Urban Land (Ceiling and Regulation) Act | Service Of Notice under S. 10(5) On Person In Actual Possession Is Mandatory : Supreme Court

The Supreme Court of India has held that proceedings under the Urban Land (Ceiling and Regulation) Act, 1976 would abate under the Urban Land (Ceiling and Regulation) Repeal Act, 1999 if the State failed to take actual physical possession of the excess land in accordance with law, including by serving mandatory notice on the persons in possession under Section 10(5) of the ULC Act.

A Bench of Justice B.V. Nagarathna and Justice R. Mahadevan allowed a civil appeal filed by sub-plot holders from Surat, Gujarat, and set aside a 2014 judgment of the Gujarat High Court which had branded them as “illegal occupants” and denied them relief.

Background

The dispute related to land admeasuring 9,303 sq. metres in Village Katargam, Surat. After proceedings under the ULC Act, 662.18 sq. metres of the land was declared surplus in 1989. Meanwhile, industrial units had been constructed on sub-plots allotted to the appellants, who had been in possession since the early 1980s.

Although the State claimed that possession of the surplus land was taken over in January 1992 through a panchnama, the appellants contended that no notice under Section 10(5) of the ULC Act was ever served on them, despite their admitted physical possession of the land. They approached the High Court after being denied No Objection Certificates for resale of their units, but lost before both the Single Judge and the Division Bench.

Supreme Court's reasoning

The Court reiterated the settled distinction between vesting of land in the State under Section 10(3) of the ULC Act and actual transfer of possession. Relying on its earlier decisions in State of Uttar Pradesh v. Hari Ram and AP Electrical Equipment Corporation v. Tahsildar, the Bench emphasised that:

• Vesting under Section 10(3) results only in de jure vesting of title, not de facto possession.
• Actual possession can pass to the State only through voluntary surrender, peaceful dispossession after service of notice under Section 10(5), or forcible dispossession under Section 10(6).
• Service of notice under Section 10(5) on the person in actual possession is mandatory and not a mere formality.

In the present case, the notice under Section 10(5) was issued only to the original landowner and not to the appellants, who were admittedly in possession of the sub-plots. The Court held that this failure was fatal.

“Mere paper possession or revenue entries in favour of the State cannot defeat the benefit of abatement under Section 4 of the Repeal Act,” the Bench observed.

The Supreme Court found that the Gujarat High Court had erred in holding that electricity bills and long-standing occupation did not establish possession, and in concluding that the appellants were illegal occupants. The Bench held that, since actual possession was never lawfully taken by the State before the repeal of the ULC Act, the proceedings stood abated by operation of law.

Allowing the appeal, the Court set aside the High Court's judgments and held that the appellants were entitled to the benefit of abatement under Section 4 of the Repeal Act, along with all consequential reliefs. 

Case : DALSUKHBHAI BACHUBHAI SATASIA v. STATE OF GUJARAT & OTHERS

Citation : 2026 LiveLaw (SC) 20

Click here to read the judgment