Supreme Court: Mere Vesting Of Land U/S 10(3) ULC Act Won’t Confer Any Right Of State Govt To Have De Facto Possession Unless There’s Voluntary Surrender

The Supreme Court held that mere vesting of the land under Section 10(3) of the Urban Land (Ceiling and Regulation) Act, 1976 (ULC Act) will not confer any right on the State Government to have de facto possession of the land unless there has been a voluntary surrender of the same before March 18, 1999.

The Court held thus in Civil Appeals preferred against the common Judgment of the Telangana High Court by which the Writ Appeals of the State were allowed and the Single Judge’s decision was set aside.

The two-Judge Bench of Justice J.B. Pardiwala and Justice R. Mahadevan observed, “The mere vesting of the land under sub section (3) of Section 10 would not confer any right on the State Government to have de facto possession of the vacant land unless there has been a voluntary surrender of vacant land before 18.03.1999. State has to establish that there has been a voluntary surrender of vacant land or surrender and delivery of peaceful possession under sub section (5) of Section 10 or forceful dispossession under sub-section (6) of Section 10. On failure to establish any of those situations, the landowner or holder can claim the benefit of Section 3 of the Repeal Act, 1999.”

The Bench was of the view that the vesting under Section 10(3) of ULC Act means vesting of title absolutely and not possession though nothing stands in the way of a person voluntarily surrendering or delivering possession.

Senior Advocates N.K. Kaul, Mukul Rohatgi, and V. Ramesh represented the Appellant while Senior Advocate Raju Ramachandran represented the Respondents.

Brief Facts

The Appellant i.e., M/S A.P. Electrical Equipment Corporation (now known as ECE Industries Limited) purchased a land in Fatehnagar Village, Rangareddy District, for a manufacturing unit. Following the ULC Act, 1976, the Appellant filed a declaration, which was processed by the authorities. The Appellant's holdings in Hyderabad were exempted from the ceiling limit, but a portion of the land was required to be utilized for industrial purposes within a specified period. However, the Government later withdrew exemptions granted to the company and declared 46,538.43 square meters of land as surplus. The Appellant was directed to surrender possession of the surplus land, which was taken over by the authorities on February 8, 2008, through a panchnama. The Appellant claimed that the said takeover was symbolic and that it still retains actual physical possession of the land.

The Appellant challenged the acquisition proceedings, arguing that the takeover was invalid and that the authorities had not followed the proper procedure. The High Court granted an interim injunction in the company's favour, restraining the authorities from taking possession of the land. The Appellant also assailed the panchnama, arguing that it was not a valid document. The High Court directed that the company should not be dispossessed from the land pending further Orders. The Single Judge allowed both the Writ Petitions filed by the company vide a Common Judgment on January 3, 2022. However, the Writ Appeals filed by the State were allowed by the Division Bench and the Single Judge’s Judgment was set aside. Challenging this, the Appellant was before the Apex Court.

Reasoning

The Supreme Court in view of the above facts, noted, “If two decisions of this Court appear inconsistent with each other, the High Courts are not to follow one and overlook the other, but should try to reconcile and respect them both and the only way to do so is to adopt the wise suggestion of Lord Halsbury given in Quinn v. Leathern, 1901 AC 495 at p.506 and reiterated by the Privy Council in Punjab Cooperative Bank Ltd. v. Commr. of Income Tax, Lahore AIR 1940 PC 230 and follow that decision whose facts appear more in accord with those of the case at hand.”

The Court said that if de facto possession has already passed on to the State Government by the two deeming provisions under sub-section (3) to Section 10, there is no necessity of using the expression “where any land is vested” under sub-section (5) to Section 10.

“Surrendering or transfer of possession under sub-section (3) to Section 10 can be voluntary so that the person may get the compensation as provided under Section 11 of the Act, 1976 early. Once there is no voluntary surrender or delivery of possession, necessarily the State Government has to issue notice in writing under sub section (5) to Section 10 to surrender or deliver possession”, it added.

The Court further noted that in this case, the State Government has not been able to establish any of those situations and hence the Single Judge was right in holding that the Appellant is entitled to get the benefit of Section 3 of the Repeal Act, 1999.

Moreover, the Court summarised the propositions of law governing the issue of possession in context with Sections 10(5) and 10(6) respectively of the ULC Act, 1976 read with Section 3 of the Repeal Act, 1999 as under –

[1] The Repeal Act, 1999 clearly talks about the possession being taken under Section 10(5) or Section 10(6) of the Act, 1976, as the case may be.

[2] It is a statutory obligation on the part of the competent authority or the State to take possession strictly as permitted in law.

[3] In case the possession is purported to have been taken under Section 10(6) of the Act, 1976 the Court is still obliged to look into whether “taking of such possession” is valid or invalidated on any of the considerations in law.

[4] The possession envisaged under Section 3 of the Repeal Act, 1999 is de facto and not de jure only.

[5] The mere vesting of “land declared surplus” under the Act without resuming “de facto possession” is of no consequence and the land holder is entitled to the benefit of the Repeal Act, 1999.

[6] The requirement of giving notice under sub-sections (5) and (6) of Section 10 respectively is mandatory. Although the word “may” has been used therein, yet the word “may” in both the sub-sections should be understood as “shall” because a Court is consequences obliged that to the decide the legislature intended to follow from the failure to implement the requirement.

[7] The mere vesting of the land under sub-section (3) of Section 10 would not confer any right on the State Government to have de facto possession of the vacant land unless there has been a voluntary surrender of vacant land before 18th March 1999.

[8] The State has to establish by cogent evidence on record that there has been a voluntary surrender of vacant land or surrender and delivery of peaceful possession under sub-section (6) of Section 10 or forceful dispossession under sub-section (6) of Section 10.

The Court remarked that the issue of possession, by itself, will not become a disputed question of fact an if all that has been said by the State is to be accepted as a gospel truth and nothing shown by the landowner is to be looked into on the ground that a Writ Court cannot go into disputed questions of fact, then the same may lead to a serious miscarriage of justice.

“We are of the considered opinion that the issue as regards taking over of the actual physical possession of the excess land in accordance with the provisions of sub-sections (5) and (6) of Section 10 of the Act, 1976 could be said to be a mixed question of law and fact and not just a question of fact”, it also said.

The Court, therefore, concluded that the Division Bench committed an egregious error in interfering with a very well-considered and well-reasoned Judgment rendered by the Single Judge and hence, there was no good reason for the Division Bench to interfere with the Judgment of the Single Judge.

Accordingly, the Apex Court allowed the Appeals, set aside the Division Bench’s Judgment, and restored that of the Single Judge.

Cause Title- M/S A.P. Electrical Equipment Corporation v. The Tahsildar & Ors. Etc. (Neutral Citation: 2025 INSC 274)

Appearance:

Appellant: Senior Advocates N.K. Kaul, Mukul Rohatgi, V. Ramesh, Advocates Sanjeev K Kapoor, Aakash Bajaj, Dhritiman Roy, Sania Abbasi, and R Ashwanth.

Respondents: Senior Advocate Raju Ramachandran, AOR Somanadri Goud Katam, Advocates Neha Agarwal, Vikram, and Sirajuddin.

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