Purchase of agri land by pvt ltd co- contradiction in expert advice
Nandkishor Maroti Ambade
(Querist) 26 April 2013
This query is : Resolved
Query :
Whether a Pvt. Company can buy agricultural land and transfer the title to its name in Maharashtra? What is the procedure for same?
The comments on the same issue received about 3 years back and as received now some 15 days back, on your website, are quite contradictory, which are listed below. I shall be glad to know which version is correct or there has been change in the law during past 3 years?
Expert comments : received about 15 days back :
Comment From Mr Ajay Shetty:
a) if any director is an agriculturist purchase land in his name. in Maharashtra only an agriculturist can buy agricultural land
Comment From Mr R. K Nanda.
b) Agree with expert Shetty.
Comment From Sevjyoti Barman
c) yes. he is right.
Comment From Mr K Mahesh
d) Only agriculture can buy the land in Maharashtra
Comment From Mr Rajkumar Makkad
e) If company has to purchase the land in its own name then also it needs to have the status of agriculturist. It means the company is required to first purchase the land (may it be just a small piece of land) in either of the States wherein there is no requirement of the agriculturist to purchase the agriculture land and then obtain the status thereto and then purchase in Maharashtra.
Expert comments : received about 3 years back
-From Mr Hemant Agarwal
Reply -1
1. A Pvt.Ltd. company CAN CERTAINLY BUY AGRICULTURAL LAND and develop and perform agricultural activities on it, BUT SUBJECT TO the approved provisions of articles and the Memorandum of the pvt.ltd. and MUST be approved by the Registrar of Companies (ROC). There is no requirement of any director being an agriculturist. The Articles of the P.Ltd. co. should clearly outline the agricultural activities the P.Ltd. proposes to indulge in.
Reply -2:
1. Under the Companies Act, a regd. co. may perform those activities that are listed in the Objects, Articles and the memorandum. By virtue of its objects and articles, as regd. under the companies act, the P.Ltd., (now non-person) can function and perform agricultural activites and need not be a agricuturist as in the case of an individual person.
2. The co. has a object of doing say. Rose Garden or say Horticulture or say Soyabean cultivation. The co. after doing the above, has to file the yearly land revenue fees, according to the usage of the land. i.e. land revenue is different for agricultural activities and for non-agricultural activities. False declarations and filing will lead to prosecution by the Revenue dept., which has a mandatory duty to periodically inspect and file reports with the district collectors office.
3. In the future event, if the pvt.ltd. co. folds-up or say closes down, then it cannot dispose of its agriculture land bank to non-farmers for non-agricultural purposes.
The agricultural activities are limited to the existence of the Co. If there is no company, all the property etc... can be attached by statutory authorities (I.Tax, S.Tax, Revenue Dept., Environment Dept, Pollution Dept among others)
The directors of the P.Ltd., DO NOT BECOME FARMERS / AGRICULTURISTS automatically just because their co. had earlier owned of agricultural land and neither the heir of such directors may ever claim right as Farmer or as an agriculturist. There is no such thing as inheirtance in a company or say to a non-individual-person.
If the annnual report / balance sheet / P&F of the company shows any profit / loss pertaining to any non-agricultural activities on the said agricultural land, THEN it will be clear violations of the objects & articles and the collector may attach / acquire the said land.
There are several parameters which have to be taken into account, when agri land is owned by corporate and agri activities are performed by such co.
4. If the collectors inspects the activities of a particular agricultural land and finds that the agricultural land is being used for other purposes, then he has to attach/ acquire the said land from the owners.
example :
5.
a) A regd. Pvt. Ltd. whose objects and articiles comply with the companies act, identifies a agricultural land. Buys it. Registers it after paying necessary duties and taxes. Co. also submits undertaking to use land only for so and so purposes.
b) submits documents to Tahsildar's office for change in revenue records. Tahsildar inspects the co. registration and articles and the sale papers etc.. and approves the ownership title change-over, BUT after taking permission from the collectors office.
c) In future Co. violates the undertaking and uses the land for other purposes. Tahsildar / Collector, after due notices may attach /acquire the land. Co. loses title.
6. Literally more than 15% land in India, is held in the name of corporates, holding companies, charitable trusts and other non-individuals. The most common name in Mumbai area is Godrej group, who holds vast tracts of agricultural and other waste land in the name of Godrej Holdings. There are several hundreds of companies who are doing plantation and Tea Gardens, Horticulture, Floriculture and Forestry plantations.
7. There are land belonging to Collector, the State Govt. the Central Govt, The defence forces, the airport authorities and other PSU. They are no restrictions to them.
8. BUT, the agricultural land transfer to non-farmer and to non-agriculturist is RESTRICTED ONLY TO INDIVIDUALS and not otherwise.
9.. Agriculture income is presently Tax-Free in the hands of Invididuals.
10. Agriculture income in NOT TAX FREE for companies.
Keep Smiling .... Hemant Agarwal.
Reply -3
1. P.Ltd. cannot be classified as a "Agriculturist", since it is not a physical person and cannot have farmer-inheritance rights, which includes its directors, share-holders and their legal heirs. The right to do "agricutural activities" is derived from company articles/ objects. However, these rights do not confer any right or title to a status called "Farmer or Agriculturist".
Similarly a "non-farmer-paid-labourer" who works in a agricultural field for scores of years, does not gain automatic status of a "Farmer or an agriculturist".
2. The right to the status of a "farmer or agriculturist" is not by virtue of the labour-work or activities (farming) being done by anybody (eg. non-farmers, or companies or anybody), BUT SUCH STATUS OF A FARMER IS DERIVED DUE TO Form no. 6A and Form no. 7 & 12 and further classification by the statute.
3. P.Ltd., can buy agricultural land anywhere in India and do agricultural activities, subject to parameters as suggested in earlier above posts. There is no time-frame problem. The law relating to acquiring or holding "agricultural" category lands SHOULD (I presume) be uniform throughout India and WOULD be NOT limited only to Maharashtra.
4. The activities of a P.Ltd. may be to do "various types of farming", which can / may be changed as and when the articles or objects or memorandum or constitution of the P.Ltd. changes or is modified. Each such changes will have to be registered with the Collector / Tahilsdar, which may pertain to objects related to Agricultural activities. Note : The district collector is well within his rights to seize / acquire or nullify all rights of the land holder, IF violations are detected by his office.
5. A non-farmer or say a compay cannot claim subsidies, benefits, exemptions, credits etc... that may be announced by the Central and the State Govts, which are meant only for individuals, which in turn is determined by Village form no. 6A and Land holding Extract form no. 7 & 12.
Keep Smiling .... Hemant Agarwal
As may be observed from above, the expert comments received on your website some 3 years back appear to be contradictory to the comments received recently. The correct position thus need to clarified.
Request :
a. Need clarity as to whether a Private Limited Company can buy agricultural land in Maharashtra, irrespective of whether promoted by Agriculturist or non-agriculturist?
If yes, then :
b. What is the exact procedure for the same? Whether prior approval for the same is required to be obtained from any Govt Authorities?
c. Whether there is any ceiling for land holding by a Private Limited company? Can it acquire agricultural land on lease basis and whether the same would be added to land owned by the company for ceiling purpose, if any?
d. Whether the Agriculturist Director’s prorata land holding in a Pvt limited Company (in terms of % shareholding) would be added to his separate individual land holding for land ceiling purpose at individual level?
e. If the company leases out the land to others for agriculture use, whether the same would be treated as violation of law, since the lease income would not be agriculture income and in such case whether the District collector can acquire / forfeit the land from Company?
f. Can the company sell part of land to other agriculturist for agriculture purpose? In such case, whether the income by way of appreciation in land value/ capital gain will be in violation of the guidelines and in such case whether the Collector would have right to forfeit the balance land holding available with the company?
h. Can the company sell entire land owned by it to an agriculturist before winding up its operations, without inviting adverse implications from revenue/ Govt authorities? Any implications for the purchaser?
I shall be glad for quick response in the matter.
ajay sethi
(Expert) 26 April 2013
The
purpose of the Bombay Tenancy Act, 1948 is to ensure holding of agricultural land by tenants, labourers and agricultural land holders. Agriculturist as defined in sec.2 (2) of the Act means a person who cultivates land personally; and under section 2 (6) to cultivate personally means to cultivate land on one's own account by one's own labour, or by the labour of any member of one's family, or under the personal supervision of oneself or any member of one's family by hired labour or by servants on wages payable in cash or kind but not in crop share. According to section 2 (5), to cultivate with its grammatical variations and cognate expressions means to till or husband the land for the purpose of raising or improving agricultural produce, whether by manual labour or by means of cattle or machinery, or to carry on any agricultural operation thereon.
Since
the word person is defined in section 2 (11) of the Act, its definition as given in the Bombay General Clauses Act, 1904 could not be applied and a company constituted as a juristic person under the Companies Act cannot be considered to be an agriculturist. Having regard to this legal provision, there is no provision under section 63 of the Act for acquisition of agricultural land by companies as non-agriculturist. The District Collectors, Prant Officers, Taluka Mamlatdars and Agricultural Tribunals have to proceed accordingly, keeping in view the aforesaid provisions.
6. The
above instructions were issued by the impugned circular, by and in the name of the Governor of Gujarat, for being followed in all the legal proceedings by the officers concerned.
ajay sethi
(Expert) 26 April 2013
Gujarat High Court
State vs Prathmesh on 31 August, 2010
Author: D.H.Waghela,&Nbsp;Honourable Mr.Justice Bankim.N.Mehta,&Nbsp;
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Print
LPA/932/2000 23/ 25 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS
PATENT APPEAL No. 932 of 2000
In
SPECIAL
CIVIL APPLICATION No. 1491 of 1999
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.H.WAGHELA
Sd/-
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA Sd/-
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5
Whether
it is to be circulated to the civil judge ? 1 & 2 : YES; 3 to 5 NO
=========================================================
STATE
OF GUJARAT & 2 - Appellant(s)
Versus
PRATHMESH
FARMS PVT. LTD. & 1 - Respondent(s)
========================================================= Appearance
:
MR
CB UPDHYAYA ASSTT GOVERNMENT PLEADER for
Appellants : 1 - 3.
MR AJ PATEL for Respondent : 1, MR AB
MUNSHI for Respondent: 2, MR ASPI M KAPADIA as
Intervener.
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.H.WAGHELA
and
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA
Date
: 31/08/2010
CAV
JUDGMENT
(Per
: HONOURABLE MR.JUSTICE D.H.WAGHELA)
1. The
appellants, State authorities, have preferred this appeal from the judgment dated 14.3.2000 of learned single Judge of this Court, whereby circular dated 23.11.1998 is quashed and consequently notices at Annexures-I, J and K to the original petition, based on the aforesaid circular, are also quashed.
2. Respondent
No.1 herein, a private limited company claiming to be in the profession of cultivation of agricultural land by scientific technology, approached this Court on the basis of the fact that somewhere in the year 1994-95 several such farming companies and land-owners had made an application for approval of registered sale of agricultural land; and on 06.02.1995, Deputy Collector had granted the necessary permission under section 63 of the Bombay Tenancy and Agricultural Lands Act, 1948 ( for short, the Act) on several conditions. Earlier to that, the State Government had, on 20.5.1991, issued a letter to the Collector, Ahmedabad to state that in case of such private limited companies buying agricultural land, income of managing director should not be considered and permission should be granted under section 63 of the Act. Thereafter, by the impugned circular dated 23.11.1998, instructions were issued to all the Collectors to, in effect, hold that permission cannot be granted under the Act for transferring agricultural land to companies as they were not natural persons.
3. Learned
single Judge has, in the impugned judgment, culled out the following two issues and pure questions of law for adjudication and resolution:
1. Whether
the circular dated 23.11.1998 issued by the State Government is contrary to the provisions of the Bombay General Clauses Act and the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948?
2. Whether
the circular dated 23.11.1998 can be applied retrospectively so as to deprive the status of agriculturist as had already been conferred at the relevant time in accordance with the rules?
Dwelling
upon the definition of person as given in the Act, the Bombay General Clauses Act 1904 and the Gujarat Agricultural Lands Ceiling Act 1960 as also referring to the scheme of the Act, it was held that, for the purpose of holding the land, it is not necessary that it can be held only by a natural person and it can certainly be held even by a juristic person as a legal entity. The Court also held that in no case such executive circulars could be made applicable retrospectively. In order to appreciate the submissions of learned counsel against the backdrop of facts which are not in dispute, it would be advantageous to quote, as under, the relevant parts of the Act:
The
Bombay Tenancy & Agricultural Lands Act, 1948:
An
Act to amend the law relating to tenancies of agricultural lands and to make certain other provisions
in
regard to those lands.
WHEREAS
it is necessary to amend the law which governs the relations of landlords and tenants of agricultural lands;
AND
WHEREAS on account of the neglect of a landholder or disputes between a landholder and his tenants, the cultivation of his estate has seriously suffered, or for the purpose of improving the economic and social conditions of peasants or ensuring the full and efficient use of land for agriculture, it is expedient to assume management of estates held by landholders and to regulate and impose restrictions on the transfer of agricultural lands, dwelling houses, sites and lands appurtenant thereto belonging to or occupied by agriculturists, agricultural labourers and artisans in the Province of Bombay and to make provisions for certain other purposes hereinafter appearing; it is hereby enacted as follows:-
S.2 Definitions.
In
this Act, unless there is anything repugnant in the subject or context-
(1) agriculture
includes horticulture, the raising of crops, grass or garden produce, the use by an agriculturist of the land held by him or a part thereof for the grazing of his cattle, the use of any land, whether or not an appanage to rice or paddy land, for the purpose of rab manure but does not include allied pursuits, or the cutting of wood only:
Provided
that in the case of such tracts of land abounding in natural growth of grass as the State Government may, by notification, in the official Gazette, specify agriculture shall include the cutting of grass for any purpose.
(1A) agricultural
labourer means a person whose principal means of livelihood is manual labour on land.
(2) agriculturist
means a person who cultivates land personally.
(5) to
cultivate with its grammatical variations and cognate expressions means to till or husband the land for the purpose of raising or improving agricultural produce, whether by manual labour or by means of cattle or machinery, or to carry on any agricultural operation thereon; and the expression uncultivated shall be construed correspondingly.
(6) to
cultivate personally means to cultivate land on one's own account-
(i) by
one's own labour, or
(ii) by
the labour of any member of one's family,or
(iii) under
the personal supervision of oneself or any member of one's family, by hired labour or by servants on wages payable in cash or kind but not in crop share.
(6C) to
hold land as an owner or tenant shall, for the purposes of clause (2D) of this section and sections 32A, 32B, 34 and 35, mean to be lawfully in actual possession of land as an owner or tenant, as the case may be.
(7A) joint
family means an undivided Hindu Family, and in the case of other persons a group or unit the members of which are by custom joint in estate or residence;
(8) land
means
(a) land
which is used for agricultural purposes, or which is so used but is left fallow, and includes the sites of farm buildings, appurtenant to such land; and
(b) for
the purposes of sections 11, 16, 17, 17A, 17B, 18, 19, 20, 26, 28, 29, 29A, 30, 41, 43, 63, 64, 64-A, 84A, 84B and 84C-
(i) the
sites of dwelling houses occupied by agriculturists, agricultural labourers or artisans and land appurtenant to such dwelling houses.
(ii) the
sites or structures used by agriculturists for allied pursuits.
(11) person
includes a joint family.
Sec.63 Transfers
to non-agriculturist barred.
(1) Save
as provided in this Act-,
(a) no
sale (including sales in execution of a decree of a Civil Court or for sums recoverable as arrears of land revenue), gift, exchange or lease of any land or interest therein, or
(b) no
mortgage of any land or interest therein, in which the possession of the mortgaged property is delivered to the mortgagee, or
(c) no
agreement made by an instrument in writing for the sale, gift, exchange, lease or mortgage of any land or interest therein,
shall
be valid in favour of a person who is not an agriculturist or who being an agriculturist cultivates personally land not less than the ceiling area whether as an owner or tenant or partly as owner and partly as tenant or who is not an agricultural labourer.
Provided
that the Collector or an officer authorised by the State Government in this behalf may grant permission for such sale, gift, exchange, lease or mortgage, or for such agreement on such conditions as may be prescribed,
Provided
further that no such permission shall be granted, where land is being sold to a person who is not an agriculturist for agricultural purpose, if the annual income of such person from other sources exceeds five thousand rupees.
(2) Nothing
in this section shall be deemed to prohibit the sale, gift, exchange or lease, or the agreement for the sale, gift, exchange or lease of a dwelling house or the site thereof or any land appurtenant to it in favour of an agricultural labourer or an artisan or a person carrying on any allied pursuit.
(3) Nothing
in this section shall apply or be deemed to have applied to a mortgage or any land or interest therein effected in favour of a co-operative society as security for the loan advanced by such society or any transfer declared to be a mortgage by a court under section 24 of the Bombay Agricultural Debtor Relief Act, 1947.
(4) Nothing
in section 63A shall apply to any sale made under sub-section (1).
Sec.
84C. Disposal of land, transfer or acquisition of which is invalid.
(1) Where
in respect of the transfer or acquisition of any land made on or after the commencement of the Amending Act, 1955 the Mamlatdar suo motu or on the application of any person interested in such land has reason to believe that such transfer or acquisition is or becomes invalid under any of the provisions of this Act, the Mamlatdar shall issue a notice and hold an inquiry as provided for in section 84B and decide whether the transfer or acquisition is or is not invalid.
(2) If
after holding such inquiry, the Mamlatdar comes to a conclusion that the transfer or acquisition of land to be invalid, he shall make an order declaring the transfer or acquisition to be invalid, unless the parties to such transfer or acquisition give an undertaking in writing that within a period of three months from such date as the Mamlatdar may fix, they shall restore the land alongwith the rights and interest therein to the position in which it was immediately before the transfer or acquisition, and the land is so restored within that period;
Provided
that where the transfer of land was made by the landlord to the tenant of the land and the area of the land so transferred together with the area of other land, if any, cultivated personally by the tenant did not exceed the ceiling area, the Mamlatdar shall not declare such transfer to be invalid-
(i) if
the amount received by the landlord as the price of the land is equal to or less than the reasonable price determined under section 63-A and the transferee pays to the State Government a penalty equal to Re.1 within such period not exceeding three months as the Mamlatdar may fix;
(ii) if
the amount received by the landlord as the price of the land is in excess of the reasonable price determined under section 63A and the transferor as well as the transferee pays to the State Government each a penalty equal to one-tenth of the reasonable price within such period as may be fixed by the mamlatdar.
(3) ...............
(4) ...............
(5) ...............
The
Bombay Tenancy and Agricultural Lands Rules, 1956:
Sec.36.
Conditions on which permission for sale etc. of land under section 63 may be granted -
(1) The
Collector or officer authorised under the proviso to sub-section (1) of section 63 shall not grant permission for sale, gift, exchange, lease or mortgage of any land in favour of a person who is not either an agriculturist or an agricultural labourer or who, being an agriculturist, cultivates personally land not less than the ceiling area whether as owner or tenant or partly as owner and partly as tenant unless any of the following conditions are satisfied:-
(a) such
a person bona fide requires the land for a non-agricultural purpose, or
(b) the
land is required for the benefit of an industrial or commercial undertaking or an educational or charitable institution; or
(c)
such land being mortgaged, the mortgage has obtained from the Collector a certificate that he intends to take to the profession of an agriculturist and agrees to cultivate the land personally; or
(d) the
land is required by a co-operative society; or
(e) no
agriculturist in the village in which the land is situated who holds lands less than the ceiling are or no agricultural labourer in such village is prepared to take the land on lease from the owner; or
(f) the
land is required for cultivating it personally by a person, who, not being an agriculturist, intends to take to the profession of agriculture and to whom the Collector after having regard to the order of priority mentioned in clause (c) of sub-section (2) of section 32P, has given a certificate that such person intends to take to the profession of agriculture and is capable of cultivating land personally; or
(g) the
owner of the land has complied with the provisions of section 64; or
(h) such
land is being sold-
(i) in
execution of a decree of a Civil Court, or
(ii) for
recovering arrears of land revenue or any sums recoverable as arrears of land revenue under the provisions of the Bombay Land Revenue Code, 1879, and
no
agricultural labourer or agriculturist holding land less than the ceiling area is prepared to bid at such sale; or
(ha) such
land is required bona fide by a cattle breeder for the purpose of cattle breeding, or
(i) such
land is being given in gift whether by way of trust or otherwise, and such gift is made bona fide by the owner in favour of a member of his family.
(1A) .........
(2) .........
(3) .........
The
Bombay General Clauses Act, 1904:
Sec.3
Definitions In this Act, and in all Bombay Acts or Gujarat Acts made after the commencement of this Act, unless there is anything repugnant in the subject or context-
(35) Person
shall include any
company or association or body of individuals, whether incorporated or not.
(underlines
added)
4. Considering
the Act in
historical perspective, it was seen that prior to enactment of the Bombay Tenancy Act 1939, the relations between landlords and tenants of agricultural
lands were governed under the Bombay Land Revenue Code, 1879, which did not secure the rights of tenants who were in inferior position. Even working of the Bombay Tenancy Act, 1939, as amended in 1946, posed administrative difficulties due to variety of tenures, customs and usages prevailing in different parts of the Province of Bombay. The change in the political status of the whole country necessitated a definite policy of agrarian reforms to achieve improved production and agricultural efficiency. Therefore, it was considered necessary to assume management of estates held by landholders and impose restrictions on transfer of agricultural lands to prevent uneconomic cultivation and to create and encourage peasant proprietorships in respect of holdings of suitable size.
5. After
reference to several earlier circulars and resolutions, the impugned circular dated 23.11.1998, inter alia,
stated: (free English translation) -
It
has come to the notice of the Government that some private companies have purchased agricultural lands for agricultural use after obtaining permission under section 63 of the Bombay Tenancy Act, 1948. Against purchase of land by private limited companies for agricultural use, it is submitted that agricultural lands are being purchased by private limited companies and corporate bodies for speculative purposes. Thus the above facts came to the notice of the State Government.
The
purpose of the Bombay Tenancy Act, 1948 is to ensure holding of agricultural land by tenants, labourers and agricultural land holders. Agriculturist as defined in sec.2 (2) of the Act means a person who cultivates land personally; and under section 2 (6) to cultivate personally means to cultivate land on one's own account by one's own labour, or by the labour of any member of one's family, or under the personal supervision of oneself or any member of one's family by hired labour or by servants on wages payable in cash or kind but not in crop share. According to section 2 (5), to cultivate with its grammatical variations and cognate expressions means to till or husband the land for the purpose of raising or improving agricultural produce, whether by manual labour or by means of cattle or machinery, or to carry on any agricultural operation thereon.
Since
the word person is defined in section 2 (11) of the Act, its definition as given in the Bombay General Clauses Act, 1904 could not be applied and a company constituted as a juristic person under the Companies Act cannot be considered to be an agriculturist. Having regard to this legal provision, there is no provision under section 63 of the Act for acquisition of agricultural land by companies as non-agriculturist. The District Collectors, Prant Officers, Taluka Mamlatdars and Agricultural Tribunals have to proceed accordingly, keeping in view the aforesaid provisions.
6. The
above instructions were issued by the impugned circular, by and in the name of the Governor of Gujarat, for being followed in all the legal proceedings by the officers concerned.
7. It
was argued by learned A.G.P., appearing for the appellant, that the scheme and provisions of section 63 of the Act clearly conveyed the policy of the legislature, which was to prohibit transfer of agricultural land in favour of a person who is not an agriculturist. An exception could be made from the embargo by obtaining permission, with such conditions as may be prescribed, from the Collector or an officer authorised in that behalf. However, that exception is subject to the proviso that such permission cannot be granted where the land is being sold to a person who is not an agriculturist for agricultural purpose, if annual income of such person from other sources exceeds 5000 rupees. Therefore, it clearly emerges that even the Collector or an officer authorised in that behalf has no power to permit sale of agricultural land to a person who is not an agriculturist for agricultural purpose, if the annual income of the buyer from other sources exceeds 5000 rupees. Agriculturist, by its definition means, a person who cultivates land personally; and to cultivate personally, the buyer must be cultivating the land on one's own account or by hired labour under the supervision of himself or any member of his family. The heading of section 63 viz. Transfers to non-agriculturists barred also clearly indicates the policy of prohibiting transfer of agricultural land to non-agriculturists, except where such transfer is permitted under the exceptions provided by the proviso.
8. In
view of the express legal provisions of the Act enacted with the express objects, inter
alia,
of regulating and imposing restrictions on transfer of agricultural lands could hardly accommodate a juristic person or a company as an agriculturist.
According to the clear definitions, a legal person cannot cultivate land personally by its own labour or under personal supervision of itself or its family members. Therefore, the word person defined in section 2 (11) to include a joint family, cannot be allowed an expansive interpretation so as to include a legal person in the context of the provisions of section 63 of the Act.
9. As
against the above reading of the relevant legal provisions in the impugned circular, learned single Judge appeared to have unnecessarily strayed into reference to the provisions of the Bombay General Clauses Act 1904, the Gujarat Co-operative Societies Act 1961 and the Gujarat Agricultural Lands Ceiling Act, 1960.
10. However,
it was reiterated and argued by learned counsel Mr.A.J.Patel, appearing for the respondent company, that the provisions of the Act must be harmoniously read with the provisions of other land laws, so as to facilitate modern and scientific farming by corporate bodies. He relied upon recent decision of the Apex Court in Ramanlal Bhailal Patel v. State of Gujarat [2008 (3) G.L.R.1841], wherein the five appellants along with their respective spouses had purchased 172 acres and 36 gunthas of agricultural land and the land was divided into 10 portions amongst them. The Mamlatdar had then issued a notice under section 20 of the Gujarat Agricultural Lands Ceiling Act, 1960 (for short, the Ceiling Act) and had made declaration under section 21 of that Act that surplus holding was 1 acre 31 gunthas which shall vest in the Government. The matter was taken into suo
motu
revision under section 37 of the Ceiling Act and it was held that a group
of persons or an association of persons purchasing agricultural land together had to be treated as a person under that Act and, therefore, they could jointly hold only one unit (36 acres) and hence he determined the surplus land as 147 acres 31 gunthas and directed the Mamlatdar to obtain selection of the land to be surrendered. The Gujarat Revenue Tribunal upheld the decision of the Deputy Collector and the matter was carried to this High Court. Learned single Judge allowed the petition and remanded the matter to the Revenue Tribunal to decide whether the definition of person in the General Clauses Act, 1904 could be imported into the definition of person under the Ceiling Act. The appellants challenged that order of learned single Judge in appeal. A Division Bench of this Court allowed the appeal in part by judgment dated 4.3.2003 holding that there was no need for remand as the pure question of law could be decided by the High Court itself. It also held that person in the General Clauses Act had to be read into the definition of person in the Ceiling Act and, therefore, the decision of the Revenue Tribunal treating the 10 co-owners as an association of persons and consequently a person for the purpose of the Ceiling Act entitled them to hold only one unit (36 acres). That order of the Division Bench was under challenge before the Apex Court. And in that context, the Apex Court identified the issues as under:
(i)
Whether the definition of 'person' in the Gujarat Agricultural Lands Ceiling Act, 1960, includes a body of individuals/association of persons ?
(ii) Whether
co-ownership, per se, is an 'association of persons/body of individuals' and therefore, constitutes a 'person'?
(iii) Whether
the ten purchasers, who became co-owners of the land, together constitute a 'body of individuals/association of persons' and therefore a 'person' within the meaning of that expression in the Ceiling Act?
(iv) Whether
the partition dated 30-12-1971 among the co-owners is 'deemed to have been made in anticipation to defeat the object of Gujarat Agricultural Lands Ceiling (Amendment) Act, 1972' under section 8(1) of the Ceiling Act; and if so what is the effect of failure to make an application under sub-section (2) of section 8 of the Ceiling Act.
(v) What
would be the position if some of the co-owners were non- agriculturists at the time of purchase of the lands? Whether the Mamlatdar can examine this issue when considering the question of surplus land under the Ceiling Act?
The
Ceiling Act, in substance, prohibited holding of agricultural land by any person, as owner or tenant, in excess of the ceiling area. The word person as defined in section 2 (21) in the Ceiling Act is also an inclusive and identical definition, i.e. person includes a joint family. Against such backdrop, the Apex Court observed:
25. Both
definitions of the word person, in General Clauses Act and Ceiling Act, are inclusive definitions. The inclusive definition of person in General Clauses Act applies to all Gujarat Act unless there is anything repugnant in the subject or the context. The inclusive definition of person in section 2(21) of the Ceiling Act, does not indicate anything repugnant to the definition of person in General Clauses Act, but merely adds joint family to the existing definition. Therefore the definition of person in the Ceiling Act, would include the definition of person in section 3(35) of General Clauses Act. The resultant position can be stated thus : The definition of person in General Clauses Act, being an inclusive definition, would include the ordinary, popular and general meaning and those specifically included in the definition. The inclusive definition of person in the Ceiling Act, in the absence of any exclusion, would have the same meaning assigned to the word in the General Clauses Act, and in addition, a joint family as defined. Thus, the word person in the Ceiling Act will, unless the context otherwise requires, refer to :
(I) a
natural human being,
(ii) any
legal entity which is capable of possessing rights and duties, including any company or association of persons or body of individuals (whether incorporated or not); and
(iii) a
Hindu Undivided Family or any other group or unit of persons, the members of which by custom or usage, are joint in estate and residence
10.1 However,
the Court also held that the Tribunal and the High Court were right in holding that the word person in the Ceiling Act includes an association of persons/ body of individuals; but they were not justified in treating the co-owners as an association of persons, or in holding that the ten co-owners will be entitled to own only one unit. Thus, holding that the ten co-owners together were not to be treated as a person , the Apex Court directed as under:
35. The
Mamlatdar will have to decide the matter by holding an enquiry under section 21 of the Ceiling Act keeping in view the principles laid down in sections 6 to 8 of the Ceiling Act. Further section 63 of the Tenancy Act also has to be kept in view while examining the claim of co-owners. If the sale was effected jointly in the name of ten persons to enable some non-agriculturists who were barred from buying agricultural land, to buy agricultural land by joining some agriculturists as co-purchasers, the sale to the extent it is in favour of non-agriculturists will not be valid and the consequences on account of sale not being valid for violation of section 63 of Tenancy Act will follow as provided in section 84C of that Act. For example if ten purchasers purchase hundred acres of land with equal shares, and six of them are non-agriculturists, then the sale in respect of the six non-agriculturists (to an extent of 60 acres) will not be valid and such land purchased by non-agriculturists may have to vest in the State Government as provided in section 84C of the Tenancy Act. In this case no such enquiry has been held to find out about the validity of the sale. Therefore, the matter will have to be remitted to the Mamlatdar to hold an enquiry under sections 63 and 84C of Tenancy Act to decide whether all the purchasers were agriculturists who were entitled to purchase agricultural land and whether transfer in favour of all of them is valid or invalid and to make consequential orders.
(underlines
added)
10.2 Obviously,
reliance by the respondent on the above judgment is misplaced and actually undermines the case of the respondent. Besides that, the Tenancy Act and the Ceiling Act, though dealing with agricultural land, have totally different purposes and the context in which the word person is used in various provisions thereof is equally different. While the avowed object of the Ceiling Act is to place restrictions upon holding of agricultural land in excess of certain limits, the object of the Tenancy Act, inter alia, is to regulate and restrict transfer of agricultural lands held by agriculturists, agricultural labourers and artisans to non-agriculturists or for non-agricultural purpose. Besides that, the clear restrictions contained in section 63 of the Tenancy Act prohibits, subject to the exceptions, transfer of agricultural land to non-agriculturists (for agricultural purpose), which has to exclude legal persons or bodies incorporate, who, in the nature of things, cannot personally cultivate land as per definition of that phrase in the Act. The phrase if actual income of such person from other sources exceeds 5000 rupees attaching to the transferee entity cannot be applied to make a person agriculturist who cannot be an agriculturist. The definition of person in the Bombay General Clauses Act, 1904 will obviously be repugnant in the context of provisions of Section 63 of the Act, and, therefore, it could not be read as incorporated in the definition of person in the Act.
11. The
other decision of the Apex Court relied upon for the respondent, viz. Shri Kalanka Devi Sansthan v. Maharashtra Revenue Tribunal, Nagpur[(1969) 2 SCC 616] also cannot carry the case of the respondent any further. The question in that case was whether the Sansthan can claim possession of land from tenant on the ground of personal cultivation. And it was held as under:
4. ......The
idol is capable of holding property in the same way as a natural person. "It has a juridical status with the power of suing and being sued. Its interests are attended to by the person who has the deity in his charge and who is in law its manager with all the powers which would, in such circumstances, on analogy, be given to the manager of the estate of an infant heir". The question, however, is whether the idol is capable of cultivating the land personally. The argument raised on behalf of the appellant is that under Explanation I in Section 2 (12) of the Act a person who is subject to any physical or mental disability shall be deemed to cultivate the land personally if it is cultivated by the servants or by hired labourer. In other words an idol or a Sansthan that would fall within the meaning of the word "person" can well be regarded to be subject to a physical or mental disability and land can be cultivated on its behalf by servants or hired labourers. It is urged that in Explanation (I) the idol would be in the same position as a minor and it can certainly cultivate the land personally within the meaning of Section 2 (12). It is difficult to accept the suggestion that the case of the appellant would fall within Explanation (I) in Section 2 (12). Physical or mental disability as defined by S. 2 (22) lays emphasis on the words "personal labour or supervision". As has been rightly pointed out in Shri Kesheoraj Deo Sansthan, Karanja v. Bapurao Deoba, 1964 Mah LJ 589 in which an identically similar (sic) point came up for consideration, the dominating idea of anything done personally or in person is that the thing must be done by the person himself and not by or through someone else. In our opinion the following passage in that judgment at p. 593 explains the whole position correctly:
"It
should thus appear that the legislative intent clearly is that in order to claim cultivation as a personal cultivation there must be established a direct nexus between the person who makes such a claim, and the agricultural processes or activities carried on the land. In other words, all the agricultural operations, though allowed to be done through hired labour or workers must be under the direct supervision, control, or management of the landlord. It is in that sense that the words "personal supervision" must be understood. In other words, the requirement of personal supervision under the third category of personal cultivation provided for in the definition does not admit of an intermediary between the landlord and the labourer, who can act as agent of the landlord for supervising the operations of the agricultural worker. If that is not possible in the case of one landlord, we do not see how it is possible in the case of another landlord merely because the landlord in the latter case is a juristic person".
In
other words the intention is that the cultivation of the land concerned must be by natural persons and not by legal persons.
It
is further held in para 6 as under:
6.
It has lastly been contended that the relevant provisions of the Act which have the effect of debarring the appellant from claiming possession for personal cultivation violate the provisions of Articles 14 and 19 (1) (f) of the Constitution. It is urged that discrimination is writ large between animate and juristic persons who fall within the definition of the word "person". Such a contention, however, cannot be entertained in view of Article 31-A of the Constitution. The Act had received the assent of the President and is rendered immune from attack or challenge on the ground of violation of Articles 14 or 19 of the Constitution. In Mahadeo Paikaji Kolhe Yavatmal v. State of Bombay, (1962) 1 SCR 733 = (AIR 1961 SC 1517) the constitutional validity of the Act itself was canvassed but the challenge failed. Similarly the validity of the Bombay Tenancy and Agricultural Lands Amendment Act, 1956 as applied to Vidarbha Region and Kutch Area was upheld in Sri Ram Ram Narain Medhi v. The State of Bombay, (1959) (Supp) 1 SCR 489 = (AIR 1959 SC 459).
It
may be pertinent to note here that the restriction on transfer of agricultural land to non-agriculturist, under the pain of invalidation of such transfer, as envisaged in the provisions of Section 63 of the Act, is different from and totally unrelated to the legal capacity of a body corporate to hold agricultural land. Even if it were held in a particular context that a juristic person could legally hold or own agricultural land, it cannot be construed as a licence to transfer the land to such artificial person in spite of its incapacity to personally cultivate the land as required under the Act.
12. Learned
counsel for the respondent also relied upon the observations made by the Apex Court in Consolidated Tea and Lands Co. (India) Ltd. v. Commissioner of Wealth Tax, West Bengal [AIR 1970 Calcutta 335]. In the facts of that case, several questions were referred to the Apex Court under section 27 (1) of the Wealth Tax Act, 1957 and the only relevant observation made by His Lordship Justice Sabyasachi Mukharji was:
9. Our
attention was drawn to the observations of Banerjee, J. in the case of (1968) 67 ITR 823=(AIR 1968 Cal 298) (supra), to the effect that a company cannot be a cultivator under section 2 (e) of the Act. It was however contended that the aforesaid observations of Banerjee J., in that case were obiter. In the view I have taken of the expression outhouse, I do not think it necessary for me to express any views on this controversy in this case. The question then that requires our consideration is, can these buildings be considered as outhouses? The expression outhouse has not been defined in the Act.
While
agreeing with the above answer, Hon'ble Justice P.B.Mukharji observed as under:
14.
This reference has caused me some anxious moments. At the same time, I do not feel that my anxiety and hesitation need be pressed to a dissent. In the facts and circumstances, I agree with the answers given.
15
to 18 .... .... ....
19. It
is well-settled principle of interpretation of statutes that the interpretation given to the word used in one statute should not be applied to interpreting that word or a similar word used in a different statute with a different purpose and a different context. Words like ideas have a certain association which is provided by the context, the object and the purpose of the statute in which it is used. One of the main and basic objects of the Wealth Tax Act is the valuation of assets and consideration of assets.
20
to 22 .... .... ....
23. There
is more cogent reason to include a company in the interpretation of the word cultivator in that section of the Act. That reason is that a company or an incorporated company is an assessee and its assets are liable to be taxed under the Wealth-tax Act. But this kind of an interpretation confining cultivator to a human cultivator and excluding a non-human cultivator, like an artificial person such as a company, would be to retain its liability to the tax and deprive it of the claim to get the exemption. Normally, no construction should be put on a taxing statute which will deprive a legally liable assessee to make a claim for exemption. Liability to tax and exemption should be co-related as far as possible, unless there is any specific provision in the statute, expressly or by necessary implication, to justify their separation. It is a kind of deprivation which the Court should be slow to adopt by a process of construction and interpretation.
24. Section
3 of the Wealth-tax Act, which is the charging section in the statute, uses the word company expressly as a possible unit of taxation. Section 2 (c) itself, clause (e) (ii) of which is under consideration, expressly defines an assessee to mean a person by whom inter alia the wealth-tax is payable under the Act. A person includes a company or any corporation under section 3 (39) of the General Clauses Act. Then, again the principle underlying this Wealth-tax Act is to be read in the light of the basis of exemption. The principal basis of exemption is that the agricultural land is exempted by the definition of assets under sec.2 (e) (i) and (ii). If the interpretation quoted above were to be accepted, the position then will be that while the agricultural land owned by the company is exempted, its dwelling house is not, on the view that a company cannot have a dwelling house in the sense that a human being can .........
Above
observations cannot be torn from the context in which they are made and cannot be applied in the context of the present matter.
12.1 When
material words are capable of bearing two or more constructions, the most firmly established rule for construction is the rule laid down in Heydon's case,
which is also known as purposive construction or mischief rule. Court is required to make such construction as shall suppress the mischief and advance the remedy, and suppress certain inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico, as discussed in several judgments of the Apex Court, including Bengal Immunity Co. v. State of Bihar [AIR 1955 SC 661] and
Ameer Trading Corporation Ltd. v. Shapoorji Data Processing Ltd. [AIR 2004 SC 355]. In the words of Lord Griffith: The courts now adopt a purposive approach which seeks to give effect to the true purpose of legislation and are prepared to look at much extraneous material that bears on the background against which the legislation was enacted. [Pepper v. Hart (1993) 1 All ER 42].
13. In
view of the above discussion of the relevant legal provisions and the ratio of the judgments of the Apex Court, it is clear that the impugned circular dated 23.11.1998 was in consonance with the relevant provisions of the Act and the Rules made thereunder and the notices issued on the basis of that circular could not be quashed as the authorities were entitled and required to initiate proceeding under section 84-C of the Act, even without reference to and reliance upon the impugned circular. In that view of the matter, whether the impugned circular could have retrospective effect or not becomes irrelevant as the law as interpreted by the Court must take its own effect and must be implemented accordingly regardless of any particular interpretation put upon it by the implementing agencies or the date on which such administrative interpretation is handed out for necessary actions in accordance with the Act.
14. Accordingly,
the appeal is allowed, the impugned judgment is set aside and the circular and the notice impugned in the original petition are upheld, without prejudice to the rights and contentions which may otherwise be available to the respondent.
Sd/-
(
D.H.Waghela, J.)
Sd/-
(Bankim
N.Mehta, J.)
Upon
pronouncement of the judgment today, learned counsel Mr.Shital Patel, appearing with learned counsel Mr.A.J.Patel, and learned counsel Mr. A.B.Munshi, requested that operation and implementation of this judgment may be stayed for a period of six weeks. We do not find any justification for granting such relief. Therefore, the request is rejected.
Sd/-
(
D.H.Waghela, J.)
Sd/-
(
Bankim N.Mehta, J.)
(KMG
Thilake)
Top
Raj Kumar Makkad
(Expert) 26 April 2013
The impugned judgment is self explanatory and it shall definitely help you to reach to a right conclusion out of the so-called contradictory opinion of the experts.
