State challenged revenue authorities' refusal to vest land purchased by a non-agriculturist under Section 118 permission, alleging non-use within the statutory period. Court upheld findings of no conscious default and dismissed the writ petition.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
( 2026:HHC:23707
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No. 9852/2026 Decided on: 22.06.2026
State of H.P. …..Petitioner
Versus M/s VRLA Manufacturing Company ....Respondent
………………………………………………………………………………… Coram
Ms. Justice Jyotsna Rewal Dua , Judge. Whether approved for reporting?1 For the petitioner: Mr. Y.P.S Dhaulta, Additional Advocate General.
For the respondent:
Nemo.
Jyotsna Rewal Dua , J.
Proceedings under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 (the Act, in short), were initiated against the respondent. The District Collector, Solan, vide order dated 30.03.2017, held that the respondent had violated the provisions of Section 118 of the Act and, ordered for vestment of the subject land, bearing Khasra No. 2172/1320 and measuring 22-17 bighas, situated in Mauja Bhatoli Kalan, Tehsil Baddi, District Solan, H.P., along with the structure standing thereon, in the petitioner-State free from all encumbrances.
Respondent’s appeal against the aforesaid order was allowed on 04.02.2019 by the Divisional Commissioner, Shimla. The impugned order passed by the District Collector was quashed and set
1 Whether reporters of the local papers may be allowed to see the judgment?
2
( 2026:HHC:23707
aside. The revision petition filed by the petitioner-State against the order passed by the Divisional Commissioner, Shimla, was dismissed by the Financial Commissioner (Appeals), H.P., on 30.10.2019. Feeling aggrieved, the petitioner preferred State of H.P. Vs. M/s VRLA Manufacturing Company2 . The said petition was disposed of as withdrawn in view of technical defect pointed out in the petition, reserving liberty to the petitioner to file a fresh petition on the same cause of action. Consequently, the instant petition has been preferred by the petitioner-State assailing the orders passed by the Divisional Commissioner on 04.02.2019, and by the Financial Commissioner (Appeals) on 30.10.2019, & to seek restoration of the order passed by the Collector, Solan, on 30.03.2017.
2. Heard learned Additional Advocate General and
considered the case file.
3. Respondent had applied for grant of permission under Section 118 of the Act to purchase land for setting up an industrial unit, comprised in Khata/Khatauni No. 101/103, Khasra No. 2172/1320, measuring 22-17 bighas, situated in Mauja Bhatoli Kalan, Tehsil Baddi, District Solan, H.P. The Sub-Divisional Officer (Civil), Nalagarh, on 17.03.2015 reported that the respondent had not set up the industry on the land in question and that the land was lying vacant. This led to the issuance of a show-cause notice to the respondent to explain as to why
2 CWP No.3294/2020 decided on 20.11.2025
3
( 2026:HHC:23707
the land in question should not vest in the State of Himachal Pradesh. The reply filed by the respondent was not found satisfactory. Consequently, proceedings under Section 118 of the Act were initiated against it. After examining the case, the District Collector returned a finding that the respondent could not utilize the land within the period of two years as prescribed in Condition No. 2 of the permission letter. The justification offered by the respondent for not utilizing the land within the aforesaid period was not found convincing by the District Collector. The explanation that the respondent had not set up an industrial unit on the land purchased by it was held to be unsatisfactory and rather misleading. Accordingly, the land was ordered to vest in the State Government. The Divisional Commissioner, while allowing the appeal preferred by the respondent, interpreted the words “shall put the land to use” occurring in Section 118 of the Act to mean that the permission holder was required to take steps towards utilizing the land so as to reach a particular stage in establishing the project. It was held that the legislative intent behind prescribing a statutory period of two years, or within the extended period of one year, was to enable the purchaser to move in the direction of utilizing the land for the purpose for which it was purchased; The proviso to Section 118(2) does not mandate that the project must be brought into existence and made operational within the statutory period of two years; Rather, within the said period, the purchaser is required to take steps towards utilizing the land so as to
4
( 2026:HHC:23707
demonstrate its readiness and willingness to establish the project, and nothing more.
The aforesaid reasoning was accepted by the Financial Commissioner (Appeals), who dismissed the revision petition preferred by the petitioner-State on 30.10.2019.
It is in the above backdrop that the petitioner-State has instituted this writ petition.
4. Section 118 of the H.P. Tenancy and Land Reforms Act pertain to transfer of land to non-agriculturists, its relevant portion is as follows:-
118. Transfer of land to non-agriculturist barred. (1) Notwithstanding anything to the contrary contained in any law, contract, agreement, custom or usage for the time being in force, but save as otherwise provided in this chapter, no transfer of land (including sales in execution of a decree of a civil court or for recovery of arrears of land revenue) by way of sale, gift, will, exchange, lease, mortgage with possession, creation of a tenancy or in any other manner shall be valid in favour of a person who is not an agriculturist.
(Explanation. For the purpose of this sub-Section, the expression “transfer of land” shall not include-
but shall not include-
(a) a benami transaction in which land is transferred to an agriculturist of a consideration paid or provided by a nonagriculturist; and
(b) an authorization made by the owner by way of special or general power of attorney or by an agreement with the intention to put a non-agriculturist in possession of the land and allow him to deal with the land in the like manner as if he is a real owner of that land.
“ (2) Nothing in sub-Section (1) shall be deemed to prohibit the transfer of land by any person in favour of -
5
( 2026:HHC:23707
(a) a landless laborer; or
(b) a landless person belonging to a scheduled caste or scheduled tribe; or
(c) a village artisan; or
(d) a landless person carrying on an allied pursuit; or
(dd) a person who, on commencement of this Act, worked and a continues to work for gain in a estate situated in Himachal Pradesh; for the construction of a dwelling house, shop or commercial establishment in a municipal area, subject to the condition that the land to be transferred does not exceed-
(i) in case of a dwelling house-500 square Meters;
and
(ii) in the case of a shop or commercial establishment- 300square meters:
Provided that such person does not own any vacant land or a dwelling house in a municipal area in the state.
(e) the State Government or Central Government, or a Government Company as defined in section 617 of the Companies Act, 1956, or a Company incorporated under the Companies Act, 1956, for which land is acquired through the State Government under the Land Acquisition Act, 1894 or a statutory body or a corporation or a board established by or under a statute and owned and controlled by the State of Central Government; or (f) a person who has become non-agriculturist on account of-
(i) acquisition of his land for any public purpose under the Land Acquisition Act, 1894; or
(ii) vestment of his land in the tenants under this Act; or
(g) a non-agriculturist who purchases or intends to purchases land for the construction of a house or shop, or purchases a built up house or shop, from the Himachal Pradesh Housing and Urban Development Authority, established under the Himachal Praedesh Housing and Urban Development Authority Act 2004, or from the Development Authority constituted under the Himachal Pradesh Town and Country Planning Act, 1977 or from any other statutory Corporation set up for framing and execution of house accommodation schemes in the State under any State of Central enactment; or
(h) a non-agriculturist with the permission of the State Government for the purposes that may be prescribed:
Provided that a person who is non-agriculturist but purchase land either under (Clause (dd) or clause (g) or with the permission granted under clause (h) of this subSection, shall, irrespective of such purchase of land, continue to be a non-agriculturist for the purpose of the Act.
Provided further that a non-agriculturist (who purchases land under clause (dd) or) in whose case
6
( 2026:HHC:23707
permission to purchase land is granted under clause (h) of this sub-Section, shall put the land to such use for which the permission has been granted within a period of two years or a further such period not exceeding one year, as may be allowed by the State Government for the reasons to be recorded in writing to be counted from the day on which the sale deed of land is registered and if he fails to do so or diverts, without the permission of the State Government, the said user for any other purpose or transfer by way sale, gift or otherwise, the land so purchased by him shall, in the prescribed manner, vest in the State Government free from all encumbrances.”
Learned Additional Advocate General highlighted the second
proviso to sub-Section 118(2) to submit that same placed an obligation upon the respondent to put to use the property/land within two years or further such period not extending one year as may be allowed by the State government for the reasons to be recorded in writing from the date on which the sale deed of the land was registered and in case the respondent failed to do so or diverted without the permission of the State government, the land so purchased by it was to vest in the State Government from all encumbrances.
4(ii) The Divisional Commissioner as also the Financial Commissioner have justly interpreted Ravinder Chauhan and others versus State of H.P .3 to hold that the vestment could not be automatic.
The failure to put to use has to be on account of conscious default, negligence or refusal on the part of a person concerned. The circumstances of non-compliance for reasons beyond grantee’s control or due to the fact that it was capable or impossible of performance due
to operation of the other provisions of law in force would not result in
3 AIR 1999 HP 43
7
( 2026:HHC:23707
vesting of land with the State. After going through the facts of the case, it
was observed by the Divisional Commissioner as under:-
“7. The present case revolves around the interpretation of the words "shall put the land to such use" as employed 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 purchases 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 and nothing else. 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 period of two years. Within two years, the purchase has to take steps in the direction of utilizing the land to disclose its intent that he is ready and willing to establish the project said and nothing more. 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
8
( 2026:HHC:23707
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 Certificates, Sanction of building plans from the competent authorities. These procedural formalities take a long time, may be, due to bureaucratic 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.
8. The findings recorded by the Ld. District Collector that the land has not been used for the purpose for which 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 nonagriculturist 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.
9. The Instruction 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 5th February 2016 which provides as under:-
However, certain cases have been brought to notice of this Department where permission have been granted under Section-118 of H.P. Tenancy and 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
9
( 2026:HHC:23707
policy or any other action on the part of Government itself. Due to this reason, the prescribed time period in these cases has expired. Such affected firms/applicants have represented to the Government through concerned Department(s), who have issued essentiality certificates in their favour. The relevant cases for departments have also recommended these 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.
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 Pradesh 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 ibid has held as under:-
"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 6th 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."
10
( 2026:HHC:23707
10. The suit land was allotted to M/s Vrla Manufacturing Company. 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 as to make operational the unit for which purpose the permission has been grantedby the State Govt. It is evident from the revenue record i.e Jamabandi for the year 2008-09 that the classification of land has been recorded as "Gher mumkin Factory". Therefore, it reveals that the report made by the patwari is not clear about the existence of the Factory on spot. There is contradiction between the revenue record and the report of patwari. The concerned Kanoongo as well as Tehsildar Kasauli have admitted their statements which is placed on lower court case file that without visiting the spot they made the report on the basis of report of patwari, and the patwari has also admitted that he did not informed to appellant at the time when he visited the Spot. The impugned order overlooks the said fact and also overlooks statement of the appellant that as on date the industrial unit is in operation which is providing employment and generating revenue for the State of H.P.”
The Financial Commissioner while affirming the above
view held as under: -
“7. In the instant case, permission was granted in favour of the petitioner company for purchase of land for setting up of an industrial unit. From the bare perusal of provisions reproduced above, it is clear that land purchased by a non-agriculturist is required to be utilized for the purpose for which it has been allowed to be purchased within a period of two years which may further be extended by one year for the reasons to be recorded in writing. From bare perusal of the Jamabandi, available at page 17 of file of District Collector, the Classification of land has been shown as "Gair Mumumkin Factory". Further, the report of Sub-Divisional Collector, Nalagarh shows that there is one room-existing at spot on the land in dispute. This shows
11
( 2026:HHC:23707
that the that the respondent company has made efforts to utilize the land in question. No doubt, the land could not be fully utilized for the purpose-for which it was allowed to be purchased, but, the fact still remains that the company has neither transferred the land in question nor applied for permission to sell the same, which transpires that the company has not purchased the land in dispute with the motive of land speculation or benami etc. The intention of the company is to utilize the land for the permitted purpose. Moreover, it is not the intention of the Legislature to confiscate the legally purchased properties, only for non completion of work within the stipulated period, despite bonafide efforts of the purchaser to utilize the land for the purpose for which it is allowed to be purchased. In such cases, the intention of the purchaser is relevant to be seen as to whether he has made genuine efforts to put to use the land for the purpose for which permission was granted by the State.
8. Further, from perusal of the impugned orders passed by the Divisional Commissioner, Shimla it is clear that the Ld. Commissioner has passed the order by appreciating the facts and law in its right perspective and the same are also based on the State Government have issued instructions dated 5.2.2016, and the judgement passed by the Hon'ble High Court of H.P. (Division Bench), in CWP No.254 of 1995 titled Ravinder Chauhan & Ors. Vs. State of H.P., (Air 1993 HP 43).”
In view of the concurrent findings of facts returned by the two revenue authorities below which do not call for any interference, it was justly concluded that 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 Chauhan3 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
12
( 2026:HHC:23707
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 State of Himachal Pradesh & Others4 wherein while relying upon Ravinder Chauhan3 it was observed that the words “shall put the land to such use for which the 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 scenario majority of the projects would fall in the
trap paving way for vestment of the land in State. Therefore, only
4 CWP No.3363/2025, decided on 26.09.2025
13
( 2026:HHC:23707
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. 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 resort within period of two years was rightly set-aside by the higher 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 Chauhan .3 The impugned orders therefore do not call for any interference. Petition is dismissed. Pending application(s), if any, also stand disposed of accordingly.
22nd June, 2026 (rohit)
Jyotsna Rewal Dua Judge
2 issues framed by the court
Whether failure to fully operationalise an industrial unit within two years under the second proviso to Section 118(2) warrants vesting of land in the State.
Whether concurrent findings of the Divisional Commissioner and Financial Commissioner that the respondent was not in conscious default required interference.
Colour shows how this judgement treated each authority
Ravinder Chauhan and others versus State of H.P.Relied on¶4
AIR 1999 HP 43 · Who else cites this
M/s Springdale Resorts and Villas Pvt. Ltd. versus State of Himachal Pradesh & OthersRelied on¶3
CWP No.3363/2025, decided on 26.09.2025
State of H.P. Vs. M/s VRLA Manufacturing CompanyReferred¶1
CWP No.3294/2020 decided on 20.11.2025
1 provisions across 1 enactments
State of H.P.
M/s VRLA Manufacturing Company
Jyotsna Rewal Dua
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
