State of Hp Vs M/S Nova Precision Pvt. Ltd.

( 2026:HHC:12511-DB )

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA

	CWP No.2448 of 2020 Decided on: 21.04.2026
__________________________________ State of H.P.	_______________________________ ....Petitioner
Versus
M/s Nova Precision Pvt. Ltd.	…Respondent
__________________________________ Coram	_______________________________

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Ms. Justice Jyotsna Rewal Dua

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1 Whether approved for	reporting?
_________________________ For the petitioner:	________________________________________ Mr. Y.P.S.Dhaulta, Additional
	Advocate General.
For the respondent:	Mr. Avinash Sharma, Advocate.

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Jyotsna Rewal Dua, Judge

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The District Collector, Solan, H.P. on 07.10.2017, passed an order of vestment of land in question in the State of Himachal Pradesh on account of respondent’s failure in putting the land to use within the period prescribed under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 (The Act in short). Respondent’s appeal against this order was allowed by the Divisional Commissioner, Shimla Division, on 06.03.2019. Revision Petition preferred by the State was dismissed by the Financial

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1 Whether reporters of Local Papers may be allowed to see the judgment? Yes

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Commissioner (Appeals), H.P. on 02.12.2019.

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Feeling aggrieved, State of Himachal Pradesh has now preferred this writ petition, assailing the orders passed by the Divisional Commissioner, Shimla Division dated 06.03.2019 as also dated 02.12.2019, passed by the Financial Commissioner (Appeals).

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2. Heard learned counsel for the parties and

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considered the case file.

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3. The Case.

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3(i). Proceedings under Section 118 of the Act for nonutilization of the land in question within the stipulated period were initiated against the respondent. Petitioner’s case was that respondent purchased the land for establishing the industrial unit in accordance with the Government permission letter dated 21.11.2003. The land had not been utilized by the respondent for above purpose within the period mentioned in the permission letter as also in terms of Section 118 of the Act. Respondent’s defence was that it had not violated the provisions of the Act, but had taken various steps for utilizing the land. It had obtained permission from Town

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& Country Planning Department, H.P., State Pollution

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Control Board, Irrigation & Public Health Department, Industries Department etc. It had also taken approval like Environment Protection etc. Respondent further projected that it had already constructed the boundary wall with gate, bore well, security room, store room and had fenced the land for the purpose of construction of building as per plan. It had also obtained electricity and water connections. Respondent stated that it was in the process of setting up the industrial unit. Keeping the stand of the respondent in view, the District Collector Solan, on 12.05.2015, discharged the respondent from notice issued to it under Section 118 of the Act, with direction to it to utilize the land by establishing the industrial unit within one year. The order was with the rider that in case new fact is brought to the notice of the Court, proceedings under Section 118 of the Act would be reinstituted against the respondent.

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3(ii) Proceedings under Section 118 of the Act were reinstituted against the respondent on 06.02.2017. The respondent contested the proceedings, however the District Collector Solan, on 07.10.2017, ordered for vestment of land in the State Government on the ground that Naib Tehsildar

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Baddi, District Solan had reported on 14.12.2016 that the land in question was visited by the concerned Patwari 01.10.2016 and he had reported non utilization of land in question by the respondent for establishing the industrial unit. During pendency of proceedings, the spot was also visited by the Sub Divisional Magistrate Nalagarh, H.P, The SDM furnished his report dated 03.10.2017, mentioning that the land in question had not been utilized for the purpose for which it was purchased. That industrial unit did not exist on the site.

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3(iii) While allowing respondent’s appeal against the above order passed by the District Collector, the Divisional Commissioner, held that the District Collector had merely relied upon the report of Patwari and of Sub Divisional Magistrate Nalagarh. No statement of any witness was recorded by the reporting authority at the time of spot visit. Statement of the reporting authority was also not recorded by the vesting authority. The reports on the basis of which proceedings had initiated against the respondent, were not even exhibited in accordance with law. No evidence was led whatsoever. That evidence of prosecution witnesses would be

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admissible only after it passes through the test of crossexamination. Such evidence against the respondent for establishing the alleged factum of non-utilization of land could not have been used unless the same had passed through the test of procedure established by law. The Divisional Commissioner also recorded findings that in view of documentary evidence produced by the respondent alongwith its objections filed before the Court of learned District Collector in form of letter issued by the Ministry of Micro, Small and Medium Enterprises, it was apparent that industrial unit was in running condition and no proper opportunity was provided to the respondent. While allowing respondent’s appeal, the Divisional Commissioner also deliberated over the meaning assigned to the words ‘shall put the land to use’ figuring in Section 118 of the Act in contradiction to the word ‘shall use the land’, by placing reliance upon following para of Ravinder Chauhan and others Vs. State of H.P.² :-

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“In our view when the statute contemplated the failure on the part of the person, who has been granted with permission to purchase, as a condition precedent for bringing into the force of the operation of the vesting clause, the failure should be on

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2 AIR 1999 HP 43

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account of the conscious default, negligence or refusal on the part of the person concerned and where the non compliance was for reasons beyond his control or due to the fact that it was incapable or impossible of performance due to the operation of other provisions of law in force and that the authorities, who accorded the permission with such conditions, which are not capable of being complied with and performed and were equally at fauit, it is not permissible for the respondents or for that matter anybody from public including the petitioners to insist or assert that despite the obvious and for no fault of the 6^th respondent, he should be condemned as having failed to comply with the conditions, that which otherwise he could have complied with, and thereby take over his property by enforcing the vesting clause engrafted in the second proviso."

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3(iv) The order passed by the Divisional Commissioner on 06.03.2019 was affirmed by the Financial Commissioner (Appeals) on 02.12.2019. The Financial Commissioner (Appeals) also concurred with the reasoning of the Divisional Commissioner that intention of the Legislature is not to confiscate the legally purchased property only for the noncompletion of work within stipulated period despite bonafide efforts from the purchaser to utilize the land for the purpose for which it is allowed to be purchased.

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4. Consideration.

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4(i) Learned Divisional Commissioner as also learned Financial Commissioner have justly interpreted Ravinder Chauhan² drawing out following conclusion:-

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“10. The present case revolves around the interpretation of the words "shall put the land to such use" as implied in second proviso to sub section (2) of Section 118 of the Act. The words "shall put the land to such use" as used in second proviso to sub section (2) of section 118 have not been defined in the Act. The meaning to these words has to be assigned by following the settled principles of statutory interpretation. A plain and precise meaning has to be assigned to these words to give effect to the provision of second proviso to sub section (2) of section 118 of the Act. In Oxford dictionary the word "put" has been assigned a meaning as "move something to". Further the word "to" has been assigned a meaning as "in the direction so as to reach a particular state". Thus the words "put the land to use" as used in the second proviso can only mean to move in the direction to use the land so as to reach a particular stage i.e. to establish the project. From the above, it is clear that from the precise and plain words used in the second proviso, the legislative intention is that within statutory period of two years or within extended period of one year, the purchaser has to move in the direction to use the land for the purpose for which it was purchased so as to form an opinion in the mind the State Govt. who had granted permission to purchase land to the effect that the purchaser is ready and willing to put the land to such use for which permission was granted. This proviso nowhere provides for bringing into existence and to make the project operational within statutory period of two years on the land. The words "put to use" cannot be given the extended meaning to bring into operation the project within a period of two years. Within two years, the purchaser has to take steps in the direction of utilizing the land to disclose its intent that he is ready

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and willing to establish the project. Had the legislative intent been that the land has to be used completely for the purpose for which permission was given within statutory period then in place of words "shall put the land to such use" the words "shall use the land" should have been employed in the said proviso. There is substantial distinction in the meaning of words "shall put the land to use" and the words "shall use the land". The legislative while enacting second proviso to sub section (2) of Section 118 has intentionally used the words "shall put the land to use" instead of words" shall use the land" because Legislative was aware of the fact that after permission to purchase the land is given there are number of procedural formalities which are to be completed before steps are taken to establish the project/industry such as preparation of building plans, various no objection certificates from concerned departments of the State, Essentiality certificate, sanction of building plans from the competent authorities etc. These procedural formalities take a long time, may be, due to official delay or some other reasons which may not be under the control of the person establishing the project which may also be due to statutory impediments including operation of other laws.

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11. The Instructions regarding excluding the period for which a person was prevented from putting the land into use due to statutory hindrance of some action of the Government, from two/three years as stipulated in the H.P. Tenancy and Land Reforms Act, 1972 issued by the Govt. of H.P dated 5^th February 2016 which provides as under:-

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" However, certain cases have been brought to notice of this Department where permission have been granted under Section-118 of H.P. Tenancy and

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Land Reforms Act, 1972 but the buyers have failed to put the land into use as provided under proviso mentioned above due to some statutory hindrances or operation of other provisions of law in force or a policy or any other action on the part of Government itself. Due to this reason, the prescribed time period these cases has expired. Such affected firms/applicants have represented to the Government through concerned Departments). who have issued essentiality certificates in their favour. The relevant departments have also recommended these cases for consideration, with cogent reasons and justification to consider these sympathetically and allow them to utilize the land for the purpose for which permission was granted as there was no fault on their part in its non utilization.

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A Division Bench of the Hon'ble High Court of Himachal Pradesh in CWP No. 254 of 1995 (AIR 1993 H.P. 43), titled "Ravinder Chauhan and others Vs. State of Himachal Pradsh and others" decided on 18-09-1998, while considering and interpreting the provision of second proviso sub section (2) of section 118 of the Act

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ibid has held as under:-

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"In our view when the statute contemplated the failure on the part of the person, who has been granted with permission to purchase, as a condition precedent for bringing into the force of the operation of the vesting clause, the failure should be on account of the conscious default, negligence or refusal on the part of the person concerned and where the non compliance was for reasons beyond his control or due to the fact that it was incapable or impossible of performance due to the operation of other provisions of law in force and that the authorities, who accorded the permission with such conditions, which are not capable of being complied with and performed and were equally at fault, it is not permissible for the respondents or for that matter anybody from public including the petitioners to insist or assert that despite the obvious and for no fault of the 6"' respondent, he should be condemned as having failed to comply with the conditions, that which otherwise he could have complied with, and thereby take over his property by enforcing the vesting clause engrafted in the second proviso."

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12. The findings recorded by the Ld. District Collector that

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the land has not been used for the purpose for which

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permission was given within statutory period is erroneous and wrong. The Ld. District Collector while passing the impugned order has not understood the real legislative intent behind second proviso to sub section (2) of Section 118 and particularly the purpose of permitting a non-agriculturist to purchase land. The real legislative intent is that the land must be used for the purpose for which permission was given and vestment of land is not automatic on the expiry of two years or the extended period as may be granted by the State Govt.

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13. The suit land was allotted to M/s Nova Precision (P) Ltd., for the construction of an industrial unit. The objective was to support and encourage industrialization in the State of H.P. which, in turn, would generate employment and revenue for the State Government. The appellant has invested considerable amount to purchase the land as well is to make operational the unit for which purpose the permission has been granted by the State Govt. The impugned order overlooks the fact that as on date there indeed has been set up an industrial unit which is providing employment to the State of H.P. and generating revenue for the State of H.P. The fact that various state and or Central Government agencies have recognized and accepted the existence of the industrial unit on the said land has also been clearly overlooked in the passing of the impugned order.

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14. The provisions of Act are Penal and very stringent and every caution should have been exercised while initiating the proceedings under Section 118 of the Act. The provisions in the Act are for the confiscation of the land along with the semi built/built structures or any running business/residence on the said land in dispute,

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which is purchased by the individual persons/company by spending their own money under this Act. The confiscation of the movable/immovable property of the said land owned by the individual is without any compensation. Therefore, the District Collector has to take utmost due care while considering all the aspects of information related to the case, providing proper opportunity and appreciation of evidences of the case.

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In view of the concurrent findings of facts returned

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by the two revenue authorities below which do not call for any interference, the default on the part of the respondent could not be held to be conscious negligence so as to order vestment of the land in the State. Reliance upon Ravinder Chauhan² was justly placed for holding that merely because respondent could not start the actual construction of the resort within two years from the date of execution of the sale deed for which he was granted permission under Section 118 of the Act would not result in automatic vestment of the land in the State. Here it would also be pertinent to take note of M/s Springdale Resorts and Villas Pvt. Ltd. versus

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State of Himachal Pradesh & Others³ wherein while relying upon Ravinder Chauhan² it was observed that the words “shall put the land to such use for which the

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3 CWP No.3363/2025, decided on 26.09.2025

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permission has been granted” are not to be interpreted myopically. Period of two years prescribed in the Statute cannot be construed in myopic manner so as to mean that everything with regard to the project has to be completed before the expiry of the period. The intent of legislation behind Section 118(2) was to ensure that steps are taken to put the land to use for the purpose for which the permission is granted before the expiry of the period prescribed in the Statute. The Court also took judicial notice of the fact that various permissions are granted under Section 118 of the Act for big and small projects by the State Government. For coming up of these projects, many further permissions/approvals/ sanction are required from several departments/ authorities. Various other formalities are also needed to be completed. The actual construction work can start only after all the permissions are in place in favour of the proponent. Therefore, if the words “shall put the land to such use for which permission has been granted” are given strict interpretation i.e. the entire project activities shall have to be completed from A to Z within the period mentioned in the second proviso to Section 118(2) of the Act, in such

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scenario majority of the projects would fall in the trap paving way for vestment of the land in State. Therefore, only meaningful interpretation can be given to these words. That beneficiary of the permission has to demonstrate taking cogent and meaningful steps for putting the land to use for the purpose for which the permission was granted and if this test is satisfied, the same has to be construed and read that the permission holder has put the land to such use for which the permission was granted. In the instant case, the respondent has taken steps for putting the land to use. It is not the case of the petitioner that respondent had diverted the land for any other use. In fact, respondent has placed on record certain documents in support of his stand that industrial unit has been set up. The Divisional Commissioner

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had justiciably did not give credence to some reports relied upon by the District Collector which had neither been put to the respondent nor placed on record in accordance with law. The mechanical order passed by the District Collector ordering vesting of respondent’s land in the State on the ground of it having failed to construct industrial unit within period of two years was rightly set-aside by the higher

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authorities. As observed earlier, two authorities below on the basis of facts have concurrently held that respondent cannot be held guilty of conscious default, negligence by correctly applying the principles laid down in Ravinder Chauhan² .

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The impugned orders therefore do not call for any interference. Petition is dismissed.

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Pending miscellaneous application(s), if any, also to stand disposed of.

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Jyotsna Rewal Dua Judge

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April 21, 2026 R.Atal

State of Hp v. M/S Nova Precision Pvt. Ltd.

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State of Hp v. M/S Nova Precision Pvt. Ltd.

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