Non-Reportable  

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.     6919-6920 OF 2009

GAURAV ASEEM AVTEJ ………APPELLANT (S)

Versus U.P.STATE SUGAR CORPORATION LTD. & ORS.  

……..RESPONDENT (S) J U D G M E N T

L. NAGESWARA RAO, J.

1. I.A. No.131233 of 2013 is an application for substitution filed by

Gaurav Aseem Avtej which was allowed on 08.03.2018.  The said

application was filed on the ground that the first Plaintiff, Sh.Vinod

Chandra  Gupta  died  during  the  pendency  of  these appeals  on

12.11.2010.  He asserts his rights over the property in dispute on

the  basis  of  a  sale  deed  executed  on  29.11.2004  by  the  first

Plaintiff,   Sh. Vinod Chandra Gupta.   

2. For  the sake of  convenience,  the parties will  be referred to as

arrayed in Suit No.212 of 1981.

3. Suit No.212 of 1981 was filed before the learned Munsif, Bijnor by

Sh.  Vinod  Chandra  Gupta  and  his  mother  Smt.  Prakashwati

seeking eviction of the Defendant-Corporation and for recovery of

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the arrears of rent.   The learned Munsif refused to decree the suit

for eviction.  However, the Defendant-Corporation was directed to

pay  Rs.1700/-  towards  arrears  of  rent  for  the  period  1979-81.

Both the  Plaintiffs  and the Defendant-Corporation filed appeals

against the judgment of the Trial Court.  The First Appellate Court

dismissed  the  appeal  filed  by  the  Defendant-Corporation  and

allowed the Plaintiff’s appeal.  Consequently, the suit was decreed

in favour of the Plaintiffs and eviction was ordered.  The second

appeals filed by the Defendant-Corporation before the High Court

challenging  the  judgment  of  the  First  Appellate  Court  were

allowed.    The  High  Court  reversed  the  judgment  of  the  First

Appellate Court and dismissed the suit.   Aggrieved by the said

judgment, the present appeals are filed.    

 4. In the plaint it was averred that the first Plaintiff along with his

father,  Sh.Ram  Narain  Gupta,  were  bhumidars  of  an  area

admeasuring  4  bighas  3  biswas  in  Mauza  Rashidpur,  Garhi

Pargana, Bijnor.  According to them, the land was grove land.  3

bighas 8 biswas from the said land which is adjacent to M/s Shiv

Prasad Banarasi Das Sugar Mills,  Bijnor was given on lease for

being used to park vehicles.  It was averred that the lease was in

existence for  a considerably long period.  As the period of the

earlier lease expired in 1976, another lease deed was executed by

the  father  of  plaintiff  No.1  on  25.06.1976  for  a  period  of  five

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years.  It was stated in the plaint that the lease was determined

by a notice dated 10.07.1979 and that the Defendant-Corporation

was also in arrears of rent for the period 1979-1980.  On the basis

of the said pleadings, relief of eviction and recovery of arrears of

rent  was  sought.    The  Defendant-Corporation  filed  a  written

statement in which it was stated that the Plaintiffs have lost all

rights in respect of the land as they could not have leased out

agricultural  land.   It  was  also  urged  that  the  Plaintiffs  cannot

derive any benefit from the declaration made by the competent

authority  under  Section  143  of  the  Uttar  Pradesh  Zamindari

Abolition and Land Reforms Act, 1950 (the 1950 Act) that the land

was  used  for  non  agricultural  purposes.    The

Defendant-Corporation  submitted  in  the  written  statement  that

the land in dispute vested with the State Government by virtue of

the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971 (the

1971  Act)  and  Defendant  No.1  became the  title  holder  of  the

property after  the scheduled undertaking was transferred to it.

The Defendants further pleaded that they have made permanent

construction on the land which was being used for the purpose of

the factory and they had become permanent lessees.  The Trial

Court relied upon the order passed by the S.D.O.  Bijnor under

Section 143 of the 1950 Act on 20.01.1972 declaring that the land

in dispute was not agricultural land.   On the basis of the said

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order, the Trial Court held that the land was not agricultural land

and the Plaintiffs had the right to lease out the land.  The Trial

Court found that the land did not vest in the State Government

under  the  1971  Act  as,  according  to  the  Trial  Court,  only  the

leasehold interest in the land vested with the State Government.

The Trial Court refused to grant a decree of eviction on the ground

that the notice dated 10.12.1979 was not proved to have been

served on the concerned person.  The Plaintiffs were held to be

entitled for recovery of arrears of rent for the years 1979-1981.

5.  The  Appellate  Court  affirmed  the  findings  of  the  Trial  Court

regarding interpretation of the 1971 Act and held that it was only

the  leasehold  interest  in  the  land  that  stood  vested  in  the

Government.   The First  Appellate Court recorded a finding that

Section 111 of the Transfer of Property Act  would apply to the

instant  case  as  the  lease  was  for  a  fixed  period  between

1976-1980  and  the  lease  stood  determined  automatically  on

30.06.1980.    The  First  Appellate  Court  decreed  the  suit  by

allowing the appeal filed by the Plaintiffs.  The appeal filed by the

Defendant-Corporation was dismissed.   

6. The High Court allowed the appeals filed by the Defendants and

dismissed the suit by holding that the land stood vested in the

State Government under the  1950 Act as the lease executed by

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the  Plaintiffs  in  favour  of  the  Defendants  was  in  violation  of

Section 156 of the  1950 Act.   The High Court also relied upon

Section 167 of the  1950 Act to hold that the Plaintiffs lost their

rights over the land and as a consequence of void transfer, the

land  stood  vested  with  the  State  Government  free  from  all

encumbrances.  The High Court further observed that by virtue of

Section 3 of the  1971 Act the land which was occupied for the

purposes of  the factory stood vested in  the State Government

free from all encumbrances.   

7. The Appellant submits that the 1950 Act is not applicable to the

land in dispute and that the vesting under the 1971 Act is only in

respect of the leasehold rights.  It is relevant to mention at the

outset that the pleadings in this case are not very clear.   After a

detailed  scrutiny  of  the  material  on  record,  we  refer  to  the

undisputed facts which are as follows:-

i. The land in dispute admittedly belongs to the Plaintiffs.  They

leased out the said land to M/s Shiv Prasad Banarasi Das Sugar

Mills, Bijnor prior to 1950.  ii. The land was being used for the purpose of parking of vehicles

which brought sugarcane to the factory.   iii. The 1950 Act came into force on 26 January, 1951 iv. The S.D.O., Bijnor by an order dated 20.01.1972 declared the

land as non agricultural land under Section 143 of the  1950

Act.    The  said  order  was  passed  on  the  basis  of  a  report

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submitted by the Tehsildar on 17.12.1970. v. The Plaintiffs were unsuccessful in their challenge to the 1971

Act.  Though the Act was passed in 1971, the possession of the

scheduled undertaking was handed over only in the year 1979

to the Government. vi. A notice of termination of the lease was issued on 10.12.1979.

The suit filed by the Plaintiffs was partly decreed by the trial

Court on 14.04.1982 and fully decreed by the First Appellate

Court on 01.08.1984.  vii.  During the pendency of the second appeal in the High Court,

the  Plaintiffs  executed a  sale  deed in  favour  of  the  present

Appellant  on  29.11.2004.   Notice  was  issued  in  the  SLP  on

20.07.2007  and  leave  was  granted  by  this  Court  on

05.10.2009.   

8. The  point  of  vesting  of  the  lands  under  the  1971  Act was

adjudicated by all the three Courts below.  We are of the opinion

that determination of this issue will set at rest the controversy in

this case.  The Trial Court and the First Appellate Court held that

the land did not vest in the Government under the 1971 Act and it

was only  the  leasehold  interest  in  the  land that  vested in  the

Government.  Whereas, the High Court held that the land vested

in the Government.   

9. The 1971 Act  was promulgated for  acquisition of  certain sugar

undertakings.  The Act was made in view of the serious problems

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created by the owners of certain sugar mills for the cane growers

and  the  labourers.   Immediate  need  for  renovation  and

rehabilitation of the mills by the Government was the reason for

the statute being brought into force.  Section 2 (a) defines the

appointed  day  in  relation  to  the  undertakings  specified  under

Schedule I as July 3, 1971.  M/s Shiv Prasad Banarasi Das Sugar

Mills, Bijnor is at serial No.10 of Schedule I.   Section 3 of the Act

provides  for  vesting  of  every  scheduled  undertaking  on  the

appointed day free from any debt, mortgage, charge or any other

encumbrances.  Scheduled undertaking as defined in Section 2(h)

of the Act reads as follows:-

"2(h) "scheduled undertaking" means an undertaking engaged in the manufacture or production of sugar by means of vacuum pans and with the aid of mechanical power in factory specified [in any of the schedules of this Act], and comprises-

xxx xxx xxx

(vi) all  lands (other than lands held or occupied for purposes of cultivation  and  grovelands)  and  buildings  held  or  occupied  for purposes of that factory (including buildings pertaining to any of the properties and assets hereinbefore specified, and guest houses and  residences  of  directors,  managerial  personnel,  staff  and workmen or of any other person as lessee or licensee, and any store houses, molasses, tanks, roads, bridges, drains culverts, tubewells, water  storage or  distribution  system and other  civil  engineering works) including any leasehold interest therein"

10.  This  Court  examined the scope of  the definition of  scheduled

undertaking  in  State of  U.P.  v.  Lakshmi Sugar  & Oil  Mills

Ltd., (2013) 10 SCC 509 and held as follows:

“15. A plain reading of the above would show that all lands other

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than  those  held  or  occupied  for  purposes  of  cultivation  and grovelands  are  treated  as  being  part  of  the  “Scheduled Undertaking” which would upon acquisition vest in the appellant Corporation,  provided  such  lands  and  buildings  are  “held  or occupied for purposes of the sugar factory”. What is important is that  buildings  pertaining  to  any  of  the  property  and  assets specified in Sections 2(h)(i)  to (xii)  including guest houses and residences of Directors, managerial personnel, staff and workmen or of any other person as lessee or licensee including any store houses,  molasses,  tank,  roads,  bridges,  drains,  culverts, tubewells,  water  storage or  distribution  system and other  civil engineering works  including leasehold  interest  therein  are  also treated as part of the Scheduled Undertaking. The test, therefore, is whether the asset or any interest therein is held or occupied “for  purpose  of  a  sugar  factory”.  If  the  answer  is  in  the affirmative,  the same is  treated to be a part  of  the Scheduled Undertaking that would vest in  the appellant Corporation upon acquisition.”

11.  A statute is best interpreted when we know why it is enacted.  If

a statute is looked at, in the context of its enactment, with the

glasses  of  the  statute  maker,  provided  by  such  context,  its

scheme,  the  sections,  clauses,  phrases  and  words  may  take

colour and appear different than when the statute is looked at

without the glasses provided by the context.  (Reserve Bank of

India v. Peerless General Finance and Investment Co. Ltd.

And Others (1987) 1 SCC 424 para 33).    Reasons for  the

enactment of the 1971 Act are set out in the statement of objects

and reasons.  The serious problems created for the cane growers

and labourers due to mismanagement of certain sugar mills led to

a situation where the only solution was to acquire the said sugar

mills  with a  view to  renovate and rehabilitate the mills.    The

interpretation of the provisions of the 1971 Act should be made

by keeping in mind the above background.   The contention of the

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Appellant is that the land belonging to him was leased out to the

sugar mill and the vesting is only of the leasehold interest in the

land and that he continues to be the title holder.  We are unable

to agree.    A detailed examination of the provisions of the Act

would make it  clear that the intention was to secure all  assets

which were being used for the purposes of the factory.  (State of

U.P. v. Lakshmi Sugar & Oil Mills Ltd. (supra)).  The crucial

words in Section 2 (h) (vi) are “held or  occupied for purposes of

that  factory.”    The  scope  of  the  word  ‘held’  arose  for

consideration in  A.G. Varadarajulu v. State of T.N., (1998) 4

SCC 231 and this Court observed :-   

“26. The word “hold” or “held” in the context of land has come up for consideration in several cases before this Court. In State of U.P. v. Sarjoo Devi [(1977) 4 SCC 2] while dealing with the said word in Section 3(14) of  the U.P.  Zamindari Abolition and Land Reforms Act, 1950, as follows: (SCC p. 8, paras 8 and 10) “The word ‘held’ occurring in the above definition which is a past participle of the word ‘hold’ is of wide import. In the Unabridged Edition of The Random House Dictionary of the English Language, the  word  ‘hold’  has  been  inter  alia  stated  to  mean  ‘to  have the ownership or use of; keep as one's own’. *** In Webster's New Twentieth Century Dictionary (Second Edition), it is stated that in legal parlance the word ‘held’ means to possess by  ‘legal  title’.  Relying  upon  this  connotation,  this  Court in Bhudan Singh v. Nabi Bux [(1969) 2 SCC 481] interpreted the word  ‘held’  in  Section  9  of  U.P.  Zamindari  Abolition  and  Land Reforms Act, 1950 as meaning possession by legal title.” (emphasis supplied) Again in State of A.P. v. Mohd. Ashrafuddin [(1982) 2 SCC 1] it was held as follows: (SCC p. 4, para 8) “According to Oxford Dictionary ‘held’  means: to possess;  to be the owner  or  holder  or  tenant  of;  keep possession of;  occupy. Thus, ‘held’ connotes both ownership as well as possession. And in the context of the definition it is not possible to interpret the term ‘held’ only in the sense of possession.” The  word  “holds”  was  again  interpreted  in Hari  Ram v. Babu Gokul Prasad [1991 Supp (2) SCC 608] where it occurs in Section 185(1) of the Madhya Pradesh Land Revenue Code, 1959. It was

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observed: (SCC p. 611, para 5) “The word ‘holds’ is not a word of art. It has not been defined in the Act. It has to be understood in its ordinary normal meaning. According to Oxford English Dictionary, it means, to possess, to be  owner  or  holder  or  tenant  of.  The  meaning  indicates that possession must be backed with some right or title.”  

12. Black’s Law Dictionary defines ‘Hold’ as under:-

“To  possess  in  virtue  of  a  lawful  title;  as  in  the  expression, common in grants, “to have and to hold,” or in that applied to notes, “the owner and holder.”  

 In the context of the 1971 Act, the word “held” connotes

a wide meaning.  All lands held or occupied lawfully and

which  were  used  for  the  purposes  of  the  factory  stood

vested in the Government on the appointed day.  The word

‘held’ in Section 2 (h) (vi) cannot be interpreted as limited

only  to  a  holding  as  an  owner  of  the  property.   Legal

possession  is  sufficient  for  the  lands  to  vest  in  the

Government by forming part of the scheduled undertaking.

13. Black’s Law Dictionary defines ‘occupy’ as under:-

“To take or enter upon possession of; to hold possession of; to hold or keep for use; to possess; to tenant; to do business in; to take or hold possession.  Actual use, possession, and cultivation. See occupancy; occupant; occupation; possession.  

The words ‘held’  or  ‘occupied’  carry  the same meaning and

there  is  no  manner  of  doubt  that  if  the  land  is  in  the  lawful

possession of the factory and was being used for the purposes of the

factory, the said land vested in the Government as per Section 3 of

the 1971 Act.   Section 3 of the 1971 Act provides for the vesting of

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the scheduled undertaking free from all encumbrances.  There is no

dispute that, in the instant case, the land was held and occupied by

the sugar factory for a long period of time pursuant to a lease deed

executed by the Plaintiffs and was being used for the purpose of the

factory.   

14.  The point that remains to be considered is about the reason for

the  insertion  of  the  words  “including  any  leasehold  interest

therein”.   The submission of the Appellant which found favour

with  the  Trial  Court  and  the  First  Appellate  Court  is  that  the

vesting under the 1971 Act is only of the leasehold interest in the

land.   We disagree.        We are of the opinion that all lands

including those which are held pursuant to a lease vest in the

State.   It  is  only  ex  abundant  cautela that  these  words  are

included in the definition clause.  The intention of the legislature

is made very clear in the definition of ‘scheduled undertaking’ by

insertion of  the  words “including any leasehold  interest.”   The

words  ‘including  any  leasehold  interest’  cannot  be  read  in  the

manner that is canvassed by the Appellant which is that vesting is

only of leasehold interest.  A plain reading of Section 2 (h) (vi) of

the  1971  Act  provides  that  a  scheduled  undertaking  would

comprise  of  all  lands  and  buildings  held  or  occupied  for  the

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purpose of the factory.  The word ‘including’ would clearly indicate

that the lands held by way of lease are also part of a scheduled

undertaking.  In  any  case  the  words  “including  any  leasehold

interest therein” cannot be understood to have a limiting effect

and result in the acquisition of only the leasehold interest in the

land.

15. If the intention of the Legislature was to exclude leasehold lands it

could have expressed the same by adding lands held on lease

along with agricultural and grove lands.  As per Section 2(h) (vi)

all  lands  other  than  lands  held  or  occupied  for  purpose  of

cultivation and grove lands are part of scheduled undertaking. In

view of above, we are of the opinion that the land in dispute stood

vested  in  the  State  Government  on  the  appointed  day  i.e.

03.07.1971.   

16. The  findings  recorded  above  would  have  been  sufficient  to

dispose  of  the  controversy  in  this  case.   But  it  has  become

necessary for us to deal with the findings of the High Court that

the Plaintiffs are not entitled for any compensation for their lands.

The reason given by the High Court is that the lease executed by

the Plaintiffs was contrary to Section 156 of the 1950 Act.   And,

the  consequence  of  the  violation  of  Section  156  is  that  the

transaction is void and the Plaintiffs lost all rights in the property

as per Section 167 of the Act.    

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17. Undisputedly, the lease of the land was entered into between the

parties prior to the 1950 Act coming into force.   The Act of 1950

is  not  applicable  to  the  land  which  was  being  used  for  non

agricultural purposes prior to 1950.   Land as defined in Section 3

(14) of the 1950 Act means land, held or occupied for purposes

connected  with  agriculture,  horticulture  or  animal  husbandry.

Moreover,  there is  also a declaration under Section 143 of  the

1950  Act  that  the  land  was  being  used  for  non  agricultural

purposes.  The said order under Section 143 passed by the SDO,

Bijnor on 20.01.1972 was on the basis of a report submitted by

the Tehsildar made on 17.12.1970.  In view of the above, we are

of the opinion that the land did not vest in the Government under

the 1950 Act.       

18. We are  not  in  agreement  with  the  findings  of  the  High  Court

regarding the vesting of the land in the Government under the

1950 Act due to which the Plaintiffs were held disentitled for any

compensation.    The  land  owners  may  resort  to  any  remedy

available to them for payment of compensation to which they are

entitled to.  

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19. For the aforesaid reasons, the appeal are dismissed.   

               ........................................J.                                                                       [S.A. BOBDE]

               ........................................J.               [L. NAGESWARA RAO]

New Delhi, April 20, 2018.

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