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PETITIONER: T.R.THANDUR

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       08/04/1996

BENCH: VERMA, JAGDISH SARAN (J) BENCH: VERMA, JAGDISH SARAN (J) BHARUCHA S.P. (J) PARIPOORNAN, K.S.(J)

CITATION:  1996 AIR 1643            1996 SCC  (3) 690  JT 1996 (4)    14        1996 SCALE  (3)322

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T J.S. VERMA, J. :      The petitioner  booked a small flat with an area of 950 sq.ft. in a multi-storeyed building containing several flats on the  excess vacant  land belonging  to  respondent  No.3, exempted under Section 20(1)(b) of the Urban Land (Ceiling & Regulation) Act,  1976 to  be constructed by respondent no.4 in survey  No.44, Marenahalli  Uttarahalli Hobli,  Bangalore South taluk.  Under the  agreement, the  petitioner  was  to purchase the  flat together  with 1/48  share in the land on which  the   building  was  to  be  constructed.  Under  the Karnataka Ownership  Flats (Regulation  of the  Promotion of Construction, Sale,  Management and  Transfer) Act, 1972 the promoter, namely,  respondent no.4,  is required  to  convey title and  execute documents  for the  share in  land of the flat/apartment. The  petitioner  took  necessary  steps  for purchase of  the flat together with his share of the land on which the  multi-storeyed building  is constructed. However, the respondent no.4 regretted its inability vide later dated 20.6.1993 to  either execute  the conveyance for transfer of the petitioner’s  share of land or to handover possession of the said  flat to  him be-cause of the order dated 16.6.1993 of the  Karnataka High  Court. The  petitioner was  informed that the  Karnataka High  Court,  by  the  said  order,  had restrained the  State Government  from  issuing  any  orders permitting transfer of the excess vacant land and therefore, the respondents  were not  in a  position to comply with the petitioner’s demand.  The order  of the Karnataka High Court is   based    on   the    decision   of    this   Court   in S.Vasudeva/D.P.Sharma Vs.  State of Karnataka and Ors., 1993 (3) scc  467, which  prohibits transfer  of any  part of the exceess vacant land in respect of which exemption is granted under Section  20(1)(b) of Urban Land (Ceiling & Regulation) Act, 1976. The decision in S.Vasudeva being the basis of the

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impugned action,  this writ  petition has  been filed  under Article 32  of the Constitution challenging this action; and for that  reason, correctness  of the decision in S.Vasudeva arises for  consideration. No  other facts  are material for deciding the question raised in this writ petition.      In  S.Vasudeva,  a  Division  Bench  comprised  of  two learned Judges of this Court (P.B.Sawant and N.P.Singh, JJ.) have held  "that the  provisions of  Section 20(1)(b) of the Act do  not permit the State Government to give exemption to the vacant  land in  excess of  the ceiling  limit  for  the purpose of  transferring the  same". This  is    the  common conclusion reached  by  the  two  learned  Judges  in  their separate opinions.  The State  Government is  applying  this decision to  all cases  of exemption under Section 20 of the Act. The  question, therefore,  is : Whether this conclusion of restriction  on transfer  must apply  invariably  in  all cases of exemption granted under Section 20 of the Act?      The relevant  provisions in  the Urban  Land (Ceiling & Regulation) Act,  1976  may  now  be  referred.  Chapter  II contains the  definitions in Section 2. Chapter III contains Sections 3  to 24  with the heading Ceiling on vacant land’. Chapter IV  contains Sections  25 to  30 under  the  heading Regulation of Transfer and Use of Under Property and Chapter V contains  the mis-cellanteous provisions in Sections 31 to 47. The relevant definitions are as under :                 "Chapter II.                  Definitions                  ------------      2.   Definitions:-  In   this  Act,      unless   the    context   otherwise      requires, -      xxx           xxx           xxx      (c)  "ceiling  limit"   means   the      ceiling limit specified in Sec.4;      xxx           xxx           xxx      (q)  "vacant land"  means land, not      being  land  mainly  used  for  the      purpose of agriculture, in an urban      agglomeration,   but    does    not      include, -      (i)  land on  which construction of      a building is not permissible under      the building  regulations in  force      in the  area in  which such land is      situated;      (ii) in an  area where are building      regulations, the  land occupied  by      any   building   which   has   been      constructed  before,  or  is  being      constructed on,  the appointed  day      with   the    approval    of    the      appropriate authority  and the land      appurtenant to such building; and      (iii)     in an  area  where  there      are no  building  regulations,  the      land occupied by any building which      has been  constructed before, or is      being constructed on, the appointed      day and  the  land  appurtenant  to      such building :           Provided that where any person      ordinarily keeps  his cattle, other      than  for   the  purpose  of  dairy      farming  or   for  the  purpose  of      breeding of live-stock, on any land

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    situated in  a  village  within  an      urban agglomeration (described as a      village in  the  revenue  records),      then, so much extent of the land as      has been   ordinarily  used for the      keeping of  such cattle immediately      before the  appointed day shall not      be deemed to be vacant land for the      purposes of this clause.         xxx          xxx           xxx               Chapter III             Ceiling on Vacant Land         ----------------------------      3.   Persons not  entitled to  hold      vacant  land   in  excess   of  the      ceiling limit - Except as otherwise      provided in  this Act,  on and from      the commencement  of this  Act,  no      person shall  be entitled  to  hold      any vacant  land in  excess of  the      ceiling limit in the territories to      which this  Act applies  under sub-      section (2) of Sec.1.      4.   Ceiling limit - (1) Subject to      the  other   provisions   of   this      section,  in   the  case  of  every      person,  the  ceiling  limit  shall      be,-       xxx           xxx             xxx      (3)  Notwithstanding       anything      contained in sub-section (1), where      in respect  of any  vacant land any      scheme for  group housing  has been      sanctioned    by    an    authority      competent    in     this     behalf      immediately before the commencement      of  this   Act,  then,  the  person      holding such  vacant land  at  such      commencement shall  be entitled  to      continue to  hold such land for the      purpose of group housing ;           Provided that  not  more  than      one  dwelling  unit  in  the  group      housing  shall   be  owned  by  one      single person :           Provided  further,   that  the      extent of  vacant land  which  such      person shall  be entitled  to  hold      shall, in no case, exceed -      (a)  the extent  required under any      building regulations governing such      group housing; or      (b)  the   extent   calculated   by      multiplying the  number of dwelling      units in the group housing and  the      appropriate ceiling  limit referred      to in sub-section (1), whichever is      less.      Explanation -  For the  purposes of      this  sub-section  and  sub-section      (10). -      (i)  "group   housing"    means   a      building  constructed   or  to   be      constructed with one or morefloors,      each floor  consisting  of  one  or

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    more  dwelling   units  and  having      common service facilities;      (ii) "common   service    facility"      includes facility  like  staircase,      baloney and verandah.       xxx            xxx            xxx      5.   Transfer of vacant land :-      xxx           xxx             xxx      (3)  In any State to which this Act      applies in  the first  instance and      in any  State which adopts this Act      under  Cl.(1)  of  Art.252  of  the      Constitution,  no   person  holding      vacant  land   in  excess   of  the      ceiling  limit  immediately  before      the commencement  of this Act shall      transfer  any  such  land  or  part      thereof by  way of  sale, mortgage,      gift, lease  or otherwise  until he      has  furnished  a  statement  under      Sec.6 and  a notification regarding      the excess  vacant land held by him      has  been   published  under   sub-      section (1) of Sec.10; and any such      transfer made  in contravention  of      this provision  shall be  deemed to      be null and void.      xxx            xxx              xxx      10.  Acquisition of  vacant land in      excess of ceiling limit.-      xxx             xxx             xxx      (4)  During the  period  commencing      on the  date of  publication of the      notification under  sub-section (1)      and ending  with the date specified      in the  declaration made under sub-      section (3), -      (i)  no person  shall  transfer  by      way of  sale, mortgage, gift, lease      or otherwise any excess vacant land      (including   any    part   thereof)      specified   in   the   notification      aforesaid  and  any  such  transfer      made  in   contravention  of   this      provision shall  be  deemed  to  be      null and void; and      (ii) no person shall alter or cause      to  be  altered  the  use  of  such      excess vacant land.         xxx          xxx           xxx      20.  Power   to    exempt   -   (1)      Notwithstanding anything  contained      in any  of the foregoing provisions      of this Chapter-      (a)  where any  person holds vacant      land in excess of the ceiling limit      and   the   State   Government   is      satisfied, either on its own motion      or otherwise,  that, having  regard      to the  location of  such land, the      purpose  for  which  such  land  is      being or is proposed to be used and      such other  relevant factors as the      circumstances  of   the  case   may      require,   it   is   necessary   or

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    expedient in the public interest so      to  do,  that  Government  may,  by      order,  exempt,   subject  to  such      conditions,  if   any,  as  may  be      specified in the order, such vacant      land from  the provisions  of  this      Chapter:      (b)  where any  person holds vacant      land in excess of the ceiling limit      and the State Government, either on      its own  motion  or  otherwise,  is      satisfied that  the application  of      the  provisions   of  this  Chapter      would cause  undue hardship to such      person,  that   Government  may  by      order,  exempt,   subject  to  such      conditions,  if   any,  as  may  be      specified in the order, such vacant      land from  the provisions  of  this      Chapter;           Provided that  no order  under      this clause  shall be  made  unless      the  reasons   for  doing   so  are      recorded in writing.      (2)  If  at   any  time  the  State      Government is satisfied that any of      the conditions subject to which any      exemption under Cl.(a) or Cl.(b) of      sub-section (1)  is granted  is not      complied with  by any   person,  it      shall be  competent for  the  State      Government to  withdraw, by  order,      such  exemption   after  giving   a      reasonable  opportunity   to   such      person for  making a representation      against the proposed withdrawal and      thereupon the  provisions  of  this      Chapter shall apply accordingly.      21.  Excess vacant  land not  to be      treated as excess in certain cases-      (1)  Notwithstanding       anything      contained in  any of  the foregoing      provisions of this chapter, where a      person holds  any  vacant  land  in      excess of  the  ceiling  limit  and      such person  declares  within  such      time, in  such  form  and  in  such      manner as  may be prescribed before      the competent  authority that  such      land is  to  be  utilized  for  the      construction of dwelling unit (each      such dwelling  unit having a plinth      area not  exceeding  eighty  square      meters) for  the  accommodation  of      the weaker sections of the society,      in  accordance   with  any   scheme      approved by  such authority  as the      State    Government     may,     by      notification   in    the   official      Gazette, specify  in  this  behalf,      then, the  competent authority may,      after making  such  inquiry  as  it      deems fit, declare such land not to      be excess  land for the purposes of      this chapter and permit such person

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    to continue  to hold  such land for      the aforesaid  purpose, subject  to      such terms and conditions as may be      prescribed, including  a  condition      as to  the time  limit within which      such   buildings    are    to    be      constructed.      (2)  Where any  person  contravenes      any of  the conditions  subject  to      which  the   permission  has   been      granted under  sub-section (1), the      competent   authority   shall,   by      order, and after giving such person      an  opportunity   of  being  heard,      declare such land to be excess land      and thereupon all the provisions of      this    chapter     shall     apply      accordingly."      The main  question is  the meaning  of  the  expression "undue hardship" in clause (b) of sub-section (1) of Section 20 and  the effect of the exemption granted under Section 20 of the Act.      The Urban  Land (Ceiling  & Regulation)  Act,  1976  is specified in  the  Ninth  Schedule  at  item  No.  132.  The question of its constitutional validity does not, therefore, arise. The  decision in  S. Vasudeva  is, therefore, related only to  the construction  of Section  20(1)(b) to ascertain its meaning.  Both the  learned Judges of the Division Bench have reached the same conclusion in their separate opinions. Reference may  be made  at this  stage to  that decision. In that case,  the State  Government  granted  exemption  under Section 20  of the  Act for  industrial  use  of  a  granite factory subject  to  certain  conditions  which  included  a condition that  the land  shall not  be transferred  in  any manner without  prior permission  of the  Government. Later, the State  Government permitted  sale of  the exempted  land subject   to   certain   conditions.   Thereafter,   another application was  made by  the owner  of the remaining excess land for permission to transfer the remaining vacant land on the ground of undue hardship, which too was  granted subject to certain  conditions. The  transaction benefited  a  close relative of  the Chief  Minister  of  the  State.  On  these undisputed facts, writ petitions were filed, inter alia, for quashing the  orders granting  exemption under Section 20 of the Act  and certain  consequential reliefs.  The  questions which arose  for decisions  in  that  case  related  to  the validity of  the permissions granted by the State Government for transfer of the exempted land. The challenge to validity of the  permissions was  also on  the  ground  of  malafides because of  the resulting benefit to a close relative of the Chief Minister of the State.      The main  judgment in  S.Vasudeva is by P.B. Sawant, J. and N.P. Singh, J. in his concurring opinion agreed with the conclusion reached  by  P.B.  Sawant,  J.  The  question  of malafides was  not considered  and  the  State  Government’s orders were  struck down  as  invalid  on  the  ground  that Section 20(1)(b)  does not  permit the  State Government  to exempt vacant  land in  excess of  the ceiling limit for the purpose of its transfer. Sawant, J. held as under:-           "It  would  be  apparent  from      clause (a)  of sub-section  (1)  of      the  section  that  under  it,  the      State Government  is given power to      exempt the  excess vacant land from      the operation  of Chapter  III only

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    if   the    State   Government   is      satisfied that having regard to (i)      the location  of the  land and (ii)      the purpose  for which  it is being      or is  proposed to  be used,  it is      necessary  or   expedient  in   the      public interest  to exempt  it. The      paramount  consideration   is   the      public  interest.   The   exemption      granted under this provision may be      subject to certain conditions. But,      it  does  not  appear  that  it  is      obligatory    to     impose    such      conditions. Not  in at necessary to      record reasons  when  exemption  is      granted under this clause".           "The power to exempt such land      under clause (b) of sub-section (1)      can  be   exercised  by  the  State      Government, if it is satisfied that      the  application   of  Chapter  III      would cause  undue hardship  to the      land-holder. The  exemption way  be      granted under  this clause  subject      to such  conditions, if any, as may      be specified  in  the  order.  But,      unlike under  clause (a),  there is      no  obligation   to  prescribe  the      conditions.  The  permission  given      under this  clause, however, has to      be  supported   by  reasons  to  be      recorded in writing".           "Sub-section   (2)    of   the      section enables  the Government  to      withdraw  the   exemption   granted      either under  clause (a) or (b), if      is  satisfied   that  any   of  the      conditions  subject  to  which  the      exemption is given, is not complied      with. Clauses  (a) and  (b) of sub-      section (1)  dead with  sub-section      (2)  make   it   clear   that   the      exemption may either be conditional      or   absolute.    Where    it    is      conditional, it  may be  withdrawn,      if any  of the  conditions are  not      complied  with.   The  very   fact,      however, that  the legislature  has      contemplated     imposition      of      conditions  on  exemptions  granted      under both  the clauses, shows that      the purpose  of the exemption under      either of the clauses cannot be the      transfer of the land. The exemption      under clause  (a) is  obviously for      the land  being put to a particular      use which  use is also necessary or      expedient in  the  pubic  interest,      while exemption under clause (b) is      for relieving  the person concerned      from any  undue hardship  which may      be caused to him personally, by the      withdrawal of  the excess land from      his  possession  probable  such  as      when the  person  may  require  the

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    land for  the expansion  of the use      to which  he has  already  put  it,      such as  his  growing  business  or      activities or  to  accommodate  his      growing    family.    The    clause      unfortunately is  completely silent      on what it intends to convey by the      expression "undue hardship".                    (paras 31, 32 and 33)           "The   examination    of   the      aforesaid  relevant  provisions  of      the Act  shows a clear intention of      the  legislature   and   revels   a      definite  scheme.   It  has  to  be      admitted that the provisions of the      Act  as   are  drafted   have   not      succeeded in translating into words      the   clear    intention   of   the      legislature and  to that extent the      Act is  an inelegant  and  confused      piece of  drafting. However,  since      the   intention    is   clear,    a      harmonious  reading   of  all   the      provisions  consistent   with  that      intention is necessary to interpret      and understand  each  of  the  said      provisions. The  intention  of  the      legislature  is   to  acquire   all      vacant  land   in  excess   of  the      ceiling limit prescribed by the Act      and the main purpose of the Act, as      stated  earlier,   is   three-fold,      viz., (i)  to prevent concentration      of the urban land in the bands of a      few   persons    and   to   prevent      speculation    and     profiteering      therein;  (ii)  to  distribute  the      urban land  equitably and  (iii) to      regulate   the    construction   of      buildings  on   the  urban   lands.      Consistent with  these  objectives,      the Act provides for acquisition of      all urban  vacant land in excess of      the ceiling limit and prohibits its      transfer in  any form   absolutely.      All that  the Act  permits  in  the      case of  such excess vacant land is      either express  exemption from  the      operation of  Sections 3  to 19  of      Chapter III of the Act by the State      Government under Section 20 or non-      declaration  of  such  land  as  an      excess  vacant   land   by   t   he      competent authority  under  Section      21 or  the retention  of such  land      with the landholder to be permitted      by the  competent  authority  under      Section 22 of the Act".           "The effect  of  exemption  of      the land  from  the  provisions  of      Sections 3  to 19  or of  the  non-      declaration of  the land  as excess      land or  of the  retention  of  the      land  with   the  landholder  under      Section 20, 21 and 22 respectively,

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    is not  to permit the landholder to      deal with  it as he likes including      to  transfer   it.  In   fact,  the      exemption, the  non-declaration and      the  retention   permitted,  is  on      certain   conditions    which   are      required to  be prescribed  by  the      State Government  or the  competent      authority as  the case  may be.  If      those conditions  are not  complied      with or  are contravened, the State      Government   or    the    competent      authority   is   given   power   to      withdraw  the   exemption   or   to      declare the  land as  excess.  This      power given to the State Government      and the  competent authority itself      negatives either  power  to  permit      the  transfer   or  the   right  to      transfer. What  is more, Chapter IV      which alone  makes  provisions  for      transfer and use of urban property,      makes  provision  for  transfer  of      vacant  land   within  the  ceiling      limit    subject     to     certain      conditions.    It     also    makes      provisions for  the transfer of the      land in excess of the ceiling limit      with a  building thereon  or with a      portion of such building. It makes,      however, no  provision for transfer      of land  in excess  of the  ceiling      limit  without   a  building  or  a      portion of a building thereon. That      is consistent  with the  object  of      the Act  since  the  Act  does  not      contemplate transfer  of the vacant      land  in   excess  of  the  ceiling      limit.   It   only   provides   for      exemption of  such land  from being      acquired and  vested in  the  State      Government or  for  non-declaration      of it  as an excess land or for the      retention  of  the  same  with  the      holder  and  that  too  subject  to      certain  conditions  which  may  be      prescribed, as stated earlier.                        (paras 46 and 47)           "The   first   question   that      arises is whether the provisions of      Section 20(1)(b)  permit the  State      Government to  permit the  sale  of      the excess  vacant land  to a third      party. According  to us, the answer      has  to  be  in  the  negative  for      reasons more than one.           "In the  first  instance,  the      central object  of the  Act, as  is      evident both  from the  preamble as      well as  the statement  of  objects      and reasons,  is to  acquire vacant      land in  excess of the ceiling area      and  to   prevent  speculation  and      profiteering in  the same  and also      to distribute the land equitable to

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    subserve the  common good.  It  is,      therefore, per  se against the said      object to  permit the  sale of  the      excess   vacant land  for  whatever      reasons,   including    the   undue      hardship  of   the  landholder.  To      construe the  provision of  Section      20(1)(b) so  as to read in them the      conferment of  such  power  on  the      State   Government   for   whatever      reasons, is  to distort  and defeat      the   whole    purpose    of    the      legislation.  Further  neither  the      plain language  of the  clause  nor      its context  and  intendment  merit      such   construction.   Section   20      itself is titled "Power to exempt".      The  power   given  to   the  State      Governments under  the  section  is      only  to   exempt  certain   excess      vacant lands  from the operation of      the provisions  of Sections 3 to 19      of  Chapter   III,  note  of  which      refers to  the subject  of transfer      or restrictions  on transfer. Those      provisions    relate     to     the      calculation,           declaration,      acquisition  and   vasting  of  the      excess vacant  land. It  is Chapter      IV  relates  to  the  transfers  of      vacant lands  and the  restrictions      thereon. Further,  from the  scheme      of the  Act, it is evident that the      transfers of  the vacant  land were      to be  regulated  by  the  specific      provisions made  in it.  They  were      not to  be left  to be  governed by      the  unguided   discretion  of  any      authority   including   the   State      Government. The specific provisions      for regulating  the  transfer  have      been incorporated in Sections 26 to      28 of  the  Act.  Those  provisions      permit  transfer   of  only  vacant      lands within the  ceiling limit but      without buildings,  and  of  vacant      lands  in  excess  of  the  ceiling      limit but  with  buildings  thereon      and subject  to the conditions laid      down there.  It cannot be suggested      that  in   defiance  of   the  said      provisions.  Section  to  sanctions      sales of  excess vacant  lands with      or without  building thereon. Under      Section   20(1)(b),    the    State      Government  can  only  exempt  such      excess  vacant   land  from   being      acquired  by   it.  The  Government      cannot permit its transfer when the      Act does  not even  by  implication      authorise it  to do  so but permits      the transfer  subject only  to  the      conditions  prescribed  by  Section      27.  The   legislature  cannot   be      presumed   to    have    prescribed

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    different conditions  for  transfer      of the same or similar lands.                        (paras 55 and 56)           "Fourthly, the exemption which      is granted  under Section  20(1)(b)      has to  be supported  by reasons to      be  recorded   in   writing.   This      requirement  also  contemplates  an      exemption which  is related  to and      prompted by  the use  or better use      of the land. If it is the financial      hardship  which   was   under   the      contemplation of  the  legislature,      there was  nothing easier  than  to      make a  reference to  the  same  in      clause (b)  if self and to lay down      guidelines  for  the  inquiry  into      such hardship".                                (para 59)           "Lastly,  if   the  power   to      exempt the land for sale is read in      Section    20(1)(b)    with    such      conditions as  the State Government      may choose  to place  and if either      the State Government chooses not to      place any  conditions or  to  place      such conditions as are inconsistent      with the  provisions of Sections 29      and 30  , it  would create two sets      of   lands    -   one    where   no      restrictions are  applicable to the      construction thereon  or only  such      restrictions    as     the    State      Government may  choose  to  impose,      and    the    other    where    the      restrictions  on  constructions  as      provided  by  Sections  29  and  30      would be applicable".           "It is,  therefore, more  than      clear  that   the   provisions   of      Section 20(1)(b)  do not permit the      State Government  to exempt  vacant      land in excess of the ceiling limit      for the purposes of transfer".                        (paras 64 and 65) In his concurring opinion, Singh, J, held as under :-           "I agree  with brother Sawant,      J. that  it is not possible to hold      that  State  Government  can  grant      exemption under Section 20(1)(b) of      the  Act,  to  the  holder  of  the      excess vacant  land, so that he may      transfer the  same in the winner be      desires.  The  object  of  the  Act      being  imposition   of  ceiling  on      vacant land in urban agglomerations      and for acquisition of such land in      excess of  ceiling  limit,  with  a      view to  prevent the  concentration      of urban land in the bands of a few      persons,      speculations      and      profiteering  therein,   will  that      object be  not defeated  if  it  is      held    that  power  under  Section      20(1) of  the Act  can be exercised

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    by the  State Government  to exempt      the excess  vacant lands  from  the      application of  Chapter III  of the      Act, so that the holder thereof can      transfer such  lands ?  Sub-section      (1) of  Section 20 is in two parts.      The exemption  under clause  (a) of      the  said   sub-section  is  to  be      granted  in   the  public  interest      whereas  under   clause   (b)   the      exemption is  to be  granted taking      into   consideration   the   "undue      hardship" of the holder of the land      in excess  of  the  ceiling  limit.      Both   the    expressions   "public      interest" and  "undue hardship" are      comprehensive in nature. But at the      same time,  it is not easy even for      courts to  say as  to whether under      different     circumstances     the      exemption  was   in   the   "public      interest" or  was necessary  in the      interest of  the holder of the land      because of his "undue hardship".           Under    Indian     conditions      expression  "undue   hardship"   is      normally   related    to   economic      hardship. That  is why from time to      time  many   holders  of  lands  in      excess of  the ceiling limit, while      claiming exemption under clause (b)      put  forth   their   bad   economic      condition and indebtedness to claim      exemption along  with permission to      sell  such  excess  lands.  In  the      modern set-up  many holders of such      excess  lands   having   undertaken      commercial or  industrial  ventures      with the help of the loans from the      Banks    and     other    financial      institutions  put   the  place   of      repayment of  such loans  as  undue      hardship  for   claiming  exemption      under clause  (b) of  Section 20(1)      aforesaid.  How   the  holders   of      excess lands having incurred losses      or having failed to discharge their      debts can  claim exemption  on  the      ground of  "undue hardship" in such      a  situation   ?  Section  4  while      fixing  the  ceiling  limit,  under      sub-section (3)  takes notes of the      fact that  "where in respect of any      vacant land  any scheme  for  group      housing has  been sanctioned  by an      authority competent  in this behalf      immediately before the commencement      of  this   Act,  then,  the  person      holding such  vacant land  at  such      commencement shall  be entitled  to      continue to  hold such land for the      purpose of  group housing."  But at      the same time under sub-section (4)      of Section  4 it has been specified      that "if  on or after the 17 day of

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    February,  1975,   but  before  the      appointed day,  any person has made      any  transfer   by  way   of  sale,      mortgage, gift,  lease or otherwise      (other than  a bona fide sale under      a  registered   deed  for  valuable      consideration) of  any vacant  land      held by  him and  situated in  such      State to  any other person, whether      or not for consideration, then, for      the  purposes  of  calculating  the      extent of  vacant land held by such      person  the   land  so  transferred      shall be taken into account without      prejudice   to    the   rights   or      interests of  the transferee in the      land so  transferred". Similarly in      Section 5 it has been provided that      "where  any  person  who  had  held      vacant  land   in  excess   of  the      ceiling limit  at any  time  during      the  period   commencing   on   the      appointed day  and ending  with the      commencement  of   this  Act,   has      transferred  such   land  or   part      thereof by  way of  sale, mortgage,      gift,  lease   or  otherwise,   the      extent of  the land  so transferred      shall also be taken into account in      calculating the  extent  of  vacant      land held  by  such  person".  When      different  provisions   take   into      consideration  the   lands  already      transferred  by   the  holder,  (i)      between  the  period  February  17,      1975 and the appointed day; (ii) as      well   as    between   the   period      commencing from  the appointed  day      and ending with the commencement of      the Act,  it should  not be  easily      inferred that  the framers  of  the      Act   desired    that   after   the      commencement  of   the  Act   while      exercising the  power of  exemption      under Section  20(1)(b)  permission      should be  granted  to  holders  of      such excess  lands to transfer such      lands to  third parties in order to      meet their financial liabilities."                        (paras 66 and 67)           "If  the  vacant  lands  which      have vested  in the  State are also      to be  disposed of strictly keeping      in view  the spiral  and object  of      the Act  how under Section 20(1)(b)      exemption can be granted to holders      of such  lands to  dispose of  such      lands in  the manner they like, the      persons they prefer, the price they      dictate, for clearing their debts ?      If it is conceded that indebtedness      amounts to  an undue hardship. Then      it may  cover  the  debts  incurred      even after  the commencement of the      Act. The  ceiling  limit  has  been

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    fixed by  Section 3  with reference      to the  date of the commencement of      the  Act,   but  exception  can  be      granted till such excess lands vest      in the  State Government under sub-      section (3)  of Section  10,  after      publication of the notification, in      terms  of   the  said  sub-section.      Although it  was not  possible even      for  the  framers  of  the  Act  to      exhaustively indicate  as  to  what      shall  he   deemed  to   be  "undue      hardship"  within  the  meaning  of      Section 20(1)(b)  but if would have      been  better,   if  it   had   been      illustratively  indicated,  leaving      the rest for the courts to decide."                                (para 70) The common  conclusion of  the two  learned  Judges  of  the Division Bench is as under :-           "For the  reasons given  by us      above, we  are of the view that the      provisions of  Section 20(1)(b)  of      the Act  do not  permit  the  State      Government to give exemption to the      vacant  land   in  excess   of  the      ceiling limit  for the  purposes of      transferring the same.           In view  of our  conclusion as      above, it  is not  necessary to  go      into the further question, viz., if      the  State   Government  has   such      power, in  which  circumstances  if      can  be   exercised   and   whether      financial  hardship   such  as  the      indebtedness of  the landholder  is      sufficient    to    warrant    such      exemption or  not and  with respect      in which  date such indebtedness is      to be  assessed and in whet manner,      and whether  in the  present  case,      the    said    aspects    of    the      indebtedness were  investigated  or      properly investigated  or not.  For      this very  reason, we  also do  not      propose  to   go  into   the  other      question regarding  the mala  fides      on  the  part  of  the  authorities      while granting  permission  to  the      firm  to   sell  the  land  to  the      builders in question."                        (paras 72 and 73)      It  is  the  reconsideration  of  the  decision  in  S. Vasudeva which  is involved  in  this  case.  Every  learned counsel appearing in the case including the learned Attorney General contended  that the  view taken  in S.  Vasudeva  is incorrect and  requires reconsideration. For this reason, we requested Shri  A.N. Jayaram,  learned Additional  Solicitor General to  appear as  amicus curiae to support the decision so  that   every  aspect   involved  would   be  raised  for consideration by  us. We  are thankful  to all  the  learned counsel including  the  amicus  curiae  for  the  invaluable assistance rendered by each of them.      We would  first construe  Section  20  of  the  Act  to ascertain its  meaning. It  is obvious  that there  being no

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question of the constitutional validity of the provision, an attempt has  to be  made to  ascertain the  true meaning  of every part  of Section  20. Section 20 contains the power to exempt. It has two sub-sections. Sub-section (1) begins with the non-obstante  clause "Notwithstanding anything contained in any  of the  foregoing provisions of this Chapter", after which occur  clauses (a)  and (b)  therein which provide for exemption, "subject  to such  conditions, if  any, as may be specified in  the order",  of "such  vacant  land  from  the provisions of this Chapter". The non-obstante clause clearly indicates that Section 20 overrides the foregoing provisions of Chapter  III, that  is, Sections 3 to 19 of the Act. This is reaffirmed  in clauses (a) and (b) wherein the concluding part in  each is  "Government may, by order, exempt, subject to such  conditions, if  any, as  may be  specified  in  the order,  such   vacant  land  from  the  provisions  of  this Chapter". The  effect of  the  non-obstante  clause  at  the beginning of  sub-section (1)  and the  concluding words  in clauses (a)  (b) undoubtedly  is  that  on  exemption  being granted subject  to the  conditions specified  in the  order granting the  exemption, such  vacant land  is exempted from the provisions  of Chapter  III which contains Sections 3 to 24, in spite of the provisions in Sections 3 to 19. There is no ambiguity  in this  behalf in  sub-section (1). The plain language of  the provision leaves no room for any ambiguity. Thus, if  the  logical  outcome  of  the  exemption  granted subject  to   the  specified  conditions,  is  to  lift  the restriction on transfer of the exempted land, then it has to be accepted.  However, the imposition of conditions attached to  the  exemption  and  the  power  of  withdrawal  of  the exemption under  Sub-section (2)  is intended to control the transfer in such cases. It has to be seen whether this plain construction of  Section 20 must be abandoned on any settled rule of construction.      The condition  precedent for  granting exemption  under clause (a)  or clause  (b) must,  however, exist  but on the exemption being  granted thereunder, the logical consequence of the  exemption as  indicated must  follow. It must follow that if  the restriction  on transfer  of the vacant land in excess of the ceiling limit is only because of any provision contained in  Chapter III  in Sections  3 to  24,  then  the effect of  the exemption  under Section  20 is  to lift even that embargo.  Sub-section (2) gives to the State Government power to  withdraw the  exemption under clause (a) or clause (b) of  sub-section (1)  if it  is satisfied  in the  manner indicated that  any of  the conditions  subject to which the exemption has  been granted  is not complied with. The power of withdrawal  of exemption  in sub-section (2) is to ensure full compliance  of the  conditions  subject  to  which  the exemption is  granted. The  restriction on  transfer may  be imposed by  such a  condition. In that even, the restriction is by virtue of the condition imposed and not because of any statutory prohibition in Chapter III of the Act.      Section 3  contains the restriction against holding any and in  excess of the ceiling limit prescribed in Section 4, "except as  otherwise provided in this Act". Section 20 is a provision in  the Act  which  provides  otherwise.  It  also begins  with  a  non-obstante  clause  and,  therefore,  the restriction in Section 3 is subject to Section 20. Section 5 relates to  transfer of vacant land in excess of the ceiling limit. Sub-section (3) of Section 5 contains the prohibition against transfer  of the  excess vacant land indicating that any such  transfer make  in contravention  of the  provision shall be  deemed to he null and void. For the reason stated, because of  the provision  made in  Section 20,  an order of

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exemption make  under Section  20 exempts the vacant land in excess  of  the  ceiling  limit  from  this  restriction  of transfer because  the order  of exemption exempts the excess vacant land  from the  provisions of Chapter III. Chapter IV containing Sections  25 to  30  relates  to  "Regulation  of Transfer and  Use of Urban Property" and is not attracted to determine the  meaning of  Section 20 and the consequence of the exemption  granted thereunder to the excess vacant land. Section 10  relates to  acquisition of vacant land in excess of  ceiling   limit.    Sub-section  (4)  therein  prohibits transfer  of  any  excess  vacant  land  during  the  period specified therein.  Section 5(3) and Section 10(4) are to be read together  as they relate to restrictions on transfer of vacant land  in excess  of the  ceiling limit. However, both these provisions  cease to  apply on exemption being granted to vacant  land in excess of the ceiling limit under Section 20 of  the Act.  The restriction, if any, on transfer of the exempted excess  vacant land  has now  to be  examined  with reference to Section 20 itself.      Clause (a)  of sub-section  (1) of  Section 20 empowers the State  Government  to  grant  the  exemption  of  it  is satisfied hiving regard to the relevant factors specified in the clause  that it  is necessary  or expedient to grant the exemption  is   the  "public   interest",  subject   to  the conditions specified  in the  order.  Clause  (a)  specifies certain  relevant  factors  for  the  purpose  of  grant  of exemption, namely, "location of such land", "the purpose for which such land is being or is proposed to be used" and such other relevant  factors as the circumstances of the case may require. Apart  from the  location of the excess vacant land and the  purpose of its use, regard must be had to the other relevant factors,  which is a question of fact in each case. However, these  factors must  indicate  that  the  grant  of exemption under  clause (a) is necessary or expedient in the "public interest".  The expression  "public interest"  has a legal  connotation.   The  broad  guidelines  for  grant  of exemption under  clause (a)  are enacted in the provision. A safeguard  is   provided  by   requiring  conditions  to  be specified in  the order  subject to  which the  exemption is granted under clause (a). Even though there is no proviso in clause (a) of the kind enacted thereafter in clause (b), yet the absence  of such  a proviso is inconsequential since the requirement of  the expressly  enacted proviso in clause (b) is implicit  in the  manner of  exercise of  the power under clause (a). The requirement in clause (a) of making an order having regard  to the  specified relevant  circumstances and specifying the conditions attached to the exemption, ensures that the  decision is  reached for  cogent reasons which are placed on record in writing culminating in the making of the written order. There is no scope for the view that exemption can be  granted under  clause (a) by an order specifying the conditions having  regard to  the specified relevant factors without recording the reasons for doing so in writing. Every State action must satisfy the rule of non-arbitrariness and, therefore, recording  of reasons in writing for granting the exemption under  clause (a)  indicating that it is necessary or expedient  in  the  public  interest  so  to  do,  is  an essential requirement  of  valid  exercise  of  power  under clause (a).  This is  how clause  (a) must  be construed and understood.      We now come to clause (b) of sub-section (1) of Section 20 to  which the  decision in  S. Vasudeva directly relates. The State Government’s power to grant exemption under clause (b) depends on its satisfaction "that the application of the provisions of  this Chapter  would cause  undue hardship  to

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such person".  The manner  of making  the  order  specifying conditions to  which it is subject, is the same as in clause (a). In clause (b), a proviso is also enacted as under :-           "Provided that  no order under      this clause  shall be  made  unless      the  reasons   for  doing   so  are      recorded in writing."      The requirement  of  this  proviso  in  clause  (b)  is implicit in  clause (a),  as earlier  indicated.  Since  the expression used in the proviso is "this clause", the express application of the proviso has to be confined only to clause (b). However,  this difference  in the two clauses is merely of form and not of substance, as already indicated.      The question is whether the expression "undue hardship" to such person, that is, the person who holds vacant land in excess of  the ceiling  limit is  a  nebulous  phrase  which permits an  uncharted course  for the  exercise of the power under clause  (b), or  it requires invariably the imposition of restriction  on transfer of the exempted land in spite of the  clear  meaning  of  Section  20?  In  S.  Vasudeva,  in substance, it  has been  held that  economic hardship of the owner cannot  fall within  clause (b)  to  permit  grant  of exemption thereunder to relieve the owner from that hardship by  granting   exemption  and  permitting  transfer  of  the exempted land  in any  case. The  question is whether such a construction of the provision is warranted.      In clause  (b), the  power of  the State  Government to grant the  exemption depends  on its  satisfaction "that the application of  the provisions  of this  Chapter would cause undue hardship to such person". It is obvious that the undue hardship must  be a direct consequence of the application of the  provisions  in  Chapter  III  which  provides  for  the restriction on  the entitlement  to hold  any vacant land in excess of the ceiling limit prescribed and further prohibits the transfer  of the  excess vacant  land which vests in the State Government  in the  manner provided  in Section 10 and the owner  is entitled  only  to  the  amount  specified  in Section 11 of the Act. It is clear that the "undue hardship" caused to  the owner  must be  the direct consequence of the provisions  contained  in  Chapter  III  of  the  Act  which disentitles the  owner to  hold any vacant land in excess of the prescribed  ceiling limit  and entitles  him only to the amount payable under Section 11 of the Act. It is also clear that the  expression "undue  hardship"  indicates  that  the extent of  hardship must  be  "undue"  and  not  merely  any hardship which  is bound  to result  from the application of the provisions  of  Chapter  III  of  the  Act.  The  direct consequence of  the application of the provisions of Chapter III  is   economic  in  nature  because  of  the  compulsory acquisition of  the excess vacant land in lieu of the amount payable under  Section 11,  apart from  deprivation  of  the benefit  of  the  use  of  the  acquired  land.  In  such  a situational, even  though mere  economic loss  could not  be intended to fall within the expression "undue hardship", yet the expression  cannot be construed to exclude every adverse economic impact  even if it be so great on that person as to amount to "undue hardship" to him. This would, however, be a question of  fact in  each case  and unless  the  impact  of economic hardship  caused to  the owner  is so  great as  to amount to "undue hardship" resulting from the application of the provisions  of Chapter III of the Act, it would not fall within  the  ambit  of  clause  (b).  It  appears  that  the enactment of  the proviso  in clause  (b) is to emphasis the requirement that  there must  be strong  reasons recorded in writing to  justify the satisfaction of the State Government

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that  the   hardship  caused   by  the  application  of  the provisions of  Chapter III  to such person amounts to "undue hardship" so  that the  grant of exemption is judicious, and in case of a challenge can be judicially tested. Suppose the owner has  to repay  bonafide outstanding dues under earlier decrees of  competent courts  and admittedly he has no other means of  satisfying those decrees out of the amount payable under Section  11. It  may be  possible to  grant  exemption under clause  (b) on  the ground of undue hardship to enable him to  satisfy the  decrees. This  is only illustrative. In cases of  exemption granted  under clause  (b), the possible misuse of  the exemption  can be  checked by  imposition  of suitable conditions  attached to the exemption and the State Government’s power  under sub-section  (2) to  withdraw  the exemption in  case of  breach of  any condition is a further safeguard in this behalf.      Cases falling  under clause  (b) for grant of exemption may be  rare, but  it cannot  be said  that the enactment of clause (b)  is an exercise in futility which does not permit grant of  exemption in  any  case  of  undue  hardship  with permission also to transfer. Whether there is undue hardship of the kind envisaged therein, is a question of fact in each case. The  entire provision  is clause  (b) has  to be given full effect and in a case falling within the ambit of clause (b), the  effect of the order of exemption is to exempt such vacant  land   from  the  provisions  of  Chapter  III  and, therefore, also  from the  restriction on  transfer of  such land. To hold that any land exempted under clause (b) cannot be  transferred   irrespective  of  the  conditions  of  the exemption is  to rewrite  the provision  which enacts  that, subject  to   the  conditions  specified  in  the  order  of exemption,  such  vacant  land  would  be  exempt  from  the provisions of Chapter III, which means the exemption is also from provisions prohibiting transfer enacted in Chapter III. It is clear that any case which can legitimately fall within clause (b)  would be  outside the  ambit of  clause (a), and clause (b)  is restricted in its application. Whether a case falls within  the ambit of clause (b) is again a question of fact and  if any  dispute arises  it will  have to be tested judicially on  the facts  of    that  case.  Similarly,  the validity of  the exercise of power of exemption under clause (b) would  also depend on the facts of each case as it would in respect  of clause (a). But that is different from saying that  a  case  of  undue  economic  hardship  to  the  owner resulting from  the application of the provisions of Chapter III can in no case fall under clause (b) to empower to State Government  to   grant  exemption   thereunder  subject   to appropriate conditions attached to the order of exemption.      The facts of the present case have also some relevance. In the  present case, the restriction against transfer would operate  to  the  extent  of  restraining  transfer  to  the individual flat  owners of  their corresponding share in the land where  a multi-storeyed  building for group housing has been constructed.  One of the objects of the enactment is to promote group  housing with  a  view    to  provide  housing accommodation to  more people  by  promoting  group  housing schemes instead  of the  same area of land being utilized to house lesser  number of people. A restriction on transfer of the exempted  land operating  in this  manner, depriving the benefit in  a group  housing scheme to flat owners, does not promote the  object  of  the  legislation.  This  too  is  a relevant factor.      It  follows   from  the   above  discussion   that  the conclusion reached  in S.  Vasudeva (supra),  which directly relates to  Section 20(1)(b)  of the  Act, is not based on a

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correct  construction   of  Section   20  of  the  Act.  The application of  that conclusion in relation to clause (a) of sub-section (1) of Section 20 by the Government of Karnataka is not  justified even  by that  decision. The provisions of Section 20 of the Act and the effect of an exemption granted under clause (a) or clause (b) of sub-section (1) of Section 20,  including   the  incidence  of  transfer,  have  to  be understood in  the manner  indicated by  us herein.  For the reasons given  by us, we regret our inability to concur with the contrary conclusion reached by the two learned Judges in S. Vasudeva. The impugned order to the extent it is contrary to the view taken by us in this decision, cannot be upheld.      We may,  however, add  that in  a case  where a dispute arises the validity of an exemption granted under Section 20 of the  Act would  depend on  the existence  of  justifiable reasons recorded  in writing for granting the exemption with the conditions  attached to  it. This  decision is not to be construed as  pronouncing on  the validity  of exemption and the permission  to transfer,  if any,  even  in  this  case, which,  if   disputed,  would   have  to   be  examined  and adjudicated separately.      Consequently, the writ petition is decided in the above manner. No costs.