# 14 S.C.R. 1 TATA STEEL LTD v. STATE OF JHARKHAND & OTHERS

- **Citation:** [2015] 14 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2015-09-24
- **Case number:** Civil Appeal No. 7929 of 2015
- **Bench:** J. Chelameswar, Abhay Manohar Sapre
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/14-s-c-r-1-tata-steel-ltd-v-state-of-jharkhand-others-30589
- **Pages:** 34

## Headnote

A
B
Bihar Industrial Areas Development Authority Act, 1974: c
State of Bihar (predecessor-in-interest of the respondent
State) transferred an interest in land admeasuring 350 acres
for a period of 99 years by a document dated 18.3. 1969-To
appellant-Company for setting up industry- One of the terms 0
and conditions for transfer [Condition No. 4 (xiv)] stipulated
that the land was to be used by the appellant for the specified
purpose within a period of one year failing which lease was to
be terminated - Appellant utilized only 200 acres of land for
setting up industry- Enactment of 1974 Act with the object E
of planned development of industrial areas - RespondentAuthority constituted under an ordinance which preceded the
Act- State of Bihar as per document dated 18. 07. 1973 made
another grant of 1266 acres of land to the Authority, to own,
possess and hold the same forthe development of Industries F
- Show Cause Notice issued by the Authority to appellant for
surrender of unutilized 150 acres of land out of the allotted
350 acres of land by taking action u/s. 6(2-a} of the Act and
Clause
4
(xiv)
of
the
document
dated
18. 03. 1969 - Subsequently 100 acres of the land out of the G
150 acres was cancelled by order dated 17. 11.2008 -
Appel/ant~Company's writ petition against the order dated
17. 11.2008 dismissed - On appeal, held: The respondentAuthority has the power u/s. 6(2-a) to cancel the allotment of
1
H
2
SUPREME COURT REPORTS
(2015] 14 S.C.R.
A land only in the case of allotment made by it - In the case of
property transferred by the State (prior to the Act) can be dealt
with by the Authority only in terms of the original document
by which the property was transferred - Clause (xiv) of the
terms and Conditions of the document dated 18.3. 1969 (by
B which the property in question was transferred by the State)
does not contemplate taking possession of part of the landIt only contemplates termination of the Grant in the event of
failure to use the land for specified purpose - Thus, it can
only be invoked in case of total failure -
The allotteeC Company in the present case, since established the industry,
cannot be said not to have utilised the land for specified
purpose - Clause (xiv) r/w clause (v) shows that it was never
intended by the Grant that every inch of the land must be
0
utilised for the purpose of establishment of industry.
Government Grants Act, 1895:
Applicability of the Act - Held: The Act does not apply
to instrumentalities and bodies corporate controlled by the
. E State.
s.2 - Transfer of land or any interest therein by the
Government - Is not governed by the Transfer of Property
Act, 1882- They are to be ascertained from the tenor of the
F document made by the Government evidencing such
transfer.
Allowing the appeal, the Court
HELD: 1. As per section 2 of the Government Grants
G Act, 1895, when Government transfers land or any
interest therein to any person, such a transfer is not
governed by the Transfer of Property Act, 18~2. The
rights and obligations flowing from the transfer of either
a piece of land or an interest therein by the Government
H cannot be determined on the basis of the rights and
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
3
obligations specified under the Transfer of Property Act, A
1882. They are to be ascertained only from the tenor of
the document made by the Government evidencing such
a transfer. The transaction dated 18.3.1969 is a grant
(Grant-I) covered by the Government Grants Act.
·Therefore, the rights and obligations created by the B
documents dated 18.03.1969 (Grant I) and the document
dated 18.07 .1973 (Grant II) are regulated only by the terms
of the documents by which those grants were made.
[Paras 6, 16, 17] [11-A; 17-8-D; 18-A, F]
Hajee S. V.M. Mohamed Jamaludeen Bros. & Co.
v. G.overnment of Tamil Nadu 1997 (2) SCR 413
: (1977) 3 sec 466 - relied on.
c
2.1 The power (legal authority) of the respondent 0
Authority to deal with any land can flow from two.
sources, (i

## Text

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(2015) 14 S.C.R. 1
TATA STEEL LTD.
v.
STATE OF JHARKHAND & OTHERS
(Civil Appeal No. 7929 of 2015)
SEPTEMBER 24, 2015
[J. CHELAMESWAR AND
ABHAY MANOHAR SAPRE, JJ.]
A
B
Bihar Industrial Areas Development Authority Act, 1974: c
State of Bihar (predecessor-in-interest of the respondent
State) transferred an interest in land admeasuring 350 acres
for a period of 99 years by a document dated 18.3. 1969-To
appellant-Company for setting up industry- One of the terms 0
and conditions for transfer [Condition No. 4 (xiv)] stipulated
that the land was to be used by the appellant for the specified
purpose within a period of one year failing which lease was to
be terminated - Appellant utilized only 200 acres of land for
setting up industry- Enactment of 1974 Act with the object E
of planned development of industrial areas - RespondentAuthority constituted under an ordinance which preceded the
Act- State of Bihar as per document dated 18. 07. 1973 made
another grant of 1266 acres of land to the Authority, to own,
possess and hold the same forthe development of Industries F
- Show Cause Notice issued by the Authority to appellant for
surrender of unutilized 150 acres of land out of the allotted
350 acres of land by taking action u/s. 6(2-a} of the Act and
Clause
4
(xiv)
of
the
document
dated
18. 03. 1969 - Subsequently 100 acres of the land out of the G
150 acres was cancelled by order dated 17. 11.2008 -
Appel/ant~Company's writ petition against the order dated
17. 11.2008 dismissed - On appeal, held: The respondentAuthority has the power u/s. 6(2-a) to cancel the allotment of
1
H
2
SUPREME COURT REPORTS
(2015] 14 S.C.R.
A land only in the case of allotment made by it - In the case of
property transferred by the State (prior to the Act) can be dealt
with by the Authority only in terms of the original document
by which the property was transferred - Clause (xiv) of the
terms and Conditions of the document dated 18.3. 1969 (by
B which the property in question was transferred by the State)
does not contemplate taking possession of part of the landIt only contemplates termination of the Grant in the event of
failure to use the land for specified purpose - Thus, it can
only be invoked in case of total failure -
The allotteeC Company in the present case, since established the industry,
cannot be said not to have utilised the land for specified
purpose - Clause (xiv) r/w clause (v) shows that it was never
intended by the Grant that every inch of the land must be
0
utilised for the purpose of establishment of industry.
Government Grants Act, 1895:
Applicability of the Act - Held: The Act does not apply
to instrumentalities and bodies corporate controlled by the
. E State.
s.2 - Transfer of land or any interest therein by the
Government - Is not governed by the Transfer of Property
Act, 1882- They are to be ascertained from the tenor of the
F document made by the Government evidencing such
transfer.
Allowing the appeal, the Court
HELD: 1. As per section 2 of the Government Grants
G Act, 1895, when Government transfers land or any
interest therein to any person, such a transfer is not
governed by the Transfer of Property Act, 18~2. The
rights and obligations flowing from the transfer of either
a piece of land or an interest therein by the Government
H cannot be determined on the basis of the rights and
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
3
obligations specified under the Transfer of Property Act, A
1882. They are to be ascertained only from the tenor of
the document made by the Government evidencing such
a transfer. The transaction dated 18.3.1969 is a grant
(Grant-I) covered by the Government Grants Act.
·Therefore, the rights and obligations created by the B
documents dated 18.03.1969 (Grant I) and the document
dated 18.07 .1973 (Grant II) are regulated only by the terms
of the documents by which those grants were made.
[Paras 6, 16, 17] [11-A; 17-8-D; 18-A, F]
Hajee S. V.M. Mohamed Jamaludeen Bros. & Co.
v. G.overnment of Tamil Nadu 1997 (2) SCR 413
: (1977) 3 sec 466 - relied on.
c
2.1 The power (legal authority) of the respondent 0
Authority to deal with any land can flow from two.
sources, (i) the statutory powers conferred on it under
various provisions of the Bihar Industrial Areas
Development Authority Act, 197 4 over the areas notified
under the Act to be either "industrial area" or E
"development area". The powers and functions of the
respondent Authority are not common with reference to
those two categories; and (ii) holding of land - The
Authority is a body corporate by virtue of Section 3(2) of
the Act. (It is capable of holding and disposing of F
properties both movable and immovable and the
expression holding can mean holding either as owner
or lessee or mortgagee etc.). Such right to hold
immoveable property extends to holding of such
property even beyond the areas which are notified under G
the Act either as "industrial area" or "development area".
[Para 27] [22-F-G; 23-A·D]
2.2 It is not correct to say that a transfer of land
evidenced by Grant-II could not have been legally made H
4
SUPREME COURT REPORTS
[2015] 14 S.C.R.
A insofar as the property in dispute is concerned without
the State of Bihar first resuming the lands which are in
the possession of the appellant pursuant to Grant-I.
Though the State of Bihar did not have possession of
the land in dispute when it made the Grant-II in favour of
B the Authority, the second grantee (i.e. the Authority) takes
the property covered by the Grant-II subject to the rights
of the earlier grantee. There is no need in law for the
termination of the interest created under Grant-I in favour
of the appellant, before the State of Bihar chose to
C transfer the property covered by the Grant-II, because
the interest created under Grant-I was a limited interest
and the title of the property still vested with the State of
Bihar. [Para 29] [24-D-G]
D
2.3 The power to terminate the lease in exercise of
the statutory power under Section 6(2-a) can be resorted
to only in one contingency that is "necessary effective
steps are not taken within the fixed period to establish
the industry". Section 6(2) authorizes the respopdent
E Authority to make an allotment of land and execute a
lease deed. It also authorises the Authority to cancel
"such allotment or lease", obviously meaning allotments
and leases made by the Authority. The expression
"allotment" in the context only means a formal
F administrative decision of the Authority to lease a
particular piece of land in favour of an applicant who is
desirous of establishing industry thereon. Once such a
decision is taken, the respondent Authority can transfer
an interest in such a piece of land by way of a lease. The
G expression lease in the context of sub-section (2) can
only mean a 'lease' as defined under the Transfer of
Property Act because the Government Grants Act does
not apply to instrumentalities and bodies corporate
H controlled by the State. A lease of immovable property
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
5
granted for the agricultural or manufacturing purposes A
is terminable only in the manner indicated under Section
106 of the Transfer of Property Act. [Para 33] [25-D-G;
26-A·B]
2.4 Section 111 of the Transfer of Property Act B
specifies various contingencies in which a lease of
immovable property determines. Sub-section (h)
stipulates that expiration of a notice to determine the
lease duly given by the lessor (in compliance with the
requirements of Section 106) is one of such c
contingencies but Transfer of Property Act does not
authorize the lessor to physically recover possession
of the property on the determination of the lease. The
lessor is still required to approach the competent court
for the recovery of the possession of the property over D
which the lease is terminated. Section 6(2-b) of the Act
on the other hand authorizes the respondent Authority
to take possession of the property which it had allotted
and leased out earlier in exercise of the power under subsection (2). Sub-sections (2-a) and (2-b) do not make E
any mention of the termination of lease. They only speak
of the "cancellation of allotment" made, which clearly
indicates that the cancellation of allotment and taking of
possession of the "plot/shed" can be resorted to only ii'!
the case of allotment made by the respondent Authority. F
[Para 33] [26-B; 27-A·EJ
2.5 In the cases of property transferred by the State
(prior to the Act by whatever name such transfer is called)
can be dealt with by the respondent Authority only in G
terms of the original document by which the property
was transferred because such a transfer is a grant within
the meaning of Government Grants Act, i.e. Grant-I
transfer by the document dated 18.3.1969 insofar as the
appellant is concerned. Therefore the Authority is entitled H
6
SUPREME COURT REPORTS
[2015] 14S.C.R.
A to deal with the land in question only as a 'grantee' under
the 'Grant-II' dated 18.07 .1973 and holder of the land.
[Para 33] (27-E-F]
3.1 Clauses (iv), (v), (xiv) and (xvii) of Condition No.4
8 of the Terms and Conditions of the 'lease' under Grant-I
dealt with the termination of the grant made in favour of
the appellant. The only clause, invoked in the show cause
notice dated 15.1.2002 of the Authority is clause (xiv).
Clause (xiv) stipulates that in the event of the appellant
c . failing to "use the land for the specified purpose within
a period of one year from the date of the lease" (Grant-I),
the same may be terminated and the appellant be evicted
from the lands without notice. (Paras 34, 41, 43] (27-GH; 28-A; 31-F-G; 32-C]
D
3.2 To understand the meaning and scope of clause
(xiv), the following factors are required to be examined ;
(i) purpose for which the Grant was made, (ii) the terms
and conditions upon which the Grant was made, (iii) the
E various contingencies under which the Grant could be
terminated in .full or in part etc. (iv) the scheme of the
Grant. The land in dispute was transferred to the
appellant for a specific purpose under Grant-I. The
appellant did in fact establish the industry for the
F establishment of which the Grant-I was made and has
been successfully running the industry for the last about
40 years (approximately). For the said purpose, the
appellant utilised a substantial portion of the land
covered by the Grant and therefore, it cannot be said
G that the appellant did not utilise the land for the purpose
specified under the Grant-I. Such a Grant was made for
a consideration (Salami of Rs. 24,48,670/-) apart from an
annual rent for the land which the appellant has
admittedly been paying. [Para 44] [32-F-H; 33-A·C]
H
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
7
3.3 Analysis of the scheme of clauses (iv), (v), (xiv) A
and (xvii), reveals that only clauses (iv) and (v) speak
about "any part" or "parts'! of the land which the
appellant is liable to transfer on demand by the Authority
under clause (iv) or voluntarily under clause (v). Clause
(xvii) stipulates the right of the respondent-Authority "to B
resume and enter upon the whole of the said land" in
the event of breach by the appellant of any of the terms
and conditions of ·Grant-I, whereas clause (xiv)
significantly does not employ the expression "part" or .
"parts of the land". [Para 44] [33-D-E]
·
C
3.4 Clause (xiv) does not contemplate 'taking
possession of parts of the land' in contra-distinction to
clauses (iv) and (v). It only contemplates the termination
of the Grant-I in the event of the failure on the part of the o
appellant to use the land for the specified purpose and
eviction of the appellant from the land. Therefore, it can
only be invoked in the case of total failure to utilise the
land for the specified purpose. Clause (xiv) read with
the right of the appellant.under clause (v) to sell a part of E
the land covered by the Grant-I which is no longer
required by him, can lead to only one conclusion that it
was never intended by the Grant-I that every inch of the
land must be utilised for the purpose of the
establishment of the industry. Any other construction F
of clause (xiv) would simply render the clause (v)
meaningless and destructive of the right created
thereunder in favour of the appellant. Therefore, the
respondent-Authority is not entitled to invoke clause (xiv)
in support of its impugned decision. [Para 44] [33-F-H; G
34-A-C]
1997 (2) SCR 413
Case Law Reference
relied on
Para 16
H
8
SUPREME COURT REPORTS
(2015] 14 S.C.R:
A
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
B
c
D
7929 of 2015.
From the Judgment and Order dated 10.09.2012 of the
High Court of Jharkhand at Ranchi in Writ Petition No. 6042 of
2008.
A. M. Singhvi, Gaurab Banerjee, Sr. Advs., Amar Dave,
Ms. Nandini Gore, Abhishek Roy, Ms. Tahira Karanjawala,
Ms. Trishala Kulkarni, Amit Bhandari, Sahil Tagotra,
M//s. Karanjawala & Co. for the Appellant.
Ajit Kumar Sinha, Neeraj Kr. Jain, Sr. Advs., Tapesh
Kumar Singh, Mohd. Waqvas, Manish Mohan, Aniket Jain,
Ardhendumauli Kumar Prasad, Umang Shankar for the
Respondents.
The Judgment of the Court was delivered by
CHELAMESWAR, J. 1. Leave granted.
2. Aggrieved by the judgment of the Jharkhand High Court
dated 10.09.2012 in Writ Petition No. 6042 of 2008, the
unsuccessful petitioner therein preferred the instant appeal.
E
3. The writ petition was filed aggrieved by an order dated
17.11.2008 of the Managing Director (respondent no.3 herein)
of the Adityapur Industrial Area Development Authority,
(respondent no.2- hereinafter referred to as the "AUTHORITY"),
a body corporate created under Section 3 of the Bihar Industrial
F Areas Development Authority Act, 1974 (hereinafter referred
to as "the ACT").
4. The first respondent (the State of Jharkhand) is carved
out of the State of Bihar on 15'h November 2000 by a
parliamentary enactment called 'the Bihar Reorganization Act,
G 2000'. The first respondent is the successor-in-interest of the
State of Bihar insofar as the property in dispute is concerned.
5. The appellant herein is a company running various
. industries. At the request of the appellant, the State of Bihar
H transferred an interest in land admeasuring 350 acres at
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
9
[CHELAMESWAR, J.]
Adityapur for a period of 99 years. It appears from the A
impugned judgment that the said land was divided into "a few
hundreds of plots of different dimensions in various small
areas". The transfer is covered by a document dated
18.03.1969, purported to have been executed on behalf of the
Governor of Bihar.in favour of the appellant company. Parties B
have been described as LESSOR and LESSEE in the said
document. The crux of the transaction is described in the
document as follows:
"WHEREAS the lessee has applied for the lands C
described and specified in Part 1 of the Schedule
appended hereto together with all rights, covenants and
appurtenances thereto belonging except and reserving
unto the lessor all mines, minerals in and under the said
land or any sort thereof for establishing (i) Alloy Tool D
and Special Steel Plant (ii) the Roll Foundry Project.
NOW THIS INDENTURE WITNESS ETH:
In consideration of the payment to the lessor by the
lessee of the premium or salami of Rs.24,48,670/-
E
(Rupees Twenty four lacs forty eight thousand six
hundred seventy only) calculated at Rs.7000/- (Rupees
Seven thousand only) per acre (including proportionate
development case of the area on or before the execution
of these presents and of the rent hereby reserved and · F
of the covenants and agreements on the part of the
lessee and fully mentioned in Part II of the Schedule,
the lessor doth hereby demise unto the lessee all the
piece of land mentioned and described in Part I of the
Schedule."
G
The transfer is subject to various terms and conditions specified
in Part-II of the said document. Under condition No.1, the
"lease" is given for 99 years subject to renewal at the option of
either party for s-uch period as may be mutually agreed upon. H
10
SUPREME COURT REPORTS
(2015) 14 S.C.R.
A
Condition No.2 stipulates annual payment of Rs17,490.50 at
the rate of Rs.50/- per acre in one installment payable on or
before 31st March every year. Rent is liable to be revised every
twenty years.
8
"1. That the lease of land detailed in Part I of the Schedule
is given for ninety nine (99) years to the lessee by the
lessor subject to renewal at the opti"on of either Party
for such period as may be mutually agreed upon.
c
D
2. That the lessee shall pay annually to the State
Government or their nominee as rent, the sum of
Rs.17,490.50 (Rupees Seventeen Thousand Four
Hundred Ninety and Fifty Paisa only) at the rate of Rs.50/
- per acre in one installment on or before 31st March,
every year. The said rent is liable to be revised every
twenty years in accordance with provisions of law or
any Rules framed by Government of Bihar as may be in
force for the time being and in the absence of any such
law rules then as may be fixed by the lessor."
E
6. Condition No.4 contains various "covenants" between
the parties. Clause (xiv) stipulates that the land shall be used
by the appellant for the specified purpose within a period of
one year from the date of the lease failing which the lease may
F be terminated and the appellant evicted from the land without
notice.
•
G
"4.(xiv) That the lessee shall use the land for the specified
purpose within a period of one year from the date of the
lease, failing which the lease may be terminated and
the lessee evicted from the lands without notice. In case
extension is required it can be granted within the
discretion of the lessor."
The transaction, in our opinion, is a grant (hereinafter referred
H to as GRANT-I for the sake of convenience~ covered by the
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
11
[CHELAMESWAR, J.]
Government Grants Act 1895. We shall deal with the said Act A
and the reasons for our conclusion that the so called lease
dated 18'h March, 1969 is a grant in some detail later in this
judgment.
7. Admittedly, the appellant herein utilized an extent of
B
about 200 acres of the abovementioned 350 acres of land for
setting up (i) Alloy Tool and Special Steel Plant (ii) the Roll
Foundry Project, the specified purpose for which the
GRANT-I was made to the appellant.
8. In the year 1974, the State of Bihar made the ACT.
C
The object of the ACT is to "provide for planned development
of Industrial Areas and promotion of Industries and matters
appurtenant thereto". (The ACT was preceded by an Ordinance
of 1972) The ACT was adopted by the State of Jharkhand.
D
9. By a document dated 18.7.1973, the Governor of Bihar
made another grant (hereinafter referred to as GRANT-II for
the sake of convenience) of an extent of 1266 acres-of land,
described in. the Schedule attached to the said document, to
the AUTHORITY "to own, possess and hold the same for the E
purposes of the development of industries of that area".
"Now, therefore, the Governor of the State of Bihar, the
GRANTOR, does hereby make this grant of an area
of land together with structures and appurtenance F
thereto measuring more or less 1266 acres, fully
described in the schedule below UNTO the GRANTEE
to own, possess and hold the same for the purposes of
the development of industries of that area with powers
to use the said lands for the purposes of development G
of industry in planned manner and in that connection to
lease out pieces of lands structures and appurtenance
thereto to entrepreneurs for a period of not exceeding
99 years on such terms and conditions as the Authority
may deem fit;
H
12
A
B
c
SUPREME COURT REPORTS
[2015) 14 S.C.R.
And further whereas this grant is made subject to the
condition that in the event of the GRANTEE ceasing to
function or in the event of the lands hereby granted being
of no· use for the purposes for which the grant is made,
the lands granted will automatically revert to the
GRANTOR and the GRANTEE will be divested of all
the rights, title and interest would get vested in the
GRANTOR but subject to the rights created in the
entrepreneurs and further subject to the condition that
the GRANTEE would abide by the instructions of the
Government from time to time."
10. By a letter dated 01.09.2000 of respondent no.3, the
appellant herein was called upon to surrender an extent of 150
acres of land on the ground that out of 350 acres of land 'leased'
D to the appellant, about 150 acres of land was still lying vacant
for more than 25 years and there was demand for land from
other entrepreneurs for setting up industries. After some
correspondence in this regard, respondent no.3 issued notice
dated 15.01.2002 asking the appellant herein to show cause
E why action under Section 6(2-a) of the ACT and Clause 4 (xiv)
of the 'lease deed' (GRANT-I) be not taken for resuming 150
acres of land which remained unutilized. Thereafter, there was
lot of correspondence between the parties, the details of which
are not necessary.
F
11. On 17.11.2008, respondent no.3 passed an order.
purporting to cancel the allotment of 100 acres out of 150 acres
of land lying vacant in the possession of appellant and
terminating the GRANT-I interestingly without any qualification
G with regard to the extent. The relevant part of the order reads
as follows:
"Clearly, Tata Steel has failed to utilize the allotted land
even after the lapse of almost 40 years and is only trying
H
to keep the land in its custody thus denying the
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
13
[CHELAMESWAR, J.)
opportunity of land allotment to other entrepreneurs. A
Mentionable, that all the small and medium sector units
located in AIADA area are governed by the same rules
for setting up the industries and utilization of the land.
Hence there appears to be no reason for any special
consideration to be given to the Tata Steel for violating B
the conditions of lease. However, taking considerate
and liberal view of the whole issue and also the all-round
performance of TISCO LTD and finally the Jharkhand
Industrial Development Authority Act and provisions of
allotment and lease deed arid by the powers confirmed C
upon me u/s. 6 sub clause 2(a) 2(b) of Jharkhand
Industrial Area Development Authority allotment of 100
acres of land out of 150 acres lying unutilized and
vacant is cancelled, lease terminated and cost D
forfeited.
Further the unit is directed to utilize the remaining portion
of vacant land within six months failing which necessary
action would be taken to cancel the land. A copy of this
order may be sent to the company."
E
12. Aggrieved by the order dated 17.11.2008, the
appellant herein filed Writ Petition No.6042 of 2008 in the High
Court of Jharkhand. By the impugned judgmeh~ the writ petition
was dismissed, holding:
f
"29. A bare perusal of Sub-Clause(iv) will clearly indicate
that it deals with two subjects one is based· on the
requirement of the State Government/or its successor
which may require for resuming the lease or part of the
lease "for public purpose". Here in this case the G
proceeding was not initiated under this provisions as it
is not the case of the Government / lessor that the
Government requires the land in question for any "public
purpose". The lessor has started proceeding !or eviction
H
14
SUPREME COURT REPORTS
[2015]14S.C.R.
A
of the lessee under proviso to Sub-Clause (iv) of
Condition 4 because of non-use of the part of the lease
land therefore., in view of the proviso to Clause (iv) of
the lease condition No. 4 of Part II of the lease, the lessor
had right to proceed for determining the lease of the
B
part of the property which has not been utilized for the
purpose for which it was acquired by the lessee on
lease."
c
D
E
F
G
H
Hence, the appeal.
13. The following principal submissions are made before
us on behalf of the appellant:
(i}
That, in view of the GRANT-I the State of Bihar could not
have made GRANT-II in favour of the AUTHORITY without
first resuming the lands covered by GRANT-I.
(ii) That, GRANT-II dated 18.7.1973 does not include the
land which is subject matter of GRANT-I between the
appellant and the State of Bihar.
(iii) Assuming for the sake of argument that the land in
occupation of the appellant is also a part of the GRANT11, the AUTHORITY can only exercise such rights as are
available to it as a successor-in-interest of the State of
Bihar under the GRANT-I. The third respondent could
not invoke the powers conferred under the ACT insofar
as the lands which are in occupation of the appellant
are concerned.
(iv) The sources of legal authority relied upon for taking the
impugned action against the appellant, the show-cause
notice dated 15.01.2002 and the final order dated
17 .11.2008 purporting to cancel the allotment and
terminate the GRANT-I are different. Therefore, there
is a denial of reasonable opportunity to the appellant to
effectively represent its case before the AUTHORITY.
(v) The High Court justified the impugned order dated
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
15
[CHELAMESWAR, J.]
17.11.2008 on a totally new ground not relied upon either A
in the show-cause notice or the final order i.e. violation
of sub-clause (xiv) of condition No.4 contained in Part-
. II of GRANT-I. Such a process is impermissible in law
·as the same would have the effect of denying a
reasonable opportunity to the appellant to effectively win B
the case.
(vi) It is submitted that sub-clause (xiv) of condition No.4
authorizes the AUTHORITY to 'terminate the lease' and
evict the 'lessee' from the land only on the failure of the C
lessee to use the land for the 'specified purpose' within
a period of one year from the date of the GRANT-I. The
appellant used the land for the purpose specified in the
GRANT-I within a period of one year. Therefore, subclause (xiv) of the Condition No.4 could not be invoked. 0
(vii) There is no requirement in the covenants contained in
Part-II of GRANT-I that every inch of the land leased to
the appellant is required to be utilized by making
construction and establishing industries thereon.
14. The respondents argued that there is no need to E
interfere with the impugned judgment as it is a well reasoned
judgment in support of the conclusion recorded by the High
Court.
15. Before we proceed to examine various submissions F
made by the appellant, it is riecessary to examine:
L
the character of the two documents i.e. 'lease deed'
dated 18.03.1969 (GRANT-I) and the 'grant dated
18.07.1973' (GRANT-II) referred to earlier; and
II.
the Scheme of the ACT insofar as it is relevant for our G
purpose;
16. It is almost becoming a forgotten proposition of law
that the Government is not bound by the T raosfer of Property
Act 1882, when it seeks to transfer any land vested in it or any H
16
A
B
c
D
E
SUPREME COURT REPORTS
[2015) 14S.C.R.
interest therein. It may not be possible to trace out the entire
history of the vesting of lands in the Government and the legal
rights and obligations flowing from such vesting as it is a huge
topic by itself. It is sufficient to state that Articles 294' to 296 of
the Constitution of India provide for vesting of property (which
includes land) and assets in the Union of India and various
States. Article 294 deals with the development of the property
and assets which vested (prior to the coming into force of the
Constitution) in His Majesty for the purposes of the Government
of the Dominion of India and for the purposes of the Government
of each Governor's Province. Article 2952 provides for the
1 294. Succession to property, assets, rights, liabilities and obligations in certain cases
as from the commencement of this Constitution
(a) all property and assets which immediately before such commencement were vested
in His Majesty for the purposes of the Government of the Dominion of India and all
property and assets which immediately before such commencement were v8sted in
His Majesty for the purposes of the Government of each Governors Province shall
vest respectively in the Union and the corresponding State, and
(b) all rights, liabilities and obligations of fhe Government of the Dominion of India and
of the Government of each Governors Province, whether arising out of any contract
or otherwise, shall be the rights, liabilities and obligations respectively of the Government
of India and the Government of each corresponding State,
subject to any adjustment made or to be made by reason of the creation before the
commencement of this Constitution of the Dominion of Pakistan or of the Provinces of
West Bengal, East Bengal, West Punjab and East Punjab
2 295. Succession to property, assets, rights, liabilities and obligations in other cases
(1) As from the commencement of this Constitution
(a) all property and assets which immediately before such-commencement were vested
in ahy Indian State corresponding to a State specified in Part B of the First Schedule
F
shall vest in the Union, if the purposes for which such property and assets were held
immediately before such commencement will thereafter be purposes of the Union
relating to any of the matters enumerated in the Union List, and
(b) all rights, liabilities and obligations of the Government of any Indian State
corresponding to a State specified in Part B of the First Schedule, whether arising out
of any contract or otherwise, shall be the rights, liabilities and obligations of the
Government of India, if the purposes for which such rights were acquired or liabilities
G
or obligations were incurred before such commencement will thereafter be purposes
of the Government of India relating to any of the matters enumerated in the Union List,
Subject to any agreement entered into in that behalf by the Government of India with
the Government of that State
(2) Subject as aforesaid, the Government of each State specified in Part B of the First
Schedule shall, as from the commencement of this Constitution, be the successor of
the Government of the corresponding Indian State as regards all property and assets
and all rights, liabilities and obligations, whether arising out of any contract or otherwise,
H
other than those referred to in clause (1)
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
17
[CHELAMESWAR, J.]
succession to the property and assets which vested prior to A
the commencement of the Constitution in any Indian State3•
Article 2964 deals with accrual of properties by escheat or
lapse or as bona vacantia. The imperial legislature recognised
the need of a law to regulate the method and manner by which
the governments could transfer or create any interest in the B
land vested in the Government. Section 25 of the Government
Grants Act declares that "nothing contained in the Transfer of
Property Act, 1882 applies to any grant or other transfer of
land or any interest therein" made by or on behalf of the
Government either prior to or after the commencement of the C
said Act. In other words, when Government transfers land or
any interest therein to any person, such a transfer is not
governed by the Transfer of Property Act, 1882. The rights and
obligations flowing from the transfer of either a piece of land 0
or an interest therein by the Government cannot be determined.
on the basis of the rights and obligations specified under the
Transfer of Property Act, 1882. They are to be ascertained .
3 Article 366 (15). '"Indian State'" means any territory which the Government of
the Dominion of India rP.cognised as such a State.
' 296. Property accruing by escheat or lapse or as bona vacantia Subject as
hereinafter provided any property in the territory of India which, if this
Constitution had not come into operatron, would have accrued to His Majesty
or, as the case may be, to the Ruler of an Indian State by escheat or lapse, or
as bona vacantia for want of a rightful owner, shall, if it is property situate in a
E
State, vest in such State, and shall, in any other case,-vest in the Union:
F
Provided that any property which at the date when it would have so accrued to
His Majesty or to the Ruler of an Indian State was in the possession or under
the control of the Government of India or the Government of a State shall,
according as the purposes for which it was then used or held were purposes
of the Union or a State, vest in the Union or in that State
Explanation In this article, the expressions Ruler and Indian State have the
same meanings as in Article 363.
G ·
5
Section 2. Nothing m the Transfer of Property Act, 1882 contained shall
apply or be deemed ever to have applied to any grant or other transfer of land
or of any interest therein heretofore made or hereafter to be made by or on
behalf of the Government to or in favour of any person whomsoever but every
such grant and transfer shall be construed and take effect as if the said Act
had not been passed.
H
18
SUPREME COURT REPORTS
[2015) 14 S.C.R.
A only from the tenor of the document made by the Government
evidencing such a transfer. This position is clearly recognized
by this Court in Hajee 5. V.M. Mohamed Jamaludeen Bros.
& Co. v. Government of Tamil Nadu, ( 1997) 3 SCC 466 as
B
follows:
"10. The combined effect of the above two sections of
the Grants Act is that terms of any grant or terms of any
transfer of land made by a Government would stand
insulated from the tentacles of any statutory law. Section
c
3 places the terms of such grant beyond the reach of
any restrictive provision contained in any enacted law
or even the equitable principles of justice, equity and
good conscience adumbrated by common law if such
principles are inconsistent with such terms. The two
D
provisions are so framed as to confer unfettered
discretion on the Government to enforce any condition
or limitation or restriction in all types of grants made by
the Government to any person. In other words, the rights,
privileges and obligations of any grantee of the
E
Government would be completely regulated by the terms
of the grant, even if such terms are inconsistent with the
provisions of any other law."
17. In the light of the above legal position, the rights and
F obligations created by GRANTS-I & II are regulated only by
the terms of the documents by which those grants were made.
18. Section 3(1) of the ACT authorizes the State
Government to constitute an authority "for any area or areas
G for development and promotion of industry" known as "the
Industrial Area Development Authority". Sub-section (2)
declares that such authorities are to be bodies corporate with
all incidental attributes, such as, the power to acquire, hold
and dispose of properties etc.
H
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
19
[CHELAMESWAR, J.]
19. Section 4(1 )6 of the ACT authorizes the State to A
declare "any area adjacent to an industrial area" to be a
"development area". The expressions "industrial area" and
"development area" are defined under Section 2(e)7 and 2(f)"
of the ACT respectively. Section 4(2)9 prohibits a person,
company or business house including a department of the B
State Government to undertake or carry out any construction,
modification or demolition of any structure or building within
such development area once an area is notified as
development area without obtaining the prior approval of the
Authority ·constitute~'Jnder Section 3 of the ACT.
C
20. Section 6 stipulates various duties and powers of
the Authority.
21. Section 9 of the ACT authorizes the State
Government to acquire any land required for the purpose of D
the Authority. Section 9( 1) declares that any acquisition of land
by the State Government for the purpose of the Authority is
deemed to be a public purpose under the Land Acquisition
Act, 1894. Sub-section (2) stipulates thatthe State Government
may transfer, on such terms and conditions, to the Authority by E
a deed of lease any developed or undeveloped land vested in
6 Section 4(1). The State Government may by a notification in the Official
Gazette declare any area adjacent to an industrial area a "development area"
for the purposes of this Act after taking into consideration any objection that
may be raised in the manner prescribed in the Rules:
F
Provided that no objections need be invited for any area already declared
as "controlled area" under sub-section (1 )·of Section 3 of the Bihar Restriction
of Uses of Land Act, 1948.
·
7
Section 2( e). "Development Area" means any area declared to be a
development area under Section 4.
6 Section 2(f). "Industrial Area" means an area for which an Authority is
constituted under Section 3.
G
' Section 4(2). After an area has been notified as development area under
sub-section (1) of Section 4 of this Act, no person or company or business
house or anybody (including a department of the State Government) shall
undertake or carry out any construction, modification or demolition of any
structure or building within such development area without the prior approval
of the Authority in accordance with the procedure laid down in the Rules H
prescribed.
20
SUPREME COURT REPORTS
(2015] 14 S.C.R.
A the State Government. Sub-sections (2) and (3) read as
B
c
follows:
"(2) The State Government may by a deed of lease,
transfer on terms of conditions as may be decided by
the State government, to the Authority any developed or
undeveloped land vested in the State of Bihar for the
purpose of development or use in accordance with
provisions of this Act.
(3) If any land so placed at the disposal of the Authority
under sub-section (2) is required at any time by the State
Government, the Authority shall restore it to the State
Government."
22. In substance, the State Government is authorised to
0 constitute an 'Authority' for any area or areas for development
and promotion of industries by a notification. By definition of
Section 2(f), the area so notified becomes an "industrial area".
Once an industrial area is notified, the State is also authorized
to notify any other area adjacent to such industrial area to be a
E "development area". The consequences of an area being
notified as a "development area" under Section 4(1) are
prescribed under Section 4(2), the contents of which are
already taken note of.
23. Under Section 610, an Authority constituted under
F Section 3 of the ACT is responsible for -
10 6. General duties and powers of the Authorlty-(1) Subject to the
provisions of this Act, the Authority shall be responsible for the planned
development of the Industrial Areas (including preparation of the Master Plan
of the area) and promotion of industries in the area and other amenities
incidental thereto.
G
(2) The Authority shall be responsible for planning, development and
maintenance of the Industrial Area and amenities thereto and allotment of
land, execution of lease and cancellation of such allo{ment or lease,
realisation of fees, rent charges and matters connected thereto.
xxx
xxx
xxx
xxx
(3) The State Government may from time to time entrust the Authority with
H
any other work that is connected with planned development, or maintenance
of the Industrial Area and its amenities and matters connected thereto.
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS
21
[CHELAMESWAR, J.]
(i) planned development,
A
(ii) promotion of industries, and
(iii) other amenities incidental thereto in the industrial
areas falling within its jurisdiction.
Under Section 6(2), the Authority is responsible for planning,
B
development and maintenance of the industrial area and the
amenities thereto. The Authority is also responsible for
allotment of land and execution of lease. Such power of
allotment of land and execution of lease is expressly declared
to carry the power to cancel such allotment or lease. In other C
words, Section 6(1) obligates an Authority to formulate policy,
6(2) obligates that Authority to execute the policy formulated
under Section 6(1 ). It must be noted here that Sections 6(1)
and (2) authorise the Authority only to deal with 'industrial area'
but not 'development area'.