the decrees. This is only illustrative. In cases of exemption granted under Clause (b), the possible misuse of the exemption can be checked by imposition of suitable conditions attached to the exemption and the State Government's power under Sub-section (2) to withdraw the exemption in case of breach of any condition is a further safeguard in this behalf.
(3) Cases falling under Clause (b) for grant of exemption may be rare, but it cannot be said that the enactment of Clause (b) is an exercise in futility which does not permit grant of exemption in any case of undue hardship with permission also to transfer. Whether there is undue hardship of the kind envisaged therein, is a question of fact in each case. The entire provision in Clause (b) has to be given full effect and in a case falling within the ambit of Clause (b), the effect of the order of exemption is to exempt such vacant land from the provisions of Chapter III and, therefore, also from the restriction on transfer of such land. To hold that any land exempted under Clause (b) cannot be transferred irrespective of the conditions of the exemption is to rewrite the provision which enacts that, subject to the conditions specified in the order of exemption, such vacant land would be exempt from the provisions of Chapter III, which means the exemption is also from provisions prohibiting transfer enacted in Chapter 111. It is clear that any case which can legitimately fall within Clause (b) would be outside the ambit of Clause (a), and Clause (b) is restricted in its application. Whether a case falls within the ambit of Clause (b) is again a question of fact and if any dispute arises it will have to be tested judicially on the facts of that case. Similarly, the validity of the exercise of power of exemption under Clause (b) would also depend on the facts of each case as it would in respect of Clause (a).
(underlining is mine)
17. A somewhat similar question was considered in Agastyar Trust v. Commr. and Secy. to Govt. Revenue Department : AIR2005SC1824 . The three Judges Bench of the Supreme Court interpreted Sections 27 and 29 of Tamil Nadu Urban Land Tax Act, 1966, which provides for exemption from payment of land tax. Speaking for the Bench, Dr. AR. Lakshmanan, J noted the distinction between the automatic exemption contemplated under Section 29 and power vested in the State Government to grant exemption under Section 27 and observed:
While under Section 29, the exemption is granted by the statute itself and is automatic in respect of the urban lands owned by the authorities or institutions referred to therein, the exemption under Section 27 is not so. For exemption under Section 27, power is vested with the State Government to exempt the lands or persons from payment of tax 'if the Government is satisfied that the payment of urban land tax... would cause undue hardship'. Such power can be exercised by the Government only on specific application by the person or institution seeking exemption and on placing satisfactory material for exercise of such power. The exemption under Section 27 is not a matter of right and does not follow as a matter of course.
(Emphasis added)
18. The above noted judgment amply support the view taken by me that exemption envisaged under Section 20(1)(b) is in the nature of concession and cannot be claimed as of right and that before granting exemption, the State has to satisfy itself that application of the provisions of Chapter III would cause undue hardship to the applicant.
19. I shall now consider whether the power exercisable by the State Government under Section 20(1)(b) is quasi-judicial or purely administrative and whether the State Government is required to record reasons for refusing to accept the prayer for grant of exemption. In this context, it is necessary to observe that while determining an application filed for grant of exemption, the State Government does not decide any lis between the parties. As a matter of fact, the power to grant exemption under Section 20(1)(b) is a contrast to the power of adjudication. Since the provision contained in Section 20(1)(b) is in the nature of a concession, the only thing required to be considered by the State Government for deciding an application made under that section is whether the applicant would suffer undue hardship on account of application of Chapter III. This exercise does not involve any adjudication of the rights of the applicant and, by no stretch of imagination, rejection of an application for exemption can be treated as an order adversely affecting vested right of the applicant for visiting him with civil consequences. Therefore, while deciding an application filed for exemption under Section 20(1)(b), the State Government cannot be said to be discharging quasi-judicial functions.
20. If proviso to Section 20(1)(b) is interpreted in the above backdrop, it becomes clear that reasons are required to be recorded by the State Government only if it chooses to grant exemption and not otherwise. In other words, the State Government is not required to record reasons for refusing to grant exemption. The object underlying this proviso is to ensure that the power to grant exemption is not to exercise arbitrarily, or for ulterior purpose or as a measure of favourtism, else, the very purpose of the legislation would get defeated. This view of mine is amply supported by the judgment in Sri Sarvaraya Sugars Limited, Chelluru v. Government of A. P. (3 supra). In that case, the learned Single Judge relied on the observations made by the Constitution Bench of the Supreme Court in S.N. Mukherjee v. Union of India (2 supra) and Union of India v. E.G. Nambudiri : (1991)IILLJ594SC and held as under:
In the system of governmental functioning where before passing an order the matter is generally considered at various levels, the reasons and opinions contained in the file at various levels would be sufficient compliance with a rule that every executive action must be supported by reasons to warrant an inference that an application was dealt with in a fair and proper manner. Applying this test, I am satisfied that the impugned order is well supported by reasons and it cannot be rejected as without reasons.
21. On the basis of the above discussion, I hold that the decision of the State Government not to grant exemption to the petitioners cannot be declared illegal on the ground of lack of reasons or violation of proviso to Section 20(1)(b) of the Act.
22. The judgment of the Supreme Court in Siemens Engg. And Mfg. Co. v. Union of India (1 supra) and S.N. Mukherjee v. Union of India (2 supra) do not help the cause of the petitioners because in those cases the Supreme Court was called upon to consider the necessity of recording of reasons by quasi-judicial authorities while passing orders adversely affecting the petitioners/appellants. In neither of the two cases, the Supreme Court interpreted the exemption clause similar to the one contained in Section 20(1)(b) of the Act. Therefore, the propositions laid down in those judgments cannot be applied to these petitions.
23. Before concluding, I consider it proper to observe that the State Government had refused to grant exemption to the petitioners after considering the relevant material. Therefore, its decision cannot be dubbed as arbitrary or vitiated due to non-application of mind. In his report dated 7.11.1987, the Special Officer, Urban land Ceiling, Visakhapatnam made a mention of various proceedings which culminated in the passing of order dated 24.11.1983, notification issued under Section 10(1, which was published in A.P. Gazette dated 14.2.1985 and declaration dated 29.7.1986 issued under Section 10(3) of the Act. In the second report dated 16.9.1991, the Special Officer noted that applications for exemption had been filed after issue of declaration under Section 10(3) vide which the surplus land had already vested in the government and recommended that the applications for exemption be rejected. The State Government considered the reports sent by the Special Officer and also consulted the Commissioner of Land Reforms and Urban Land Ceiling, Andhra Pradesh, and concluded that there was no valid ground to grant I exemption to the surplus area of the petitioners.
24. In their affidavits, the petitioners have pleaded that the operation of the provisions of Chapter III of the Act would cause hardship to them inasmuch as they would be deprived of their valuable land, but no tangible material has been produced before the Court to show that the so-called hardship suffered by them on account of determination of the surplus area. Therefore, I am unable to agree with the learned Counsel for the petitioners that the decision of the State Government to refuse exemption to his clients is vitiated by arbitrariness.
25. No other point has been argued.
26. In the result, the writ petitions are dismissed.