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PETITIONER: UNION OF INDIA & ANR.

       Vs.

RESPONDENT: M/S MUNDRA SALT & CHEMICAL INDUSTRIES & ORS.

DATE OF JUDGMENT:       14/11/2000

BENCH: Ruma pal, A.P.Misra

JUDGMENT:

J U DG M E N T

MISRA, J.

L.....I.........T.......T.......T.......T.......T.......T..J

     The  present appeals are directed against the judgment and  order  of  the High Court  dismissing  the  appellants appeal,  challenging the order of the District Judge holding that  the  respondents are owners of the suit land  and  the grant  made by the Government in their favour was in fact  a sale  and not merely lease or licence to manufacture salt on the  suit  land.  The question raised in these  appeals  is: who  is the owner of the suit land, whether the appellant Union  of India or the State Government?  This is raised  in the   land  acquisition  proceeding,  in  the   context   of adjudication  of the apportionment of the compensation.   In order  to appreciate the controversy it is necessary to give certain facts.

     On  22nd May, 1952 Tehsildar issued a notification for sale  of  Khajan  (Marshy) land on ownership  basis  through public auction.  In the public auction dated 12th June, 1952 Hanumanbux Lalchand Mundra offered highest bid and deposited the  part amount on the same day towards the price of  land. The balance amount was deposited on 26th June, 1952.  On 5th May, 1955 the Collector confirmed the said auction sale.  As a  consequence, on 25th May, 1955 an agreement was  executed with  the  said  purchaser and on 24th  November,  1955  the Circle  Officer  handed  over the possession  of  the  land. Through  mutation  Entry No.  227 dated 24th February,  1970 the  names  of  all the partners of Respondent No.   1  were entered  in  the revenue records.  In the  land  acquisition proceedings  for  the construction of highway a  portion  of land  bearing  Sl.  No.  386 (p) Mulund through  the  award, ownership   of   Respondent  No.   1  was   recognised   and compensation  was held to be payable to the said  Hanumanbux Lalchand  Mundra.   The  Municipal  Corporation  of  Greater Bombay  also  acquired  a portion of the land  purchased  in public  auction held on 12th June, 1952 and through an award dated 13th April, 1972 accepted the title of the respondents and paid compensation to the partners of the Respondents.  A notification  under  Section 4 of the Land Acquisition  Act, 1894  read with Section 128 of the Maharashtra Regional  and Town  Planning  Act, 1966 (hereinafter referred to  as  the said  Act) was issued by the Government of Maharashtra  for acquiring land measuring 32,506 Sq.  Mtrs.  Out of Gat.  No.

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86  (p).   A  notification dated 11th November,  1980  under Section  126 of the said Act read with Section 6 of the Land Acquisition   Act,  1894  was   issued.    The   respondents challenged  these notifications through a writ petition,  in which  respondents  agreed  to hand over possession  of  the aforesaid  area.   The respondents accordingly  handed  over possession  of  the said area and submitted their claim  for compensation.

     It  is at this stage, the Salt Department of the Union of  India  challenged  the ownership of the  respondents  in respect of this acquired land.  The Land Acquisition Officer referred  the matter of ownership to the Collector who  held respondents  to be the owners.  However, on 19th  September, 1986  the  Collector  in review proceedings held,  Union  of India  to be the owner and respondents were only the lessees who  were entitled to receive compensation only for the loss of  their  business.  The respondents challenged this  order through  a  writ  petition.   The  High  Court  quashed  the aforesaid  order  and directed the District Judge to  decide this  question  of  ownership  of   land  in  pending   Land Acquisition  Ref.   No.  90 and 91 of 1986.  In  this,  only Union  of India and not the Government of Maharashtra  filed written   statement.   The  aforesaid   references  of   the respondent  were  allowed.  The Court held that  respondents were  the  owners  and were entitled  for  the  compensation calculated  at  the market value of Rs.  80/- per sq.   mtr. Aggrieved  by  this  the appellants filed the  first  appeal before  the High Court, which was also dismissed.  The  High Court  confirmed  respondents to be owners of  the  acquired land.   However,  the rate of compensation was reduced  from Rs.   80/-  per sq.  mtr.  to Rs.  70/- per sq.   mtr.   The High  Court held, that Section 37 of the Bombay Land Revenue Code of 1879 (hereinafter referred to as the 1879 Code) on which strong reliance was placed, cannot confer title on the appellants.

     Learned senior counsel for the appellants  Mr.  Mukul Rohtagi,  Addl.   Solicitor General, submits with  vehemence that  High Court fell into error in not applying Section  37 of  the  1879 Code.  The submission is, application of  this Section  clearly  recognises  title of the Union  hence  any finding  to the contrary is liable to be set aside.  He also referred  to the proclamation issued for selling the land on ownership  basis  through  public   auction  including   the agreement  of  sale to show the land which was given to  the respondents  was  not  to confer any ownership but  at  best confer right as a lessee or licensee.  He also relied on the aforesaid  order of the Collector, wherein the appellant was held  to  be  the owner of the land in  question.   He  also referred  to the licence issued under the Central Excise and Salt Act, 1944.

     On  the  other  hand, learned senior counsel  for  the respondents    Mr.  Gopal Subramaniam submits,  High  Court findings  require no interference.  It is rightly  concluded Section  37 will have not application.  Further, Article 294 of  the  Constitution of India read with Section 99 and  100 and  legislative entries under the Government of India  Act, 1935 makes the legal position clear that it is not the Union but  the  State  Government which is the owner of  the  suit land.

     The  main  thrust  of  argument   on  behalf  of   the appellants  is  with reference to Section 37 of  1879  Code,

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which is quoted hereunder:-

     Section  37 (1):  All public roads, lanes and  paths, the  bridges, ditches, dikes, and fences, on, or beside, the same,  the  bad of the sea and of harbours and creeks  below high-water-mark,  and of rivers, streams, nallas, lakes, and tanks,  and all canals, and water-courses, and all  standing and  flowing  water, and all lands wherever situated,  which are  not  the property of individuals, or of  aggregates  of persons  legally capable of holding property, and except  in so  far as any rights of such persons may be established, in or over the same, and except as may be otherwise provided in any  law  for  the time being in force are  and  are  hereby declared  to  be,  with all rights in or over the  same,  or appertaining thereto, the property of the Crown and it shall be  lawful  for the Collector, subject to the orders of  the Commissioner,  to  dispose of them in such manner as he  may deem  fit,  or  as  may  be  authorized  by  general   rules sanctioned  by  the Government concerned, subject always  to the  rights of way, and all other rights of the public or of individuals legally subsisting.

     Explanation   In this section high-water-mark means the  highest  point reached by ordinary spring-tides at  any season of the year.

     (2)  Where  any property or any right in or  over  any property  is  claimed  by or on behalf the Crown or  by  any person  as  against  the Crown, it shall be lawful  for  the Collector or a survey officer, after formal inquiry of which due  notice  has been given, to pass an order  deciding  the claim.

     (3)  Any suit instituted in any Civil Court after  the expiration  of  one year from the date of any  order  passed under sub-section (1) or sub-section (2), or, if one or more appeals  have been made against such order within the period of limitation, then from the date of any order passed by the final  appellate  authority,  as   determined  according  to section 204, shall be dismissed (although limitation has not been  set  up  as a defence) if the suit is brought  to  set aside  such  order or if the relief claimed is  inconsistent with such order, provided that in the case of an order under sub-section  (2)  the plaintiff has had due notice  of  such order.

     (4)  Any person shall be deemed to have had due notice of  an inquiry or order under this section if notice thereof has  been given in accordance with rules made in this behalf by the Provincial Government. {Emphasis supplied}

     The  empahsis  is that this section makes  all  public roads,  lanes, paths, the bridges, ditches, dikes,..bed  of the sea, harbours and creeks below high-water-mark..and all lands  wherever  situated,  which are not  the  property  of individuals  are  declared to be the property of the  Crown. The  use  of  the  words all lands  wherever  situated  is comprehensive  to include all lands which would include  the suit  land and the Crown referred to in the Section, at  the relevant  time,  refers to the Crown of England which  could only  be the Central Government now and it by no stretch  of imagination would mean the Provincial Government.

     Having  considered  the  submission  of  the  parties, before  considering  Article 294 of the Constitution, it  is

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necessary  to refer to the preceding legislative history, in relation  to  the  ownership  of the  land  which  has  some relevance   for  the  consideration  of  the  ownership   in question,  whether  it  is  the   Union  or  the  Provincial Government which is the owner of the land.

     The  first  legislation in this regard  is  Regulation No.1 of 1799.  This was enacted to constitute a regular code or regulations for the internal Government management of the British  territories  under the Presidency of Bombay.   This regulation  prescribes  the manner and method of making  the rule  or  passing the orders, in respect of the  rights  and tenures  of  the  cultivators of the soil.   Then  came  the Regulation  No.  1 of 1808, which.  records that the  island of  Salsette  was  conquered  by  the  Portuguese  in  1584, thereafter  it was parcelled out among the European subjects into  village  allotments for a very small (or) fixed  rent. The  lands were subject to grants either from the Mohammedan rulers, the Peshwas or the Portuguese.  After the annexation of  Salsette by the East India Company sometime in 1774, the question arose, whether the properties in the salt vested in the company or the occupants, as salt was cultivated both on the  land of the Government as also on the land purchased by the  natives  from the Portuguese.  Under  this  regulation, Governor  General  in  Council recognised the right  of  the occupants  of  the soil by charging moderate and fixed  rent from  them.  This regulation records, after 1801, when deeds were  introduced as evidence of the grants of rights to  the occupants,  various  persons,  some  of whom  named  in  the Regulation,  accepted the deeds.  Next came Regulation IX of 1827  which obligated the authorities to maintain a register of  title  deeds.   It  was done as it  was  thought  to  be conducive  to  the  security  of  titles  of  the  immovable properties,  which also greatly facilitated the transfer  of such  properties  through sale, gift, mortgage  etc..   This register  of  title  deeds  was established  in  each  Zilla (District).  Under Section VI  Clause 1st ,  every deed or other   writing,   transferring  or   mortgaging   immovable properties, situated within the Zilla, if registered in this Register of title deeds, shall without regard to the date of its  execution,  if  proved to be valid,  be  preferred  to, either  subsequently registered or not registered at all but this   preference  was  extended   only  to  the   immovable properties.   Thus, came the aforesaid 1879 code followed by the  Record of Rights Act, 1903 which required the  detailed enquiry  before  recording the creating of any right in  any person.

     Similarly,  with  reference to the Regulation of  Salt Manufacture,  the Salt Act, 1837 was enacted under which  no salt  could  be  manufactured on any  land  without  express permission.   Then  came  the  Salt Act,  1850  under  which detailed  provision  was made to levy duties of  custom  and excise  on  the  manufacture  of salt.  In  fact,  the  Land Revenue  Code Rules, 1905 was made under Section 214 of  the aforesaid 1879 Code.

     The  legal  position which emerges from the  aforesaid laws  appears  to  be that unless an individual  proves  his claim  and title over the land, where the salt work is being carried  on,  such  land  was  deemed  to  be  that  of  the Government.   It is in these set of laws, Section 37 of  the 1879  Code  also projects itself in the same manner.   Under it,  if  any  individual fails to establish his  title,  the Union  Government  is presumed to be the owner of the  land.

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However,  we  have  to  keep in mind,  when  1879  Code  was promulgated  federalism was not even born.  In other  words, then  there was no question of any right of two  Governments to hold the properties between them as it is now between the Union  and  the State Governments.  Then the right over  the land  was  confined to that of the Crown and an  individual. That  is  why  Section  37  of  the  1879  Code   recognises preemptory right of the Crown in respect all lands which are not  the  property  of   individuals.   This  conception  of exclusive  ownership  over  all  land  by  the  Crown  stood dissolved  after  coming into force of the  Constitution  of India,  under which right over such land was conferred  both on the Union and the State Governments.

     In order to adjudicate the controversy in this case it is  necessary to refer to Article 294 of the Constitution of India, which is quoted hereunder:

     294.    Succession  to   property,  assets,   rights, liabilities  and obligations in certain cases  As from  the commencement of this Constitution

     (a)  all property and assets which immediately  before such  commencement  were  vested  in  His  Majesty  for  the purposes  of  the  Government of Dominion of India  and  all property   and   assets  which   immediately   before   such commencement  were vested in His Majesty for the purposes of the  Government  of  each  Governors  Province  shall  vest respectively in the Union and the corresponding State, and

     (b)  all  rights, liabilities and obligations  of  the Government of the Dominion of India and of the Government of each  Governors  Province,  whether   arising  out  of  any contract  or otherwise, shall be the rights, liabilities and obligations  respectively of the Government of India and the Government of each corresponding State,

     subject to any adjustment made or to be made by reason of the creation before the commencement of this Constitution of  the  Dominion  of Pakistan or of the Provinces  of  West Bengal, East Bengal, West Punjab and East Punjab.

     This Article declares which property would vest in the Union  and which would vest in the State Government.   Under it,  all  properties immediately before the commencement  of the  Constitution  which  vested  in  His  Majesty  for  the purposes of the Government of Dominion of India vests in the Union and all properties which vested in His Majesty for the purposes of the Government of each Governors Province vests in  the corresponding State and all rights, liabilities  and obligations  of  the Government of Dominion of India and  of the Government of each Governors Province are recognised to be  the rights, liabilities and obligations respectively  of the  Government  of  India  and   the  Government  of   each corresponding  State.   So  under   this  Article  ownership question between the Union and the State Government is to be tested  and  not  under obsolete Section 37  of  1879  Code. Faced with this, Mr.  Rohtagi submits this vesting in favour of  the  State could only be, if before the commencement  of the  Constitution  the  land was used for  the  purposes  of Government of Governors Province.  We have already referred to  the  historical  background as to how  first  rights  of individual  were  recognised.   Thereafter  a  register  was brought  into  the picture for recording the names  of  such

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owners  including  occupancy  right holders and  later  land revenue  was  charged from such holders of such land by  the Government  of the Province, the administration and  control of  which  was with the Government of Provinces except  when licences  were  issued by the Union under the relevant  Salt Act.   This  position becomes more clear, after coming  into force of the Government of India Act 1935.  The 1935 Act for the first time effectively demarcated the legislative powers of  the federal legislation and the provincial  legislation. Sections 99 and 100 of this Act define fields of legislation read  with  three lists contained in the  Seventh  Schedule. The  land under Entry 21 and land revenue under Entry 39 fell  under  the provincial list.  When the Constitution  of India came into force, we find similar entries of the land under  Entry 18 and land revenue under Entry 45 of List II of  the  Seventh Schedule.  This leaves no doubt  that  both land  and  land  revenue fell under State List  and  was governed by the State even prior to the coming into force of the Constitution of India.

     The  question of title of the Union in the proceedings under   the   Land   Acquisition   Act,   which   is   under consideration,  admittedly  is after the enforcement of  the Constitution  of  India  hence the title over  the  land  in question could not be that of the Union of India.

     Lastly,  learned  counsel for the Union  submits  that significantly the very High Court in another set of contest, which  is  subject matter of consideration in  Civil  Appeal Nos.   2286-2343 of 1998 has held, Union of India to be  the owner over such land.  We have perused the said judgment, we find,  the  High  Court  merely   relies  for  drawing  such inference  on Section 37 of 1879 Code.  We have already held after  Government of India Act, 1935, in any case after  the Constitution  of  India, Section 37 of the 1879  Code  would have  no application for the claim by the Union.  Hence this submission  has  no  merit.   Hence  we  do  not  find   any sustainable  submission  to  hold Union of India to  be  the owner  of the suit land.  Consequently, we find no error  in the impugned judgment of the High Court.

     For  all  the  aforesaid reasons, we do not  find  any merit  in  the present appeals.  Accordingly, the  same  are dismissed with costs.