Raja Bahadur Kamakshya Narainsingh and Others vs The Collector and Deputy Commissioner

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Petition No. 217 of 1955

Decision Date: 28 October 1955

Coram: Syed Jaffer Imam, Vivian Bose, B. Jagannadhadas

The Supreme Court of India decided on 28 October 1955 the case titled Raja Bahadur Kamakshya Narainsingh and Others versus the Collector and Deputy Commissioner of Hazaribagh. The judgment was authored by Justice Syed Jaffer Imam and the bench comprised Justices Syed Jaffer Imam, Vivian Bose and B. Jagannadhadas. The petitioner consisted of Raja Bahadur Kamakshya Narainsingh together with other co-trustees, while the respondent was the Collector and Deputy Commissioner of Hazaribagh. The case was reported in the 1956 All India Reporter at page 63 and also in the 1955 Supreme Court Reports (Second Series) at page 988. The principal statutory provision in dispute was the Bihar Land Reforms Act, 1950, referenced as Bihar Act XXX of 1950, specifically sections 3(1), 4(a), 4(h), 5 and 7. The issues raised concerned the vesting of buildings standing on land that formed part of a notified estate, the validity of a notice issued under section 4(h), and whether section 4(h) exceeded constitutional limits.

The factual background began on 29 December 1947 when petitioner number one executed a lease of certain lands and buildings, which formed part of his estate, to a company identified as C. In 1949, petitioner one executed a deed of settlement transferring those properties to three trustees: himself and petitioners two and three. The Bihar Land Reforms Act, 1950 became effective on 25 September 1950, and on 3 November 1951 the State of Bihar issued a notification under section 3(1) declaring that petitioner one’s estate had passed to and become vested in the State. Subsequently, the Collector issued a notice under section 4(h) to the company C, and on 4 March 1954 the State Government issued a further notification under section 3(1) purporting to vest the disputed properties in the State. The petitioners argued that the buildings standing on the notified land did not vest in the State for four reasons: first, that vesting occurred under section 4 rather than section 3; second, that the definition of “estate” in the Act referred only to land and not to any building; third, that at the date of vesting the buildings were not used as an office or cutchery for rent collection within the meaning of section 4(a); and fourth, that section 4(h) was unconstitutional because it unreasonably restricted the petitioners’ fundamental right to recover rent from the company. The Court held that it was immaterial whether vesting arose under section 3 or section 4, because in either case the estate had indeed vested in the State; furthermore, the Court proceeded to consider the remaining aspects of the case. The judgment continued beyond the material provided, but the portion reproduced here concludes with the Court’s preliminary determination that vesting had occurred irrespective of the statutory provision relied upon.

The Court observed that the definition of “estate” in the statute uses the word “land” and does not mention “building”. Nonetheless, the provisions of sections 4, 5 and 7 demonstrate the legislature’s intention to include something more than merely the land of a notified estate as vesting in the State.

Section 4(a) provides that buildings of a certain description and other specified things vest in the State absolutely when a notification under section 3 is published. Sections 5 and 7 state that the buildings mentioned therein are deemed to be settled by the State with an intermediary, which leads to the supposition that those buildings have vested in the State, the intermediary being a settlee under the State.

The Court held that sections 4(a) and 4(h) must be read together. Section 4(h) concerns the use to which a building was put before its transfer after the first day of January 1946, and not the use after that transfer. The Collector’s inquiry is limited to the pre-transfer use, not to any post-transfer occupation.

The Court explained that if a transfer of a building that forms part of the notified estate is made after the first day of January 1946, and that building was used immediately before the transfer primarily as an office or cutchery for the collection of rent of the estate, then such a transfer would be liable to be annulled under section 4(h). In that event, the building would vest absolutely in the State on the publication of the notification, and the provisions of section 4(a) must be applied accordingly.

Regarding the scope of the Collector’s powers under section 4(h), the Court said that although the powers are wide, they are not as absolute or arbitrary as was suggested. Section 4(h) is a component of a validly enacted law of acquisition of estates and forms an integral part of the mechanism by which an estate is acquired. Consequently, the Act, including section 4(h), does not impose an unreasonable restriction on the petitioners’ fundamental right, and the provision is protected by Article 31-A of the Constitution.

The judgment originated in the original jurisdiction of Petition No. 217 of 1955, filed under Article 32 of the Constitution of India for the enforcement of fundamental rights. Counsel for the petitioners appeared, and counsel for respondent No. 2 also appeared. The judgment was delivered by Justice Imam. The petitioners sought relief under Article 32, contending that the buildings and lands listed in the Schedule annexed to the petition and marked “A” – hereinafter referred to as the disputed properties – did not vest in the State of Bihar under the Bihar Land Reforms Act 1950. Petitioner No. 1, in his individual capacity, had previously been the owner of the disputed properties located within Touzi No. 28 of the Collectorate.

The court noted that the disputed properties were situated in the Touzi No. 28 area of the Hazaribagh Collectorate. On 29 December 1947 the first petitioner, in his capacity as the owner of those properties, executed a lease granting possession of the premises to Mineral Development Ltd., a company that thereafter took possession and began remitting rent for the use of the land and any structures thereon. Subsequently, on 7 April 1949 the first petitioner, still acting in his individual capacity, executed a deed of settlement that transferred title to the disputed properties to three trustees – namely, himself together with the second and third petitioners. From that date forward the company continued to pay rent, but its payments were now made directly to the trustees rather than to the original owner. The Bihar Land Reforms Act of 1950 became operative on 25 September 1950, thereby establishing the statutory framework under which the subsequent government actions were taken.

On 3 November 1951 the State Government issued a notification pursuant to section 3(1) of the Act, declaring that the estate of the first petitioner, as specified in the notification, had passed to and become vested in the State. Later, on 26 October 1953 the Collector served a notice to the company under section 4(h) of the Act. Following that, on 4 March 1954 the State Government issued a further notification under section 3(1), purporting to vest in the State the properties covered by the earlier deed of settlement and by another deed of settlement that was not in issue before the Court. In response to these governmental actions, the company instituted several title suits. The first, titled Title Suit No. 33 of 1951, was filed in the Court of the Subordinate Judge, Hazaribagh, wherein the company claimed title based on the original mining lease granted by the first petitioner; the State contested the authenticity of that lease and the first petitioner was made a party to the suit. The company then filed Title Suit No. 9 of 1954 against the State, again naming the first petitioner as a party, challenging the legality of the notice dated 26 October 1953 issued under section 4(h). On 11 November 1954 the State filed Title Suit No. 53 of 1954, joining the company, the first petitioner, the three trustees and other interested parties; through this suit the State sought to challenge both the validity of the lease in favor of the company and the deed of settlement in favor of the trustees.

The principal issue for determination, as framed by the parties, was to ascertain what exactly vested in the State upon the publication of the notification under section 3 and whether, by operation of section 4(a) of the Act, any additional interests vested as well. Counsel for the petitioners, Mr. Chatterjee, submitted that the disputed properties never vested in the State, irrespective of any other considerations. He argued that, according to the definition of “estate” contained in the Act, any vesting effected by a notification could only relate to the land forming the notified estate. Although the disputed properties physically stood upon land that formed part of the notified estate, they did not vest in the State because the statutory definition of “estate” expressly refers only to land and does not encompass any buildings or structures situated upon that land. Accordingly, the notification issued under section 3 was, in his view, a mere declaration, and any actual vesting of rights would have to occur under the provisions of section 4(a). The court therefore had to decide whether the notification alone transferred ownership of the land and any edifices thereon, or whether further statutory mechanisms were required to effect such a transfer.

Section 3 was only a declaration, and the actual vesting of rights occurred under section 4(a). On the date when vesting was intended to take effect, the properties that were being disputed were not being employed as an office or as a cutchery for the collection of rent of the estate that had been notified in favour of petitioner No 1. Petitioner No 1 had already relinquished his right, title and interest in that estate long before the enactment of the Act and before the notification issued under section 3. The State of Bihar, represented by counsel, argued that a reading of sections 4, 5 and 7 of the Act revealed that the legislature intended to vest more than merely land in the State, and that consequently the disputed properties could and did vest in the State when the notification under section 3 was issued. The Court held that it was immaterial for the present dispute whether the estate vested in the State because of the publication of the notification under section 3 or because of the operation of section 4, since vesting occurred in either event. Although the definition of “estate” mentions land, the provisions of sections 4, 5 and 7 demonstrate the legislative intention to include items beyond land when an estate vests in the State. Section 4(a) expressly provides that, upon publication of a notification under section 3, not only the estate but also buildings of a specified description and other appropriate things vest in the State absolutely. Sections 5 and 7 further deem that the buildings referred to therein also vest in the State because they are regarded as settled by the State with the intermediary who possesses them, an assumption that rests on the premise that those buildings have indeed vested in the State and the possessor holds them as a lessee of the State. In the factual situation before the Court, at the time the notification under section 3 was issued, the disputed properties were in the possession of the Company as a lessee, and petitioner No 1 no longer held any right, title or interest, having transferred his reversionary rights to trustees by way of a deed of settlement. Accordingly, it may be presumed that, on the date of the notification, the disputed properties were not being used primarily as an office or cutchery for the collection of rent of the notified estate of petitioner No 1. This leads to the necessity of interpreting the term “used” that appears in section 4(a). It is noteworthy that the clause in section 4 does not expressly require that a building described as being used primarily as an office or cutchery for rent collection must be serving that purpose at the exact moment of the notification’s publication. Therefore, the wording “used primarily as office or cutchery for the collection of rent of such estate” must be read in the context of the broader provisions of the Act.

The Court explained that section 4 (h) granted the Collector authority to investigate any transfer of any interest in a building that was used primarily as an office or cutchery for the collection of rent of a notified estate, provided that such transfer occurred after 1 January 1946. The Court noted that, after making a proper inquiry, the Collector could be satisfied that the transfer had been effected with the purpose of defeating the provisions of the Act, causing loss to the State, or obtaining a higher compensation. If the Collector reached that conclusion, the Court said, the Collector was empowered, after giving notice to the concerned parties, hearing them, and obtaining prior sanction from the State Government, to annul the transfer and to dispossess the person claiming under it. The Court emphasized that these provisions made clear that whenever a building that had been used primarily as an office or cutchery for rent collection was transferred after the specified date, the transfer could be set aside if the circumstances described in section 4 (h) were established. Accordingly, the relevant factor for the Collector was the use of the building prior to its transfer after 1 January 1946, not the use to which it was put after that transfer. The Court warned that interpreting the provision otherwise would render section 4 (h) meaningless. The Court further observed that when a proprietor transferred such a building, it inevitably followed that the building thereafter was no longer used by that proprietor as an office or cutchery for rent collection. The Court clarified that if a transfer had taken place before 1 January 1946, section 4 (h) would not apply, the transfer would not be liable to be annulled, and the building would not automatically vest in the State upon the publication of the notification covering the estate on which the building stood. Conversely, if the transfer occurred after that date and the building forming part of a notified estate had been used immediately before the transfer primarily as an office or cutchery for rent collection, the transfer would be liable to be annulled under section 4 (h) and would vest absolutely in the State on the publication of the notification; the Court said that section 4 (a) must be read in that light. The Court found it unreasonable to construe section 4 (a) in the manner suggested by counsel for the respondents. It held that the overall scheme of the Act required sections 4 (a) and 4 (h) to be read together. Finally, the Court noted that the petitioners had not claimed in their petition that the disputed properties had not been used as an office or cutchery for rent collection of the notified estate of petitioner No 1 before 1 January 1946 or before the lease in favour of the Company.

The lease was granted in favour of the Company, and the State, affidavit, asserted that the disputed properties had been used as cutchery before the lease was created and were unrelated to any mining activity. The Court held that if an inquiry under section 4(h) led to the annulment of petitioner No I’s transfer, the properties would vest in the State. The reason was that the properties had previously served as office or cutchery for the collection of rent before the petitioner’s transfers. The petitioners further contended that section 4(h) was ultra vires the Constitution because it imposed an unreasonable restriction on their fundamental right to collect rent from the Company. They argued that the transfer in the Company's favour was endangered by the notice issued under that provision. The petitioners pointed out that the Act contained no mechanism for appeal or review against a Collector’s notice or an annulment order issued by him. They therefore claimed that the Collector possessed absolute authority to annul a transfer and to dispossess any person then in possession of the property. Section 4(b), however, obliges the Collector to give reasonable notice to the affected parties and to afford them an opportunity to be heard. Any annulment or dispossession ordered by the Collector must first obtain prior sanction from the State Government and must be carried out on terms that the Collector considers fair and equitable. The Court therefore concluded that the Collector’s power, while wide, is not as absolute or arbitrary as the petitioners had suggested. Even assuming that the Collector enjoys very wide powers, the Court noted that section 4(h) forms an integral part of the law of estate acquisition enacted by the Act. The provision is essential to the mechanism by which an estate is acquired, serving as a necessary step in the acquisition process. The Act constitutes a valid law of acquisition, and its whole purpose would be defeated without a provision such as that contained in section 4(b). Because the Act is legislation for acquiring estates, the question of whether section 4(h) imposes an unreasonable restriction on the petitioners’ fundamental rights does not arise. In any event, the Act, including section 4(h), enjoys protection under Article 31-A of the Constitution, which safeguards laws relating to acquisition. The petition was therefore dismissed, and the respondents were ordered to bear all costs incurred in the proceedings.