Reportable IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.10187  OF 2010

Tata Motors Ltd. … Appellant

Vs.

Talathi of Village Chikhali & Ors. … Respondents

J U D G M E N T  

R.V.RAVEENDRAN, J.

1. Under  Lease  Deed  dated  3.1.1995,  Pimpri-Chinchwad  New  Town  

Development Authority (6th respondent herein – for short ‘the Development  

Authority’) granted a lease of land measuring 164.5 acres in Sectors No.15  

and 15A in  Village  Chikhali,  Taluka  Haveli,  District  Pune,  converted  to  

industrial use,  to the appellant herein for a term of 99 years commencing  

from  21.11.1994.  The  consideration  for  the  lease  was  a  premium  of  

Rs.17,91,40,500/-  (at  the  rate  of  Rs.25/-  per  sq.ft.)  paid by the appellant  

apart from a yearly rent of rupee one. The appellant utilized the said plot and

adjoining plot obtained on lease from Maharashtra Industrial Development  

Corporation (for short ‘MIDC’) for construction of its factory. The appellant  

commenced  construction  of  its  plant  in  or  about  the  year  1997  and  on  

completion, commenced actual use for industrial purpose, in the year 1999.

2. The appellant was served with a demand notice dated 26.2.2002 by  

the Gar Kamgar Talathi, Chikhali, demanding payment of Rs.45,25,538/- as  

non-agricultural  cess  and  additional  non-agriculture  cess,  for  the  period  

1995-96 to  2001-02.  As the  said payment  was  not  made,  default  notices  

dated  1.3.2002  and  5.3.2002  were  issued  under  Section  174  of  the  

Maharasthra Land Revenue Code, 1966 (‘Code’ for short) informing that if  

the amount demanded was not paid within seven days, the amount due will  

be  recovered  with  25% of  the  amount  due  as  penalty.  At  that  stage  the  

appellant filed a writ petition before the Bombay High Court for quashing  

the  demand  notice  26.2.2002,  1.3.2002  and  5.3.2002.  The  appellant  

contended that it was a “government lessee”. Alternatively, it was contended  

that it was the tenant of the Development Authority. It was submitted that  

neither a government lessee nor a tenant of the Development Authority was  

liable  to  pay the  non-agricultural  assessment  under  the  provisions  of  the  

Code.

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3. The High Court, by judgment dated 4.7.2007 rejected the contention  

that  appellant  was  a  government  lessee.  It  held  that  as  lessee  under  the  

Development Authority, the appellant was liable to pay the non-agricultural  

assessment. The High Court however held that having regard to section 115  

of the Code, non-agricultural  assessment could be levied only with effect  

from the  date  on  which  the  land  was  actually  used  for  non-agricultural  

purpose, and as appellant commenced actual non-agricultural use in the year  

1999, the non-agricultural assessment was due by it only from 1999-2000.  

As a consequence, the High Court allowed the writ petition in part, quashed  

the demand relating to the period 1995-96 to 1998-99 and upheld the claim  

for the non-agricultural assessment from the year 1999-2000 onwards. The  

said order is challenged in this appeal by special leave contending that it is  

not liable to pay the non-agricultural assessment as it is a government lessee.  

Alternatively it  is contended that being the tenant of the ‘occupant’,  it  is  

liable to pay the land revenue, as only the ‘occupant’ is liable to pay the  

land revenue under section 39 of the said Code. On the contentions raised,  

the following questions arise for consideration:

(i) Whether the petitioner is a ‘government lessee’ and therefore not  liable to pay the non-agricultural assessment?  

(ii) Whether the appellant being a tenant of the Development Authority,  the demand for non-agricultural assessment could be made only on  the Development Authority and not against the tenant?

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The relevant statutory provisions

4. The answers to the aforesaid two questions would depend upon the  

provisions of the Maharashtra Land Revenue Code, 1966. Section 39 makes  

the occupant liable to pay the land revenue and the said section is extracted  

below:

“39. Occupant to pay land revenue and Government lessee to pay rent   fixed.  

Every occupant shall pay as land revenue the assessment fixed under the  provisions of this Code and rules made thereunder; and every Government  lessee shall pay as land revenue lease money fixed under the terms of the  lease.”

(emphasis supplied)

The term “land revenue” and “occupant”  referred in  the said section  are  

defined  in  Section  2(19)  and  section  2(23)  and  the  said  definitions  are  

extracted below:

“(19) – “land revenue” means all sums and payments, in money received  or legally claimable by or on behalf of the State Government from any  person on account of any land or interest in or right exercisable over land  held by or vested in him, under whatever designation such sum may be  payable and any cess or rate authorised by the State Government under the  provisions of any law for the time being in force; and includes premium,  rent,  lease  money,  quit  rent,  judi payable  by  a  inamdar  or  any  other  payment provided under any Act, rule, contract or deed on account of any  land;

“(23)  –  “occupant”  means a holder  in  actual  possession of unalienated  land, other than a tenant or Government lessee ; provided that, where a  holder  in  actual  possession is  a  tenant,  the land holder  or  the superior  landlord, as the case may be, shall be deemed to be the occupant;

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The expressions “to hold land” or “to be a land holder or holder of land” is  

defined  in  section  2(12)  and mean to  be lawfully  in  possession of  land,  

whether such possession is actual or not.

The  term “tenant”  and “government  lessee”  referred  in  the  definition  of  

“occupant”  are  defined  in  Section  2(40)  and  Section  2(11)  and  they  are  

extracted below:  

“(40) “tenant” means a lessee, whether holding under an instrument, or  under an oral agreement, and includes a mortgagee of a tenant's rights with  possession; but does not include a lessee holding directly under the State  Government;

(11) “Government lessee” means a person holding land from Government  under a lease as provided by section 38”.

Section 38 referred in the definition of ‘Government Lessee’ is extracted  

below :  

“It shall be lawful for the Collector at any time to lease under grant or  contract any unalienated unoccupied land to any person, for such period,  for such purpose and on such conditions as he may, subject to rules made  by the State Government in this behalf, determine, and in any such case  the land shall, whether a survey settlement has been extended to it or not,  be  held  only  for  the  period  and  for  the  purpose  and  subject  to  the  conditions so determined. The grantee shall be called a Government lessee  in respect of the land so granted.”

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Chapter  XI of the Code deals with realization of land revenue and other  

revenue demands. Section 168 in Chapter XI of the Code dealing with the  

liability for land revenue is extracted below:   

“168. Liability for land revenue.  (1)   In the case of  

(a)  unalienated  land,  the  occupant  or  the  lessee  of  the  State  Government,  

(b) alienated land, the superior holder, and  (c) land in the possession of a tenant, such tenant if he is liable to  pay land revenue therefor  under  the  relevant  tenancy law,  shall  be  primarily liable to the State Government for the payment of the land  revenue, including all  arrears of land revenue, due in respect of the  land. Joint occupants and joint holders who are primarily liable under  this section shall be jointly and severally liable.  

(2) In case of default by any person who is primarily liable under this  section,  the  land  revenue,  including  arrears  as  aforesaid,  shall  be  recoverable from any person in possession of the land.  Provided that, where such person is a tenant, the amount recoverable from  him shall not exceed the demands of the year  in which the recovery is  made.  Provided further that, when land revenue is recovered under this section  from any person who is not primarily liable for the same, such person shall  be allowed credit for any payments which he may have duly made to the  person  who  is  primarily  liable,  and  shall  be  entitled  to  credit,  for  the  amount recovered from him, in account with the person who is primarily  liable”.  

5. It is not in dispute that the land in question is unalienated land and that  

in  regard  to  such  land,  only  the  ‘occupant’  as  defined  in  the  Code  is  

primarily  liable  to  pay  the  non-agricultural  assessment  to  the  state  

government. Section 2(23) makes it clear that where the land is in the actual  

possession of a tenant, the superior landlord or the land holder is deemed to  

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be the occupant. It is also not in dispute that the Development Authority is  

the ‘occupant’ and the appellant is not the occupant, but only a tenant under  

the occupant.

Re : Question (i)

6. There is no dispute that a government lessee is not liable to pay any  

land  revenue.  Section  2(11)  read  with  section  38  defines  a  ‘government  

lessee’  as  a  lessee  under  a  lease  granted  by  a  Collector  in  regard  to  

unalienated unoccupied land belonging to the government. In this case the  

lands  in  question  for  which  the  non-agricultural  assessment  has  been  

demanded, were not leased by the Collector to the appellant. The lease deed  

states that the lands leased were held by the Development Authority, and the  

lessor is the Development Authority. Therefore the leased lands were not  

government  lands  and  the  lessor  was  not  the  government.  There  is  also  

nothing  to  show  that  the  lands  belonged  to  government  and  that  the  

Development Authority granted the lease in favour of appellant, acting as an  

agent of the state government. A lessee from the Development Authority is  

not  a  government  lessee  as  the  Development  Authority  is  not  the  

government  and the  lease  lands  are  not  government lands.  Therefore  the  

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appellant  cannot  call  itself  a  government  lessee.  The  first  contention  is  

therefore rejected.  

7. Though the  issue  is  thus  simple  and straightforward,  the  appellant  

however contended that it is a ‘government lessee’ in a rather round-about  

manner,  relying upon a state government Circular dated 29.3.1975 which  

clarified that as on that date, MIDC was the agent of the state government  

and therefore not liable to pay any assessment to the government in respect  

of the lands held by it as agent of the state government; that any lessee under  

MIDC would therefore become a government lessee and will not be liable to  

pay the non-agricultural assessment under the provision of Code, but will  

only  be  liable  to  pay  the  lease  money  fixed  under  the  lease;  and  that  

consequently the industrial lessees, under MIDC, were not  required to pay  

any  non-agricultural  assessment  in  addition  to  the  lease  money.  It  is  

submitted by the appellant that in regard to the adjoining land taken by it on  

lease from MIDC, it is not required to pay the non-agricultural assessment  

on account of appellant being treated as government lessee, under the said  

Circular  dated  29.3.1975.  It  is  contended  that  in  principle,  there  is  no  

difference between the MIDC and the Development Authority and having  

regard to the provisions of the Maharashtra Regional and Town Planning  

Act, 1966 (for short ‘MRTP Act’), the Development Authority should also  

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be treated as agent of the state government and consequently, the appellant  

should be treated as a government lessee which is not liable to pay any non-

agricultural  assessment,  in regard to the lands taken on lease under deed  

dated 3.1.1995.

8. The question whether the appellant is liable to pay non-agricultural  

assessment  in  regard  to  the  land  taken  on  lease  from  the  Development  

Authority will have to be decided with reference to the relevant statutory  

provisions  and  the  terms  of  lease  and  not  with  reference  to  position  

prevailing with reference to some other lease taken by the appellant from  

MIDC. The status, objects, functions and area of operation of MIDC and the  

Development Authority are different.  Any decision or clarification issued in  

regard to lands held by MIDC or lands leased by MIDC will not apply to  

lands held or leased by the Development Authority. As noticed above, the  

circular dated 29.3.1975 relied upon by the appellant is not relevant as it  

applies only to lessees of MIDC, which as agent of the state government  

granted certain leases and consequently such lessees as government lessees  

were  exempted  from  paying  the  non-agricultural  assessment.  The  said  

notification  did  not  refer  to  Pimpri-Chinchwad New Town Development  

Authority as the agent of the state government in regard to grant of leases to  

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appellant  and others.  In fact  there is  no document which shows the state  

government  to  be  the  owner  of  the  lands  leased  by  the  Development  

Authority, nor any document to show that the state government had either  

constituted or recognized the Development Authority as its agent in regard  

to leased lands.  

9. To know whether  the  Development  Authority  was an  agent  of  the  

state government and to ascertain its status, it is necessary to refer to the  

relevant provisions of the Maharashtra Regional and Town Planning Act,  

1966  (for  short  ‘MRTP  Act’).  Section  113  of  MRTP  Act  provides  for  

designation of new towns and constitution of Development Authorities for  

those new towns. Sub-sections (1), (2), and (4) of that section are extracted  

below:

“113. (1) If the State Government is  satisfied that it is expedient in the  public interest that any area should be developed as a site for a new town  as reserved or designated  in  any draft or final Regional Plan it may by  notification in the Official Gazette,  designate that area as the site for the  proposed new town. The new town shall be known by the name specified  in the notification.  

(2) After  publication  of  the  notification  under  sub-section  (1) for  the  purpose of acquiring, developing and  disposing  of land in the area of a  new  town,  the  State  Government  shall  by  another  notification  in  the  Official Gazette, constitute a New Town Development Authority……….

xxx xxx  xxx

(4) Every Development Authority shall be a body corporate with perpetual  succession and a common seal with power to acquire, hold and dispose of  

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property, both moveable and immoveable, and contract and sue or be sued  by such name as may be specified in the  notification under sub-Section  (2)”.

Section 114 lays down the object of Development Authority and sub-section  

(1) thereof is extracted below:

“114(1) The  objects of a Development Authority shall  be  to secure the  laying out and development of the new town in accordance with proposals  approved  in  that  behalf  under  the  provisions  of  this  Act,  and  for  that  purpose every such Authority shall  subject to  the provisions of  section  113A have power to acquire, hold, manage and dispose of land and other  property  to  carry out  buildings  and other  operations,  to  provide  water,  electricity, gas, sewerage and other  services,  amenities  and facilities  and  generally to do anything necessary or expedient for the purpose of the new  town or for purposes incidental thereto.”

Section 116 empowers Development Authorities to acquire lands. Section  

118  deals  with  disposal  of  lands  by  Development  Authorities  and  sub-

section (1) thereof which is relevant is extracted below:

“118.(1)  Subject to any directions given by the  State  Government under  this Development Act, a Development Authority may dispose of any land  acquired by it or vesting in it to such persons, in such manner, and subject  to such  terms  or conditions as they consider expedient for securing the  development of the new town in accordance with proposals approved by  the State Government under this Act :

Provided that, a Development Authority shall not have power, except with  the consent of the State Government, to sell any land or to grant a lease of  any  land  for  a  term  of  more  than  ninety-nine  years,  and  the  State  Government  shall  not consent  to any such disposal  of land unless it  is  satisfied  that  there  are  exceptional  circumstances  which  render  the  disposal of the land in that manner expedient.”

10. It  is  evident  from section  113,114 and 118 of  MRTP Act  that  the  

Development Authority is a body corporate which can acquire, hold, manage  

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and dispose of land. Section 113 provides for constitution of a New Town  

Development Authority. Section 114 states the objects of such Development  

Authority.  Section  118  of  MRTP  Act  provides  for  disposal  by  the  

Development  Authority  of  any  land  acquired  by  it  or  vesting  in  it.  The  

Development  Authority  is  therefore  a  body corporate  which  can acquire,  

hold, possess, manage, develop and dispose of land in its name and on its  

own behalf. The fact that the Development Authority requires the consent of  

the state government to dispose of any of its land by way of leases in excess  

of 99 years will not alter the position that the lands leased are lands of the  

Development Authority. There is no provision in MRTP Act which requires  

the  New  Town  Development  Authority,  to  hold  and  dispose  of  any  

government land as agent of the state government. In contrast, MRTP Act  

contains  a  specific  provision  enabling  the  state  government  to  require  a  

corporation or company (other than a New Town Development Authority,  

which is specific to a new Town), to execute development work and dispose  

of  its  lands  as  its  agent.  Sub-section  (3A) of  section  113 of  MRTP Act  

provides:  

“(3A).  Having  regard  to  the  complexity  and  magnitude  of  the  work  involved  in  developing  any area  as  a  site  for  the  new town,  the  time  required for  setting up new machinery for  undertaking  and completing  such work of development, and the comparative speed with which such  work can be undertaken and completed in the public interest, if the work is  done through the agency of a corporation including a company owned or  controlled by the State or a subsidiary company thereof, set up with the  

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object of developing an area as a new town, the state government may,  notwithstanding anything contained in sub-section (2), require the work of  developing and disposing of land in the area of a new town to be done by  any such corporation,  company or subsidiary company aforesaid,  as an  agent  of  the  state  government;  and  thereupon,  such  corporation  or  company  shall,  in  relation  to  such  area,  be  declared  by  the  state  government, by notification in the official gazette, to be the New Town  Development Authority for that area.”  

MIDC is a corporation which would fall under sub-section 113(3A) whereas  

the Development Authority falls under section 113(2) of MRTP Act. The  

circular  issued  with  reference  to  MIDC  is  therefore  of  no  assistance  to  

contend that  land leased by the  Development  Authority  to  appellant  is  a  

government  land.  The  contention  of  appellant  that  the  Development  

Authority  is  the  agent  of  state  government  and  that  the  appellant  is  a  

government lessee are therefore rejected.

Re : Question (ii)

11. The appellant next contends that even if it is not a government lessee,  

being a lessee of the ‘occupant’,  it  is not liable to pay the land revenue.  

There  is  no  dispute  that  section  39  of  the  Land  Revenue  Code,  fastens  

liability to pay land revenue upon the occupant and not on the tenant of the  

occupant. Section 168(1)(a) of the Code also reiterates that in the case of  

unalienated  land,  the  occupant  shall  be  primarily  liable  to  the  state  

government for making the  payment of land revenue including all arrears.  

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Sub-section (2) of section 168 provides that in case of default of the person  

primarily liable, the land revenue shall be recoverable from any person in  

possession of the land. It  is therefore contended by the appellant that the  

state government can make the demand for any land revenue only upon the  

occupant, that is, the Development Authority in this case, which is primarily  

liable. It is  submitted that only if it defaults, the amount could be recovered  

from the person in possession, as provided under section 168(2) of the Code.  

It is submitted that the notice of demand, directly issued to the appellant,  

should  be  quashed,  as  there  is  nothing  to  show that  a  demand was  first  

issued to the Development  Authority,  that it  defaulted in payment of the  

amount  demanded,  and  that  the  impugned  notices  were  issued  only  

thereafter, under section 168(2) of the Act. It is submitted that the liability to  

pay  land  revenue  being  that  of  the  Development  Authority,  the  demand  

notices issued to the lessee as if it is person primarily liable are liable to be  

quashed. It is further submitted that if and when the Development Authority  

pays the land revenue to the government,  in turn, it  would be entitled to  

make a demand upon the appellant, if the lease permitted such a demand;  

and when such a demand is made, the appellant as lessee would deal with  

the demand in terms of the lease and if there is any dispute between the  

Development Authority and the appellant as lessor and lessee, that will be  

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settled in accordance with law.

12. It is no doubt true that the primary liability to pay the land revenue  

which  includes  non-agricultural  assessment  is  on  the  occupant,  under  

Section  39  of  the  Code.  The  definition  of  ‘occupant’  excludes  not  only  

‘government lessee’ but also every tenant. Whenever the person in actual  

possession of the land is the tenant, the land holder or the superior landlord  

who granted the lease to such tenant is deemed to be an occupant. In this  

case the appellant has taken the lease from the Development Authority and  

therefore the Development Authority as the landlord and occupant, will be  

primarily liable to pay the land revenue. But the matter does not rest there.

13. In exercise of the powers conferred by Section 159 of the MRTP Act,  

the  Development  Authority,  with  the  previous  approval  of  the  state  

government,  has  made  regulations  for  regulating  the  disposal  of  land  

acquired by it or vesting in it in the Pimpri-Chinchwad New Town, known  

as the “Pimpri-Chinchwad New Town Development Authority (Disposal of  

Land)  Regulations,  1973”  (‘Regulations’  for  short).  Regulation  1(ii)  

provides that the said Regulations shall apply to the lands acquired by or  

vested in the Pimpri-Chinchwad New Town Development Authority for the  

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development  of  Pimpri-Chinchwad  New  Town.  Regulation  5  relates  to  

disposal of land by lease. It provides that the Development Authority may  

from time to time dispose of plots of land on lease, to the persons eligible, in  

consideration  of  a  premium  and  an  annual  ground  rent.  Part  IV  of  the  

Regulation contains the conditions of lease.  Regulations 10(iv) and 10(v)  

relating to the question of payment of rates and taxes and land revenue and  

cesses are extracted below:  

“10(iv)  The lessee shall during the continuance of the lease, pay all the  rates, taxes, fees and other charges due and becoming due in respect of  demised land by the Development Authority or lessee thereof.

(v)    The lessee shall during the continuance of the lease pay the land  revenue cesses assessed or which may be assessed on the demised land”.  

Regulation 16 provides that in the event of conflict between the Regulations  

and provisions of a lease deed entered into by the Development Authority,  

the provisions of the Regulations will prevail. There is however no conflict  

between the Regulations and the terms of the lease. Clause 2 (c) of the lease  

deed  dated  3.1.1995  between  the  Development  Authority  as  lessor  and  

appellant as lessee, reiterates the terms and conditions of lease contained in  

the  Regulations  by  providing  that  the  lessee  would be  liable  to  pay  any  

future rates or taxes recoverable under law from the lessee. Thus there is a  

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statutory liability upon the appellant as lessee to pay the land revenue (non-

agricultural assessment) to the state government.  

14. Section  39  of  the  Code  makes  the  Development  Authority,  as  

‘occupant’,  liable  to  pay  the  non-agricultural  assessment  and  the  said  

liability is, in turn, statutorily passed on to the appellant as lessee under the  

Regulations 10(iv) and (v) and the clause 2(c) of the lease deed. This Court  

in  Nagpur Improvement Trust v. Nagpur Timber Merchants Association -  

1997 (5) SCC 105, recognized that the Improvement Trust or Development  

Authority under the terms of lease, can pass on the liability in regard to non-

agricultural assessment to the lessees.  

15. The only issue that remains for consideration is whether the demand  

for land revenue could be directly made against the lessee of the occupant,  

when the land revenue code makes the occupant primarily liable. But for the  

statutory  obligation  created  under  regulation  10(iv)  and  (v)  of  the  

Regulations, in the normal course, a demand should have been made upon  

the occupant (landlord) who is primarily liable and only if the landlord fails  

to  pay,  recourse  could  be  had  to  sub-section  (2)  of  section  168  which  

enabled a  claim being made against  the  tenant  in  terms of  the  said sub-

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section. But where the liability to pay land revenue is fastened on the lessee  

under  the  statutory  regulations,  it  is  not  be  necessary  for  the  state  

government to make a claim upon the occupant, leading to a demand by the  

Development  Authority,  in  turn,  upon  its  lessee,  for  payment  of  land  

revenue. The state government can directly make the demand as the lessee,  

by taking note of the liability statutorily fastened on the lessee under the  

Regulations. When the liability of the lessee to pay the land revenue is not  

open to challenge, having regard to the provisions of the Regulations and  

terms  of  the  lease,  no  purpose  would  be  served  by  requiring  the  state  

government  to  recover  the  amount  from  the  Development  Authority  

(occupant) and then require the Development Authority to make a demand  

upon  the  lessee  to  recover  the  amount.  Having  regard  to  the  statutory  

liability created upon the lessee, under the Pimpri-Chinchwad New Town  

Development Authority (Disposal of land Regulations), 1973, the position of  

the lessee would be similar  to a tenant  referred to in sub-section 1(c) of  

section  168  of  the  Code  which  provides  that  in  the  case  of  the  land  in  

possession  of  a  tenant,  such  tenant  if  he  is  liable  to  pay  land  revenue  

therefor under the relevant tenancy laws, shall be primarily liable to the state  

government  for  the  payment  of  land  revenue,  including  all  arrears.  The  

liability of the appellant as tenant, to pay the land revenue, though not under  

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a  ‘tenancy  law’  in  its  strict  sense,  but  is  nevertheless  under  a  statutory  

regulation  governing  the  tenancy  and  therefore  the  demand  by  the  state  

government directly against the appellant, can be justified by the principle  

underlying section 168(1)(c). In the view we have taken, it is not necessary  

to  consider  the  further  submission  that  the  term  ‘tenancy  laws’  used  in  

section  168(1)(c)  should  be  understood  in  a  broad  sense,  and  if  so  

interpreted, would include any law regulating or governing tenancies, and as  

the  Regulations  govern  tenancies  by  the  Development  Authority,  the  

Regulations will fall within the term ‘tenancy laws’ and consequently the  

primary liability  to pay land revenue would be upon the appellant  under  

section 168(1)(c). Be that as it may.  

16. However, as we have held that a demand can directly be made upon  

the lessee, the lessee can give a representation or file objections before the  

revenue authorities of the state government, if it has any grievance in regard  

to the determination of the quantum of the non-agricultural assessment or the  

demand therefor.

17. Sub-section  (2)  of  section  168  no  doubt  provides  that  in  case  of   

default by any person who is primarily liable under sub-section (1), the land  

revenue including arrears shall be recoverable from any person in possession  

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of  the  land  provided  that  where  such  person  is  a  tenant  the  amount  

recoverable from him shall not exceed the demands of the year in which the  

recovery is made. This sub-section no doubt implies the demand should be  

made upon the occupant and only if the occupant defaults, a demand can be  

made upon the person in occupation, that is the lessee. We are of the view  

that  sub-section  (2)  of  section  168  will  operate  where  the  tenant  is  not  

primarily  liable  under  section  168(1)  of  the  Code,  or  where  there  is  no  

statutory  liability  upon the lessee to  bear  and pay the land revenue.  The  

procedure under sub-section (2) would apply where the liability to pay the  

land revenue is on the lessor, and where the lessee is not liable therefor or  

where  the  liability  of  the  lessee  to  pay  the  land  revenue  is  merely  

contractual, as contrasted from a statutory obligation. Where the liability of  

the lessee is a statutory liability, we see no reason why that recovery should  

be delayed and protracted by requiring a demand by the state government on  

the lessor and a consequential demand by the lessor on the lessee. We may  

further note, if the lessee commits default in paying the land revenue, it may  

amount to a breach leading to re-entry under clause (4) of the lease deed.  Be  

that as it may. However, having regard to the pendency of these proceedings,  

if the payment of the land revenue dues is made within four months from  

today it shall not be treated as a default or breach of the terms of the lease  

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deed for the purpose of re-entry.  

18. In view of the above, we find no error in the order of the High Court.  

Consequently  this  appeal  is  dismissed  reserving  liberty  however  to  the  

appellant  to  file  representations/objections  before  the  concerned  Revenue  

Authority, if it has any objection or grievance in regard to the quantum of  

non-agricultural assessment claimed in regard to the property leased to it. As  

the appellant had the benefit of interim stay against recovery, the appellant  

shall be liable to pay interest on the arrears/dues at the rate of 9% per annum  

from 26.2.2002.  

…………………………..J. (R V Raveendran)

…………………………..J. (P. Sathasivam)

New Delhi; …………………………..J. July 4, 2011. (A K Patnaik)              

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