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Bar On 'Transfer/Assignment' Of Agricultural Land To Non-Agriculturist Applicable To Testamentary Disposition Also: SC [Read Judgment]

Mehal Jain
16 Jun 2020 3:11 PM GMT
Bar On Transfer/Assignment Of Agricultural Land To Non-Agriculturist Applicable To Testamentary Disposition Also: SC [Read Judgment]

The Supreme Court on Monday ruled that Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 debars an agriculturist from parting with his agricultural land to a non-agriculturist through a "Will". The three-judge bench headed by Justice U. U. Lalit, in dismissing the appeals against the impugned Gujarat High Court judgment, also held that Section 43(1) of the Tenancy...

The Supreme Court on Monday ruled that Section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 debars an agriculturist from parting with his agricultural land to a non-agriculturist through a "Will".

The three-judge bench headed by Justice U. U. Lalit, in dismissing the appeals against the impugned Gujarat High Court judgment, also held that Section 43(1) of the Tenancy Act restricts transfer of any land or interest purchased by the tenant under Sections 17B, 32, 32F. 321. 320, 32U, 33(1) or 88E or sold to any person under Section 32P or 64 of the Tenancy Act through the execution of a Will by way of testamentary disposition.

The Court said that if a testamentary disposition which does not have the element of consideration is to be permitted, and if it is assumed that Sections 43 and 63 of the Act do not get attracted, the land can be bequeathed to a total stranger and a non-agriculturist who may not cultivate the land himself; which in turn may then lead to engagement of somebody as a tenant on the land. In such a situation, the legislative intent to do away with absentee landlordism and to protect the cultivating tenants, and to establish direct relationship between the cultivator and the land would then be rendered otiose.

"The construction put on the expression "assignment" appearing in Section 43, therefore, has to be consistent with the legislative scheme. In the context of the entire scheme, the term "assignment" used in Section 43 of the Act must include testamentary disposition as well. By adopting such construction, in keeping with the law laid down by this Court, the statute would succeed in attaining the object sought to be achieved. On the other hand, if it is held that the testamentary disposition would not get covered by the provisions of Section 43, a gullible person can be made to execute a testament in favour of a person who may not fulfil the requirements and be eligible to be a transferee in accordance with law. This may not only render the natural heirs of the tenant without any support or sustenance, but may also have serious impact on agricultural operations", concluded the bench.

The Court also declared as incorrectly decided its own 2016 Judgment in Mahadeo (Dead through legal representatives) v. Shakuntalabai in which similar provisions from Bombay Tenancy and Agricultural Lands Act, 1958 (as applicable to Vidarbha Region of State of Maharashtra) came up for consideration. In the said decision, a two-judge bench of former Justices Madan B. Lokur and A. K. Goel had held that "On a plain reading of the aforesaid provision, it is clear that transfer without the previous sanction of the Collector is impermissible by way of sale, gift, exchange, mortgage, lease or assignment" and that "there is no prohibition insofar as the transfer of land by way of a will is concerned".

Legislative Scheme of the 1948 Tenancy Act

In the judgment rendered on Monday, the bench, also comprising Justices Indu Malhotra and A. S. Bopanna, appreciated the provisions of the 1948 Act to consider the legislative scheme:

A) In terms of Section 32, on the tillers' day every tenant satisfying the requirements spelt out in Section 32(1), and upto the ceiling limit as laid down in Section 32A, is deemed to have purchased from his landlord, free from all encumbrances, the land held by him as tenant.

B) The purchase price payable by the tenant for such deemed purchase is to be determined in terms of Section 32H, according to which, in case of a permanent tenant the purchase price has to be equal to six times the rent, while in case of other tenants, the purchase price would not be less than 20 times the assessment, and not more than 200 times the assessment.

C) In case the proceedings for eviction of the tenant are pending, the deemed date of purchase will stand postponed in terms of the first proviso to Section 32.

D) Even if the tenant had lost the possession before the tillers' day, in certain cases the possession can be restored to him and the benefit of statutory purchase can be enjoyed by him as stipulated in sub-sections (1A) and (1B) of Section 32. The benefit of statutory purchase is also made available to tenants in areas within the limits of Municipal Boroughs, or within the limits of Municipal Districts as contemplated by Section 32(4) of the Act.

E) If the landlord is under a disability, as stated in Section 32F, the right to purchase the land can be exercised after cessation of disability. In such cases, the period within which the right to purchase could be exercised was initially a fixed period, but facility is given in Section 32F(1A) that even if the period had expired, the tenant is still deemed to have purchased the land.

F) Even a sub-tenant of a permanent tenant is entitled to the right of deemed purchase in terms of Section 32I and all the provisions concerning deemed purchase are to apply to such sub tenant. The shares of purchase price are then to be allocated in terms of Section 32I (3).

G) If the tenancy is created after the tillers' day, in terms of Section 32O, as it stood before its deletion, a tenant could exercise the right of purchase within one year from the commencement of his tenancy.

H) If the purchase has become ineffective or there was failure on the part of the tenant to exercise the right of purchase, the Collector under Section 32P either suo motu, or on an application, can pass appropriate directions in terms of Section 32P(2). In such cases, the land is to be disposed of to the persons in the priority list. At the top of the priority list is the tenant himself, in case he is willing to accept the offer of sale, followed by various entities and persons including agricultural labourers, land-less persons, small holders and persons belonging to Scheduled Castes and Scheduled Tribes.

I) If none of those persons in the priority list come forward to purchase the land, the land is to vest in the State Government, whereupon in terms of Section 32P(4) the purchase price can be determined, which will then be paid to the owner of the land.

J) Where the purchase in favour of persons from the priority list in terms of Section 32 is effected, the price will be determined in terms of Section 32P(5) read with other provisions, to be paid in annual instalments not exceeding six.

K) If any land was surrendered to the landlord before the specified date and the possession of the land was taken by the landlord, in terms of Section 32P(7), the landlord will be entitled to the use and occupation of the land so long as he cultivates the land personally. In such cases, by virtue of Section 32P(8) no land as described in Section 32P(7) can be transferred by sale mortgage, lease or assignment without the previous sanction of the Collector.

L) Even in cases where the land is at the disposal of the Collector under Section 32P, by virtue of Sections 32PP, 32PPP additional opportunities are granted to the tenant to avail of the benefit of statutory purchase. Even where the tenant had failed to deposit the purchase price, in cases covered by Section 32QQ the amount will be deposited on his behalf by the State Government.

M) Upon payment of the last instalment, a certificate of purchase is issued to the tenant or sub-tenant or such other person(s)/ entities in the priority list, as the case may be. The certificate of purchase is conclusive evidence of the ownership of such purchaser.

N) A right was conferred upon the tenant with respect to a dwelling house under Section 17 whereunder the tenant was given the first option of purchasing the site at a value, to be determined by the tribunal. However, by virtue of the newly incorporated Section 17B, every tenant is deemed to have purchased from his landlord the site on which the dwelling house occupied by such tenant is built and the land immediately appurtenant thereto and necessary for the enjoyment of dwelling house.

O) If the landlord intends to sell any land, he must apply to the tribunal in terms of Section 64 which may thereafter determine the reasonable price, and the offer has to be made in terms of Section 32P to the concerned persons.

P) Section 88B had granted exemption from the provisions pertaining to statutory purchase and determination of price in respect of lands held by a University or a trust for an educational purpose, a hospital, punjarapol or Gaushala and to lands donated by any person for the purposes of rendering any services to the community. However, in terms of Section 88E, such exemption ceased to operate from the specified date, and the tenants of such lands are also deemed to have purchased the land on the specified date, and all the relevant provisions regarding statutory purchase would then apply to such land.

Q) Section 32R obliges the purchaser of land to cultivate the land personally, and in case of failure, the land can be disposed of in terms of Section 84C of the Act.

Examining the earlier authorities of the top court on this subject, the bench opined that the common thread running through these decisions is to construe the prohibition against transfer appearing in various statutes in keeping with the legislative intent. "...where the object of the legislation is to prevent a mischief and to confer protection on the weaker sections of the society, the court would not hesitate in placing an extended meaning, even a stretched one, on the word, if in doing so the statute would succeed in attaining the object sought to be achieved", cites the judgment penned by Justice Lalit.

The bench noted that in terms of Section 14 of the Act in question, if the land "is assigned" in contravention of Section 27, the tenancy of the tenant is liable to be terminated. Section 27 states in clear terms that "assignment of any interest" in the land by a tenant shall not be valid. "The decision of this Court in Bhavarlal Labhchand Shah v. Kanaiyalal Nathalal Intawala (1986) has stood the test of time which clearly states that a tenancy governed by a statute which prohibits assignment, cannot be willed away to a total stranger. The expression "assignment" in Sections 14 and 27, if understood in light of the decision of this Court in Bhavarlal which has consistently been followed, must include testamentary disposition", expressed the bench.

Accordingly, the Court was of the view that the meaning ascribed to the expression "assignment" in Section 43 cannot in any way be different. There is nothing in the provisions of the Act to suggest that the expression "assignment" must carry a different meaning in Sections 14 and 27 on the one hand, and Section 43 on the other.

"Thus, a cultivating tenant, if his holding is otherwise not beyond the ceiling limit would be given the right to own the land cultivated by him. In cases where no purchase could be effected either on account of inability of the tenant to pay the purchase price, or on account of other situations, more than one attempt and opportunities are afforded to him. The statute goes to the extent of obliging the State Government to deposit the purchase price on his behalf. Even in cases where the tenant is unable to exercise the right of purchase because his holding would go beyond ceiling limit, the land would not revert to the landlord, but in terms of Section 32P, it must come to the persons or entities listed in the priority list", asserted the Court.

It proceeded to observe that the priority list includes persons such as agricultural labourers and landless persons. The bench inferred that the scheme is, therefore, to effectuate distribution of agricultural lands in such a way that the persons who are disadvantaged, would be conferred the ownership.

The bench reflected that after such purchase, the law obliges the purchaser to cultivate the land personally and not to transfer it- "If a tenant or any other person from the priority list is conferred ownership in respect of the agricultural land or when a landlord is allowed to retain the land which was surrendered by his tenant, each one of them is obliged to cultivate the land personally. In case any of them is unwilling, the land must be given to those who principally depend upon agricultural operations for their sustenance. If a person is a beneficiary of such statutory purchase and wishes to transfer his holding the law obliges that he must take prior sanction from the Collector. While granting such sanction, the authorities may essentially check whether the transferee is an agriculturist or an agricultural labour who otherwise fulfils the requirements and would carry out the obligation of cultivating the land personally; and that his holding would not go beyond the ceiling limit"

The judgment states that a transfer inter vivos would normally be for consideration where the transferor may get value for the land but the legislation requires previous sanction of the concerned authority so that the transferee can step into the shoes of the transferor, and carry out all the obligations as a part of legislative scheme must be discharged. Thus, the screening whether a transferee is eligible or not, can be undertaken even before the actual transfer is effected.

Whether Prohibition In State Enactment Inconsistent With Principles Emanating From Indian Succession Act, 1925, A Central Legislation, Must Be Held To Be Void

The judgment asserts that ff the provisions referred to in Section 43 of the Act and allied provisions are considered in light of the settled principles, it emerges that the primary concern of those provisions is to see that the legislative scheme of granting protection to persons from disadvantaged categories and conferring the right of purchase upon them, and thereby ensure direct relationship of a tiller with the land.

"The provisions, though lay down a norm which may not be fully consistent with the principles of Indian Succession Act, are principally designed to attain and sub-serve the purpose of protecting the holdings in the hands of disadvantaged categories. The prohibition against transfers of holding without the previous sanction of the concerned authorities, is to be seen in that light as furthering the cause of legislation. Even if by the process of construction, the expression "assignment" is construed to include testamentary disposition, in keeping with the settled principles, the incidental encroachment cannot render the said provisions invalid", held the bench.

The court declared that in pith and substance, the legislation and the concerned provisions are completely within the competence of the State Legislature and by placing the construction upon the expression "assignment" to include testamentary disposition, no transgression will ensue.  

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