State Can Notify All Corporations, Municipalities & Panchayats U/S 58(f) Of Transfer Of Property Act: Kerala High Court

The Kerala High Court has recently held that the State Government is justified in notifying all Corporations, Municipalities and Panchayats in the State of Kerala under Section 58(f) of the Transfer of Property Act.

A Division Bench of Chief Justice S. Manikumar and Justice Shaji P. Chaly thereby refused to interfere with a State notification in that regard and accordingly dismissed an appeal.  

"...we have no hesitation to perceive that the State was right in all respects in extending the benefits of clause (f) of Section 58 of the T.P. Act, 1882 to the Corporations, Municipalities and the Panchayat areas."

The Court also added that the extension of Section 58(f) to the entire State would only help the citizens because they don't have to depend on the banks situated in the notified towns for their financial needs and banking activities.

"In our considered opinion, commercial activities, agricultural activities, and other economic & social activities have considerably accelerated irrespective of towns and villages thus enhancing the requirements of the citizens, depending the banks and other financial companies to carry on their activities uninterruptedly and seamlessly. That is the reason why the banks have expanded their scope of business by providing loans in various sectors."

The State government had issued a notification in 2010 exercising powers under Section 58(f) notifying all Corporations, Municipalities and Panchayats in the State for the purpose of this provision. 

When the appellant herein approached a Single Judge challenging this notification, their petition was dismissed citing that the State was not obligated by the provision to explain why a particular territory has been either brought in or excluded from the provisions of Section 58(f). It was further held that this was a policy decision wherein the Court seldom interferes. 

Contesting this order, the appellant moved the Division Bench. 

Advocates R. Surendran and S. Mayukha appearing for the appellant argued that the findings of the Single Judge were unfounded and an outcome of guesswork. They contended that the decision to bring in a particular territory within the umbra of Section 58(f) is not a policy decision as per legislative history.

It was further submitted that treatment of all persons within a Panchayat or Corporation in the State as one category for urbanisation is illegal.

On the other hand, Standing Counsel S. Easwaran for South Indian Bank argued that the legislature felt that to achieve economic progress, it is better if section 58(f) is extended to all the territories to which the Act extends with power to the State to exclude certain areas from the scope of the clause if it considered fit to do so. He advanced that the situation makes it clear that the primary consideration before the State was the urbanisation of the areas under its control and the ease of doing commercial activities. 

Senior Government Pleader K.P Harish also resisted the appeal. 

The Court noted that Section 58(f) was introduced to ensure that the economic activities are accelerated seamlessly by working out mechanisms to ease banking and financial transactions, simultaneously protecting their interests. 

Later, it was amended in 1939, vesting with the State the powers to notify the provision extending it to other areas, taking into account the State-specific situations. 

"It is easily gatherable from clause (f), that the power of the State Government under clause (f) is not saddled, restricted or circumscribed, and thus giving absolute power to expand the scope and horizon of the provision to tackle the situations so to have maximum advantage to the public and the needy in all respects."

Therefore, the Bench held that it is clearly presumable that Section 58(f) was extended in the manner contained in the impugned notification by the State after making an in-depth analysis of various factors.

It was also asserted that the fact that Part IX and Part IXA of the Constitution of India have given the local bodies a constitutional colour and responsibilities to carry on with their administration also persuaded the State Government to issue the impugned notification.

As such, the Bench took the opinion that the Single Judge was right in dismissing the petition and dismissed the appeal. 

Also Read: State Can Bring Its Entire Territory U/S 58(f) Of Transfer Of Property Act For Enabling Mortgage By Deposit Of Title-Deeds: Kerala High Court

Case Title: Pradeep Kumar P v. State of Kerala & Ors.

Citation: 2022 LiveLaw (Ker) 109

Click Here To Read/Download The Order