# S. V ASUDEV A ETC. ETC v. STATE OF KARNATAKA AND ORS

- **Citation:** [1993] 2 S.C.R. 715
- **Court:** Supreme Court of India
- **Decided:** 1993-03-30
- **Case number:** Civil Appeal Nos. 1454-56 of 1993
- **Bench:** P.B. Sawant, N.P. Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-v-asudev-a-etc-etc-v-state-of-karnataka-and-ors-11716
- **Pages:** 43

## Headnote

B
Urban Land (Ceiling & Regulation) Act, 1976:
Sections 20(1)(a) & (b) and 21-Vacant land in excess of ceiling
limil-£.xemption could be granted only for the purpose of user of such C
land-Not for purposes of transfe,......State Government has no power to pem1it
sale of such land even on ground of undue hardship.
Section 20(1 )(b ): Exemption-Permission to transfer excess vacant
land-Classification of land-owners as debtors and non-debtors-Reasonableness of-Discretion of State Government in granting exemption- UnD
guided and wltrammel/e~Transfer of /and-Restriction on registration in
respect of land not exempted--Discrimination-lrrationaf-Hence S.20(1 )(b)
held violative of Article 14 of the Constitution of India, 1950.
Sections 26, 27, 28: Transfer of excess vacant land-Not permissible
unless encumbered with a building or portion thereof
Constitution of India, 1950:
Article 14-Whether S.20(J)(b) of the Urban Land (Ceiling & Regulation) Act, 1976 is violative of
Words & Phrases:
"Person'~ "Undue hardship''-Meaning in the context of Urban Land
(Ceiling & Regulation) Act, I97fr-Sections 2( 1) and 20( l)(b) respective(v.
E
F
The second respondent, a partnership firm was carrying on the G
business of manufacturing and selling polished granites. It was running
its factory in a small portion of the land owned by it and the rest of the
land was vacant when the Urban Land (Ceiling & Regulation) Act, 1976
was made applicable to that area. The firm made an application to. the
State Government for exemption of the vacant land from the provisions of H
715
716
SUPREMECOURTREPORTS
[1993] 2 S.C.R.
A
the said Act, and the exemption was granted subject to certain conditions.
B
The Competent Authority under the Act came to the conclusion that
there was some excess vacant land and directed the publication ofa notification u/s 10(1) of the Act for acquisition of the same. Later, the firm made an
application to the State Government for permission to sell thevacaotlaod to
the third respondent (builders) mainly on the ground that the firm had been
incurring huge losses in its business. On 63.1987 the State Government
permitted the firm to sell the land to the builders, only to the exte.nt of 16194 ,
sq. mtrs. Again the firm filed another application to transfer the remaining
3444 sq. mtrs. oflaod to the builders, and on 18.4.1987 the State Government
C permitted the same subject to certain conditions.
Consequently, by a sale deed dated 30.9.1987 the firm entered into a
deed of absolute sale with the builders for sale of the entire vacant land.
Writ Petitions by way of Public Interest Litigation were filed in the
D High Court challenging the exemptions granted by the State Government,
for declaring the sale deed void B:nd inoperative and for acquiring the land
for the weaker sections. A Single Judge allowed the Writ Petitions an.d gave
certain directions including sale of plots to he carved out from the land
and only such number of plots as would be necessary to discharge the debts
of the firm were to be sold and the remaining portion of the vacant land
E was to he acquired under the Act. He also held that there were no ma/a
fides in the State Government granting exemptions by its orders dated
63.1987 and 18.4.19P7.
F
G
Against the decision of the Single Judge, appeals were preferred
before the Division Bench of the High Court and the Division Bench set
aside the findings as well as the direction given by the Single Judge.
Aggrieved by the Judgment of the Division Bench, the appellants preferred
the present appeals.
Allowing the appeals, this Court,
HELD:
BY THE COURT:
1.1. The provisions of Section 20(1)(b) of the Urban Land (Ceiling
and Regulation) Act, 1976 do not permit the State Government to give
H
exemption to the vacant land in excess of the ceiling limit for the purposes
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S. VASUDEVAv. STATEOFKARNATAKA
717
of transferring the same. [757 CJ
A
1.2. The orders dated 6.3.1987 and 18.4.1987 granting exemption and
permissi

## Text

_Characters 0–39,927 of 103,136. This is a partial read: ask again with offset=39927 for what follows._

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-
S. V ASUDEV A ETC. ETC.
A
v.
STATE OF KARNATAKA AND ORS.
MARCH 30, 1993
(P.B. SAWANT AND N.P. SINGH, JJ.)
B
Urban Land (Ceiling & Regulation) Act, 1976:
Sections 20(1)(a) & (b) and 21-Vacant land in excess of ceiling
limil-£.xemption could be granted only for the purpose of user of such C
land-Not for purposes of transfe,......State Government has no power to pem1it
sale of such land even on ground of undue hardship.
Section 20(1 )(b ): Exemption-Permission to transfer excess vacant
land-Classification of land-owners as debtors and non-debtors-Reasonableness of-Discretion of State Government in granting exemption- UnD
guided and wltrammel/e~Transfer of /and-Restriction on registration in
respect of land not exempted--Discrimination-lrrationaf-Hence S.20(1 )(b)
held violative of Article 14 of the Constitution of India, 1950.
Sections 26, 27, 28: Transfer of excess vacant land-Not permissible
unless encumbered with a building or portion thereof
Constitution of India, 1950:
Article 14-Whether S.20(J)(b) of the Urban Land (Ceiling & Regulation) Act, 1976 is violative of
Words & Phrases:
"Person'~ "Undue hardship''-Meaning in the context of Urban Land
(Ceiling & Regulation) Act, I97fr-Sections 2( 1) and 20( l)(b) respective(v.
E
F
The second respondent, a partnership firm was carrying on the G
business of manufacturing and selling polished granites. It was running
its factory in a small portion of the land owned by it and the rest of the
land was vacant when the Urban Land (Ceiling & Regulation) Act, 1976
was made applicable to that area. The firm made an application to. the
State Government for exemption of the vacant land from the provisions of H
715
716
SUPREMECOURTREPORTS
[1993] 2 S.C.R.
A
the said Act, and the exemption was granted subject to certain conditions.
B
The Competent Authority under the Act came to the conclusion that
there was some excess vacant land and directed the publication ofa notification u/s 10(1) of the Act for acquisition of the same. Later, the firm made an
application to the State Government for permission to sell thevacaotlaod to
the third respondent (builders) mainly on the ground that the firm had been
incurring huge losses in its business. On 63.1987 the State Government
permitted the firm to sell the land to the builders, only to the exte.nt of 16194 ,
sq. mtrs. Again the firm filed another application to transfer the remaining
3444 sq. mtrs. oflaod to the builders, and on 18.4.1987 the State Government
C permitted the same subject to certain conditions.
Consequently, by a sale deed dated 30.9.1987 the firm entered into a
deed of absolute sale with the builders for sale of the entire vacant land.
Writ Petitions by way of Public Interest Litigation were filed in the
D High Court challenging the exemptions granted by the State Government,
for declaring the sale deed void B:nd inoperative and for acquiring the land
for the weaker sections. A Single Judge allowed the Writ Petitions an.d gave
certain directions including sale of plots to he carved out from the land
and only such number of plots as would be necessary to discharge the debts
of the firm were to be sold and the remaining portion of the vacant land
E was to he acquired under the Act. He also held that there were no ma/a
fides in the State Government granting exemptions by its orders dated
63.1987 and 18.4.19P7.
F
G
Against the decision of the Single Judge, appeals were preferred
before the Division Bench of the High Court and the Division Bench set
aside the findings as well as the direction given by the Single Judge.
Aggrieved by the Judgment of the Division Bench, the appellants preferred
the present appeals.
Allowing the appeals, this Court,
HELD:
BY THE COURT:
1.1. The provisions of Section 20(1)(b) of the Urban Land (Ceiling
and Regulation) Act, 1976 do not permit the State Government to give
H
exemption to the vacant land in excess of the ceiling limit for the purposes
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S. VASUDEVAv. STATEOFKARNATAKA
717
of transferring the same. [757 CJ
A
1.2. The orders dated 6.3.1987 and 18.4.1987 granting exemption and
permission to the firm for sale of the land are void ab illitio having been
~ passed without jurisdiction. Accordingly, the sale-deed dated 30.9.1987
executed by the 2nd respondent-firm in favour of the 3rd respondentB
builders is invalid and inoperative, as the respondent-firm had no legal
right to transfer the land in favour of the builders. [757 F, GI
-
j
1.3. In view of the above conclusions, it is not necessary to go into the
questions as to whether the State Government has the power to grant exemplion; the circumstances in which it can be exercised; and whether financial 0
-.,...
hardship such as the indebtedness of the land-holder is sufficient to warrant
such exemption <;r not; and the date on which such indebtedness is to be
assessed and in what manner; and whether in the present case, the said
aspects of the indebtedness were properly investigated or not. .For this very
reason, there is no need to go into the other question regarding the ma/a fide
on the part of the authorities while granting permission to the firm to sell the D
land to the builders in question. [757 D, E]
Per Sawant, J.
;A.
l. The provisions or Section 20(l)(b) of the Urban Land (Ceiling & E
Regulation) Act, 1976 do not permit the State Government to exempt vacant
land in excess of the ceiling limit for the purposes of transfer. [753 BJ
2. The central object of the A.ct, as is evident both from the preamble as
well as the statement of objects and reasons, is to acquire vacant land in
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excess or the ceiling area and to prevent speculation and profiteering in the F
I
same and also to distribute the land equitably lo subserve the common good.
It is, therefore, per se against the said object lo permit the sale of the excess
vacant land for whatever reasons, including the undue hardship of the
land-holder. To construe the provisions of Section 20 (l)(b) so as to read in _
them the conferment of such power on the Sta.le Government for whatever G
----r
reasons, is lo distort and defeat the whole purpose of the legislation. Fu)--
ther, neither the plain language of the clause nor its context and intendment
merit such construction. Section 20 itself is titled
11Power to exempt". The
power given lo the State Government under the Section is 9nly to exempt
certain excess vacant lands from the operation of the provisions of Sections
3 to 19 of Chapter III, none of which refers to the subject of transfer or H
718
SUPREME COURT REPORTS
I 199312 S.C.R.
A
restrictions on transfer. Those proYisions relate to the calculation. declaration,acquisition and vesting ofthr excess vacant land. It is Chapter IV which
rdates to the transfers ofrnrant lands and the restrictions thereon. Further,
from the scheme of the Act, it is e•ident that the transfers of the vacant land
were to be regulated by the specific provisions made in it. They were notto be
B left to be govrrned by the unguided discretion of any authority including the
State Government. The specific provisions for regulating the transfer have
been incorporatrd in Sections 26 to 28 of the Act. Those provisions permit
transfrr of only .vacant lands within the ceilin_g limit but without buildings,
and of vacant lands in rxcess of the ceiling limit but with buildings thereon
and subject to the conditions laid dmm there. It cannot be suggested that in
c defiance of the said provisions, Section 20(1)(b) vests power in the State
Government to sanction salrs of excess vacant lands with or without building thereon.Under Section 20(\)(b), the State Government can only exempt
such excess vacant land from being acquired by it. The Government cannot
permit its transfer when the Act, does not even by implication, authorise it to
D do so but permits the transfer subject only to the conditions prescribed by
Section 27. The legislature cannot be presumed to have prescribed different
conditions for transfer of the same or similar lands. (746 C-H; 747 A]
3. The restriction on transfer even of vacant land within the ceiling
limit but without building is deemed to be valid. Thus the transfer of the
E
vacant land without building even if it is within the ceiling limit and of the
vacant land in excess of the ceiling limit with a building or a portion of
the building an' subject to the restrictions placed by the Act. Section 20 is
subject to the provisions of sections which follow it including Sections 26
to 28. Hence no construction can be placed on clause (b) of sub-section (1)
F
thereof which will be in conflict with the provisions of sections 26 to 28.
(747 E, F]
Maharao Sahib Shri Rhim Singhji v. Union of India, [19811 1 sec
166, referred to.
4. Since as per the definition of "person" in Section 2(i), the said
G provision viz. S.20(li(a) is applicable not only to individuals, but also to a
family, a firm, a company or an association or body of individuals whether
incorporated or not, the hardship spoken of there, is obviously one related to
the user of the land. In fact, it is difficult to understand the precise purpose
for which clause (b) has been enacted and the meaning of the expression
H "undue hardship" there. One Is left only to speculate on the subject. The
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S.VASUDEVAv.STATEOFKARNATAKA
719
speculation itself may not be valid. The lands are held by companies, lrisU
and associations for industrial and commercial use, for the use of medical
and educational institutes, sports, clubs, cultural activities, gardens, exhibi_lions etc. There is no special provision made in the Act to protect or take care
of such users. The only provision under which a relief can be given to
preserve and sa(eguard such user is Section 20(1) (a). But that provision can
be pressed into service only on the basis of the location orthe land and its
present or prospective user and only if it passes the test of public interest.
However, all lands in excess of the ceiling limit may not strictly be necessary
for such user, even ir the user is in the public interest. Nevertheless, _the
withdrawal of a part ofthe land found to be in excess may cause an avoidable
hardship to the land-holder which may be c:l.isproportionate.to the benefit
that is to accrue to the public on account of oach withdrawal. The excess of
land may be meagre or the severance of such excess land itself may result in
unnecessary hardship. The hardship further has to be undue and not merely
an ordinary hardship which is bound to be caused on account orthe applica·
lion of the Act to every holder of the excess vacant land. The undue hardship
must be one which cannot be avoided except by granting a relief of exemption
as contemplated by the said provision. The relief from financial hardship or
from indebtedness to the land-holder of such land is alien both to the object
and the scheme of the Act. The classification of the owners of land for this
purpose between debtors and non-debtors is itself irrational and has no
plausible nexus with the object of the Act. Such a classification is, therefore,
discriminatory and violative of Article 14 of the Constitution.
[7.fll 8-H; 749 A)
711akorbhai Dajibhai Desai v. State of Gujarat, AIR 1980 Guj. 1891,
overruled.
5. The exemption which is granted under Section 20(l)(b) has to be
supported by reasons to be recorded in writing. This requirement also
contemplates an exemption which is related to and promoted by the use
or better use of the land. If it is the financial hardship which was under
the contemplation of the legislature, there was nothing easier than to make
a reference to the same in clause (b) itself and to lay down guidelines for
the inquiry into such hardship. The provisions of sub-section (2) of Section
20, directly negative either exemption on account of financial hardship or
for the purpose of the transfer of the land, since that sub-section empowers
A
B
c
D
E
F
G
the State Government to withdraw the exemption already granted if the H
720
SUPREME COURT REPORTS
[1993] 2 S.C.R.
A. ..
A State Government is satisfied that any of the conditions subject to which
the exemption is granted either under clause (a) or clause (b) or sub-seclion (1) is not complied with. It is inconceivable that the legislature had
in mind the cancellation or the transfer including sale, which cannot be
done when it has already taken place. 1749 E-G]
~
~
B
6. It cannot be said that the legislature which places restrictions on
the transfer or the land within the ceiling limit would at the same time give
a carte blanche for the sale or the land in excess of the ceiling limit. For it
-
would mean, that the State Government cannot have an option to purchase
such land and that the sale can be made by the holder or the excess land
c at any price that he chooses. Such a reading of Section 20(l)(b) would
militate against one or the objects or the Act, viz., to prevent speculation
~
and profiteering in the sale and purchase of land. Moreover, it would be
patently discriminatory. Whereas the holder of vacant land within the
ceiling limit would have to suffer the restrictions placed by Section 26, the
D holder or the vacant land in excess or the ceiling limit has not to do so. He
would in fact be in a better position. The provisions with regard to granting
such exemption subject to certain conditions contained in Section 20(1)(b),
do not in any way mitigate the discrimination. When the statute itself
places specific restrictions under Section 26 on the sale of land within the
-~
ceiling limit, it is not possible to reach a conclusion that the conditions on
E which the State Government is empowered to permit the sale can be left
to the discretion or the State Government. In fact, such discretion given to
the State Government would itself be violative of Article 14 of the Con'sfitulion, the same being unguided and untrammelled This also shows that the
legislature has not given power to the State Government under Section
F
20(l)(b) to permit exemption for sale of the land. Otherwise it would have
,4.
provided in the section itself for the conditions on which the permission
to sell can be given and such conditions could not be less onerous than '
those provided under Section 26 or the Act. Ir the power to permit sale or
the land was intended to be given only for relieving the land-holder of his
G
financial hardship, the section could very well have provided for sale of
such land under Section 26 or the Act or made provision in Section
20(l)(b) itself for the first option of the State Government to purchase it.
-r-<~
It cannot be said that by not making such provision either in Section
20(l)(b) or Section 26, the legislature intended to permit the sale of such
land at a price above the fair market price payable under the Land
H Acquisition Act, 1894 or the corresponding law and thereby encourage
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S. VASUDEVA i·. STATEOFKARNATAKA
721
speculation and profiteering, the very evils which the Act intended to curb, A
(750 E-H; 751 A-CJ
7. The provisions of Section 27 also militate against the conferment
of the power on the State Government to _permit exemption of land for the
purpose of its transfer. The provisions of Section 27 refer to any urban or
urbanisable land with a building. The vacant land in excess of the ceiling
limit may be with or without a building. In fact, the provisions of Section
27 directly negative the conferment of such power, for the said provisions
show that the legislature did not want the sale of any urban or urbanisable
land with a building whether it is within or without the ceiling limit except
B
in accordance with the provisions of Section 27. For Section 27 speaks of C
transfer of any urban or urbanisable land with a building or a portion only
of such building, only with the permission of the competent authority and
on the terms mentioned therein. This Court has invalidated the provisions
of the said section to the extent they apply to the vacant land with a
building when the land is withie the ceiling limit. But it does apply to land
in excess of the ceiling limit and with a building or a portion of it thereon. D
It is not possible to accept that there are two provisions, viz. Section
20(1)(b) and Section 27 operating at the same time in the same area. Also
there is nothing either in Section 20(1)(b) or Section 27 to exclude the
operation of Section 27. (751 G, H; 752 A]
Maharao Sahib Shri Bhim Singhji etc. etc. v. Union of India & Ors.,
(1981] 1 sec 166, referred to.
8. Section 28 does not make any reference to the transfer permitted
by the State G?vernment under Section 20(1)(b). The holder of the vacant
land in excess of the ceiling limit has not to face the restriction on the
registration of the document of transfer of his land provided under Section
28 when such transfer is permitted by the State Government under Section
20(1)(b), whereas the holder of similar land who does not approach the
State Government has to suffer the same when he transfers the land held
E
F
by him. The discrimination between the transfers under the different G
provisions is irrational and· has no nexus with the object ought to be
achieved by the classification. (752 E-G]
9. If the power to exempt the land for sale is read in Section 20(1)(b)
with sueh conditions as the State Government may choose to place and if
either the State Government chooses not to place any conditions or to H
722
SUPREME COURT REPORTS
[1993] 2 S.C.R.
......_
A
place such conditions as are inconsistent with the provisions of Sections
29 and 30, it would create two sets of lands - one where no restrictions are
applicable. to the construction thereon or only such restrictions as the
State Government may choose to impose, and the other where the restriclions on constructions as provided by Section 29 and 30 would be apB
plic11ble. [752 G-H; 753 A) .
~
~
Per N.P. Singh, J. (Concurring):
1. The object of the Ad being imposition oi ceiling on vacant land io
urban agglomerations and for acquisition of such land in excess of ceiling
c limit, with a view to prevent the concentration of urban land in the hands
of a few persons, speculations and profiteering therein, that object will be
defeated i£ the power under Section 20(1) of the Act is exercised by the
State Government to exempt the excess vacant lands, from the application
~
of Chapter III of the Act, so that the holder thereof can transfer such
lands. [753 C, DJ
D
2. Under Indian conditions the expression "undue hardship' is normally related to economic hardship. That is why from time to time many
holders of lands in excess of the ceiling limit, while claiming exemption
under clause (b) put forth their bad economic condition and indebtedness to
E claim exemption along with permission to sell such excess lands. In the
modern set up many holders of such excess lands having undertaken com- ""
mercial or industrial ventures with the help of the loans from the Banks and
other financial institutions, put the plea of repayment of such loans as
undue hardship for claiming exemption under clause (b) of section 20(1)
aforesaid. When different provisions take into consideration the lands alF
ready transferred by the holder, between the period 17th February, 1975 (as
specified in sub. sec. (4) of S.4; and the appointed day as well as between the
period commencing from the appointed day and ending with the commence-
•
ment of the Act, it should not be easily inferred that the framers of the Act
desired that after the commencement of the Act while exercising the power of
G exemption under section 20(l)(b) permission should be granted to holders
of such excess lands to transfer such lands to third parties in order to meet
their financial liabilities. [753 G, H; 754 A-Fl
--r'--
3. If Section 21 provides for granting exemption in respect of excess
land held by the holder only on a specific condition that the holder shall
H utilise the same for the construction of dwelling units for weaker section, to
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S. VASUDEVAv. STATEOFKARNATAKA[SAWANT,J.l
723
serve a public cause, the framers of the Act could not have conceived the A
grant of exemption under Section 20(l)(b) to the holder oft!te excess land,
only to serve his interest, by selling such excess lands. (754 H; 755 A-Fl
4. If the State Government can exempt the vacant land held by the
land holder in excess of the ceiling limit, from the applicability of the
provisions of Chapter III of the Act, in order that the said holder sells B
such land to liquidate his debts which amounts to an 'undue hardship',
then there will be an apparent conflict between the interest of the land
holder lUld the public interest. In the interest of the land holder the
maximum price fetched by sale of such land will be the solution of his
hardship, whereas that will run counter ,to the object of the Act to prevent C
•
'speculations and profiteering". It cannot be said that even in such transfers the dominant purpose of the legislation, to prevent 'the concentration
of urban land in hands of few persons' is none-the-less sel'>'ed. The
concentration of urban land in hands of few persons has to be prevented
with a view to bring about "an equitable distribution of land in urban
agglomerations to subserve the common go;d". 1755 B·Dl:
D
5. If the vacant lands which have vested in the State are also to be
disposed of as stipulated under S.23 strictly keeping in view the spirit and
object of the Act, exemption u/s.20(l)(b) cannot be granted to holders of
such lands to dispose of the lands in the manner they like, to th~ persons they E
prefer, at the price they dictate, for clearing their debts. Ifit is conceded that
indebtedness amounts to an undue hardship, then it may cover the debts
incurred even after the commencement of the Act. (756 D, El
6. This Court has already held that Section 27(1) in so far as it imposes
restriction on transfer ofany urban or urbanisable land with a building or of F
a portion of such building which is within ceiling area, was invalid. The said
sub-section (l) of Section 27 was struck down being unconstitutional. Sec·
tion 26 of the Act also imposes certain restrictions on transfer of vacant land
even within ceiling limit. It can therefore be stated that Section 26(1) suffers
from the same vice. But neither in that case nor in this case, this court was or G
is concerned with Section 26. As such, it is not necessary to express any
opinion in respect of Section 26 of the Act, while considering the issue
involved in the present appeals. (756 G, H; 757 A, BJ
Maharao Sahib Shri Rhim Singhji etc. etc. v. Union of India & Ors.,
!19811 l sec 166, referred to.
H
724
SUPREME COURT REPORTS
[1993] 2 S.C.R .
A
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1454-56
of 1993 etc. etc.
From the Judgment and Order dated 15.2.1991 of the Karnataka
High Court in Writ Appeal Nos. 2083, 2084 and 2085 of 1989.
.. A
B
K. Madhava Reddy, P.P. Rao, N.D.B. Raju, Guntur Prabhakar, Dr.
-"(
c
Sumand Bhardwaj, Yatish Mohan Verma and Ranjit Kumar for the Appellants.
Soli J. Sorabjee, N.B. Shetye, R.N. Narasimha murthy, S.Ganesh,
Vineet Kumar, M. Veerappa, Nobin Singh, P.R. Ramasesh, P. Mahale
(NP), S.K. Kulkarni and Surya Kant for the Respondents.
The Judgment of the Court was delivered by
SAWANT, J. Leave granted.
D
2. These appeals arise out of the same facts and judgments of the
E
F
Karnataka High Court and are being disposed of by this common judgment. For the sake of the narration of events Civil Appeal Nos. 1461-72/
1993 arising out of SLP (Civil) Nos. 7230-41 of 1991 may be referred to.
The 2nd respondent-Mis Naryanaswamy & Sons is a partnership
firm. While it was carrying on the business of manufacturing and selling of
polished granites, it acquired on 30.9.1953, 6 acres and 4 gunthas of land
in Survey Nos. 6/1 and 6/2 of Dasarahalli in the heart of Jayanagar Extension of the city of Bangalore. Out of the said land, 1 acre and 2 guntbas
had already been acquired by the Ist respondent-State Government under
notification dated 1.4.1948. The acquisition proceedings bad culminated in
an award, granting compensation to the land owner on 3.3.1955. In a small
portion of the said land, the 2nd respondent-firm (hereinafter referred to
as the 'firm'), established a granite factory and the rest of the land was
vacant when the Urban Land (Ceiling and Regulation) Act, 1976 (the
G
~Act') was made applicable to the Bangalore Agglomeration consisting of
the area within the juri;diction of the Bangalore City Municipal Corporation and the Trust Board, and the peripheral area of 5 kms.
3. On 9.6.1983, the firm preferred an application to the State Government for exemption of the vacant land from the provisions of Chapter III
H of the Act. By an order of 17.7.1985, the State Government, granted
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S. VASUDEVAv. STATEOFKARNATAKA[SAWANT,J.]
725
exemption under Section 20 of the Act for industrial use of a granite A
factory. The exemption related to 16194 sq. mtrs. of land and was granted
on the following conditions:
(i] The entire land utilisation shall be completed within a
period of two years from the date of the order.
[ii] The exempted land shall be exclusively used for the
purpose for which the exemption was granted and for
the purposes related thereto.
[iii] The land shall not be transferred by way of sale,
mortgage, gift, lease or otherwise without prior permission of the Government and that such permission,
when given, shall be subject to such conditions as the
Government may deem fit to impose.
B
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4. The 3rd respondent-partnership firm - M/s. Reevajethu, Builders D
and Developers (the 'builders'] was constituted on 6.1.1987 with Smt.
Shobha Makhija as the major partner with 50% share and other 18
partners, mainly "to develop the immovable property to be acquired by the
firm of an extent of 5 acres and 24 gunthas situated at Survey Nos. 6/1 and
6/2 of Dasarahalli of Bangalore City and to carry on the business as
E
builders and developers of flats, shops, commercial complexes and other
types of buildings, dealers in real estate and all other allied business and
activities!! and to
11carry on any other business as may be mutually agreed
upon by all the partners". It is not in dispute that Smt. Shobha Makhija is
the sister of the son-in-law of the 4th respondent who was then the Chief
Minister of the State of Karnataka.
F
5. On 9.1.1987, the competent authority under the Act came to the
conclusion that the excess vacant land out of the said Survey Nos. 6/1 and
6/2 after the grant of exemption by the Government Order dated 17.7.1985,
was 3444 sq. mtrs. The competent authority accordingly directed the G
publication of a notification under Section 10 fl] of the Act for the
acquisition of the said excess vacant land~
6. On the same day, i.e., 9.1.1987, the firm made an application to
the Stale Government for permission lo sell land to the extent of 5 acres
and 24 gunthas comprised in the said Survey Nos. 6/1 and 6/2 to the H
726
SUPREME COURT REPORTS
(1993] 2 S.C.R.
. ,A.
~
A
builders. The grounds made out in the application were that due to st.iff
competition, and nationalisation of black and pink granite by the southern
States including Karnataka, the firm. was running under losses; that its
Woodlands Hotel at Madras was also not making profits since the hotel
•
building had become very old and there were no funds for modernising it;
B
that its theatres in Madras were also not yielding profits due to unhealthy
~ -
competition by the video piracy and the advent of the television; that the
partners of the firm individually and jointly were indebted to Andhra Bank,
Bank of India, State Bank of Mysore and Dena Bank; that the said debts
-
were of more than Rs. l crore 65 lakhs; that suits had been filed in the
High ·Court of Madras against the partners; tha~ the business of the
-
.c partners had been suffering huge losses specially due to continuing heavy
interest burnden; that the families of the seven partners of the firm had no
other source of income and had been over-drawing from the firms for their
maintenance; and that one of the partners was seriously ill in a hospital at
~
Bangalore and he had to borrow money for taking medical treatment.
D
7. On 6.3.1987, the State Government under Section 20 [1] of the Act
permitted the firm to sell land to the extent of 16194 sq. mtrs. to the
buHders subject to .:ertain conditions.
8. On 24-3d987, the firm filed another application before the State
Government seeking permission to transfer the remaining 3444 sq. mtrs. of
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vacant land from Survey Nos. 6/1 and 6/2 to the builders on the ground of
A.,
undue hardship since the firm had incurred debts. On 18.4.1987 the State
Government under Section 20 [l](a) of the Act granted exemption for the
said land from the purview of Chapter III of the Act and also permitted
the firm to sell the said 3444 sq. mtrs. of vacant land from Survey Nos. 6/1
F
and 6/2 subject to certain conditions.
9. By a sale deed of 30.9.1987, i.e., a day before the extension of
Chapter XXC of the Income-tax Act providing for preemptive purchase by
the Central Government of immovable property in certain cases on transfer, the firm entered into a deed of absolute sale for the sale of the property
G consisting of land to the extent of 5 acres and 24 gunthas situated in the
said Survey Nos. 6/1 and 6/2.
10. On this undisputed factu.al matrix, writ petitions were filed by way
~
of public interest litigation, under Article 226 and 227 of the Constitution
before the High Court for issue of a writ of mandamus [a] directing the
H
respondent-Government to take action for forfeiture of the land for con-
r
S. VASUDEVA v. STATEOFKARNATAKA(SAWANT,J.)
727
!!Ill.
A
travention of Section 79 of the Karnataka Land Reforms Act; [b) for A
acquiring the land for the purpose of weaker sections under the provisiolls
of the Act; [c] for quashing the orders dated 63.1987. and 18.4.1987
granting exemption to the lanct fa question from the purview of the Act
under Section ·20 (l](a) & (b) of the Act and for declaring the sale deeds
)r:
dated 30.9.1987 executed by t.he firm in favour of the builders as void and B
inoperative; ( d). for directing the State Government to take action under
Section 6 of the Karnataka Parks, Play-fields, and Open Space [Reservation
and Regulation] Ac~ 1985 and for other reliefs.
-
11. The learned Single Judge by his judgment and order dated
8.9.1989 allowed the writ petition, and among others, [I] qua5hed the c
Group Housing Policy of the State Government as embodied in the
decision of the Committee held on 22.10.1986 and communieated under
._,,.
letter dated 24.11.1986 insofar as it encouraged the Group Housing Scheme
through individuals and partnership of individuals by transferring vacant
land to such persons; [ii] restrained the State Government from enforcing D
the said Policy through individuals and partnership of individuals against
the vacant land; [iii] declared as null and void and quashed the orders
dated 6.3.1987 and 18.4.1987 granting exemption; [iv] declared the sale
deed dated 30.9.1987 executed by the firm in favour of the builders as null
and void so far as it related to the extent of land admeasuring 19368 Sq.
E
mtrs. covered by the exemption orders of 6.3.1987 and 18.4.1987. The
validity of the sale deed so far as. it related to the remaining land mentioned
therein was, however, saved by the said declaration; [v] directed the State
Government, the Special Deputy Commissioner under the Act, the Bangalore Development Authority and the Municipal Corporation of Bangalore to identify the extent of 1 acre, 2 gunthas and 58 square yards which F
was acquired in 1948 out of the sa;d Survey No. 6/1 and to set them apart
..l.
for the purpose of road and Boule-vard and use it only for said purpose;
[vi] remitted the applications dated 9.1.1987 and 24.3.1987 made by the firm
to the State Government with the direction to consider them in accordance
with law under Section 20 [l](b) of the Act and to exempt them in the light G
of the extent of the debt owed by the firm to the creditors prior to the
coming into force of the Act; [vii] directed that even if after examining the
,
application in the aforesaid light the State Government granted permission
=-"y·
to the firm to sell the vacant land on the ground of hardship, the Govern-
~
ment should see that, in the vacant. land, sites are formed of various
dimensions not exceeding 60' x 90' keeping in view the sites already formed H
728
·SUPREME COURT REPORTS
(1993) ~ S.C.R.
A
in the locality. The learned Judge further directed that each such site
should be sold by public auction by the competent authority with the
condition that no person is entitled to purchase in public auction more than
one site, and to credit the sale proceeds in the office of the competent
authority under the Act who would pay the amount to the creditors of the
B
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firm. The learned Judge also further directed that only such number of
sites should be sold which are necessary to discharge the debts and the
remaining portion of the vacant land should be_ acquired under the Act. It
may be noted here that the learned Judge held that the allegations of ma/a
fides in granting exemptions by the orders of 6.3.1987 and 18.4.1987 against
respondents 4 and 8, were not proved.
12. Against the said decision of the learned Single Judge, appeals
were preferred before the Division Bench of the High Court, among others,
by writ petitioners as well as the firm and the builders. All the appeals were
heard together and the learned Judges of the Division Bench gave separate
~but concurring judgments and set aside the findings as well as the direcD tions given by the learned Single Judge and dismissed the writ petitions.
E
F
13. The precise questions which arise for our consideration in these
appeals are:
[i] Were the permissions granted by the State Government
to sell land admeasuring 16194 sq. mtrs. and 3444 sq.
mtrs. by its orders of 6.3.1987 and 18.4.1987 respectively valid under the Act?
[ii] Were the said orders motivated by ma/a fides ? and
[iii) Is the sale deed executed by the firm in favour of the
builders on 30.9.1987 void and inoperative?
14. In order to appreciate the answer to the first and the third
question, it is necessary to understand the scheme of the Act which came
G into force on 17.2.1976. As the preamble of the Act states, it has been
placed on the statute book [i] to provide for the imposition of a ceiling on
vacant land in urban agglomerations; [ii) to provide for the acquisition of
such vacant lan.d in excess of the ceiling limit; and [iii) to regulate the
construction of buildings on such land and for matters connected therewith
H with a view to [a J preventing the concentration of urban land in the hands
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j.
... -,..--
S. VASUDEVA v. STATEOFKARNATAKA{SAWANT,J.J
729
of a few persons and speculation and profiteering therein and [b) bringing A
about an equitable distribution of land in urban agglomerations t.o subserve
the common good. These objects . which are otherwise· clear from the.
preamble of the Act have been explained in the statement of objects and
reasons accompanying the Bill which, among other things, stales as follows:
'There has been a demand for imposing a ceiling on
urban property also, especially after the imposition of a
ceiling on agricultural lands by the State Governments.
With the growth of population and increasing urbanisation, a need for orderly development of urban areas has
also been felt. It is, therefore, considered necessary to take
measures for exercising social control over the scarce
resource of urban land with a view to ensuring its equitable distribution amongst the various sections of society
and also avoiding speculative transactions relating to land
in urban agglomerations.
xx
xx
xx
The Bill is intended to achieve the following objectives:-
[i) to prevent concentration of urban property in the hands
of a few persons and speculation and profiteering
therein;
[ii) to bring about socialisation of urban land in urban
agglomerations to subserve the common good by en-
. soring its equitable distrib!ition;
[iii) to discourage construction of luxury housing leading
(0 conspicuous consumption of scarce building
materials and to ensure the equitable utilisation of
such materials; and
\iv] to secure orderly urbanisation.
The Bill mainly provides for the following:-
B
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D
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F
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[i) imposition of a ceiling on both ownership and possesH
A
B
c
D
E
F
G
730
SUPREME COURT REPORTS
[1993] 2 S.C.R.
sion of vacant land in urban agglomerations, the ceiling
being on a graded basis according to the classification
of the urban agglomeration;
(ii] acquisition of the excess vacant land by the State
Government with powers to dispose of the vacant land
to subserve the common good;
[iii] payment of an amount for the acquisicion of the excess
vacant land, in cash and in bonds;
[iv] granting exemptions in .respect of certain specific
categories of vacant land;
[v) regulatiltg the transfer of vacant land within the ceiling
limit;
[vi] regulating the transfer of urban or urbanisable land
with any building [whether constructed bdore or after
the commencement of the proposed legislation], for a
perfod of 10 years from the commencement of the
legislation or the construction of the building
whichever is later;
[vii] restricting the· plinth area for the construction of
future residential buildings; and
[viii] other procedural and miscellaneous matters."
It is needless to emphasise that while interpreting the various
provisions of the Act the said objects will have to be kept in view, constantly. However, only those ·provisions of the Act which have a bearing on the
controversy before us may be referred to.
The "vacant land" has been defined in Section 2 ( q) as follows:
"vacant land" means land, not being land mainly used for the purpose
of agriculture, in an urban agglomeration, but does not include -
[i] land on which construction of a building is not permissible under the building regulations in force in the area
H
in which such land is situated,
' ' ·,A ..
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S. VASUDEVA v. STATEOFKARNATAKA[SAWANT,J.)
731
[ii] in an area where there are building regulations, the
A
land occupied by any building which has been constructed before or is being constructed on, tbe appointed day with the approval of the appropriate
'r
authority and the land appurtenant to ouch building;
and
B
[iii] in an area where there are no building regulations,
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the land occupied by any building which has been
constructed before, or is being constructed on, the
appointed day and the land appurtenant to such building;
c
-,.:.
Provided ...................... ".
The "land appurtenant", in relation to any building, has been defined
in Section 2(g) 'as follows:
D
"land appurtenant", in relation to any building, means -
[i] in an area wher'e there are building regulations, the
.~'
minimum extent of land required under such regulations to be kept as open space for the enjoyment of
such building, which in no case shall exceed· five
E
hundred square metres; or
-
[ii] in an area where there are no building regulations, an
extent of five hundred square metres contiguous to the
land occupied by such building,
F
A~
and includes, in the case of any building constructed
before the appointed day with a dwelling unit therein, an
additional extent not exceeding five hllndred square
metres of land, if any, contiguous to the ~inimum extent
referred to in sub-clause [i] or the extent referred to in
G
'.,..-
sub-clause [ii], as the case may be".
Section 3 states that except as provided in the' Act, on and from the
commencement of the Act, no person shall be entitled to hold any vacant
land in excess of the ceiling limit. The "ceiling limit" is prescribed in Section
4. The provisions of Section 4, so far as they are relevant for our purpose, H

A.
S. VASUDEVAv.