Dismissed

State of Punjab v. Ramjllal & Ors.

Supreme Court12 Oct 19701970 INSC 208 · [1971] 2 S.C.R. 5501970 INSC 208

Case brief

AI extract

What is this about?

The Supreme Court held that the State bears the burden of proving the bona fides of its actions and is not required to name specific officers in a mala fides claim. The impugned notification under the Punjab Pre-emption Act was affirmed as invalid because it was issued to defeat a property decree.

What did the court decide?

The appeal filed by the State was dismissed, and the High Court's finding that the notification was issued mala fide was upheld.

What the court decided

State of Punjab versus Ramjllal… — Constitutional and Fundamental Rights | Supreme Court (1971)

5 5 'l

STATE OF PUNJAB

RAMllLAL & ORS.

October 12, 1970

[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.]

¶8

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Punjab Pre-emption Act I of 1913-Notification dated September 13, 1"62, under s. 8(2) of the Act whether issued mala fide-Party alleging m1la fide whether must name officer or officers misusing authtJrity of State for collateral purpose-Such burden would be intolerable.

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Surinder Kumar and Virender Kumar (defendants in the suit) purchased on M'!)' 9, 1958 a plot of land in District Guriaon. On January 9, 1959 the plaintiffs filed a suit in the. Civil Court to pre-empt the _sale. On November 16, 1961 the Qovernment of Punjab issued in exercise of the power conferred by s. 8(2) of the Punjab Pre-emption Act, 1913, a notification declaring "that no rights of pre-emption shall exist with. res · pect to urban of village immovable property or agricultural land when purchased by any person for setting up or expan.sion of any industry in the State with the permission of the· Director of Industries, Punjab.'' By order dated February 16, 1962 the Civil Court passed a decree for preemption conditionally on payment of the amount for which the property was sold. The Civil Court found that the defendants had failed to establish that they intended to establish a factory on the land in question. The defendants appealed to the Court of the Senior Subordinate Judge against the decree of the Trial Court. Thereafter the Government of Punjab issued another notification on September 3,1962, that the Governor of Punjab was pleased to order that "no right of pre-emption shrul exist with respect to the sale of land. described in the Schedul~ to this Notification made on the 9th May, 1958, · in favour of Messrs. Sunnder Kumar and Virender Kumar, opposite Railway Station. Faridabad for the establishment of a factory for manufacl\Ire of cork products". In the Schedule was described the · prpperty aforesaid purchased by the defendents. The plaintiffs then moved a petition in the High C9urt challenging the validity of the Notification dated September 3, 1962 among others on the ground that in issuing the order the Government acted mala fide. The High Court held that the notification extinguishing the right of pre-emption in the property .issued during the pendency of the appeal did not disentitle the plaintiffs to maintain ·their claim of preemption already exercised and in respect of . which a decree was granted to them. The notification .dated September 3, 1962 was held to have been issued ma/a fide and on that account invalid though s. 8(2) of the Punjab Act I of 1913 was held not offend Art. 14 of the Constitution. With special leave the State of Punjab appealed to this Court.

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HELD : The High Court rightly h,eld on the facts that the impugned notification was issued ma/a fide. The · plaiI!tiffs who claimed that they had a right to pre-empt the sale filed a suit against the defendants and obtained a decree. On the finding of the High Court it was clear that e/<cept disclosing th~t the defendants intended to construct a factory, nothing more was said. The State Government still proceeded to exclude from the operation of the Act the land so as to defeat the right of preemption exercised by the plaintiffs in respect of which a decree was pasoed

•

Di "'I

PUNJAB V. RAMJILAL (Shah, /.)

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551

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by the Civil Court. The Stale Government had not in their affidavit satisfactorily explained the circumstances in which the order was passed. The conclusion of the High ·Court was borne out by the evidence and no ground was made out calling for interference in this appeal by special leave. [,554 E; 556 B-C]

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The contention on behalf of the Stale that the party alleging that the

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action of the State was not bona fide must name the officer or officero

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I gnilty -Of conduct which justifies an inference that the official act was done for a collateral purpose, could not be ·accepted. It would be placing .an intolerable burden of preuf of a. just claim to require a party alleging mala fides of Stale action to aver in his petition and to prove by positive eYidence that a particular officer was responsible for misusing the authority of the State by taking action for a collateral purpose. [555 F-H]

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c 1Tbe imp111ned notification having been held invalio the question whether 1. 8 ( 2.) of the Punjab Pre-emption Act wu ultra vim Art. 14 of the Con1tltutlon did not survive for consideration,] [553 BJ

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C1v1L APPELLATE Jca1smcr10N : Civil Appeal No. 1946 of

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Appeal by special leave from the judgment and order dated

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D December 6, 1965 of the Punjab High Court in Civil Writ No. 1523 of 1962.

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V. C. Mahajan, for the appellant.

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Abad Rehari, for respondents Nos. I and 2.

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The Judgment of the Court was delivered by

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. Shah, 1. On May 9; 1958 Khillu and two others sold a plot

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of la~d in village Majesar, Tehsil Ba!labligarh, District Gurgaon to Surinder Kumar and Virender Kumar (who will hereinafter be referred to as "the defeddants"), On January 9, 1959 Ramjilal and Khazan hereinafter called the "plaintiffs" filed a suit in the Civil Court to pre-empt the sale. On November 16, 1961 the Government of Punjab issued in exercise ot the power conferred by sub-section (2) of Section 8 of the Punjab Pre-emption Act, 1913 a notification declaring "that no rights of pre-emption shall exist with respect to urban or village immovable- property or agricultural land when purchased by any person for setting up or ex-

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G tension ol any industry in the State with the permission of the Director o.f Industries, Punjab."

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The plaintiffs contended that the notification issued by the. Government did not prejudicially affect their claim to pre-empt the sale. By order dated February 16, 1962 the Civi1'Court passed a· decree for pre-emption conditionally on payment of the amount H for which the property was sold. The Civil Court found that the defendants had failed to establish that they intended to establish a factory on the land in questiorl.

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[ 1971] 2 S.C.R.

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SUPREME COURT 'REPORTS

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552

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The defendants appealed to the Court of the Senior Subordinate Jildge against the decree. of the Trial Court. Thereafter thll Government of Punjab issued another notific~tion on September 3, 1962, that the Governor of Punjab was pleased to order that "no right of pre-emption shall exist with respect to the sale of land, described in the Schedule to this Notification made on thc·9th May, 1958, in favour of Messrs. Surinder Kumar and Virender Kumar, opposite Railway Station, Faridabad, for the establishment of a factory for manufacture of cork products". In the Schedule was described the property sold to the defendants by Khillu and two others.

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The plaintiffs then moved a petition ill the High Court of Punjab challenging the validity of the notification dated September 3, 1962, among others on the ground that in issuing the order the Government acted mala fide. A Division Bench of the High Court referred the case for hearing before a full bench ot 1he Court.

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The ful! bench held that in a suit for pre-emption the claimant must prove that his right to. pre-empt subsisted till the date of the decree of the first Court and that. loss of .the right after the diite of the decree "by his own act or by an act beyond his control" did not affect his claim in the suit. Accordingly the notification under s. 8 ( 2) of the Punjab Pre-emption Act, 1913 extinguishing the right of pre-emption in the property issued during th11 pendency of the appeal against the decree of the Trial Court did not dis· entitle' the plaintiffs to maintain their claim of pre-emptii;in already exercised, and in respect of which a decree was granted tc> !hem. The High Court also held that s. 8 (2) of Pun.iab Act I\ of 1913 did not offeild Art. 14 of the Constitution, but the notification dated September 3, 1962, was issued mala fide, and was on that account liable to be struck down as invalid." With special leave, the State of Punjab has appealed to this Court.

Ji'

It was urged, that s. 8 (-2) infringes the guarantee of equality under Art. 14 of the Constitution. Jn terms, s. 8(2) provides:

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"The State Government may declare by notificat10n that in any local area or with respect to any land or property or class of land or property or with respect to any sale or class of sales,. no right of pre-emption or only such limited right as the State Government may specify shall exist."

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The High Court was of the view that s. 8 must be read in the light of the scheme of the Ac.t and especially s. 9 which excludes from ·the operation of the Act sales made by or to Government, or by or to any local authority. or to any company under the provisions of Part VII of the Land Acquisition Act, 1894, or in respect of any sale sanctioned by the Deputy Commission~r under s. 3(2) of

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PUNJAB V. RAMJlLAL (Shah, J.)

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5 ~3

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A the Punjab Alienation of Land Act, 1900. The power conferred by s. 8 ( 2) to declare by notification that to certain sales the Act will not apply is independent of the exemption which is statutorily prescribed bys. 9. Exercise of the power under s. 8\2) is apparently not restricted to transactions of the nature specified in s. 9, but for the purpose of the present case we do not feel called upon

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B to decide whether sub-s. ( 2) of s. 8 invests the State Government with "arbitrary, unguided and uncanalised power" so as to i_nfringe the guarantee of Art. 14 of the Constitution, for, in our view the plea that the order was issued ma/a fide raised by the plaintiffs and upheld by the High Court must be decided in their favour.

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The High Court on a review of the evidence found it proved, c that, although at some stages reference to the pre-emption suit filed by the plaintiffs appeared in the history of the case, the defendants did no~ disclose the fact that a decree had been passed in .Eavou1· of the plaintiffs in the suit, nor did any authority (except the Tehsildar) try to find out whether a decree had been passed in that suit; that it was never brought to the notice of any authority D by the defendants that the finding of the Trial Court was agaiillit them and it was because they had failed to prove that they intended to set up a factory, no authority ever trii:d to learn anything about that finding; that only a few days after the filing of the appeal by the defendants against the decree of the Trial Court an affidavit was filed by one of the defendarlts that they intended to put up a factory on the land in question; that the District Inspector of Industrles at Gurgaon made a report in favour of the defendants, only on the basis that they had started building the boundary wall; that the Tehsildar made a report adverse to the defendants, and poi11ted out that they had ~nly constructed a small room in the middle of the land and not a factory building; that the move of the defendants "was 'm' stultify and defeat that decree; that the Deputy CommisF sioner first ordered that a copy of the report of the Tahsildar be forwarded to the Government, but two days later the Deputy Commissioner changed his mind when the defendants approached him and on the mere statement of the defendants that they intended to set up a factory in the land in question, he proceeded to recommend that "exemption notification under s. 8 ( 2) of the Act" be issued G in favour of the defendants and that this was followed up bv the higher authorities; that the report of the Tahsildar which had 111ateriaJ bearing ·on the decision to be taken in the matter of issue of the impugned notification was suppressed and for this suppression !here was no explanation "on the side of the State"; that although m the note dated March 14, 1962 of the Joint Director of IndusH tries, it was directed that the defendants were to sign an agreement that the exettlption to be granted to them would not be "misutilised" .and the land would "not be ksold for money-making", and although m the Revenue Department'l> note of August 14, I 962, it was

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( l 971J 2 S.C.It,

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SUPREME COURT REPORTS

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554

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stated that the Director of Industries be asked to obtain such aii. undertaking before the issue of the notification, no such agreement .. or undertaking was obtained from the defendants and all that was done was that on, November 8, 1962 (a day before the date of the notification and some days before its publication) another affidavit was obtained from the defendants that the land had been purchased for establishing a factory and "they solemnly undertook no• to misuse or abuse the land", and declared and undertook that the land shall be used only for ind'ustrial purposes, but there was "no manner of contract by them whereby they would have to surrender back the land in the event of their not ·using it tor the purpose of establishing a factory".

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The High Court also observed that there was no allegation that sny superior. officer "in the Revenue Department such as the Secretary or the Deputy Secretary had acted in a ma/a fidt manner in, the issue of the impugned notification". But it wa5 pressed before the Court that the notification was not really the act of one single person finally approving that the notification be issued : it was the result of a process of formal or irlformal inquiries and· reports and consideration of various authorities at various stages' leading up to the recommendatiom based on materi.al collected which went to form the basis of the judgment whether or not such a notification should issue in any particular case. Approving of the pro<;ess, the High Court observed that on a consideration of all the circumst31!lces the impugned notification must be h:id to have been i&5ued ma/a fide. The High Court concluded :

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"The reason in the circumstances of this case is simple. In the first place, the report of the Tahsildar was a crucial and vital document in this case, which would substantially and materially affect the approach of the higher authorities in the conclusion to issu<> or not, to issue the mtification. In this respect what happened before the Deputy Commissioner (Collector) had also the same bearmg. It should have been disclosed what orders the Deputy Commissioner (Collector) passed fi1'6t and what was the order which he passed two days later. An enpeavour shoµld have been made by somebody to find out what was the finding given by the Trial Court in the decision of that suit. This was not done even after the matter was pointed out by the Tahsi!dar. Lnl other words, either deliberately or by sheer avoidance no effort wa§. made to find out what finding the Trial Court hl!d given in the matter . . . . In spite of it having been poitited out that before the issue of. the notification an agreement be obfained from respondents

PUNJAB v. RAMJILAL (Shah, I.)

¶72

555

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. ·- ~ '

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A 2 and 3 (the defeddants) against misuse and mis utilisation of the }and for the purpose other than that for which it was being exempted from the right' of pre-emption of the petitioners and for not making it an otherwise profiteering transaction, no such agreement, binding in Jaw, was obtained from these respondents (the defenB dants), but instead the matter was slurred over by obtaining a second affidavit from the two respondents (the defendants). It is thus apparent that at the finol stages, \I/hen the question for consideration was whether or not the impugned notification should be issued, whether. all .the pircumstances were present which justified the issue of such a notification and whether all the obligations c that were required to be taken by respondents 2 and 3 (the delenidants) had been taken befOre its !Hue, were - matters which either could not be considered because substantial material collected was withheld or clear directions were completely ignored. In the circumstances of the case, to my mind, the impugned D notification cannot be held' to have been issued in good faith and has to be held to have been issued ma/a fide."

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This is a finding based on appreciation of evidence, and no case is made on which may justify us in interfering with that finding. It appears that the subordinate authorities withheld very important facts which had bearing on the issue of the notification by the State E Government excluding the land sold unde,io the sale deed dated May 9; 1958 executed by Khillu from the operation of the Punjab Pre-emption Act l of 1913 even after a decree was passed by the Civil Court granting pre-emption.

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Counsel fur the State O>f Punjab contended that the plea that the action of the State was not bona fide established, cannot be said to' be unless the party alleging that case names the officer or officers guilty of conduct which justifies ·run inference that the official act was done for a coUateral purpose, and since no such attempt was made and the High Court .did not find that any named officer or officers was or were responsible for that official act, the plea G that it was bona fide m11St fail. We do not think that the Jaw casts anY. such burden upon the party challengiarg the validity .of the action taken by the State Government. The State Government has undoubtedly to act through its officers. What matters were considered, what matters were placed before the final authority, and who acted on behalf of the State Government in issuing the order in the name of the Governor, are all within the knowledge H of the State Government, and it would be placing an intolerable burden in proof of a just claims to require a party alleging mala {ides oB State action to aver in his petition and to prove by positive

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[1971] 2 ~.C.R.

¶79

SUPREME COURT REPORTS

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556

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evidence that a particular officer was responsible for misusing the authority of the State by taking action for a collateral purpose.

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The facts in the present case are eloquent. A sale deed was executed in favour of the defendants. The plaintiffs who claimed that th@y had a right to pre-empt the sale filed a suit against the defendants ·and obtained a decree. On the finding of the High Court it is clear that except disclosing that the defendants intended to construct a factory, nothing more was said. The State Goverament still proceeded to iss).le, in exercise of the power under s. 8 (2) of the Punjab Pre-emption Act, a notification to exclude from the operatior. of the Act the land so as to defeat the right of preemption exercised by the plaintiffs in respect of which a decree was passed by the Civil Court. The State Government has filed no affidavit explaining the circumstances in which the order came to be passed : they have merely offered "commemts" on the petition filed by the plaintiffs. In our judgment, the conclusion of the Hi.di Court was borne out by eviden.ce and no ground is· made out cailini for our interference with that conclusion in this appeal with special leave.

The appeal therefore fails and is dismissed with costs.

¶87

G.C.

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Appeal dismissed.

State of Punjab v. Ramjllal & Ors.

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State of Punjab v. Ramjllal & Ors.

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