“Socialism In Its Extreme”: Supreme Court On Giving Kerala Land Reforms Act Protection To Commercial Establishment

The Supreme Court on Wednesday criticised the grant of land reform protection to Indian Oil Corporation Limited (IOCL) in a dispute that has kept the landowner out of possession for more than three decades.

A bench of Justice BV Nagarathna and Justice Alok Aradhe directed Indian Oil Corporation Limited (IOCL) to hand back vacant possession of leased land in Ernakulam to the heirs of the original landowner, holding that the company was not entitled to protection under Section 106 of the Kerala Land Reforms Act, 1963.

Section 106 grants protection from eviction to lessees of land leased for commercial or industrial purposes if they had constructed buildings on the land before May 20, 1967.

Justice Nagarathna criticised the application of land reform protections to commercial property held by a large corporate entity.

“What kind of land reform is this? We understand if it is agricultural property. But even commercial and industrial property is being given. Kerala, that is why we are saying that this is socialism in its extreme. All commercial and industrial property you give to the tenant who may be a big corporate. We can understand land to the tiller. That's why we asked whether Section 106 is assailed or not. This is socialism in its extreme”, she said.

The case arises from a suit filed in 1994 by the landowner seeking recovery of possession of about 20 cents of land in Elamkulam Village, Ernakulam. The land had been leased to Indian Oil Corporation Limited and was being used for a petrol pump through a dealer. After terminating the lease, the landowner approached the trial court for vacant possession.

The trial court had decreed the suit against the plaintiff, adopting the finding of the Land Tribunal, which had held that Indian Oil was entitled to protection under Section 106.

On appeal, though IOCL claimed that building had been constructed on the land before May 20, 1967 and the conditions under Section 106 were met, the Kerala High Court noted that no evidence was shown to support the claim. The High Court set aside the trial court decree and directed vacant possession to be restored to the plaintiff.

Thus, IOCL approached the Supreme Court in 2011.

The Supreme Court found no merit in the appeal and held that the High Court was justified in decreeing the suit in the favour of the plaintiff. Noting that the plaintiff has not got possession of the land since 1994 when the suit was filed, the Court directed IOCL to restore vacant possession of the land to the heirs of the landowner within six months.

The Court directed the responsible officer of IOCL to file an undertaking within three weeks stating that IOCL will vacate and handover possession of the land within 6 months, that it will not seek any extension, that it will pay all arrears of rent, and that it will not create any third-party interest on the land.

Case no. – C.A. No. 8576/2011

Case Title – Indian Oil Corporation Ltd. v. P.C. Sathiyadevan (D) By Lrs. and Another