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PETITIONER: KANPUR SUGAR WORKS LTD.

       Vs.

RESPONDENT: STATE OF BIHAR & ORS.

DATE OF JUDGMENT: 06/03/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S. GROVER, A.N.

CITATION:  1970 AIR 1539            1970 SCR  (3) 903  1970 SCC  (1) 628

ACT: Bihar Land Reforms Act (30 of 1950), ss. 5(1) and  7(1)-Used us factory-Scope of.

HEADNOTE: The appellant was engaged in the business of manufacture  of sugar,  in  the respondent-State.  It was in  possession  of Zamindari  property.   Part of the area  in  its  possession consisted  of  two  enclosures The  factory  buildings  were situated  in the inner enclosure and the outer was used  for residential    quarters,    garages,    kitchens,     clubs, dispensaries,  rest  houses, out houses,  office  buildings, tubewell  and water tank, godown, cattle  shed,  weighbridge house etc. Under  the notification issued under the Bihar land  Reforms Act,  1950, the Zamindari vested in the State but  homestead lands and lands of the factory remained in the occupation of the appellant. On  the question whether the outer enclosure  was  homestead land  not liable to assessment under s. 5(1) of the  Act  or was liable to assessment under s. 7(1). HELD  : Under s. 5(1) an intermediary is entitled to  retain possession  of homestead lands as a tenant under  the  State free of rent; and under s. 7(1) an intermediary is  entitled to  retain  possession as a tenant buildings  or  structures together  with  the  lands on which they  stand  subject  to payment  of  such fair and equitable ground rent as  may  be determined  by  the  Collector if they are  used  as  golas, factories or mills, for the purpose of trade, manufacture or commerce.   The  expression employed is ’used  as’  and  not ’used for’.  Therefore, merely because a factory has for the benefit  of the workmen and managerial staff working in  the factory, constructed buildings as quarters, clubs, kitchens, garage,  dispensary,  rest  houses, out  houses  etc.,  they cannot  be deemed to fall Linder s. 7(1) when they  are  not directly used as factory or mill buildings.  The  definition of  ’factory’ in the Factories Act whose object  and  scheme are entirely different, cannot be a guide in determining the meaning  of the expression, ’factory’ as used in Bihar  Land Reforms Act. [907 B-G]

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JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 169 of 1967. Appeal  from the judgment and decree dated October 28,  1965 of the Patna High Court in MisC.  Judicial Case No. 1262  of 1962. M.   C.  Chagla,  D. N. Mishra, J. B. Dadachanji and  O.  C. Mathur, for the appellant. D. Goburdhun, for the respondents. 904 The Judgment of the Court was delivered by Shah, J. Kanppur Sugar Works Ltd.-a public limited  Company- is engaged in the business of manufacturing sugar in village Marhowrah, District Saran, in the State of Bihar.  Prior  to 1956 it possessed a considerable-zamindari  property.  Under a  notification issued in exercise of the power  under’  the Bihar  Land  Reforms  Act 30 of 1950  the  entire  zamindari vested  in the State with effect from January 1, 1956.   But by  the provisions of the Act homestead lands and  lands  of the factory remained in the occupation of the Company.   The Circle-Officer commenced a rent assessment proceeding  under the Bihar Land Reforms Act for determining-the rent  payable by  the Company.  The Company cliamed to classify  lands  in its occupation under three heads : (i) 12 bighas 9 kathas  7 dhurs  on  which the factory buildings stood,  and  on  that account  assessable  to rent under s. 7 of  the  Bihar  Land Reforms  Act,  1950;  (ii) 50 bighas 3 kathas  13  dhurs  of cultivable  land  under,  Khas cultivation  of  the  Company liable  to  assessment of rent under s. 6 of  the  Act,  and (iii)  71  bighas 2 kathas 12 dhurs as  homestead  land  not liable to assessment under sub-s. (1) of s. 5 of the Act.  By  order dated February 10, 1961 the Circle Officer  fixed rent  at the rate of -Rs. 187-8-0 per acre in respect of  80 bighas 16 kathas 151/2 dhurs of land under s. 7 of the  Act. The  Circle Officer rejected the contention of  the  Company that  71  bighas 2 kathas 12 dhurs of land  on  which  there stood  residential  bungalows, quarters,  garage,  kitchens, clubs, dispensary, rest house, outhouses, office  buildings, tube-well  and water tank godown,  cattle-shed,  weighbridge house etc. was homestead and was on that account exempt from liability  to  pay  rent.  Appeal  against  that  order  was dismissed  by  the  Collector of Saran by  his  order  dated August 6, 1962. The Company then moved a petition in the High Court of Patna for a writ quashing the order of the Circle Officer and  the Collector  fixing  the  rent under s. 7 of  the  Bihar  Land -Reforms  Act,  1950, in respect of the land claimed  to  be homestead.   The High Court rejected the petition.   In  the view  of the High Court the expression "factory"  could  not mean  merely the place where the machinery is installed  and the process for the manufacture of sugar or distillation  of liquor  is carried on, but the whole area of land  including the courtyard necessary for carrying on various  operations. The High Court recorded the conclusion as follows               "....... the buildings and structures used for               the   aforesaid  ancillary  purposes  of   the               factory must also be held to form part of  the               factory and the land on which               90 5               they  stand must include not only  the  actual               site  on which the structures are erected  but               also  the  adjacent  land  necessary  for  the               convenient  use  of the  said  structures  and

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             buildings.   The whole of the land covered  by               the outer enclosure would, therefore, be, on a               reasonable  interpretation of S. 7 (1) of  the               Act,  included within the  words"buildings  or               structures" used as factories for the  purpose               of the said sub-section, even though that area               may include some vacant land as well." The High Court further observed ’that the proviso to s. 5(1) of  the  Act  had  no application,  because  (1)  the  staff quarters  cannot  be  clearly  demarcated  from  the   other structures and buildings located within the outer  enclosure used  for  the purpose of the factory, such as  rest  house, outhouses,   office-buildings,   tube-well,   water   tanks, go downs, cattle-shed, weighbridge etc.; and (2) Though  the occupants  of  the staff quarters pay rent to  the  factory, nevertheless it cannot be said that those quarters are  used "for  the purpose of letting out on rent".  The  High  Court then  proceeded to state that "the mere fact that some  rent is  incidentally  collected  from  the  occupants  will  not detract  from  the main purpose for which the  quarters  are used,  namely,  to  facilitate the  proper  working  of  the factory.   The occupation by -a member of the staff  of  the factory  of  those  quarters is that of  a  servant  of  the factory  and  not that of an -ordinary tenant.  It  was  not alleged,  nor is there a finding to the effect, that he  can continue to occupy the quarters if he ceases to be a  member of the staff of the factory or else that he can sub-let  the house  to  some other person like an ordinary  tenant.   The relationship between the occupant of these quarters and  the factory continues to be that of a master and servant and not that of an ordinary landlord and tenant." Against the  order dismissing  the  writ petition, this appeal has  been  filed with certificate granted by the High Court. In  our view, the order passed by the High Court  cannot  be sustained.   It appears that there are two enclosures  which comprise the total area of 83 bighas odd in respect of which the dispute arises.  One is the inner enclosure in which are situate  the  buildings  of the factory  in  which-sugar  is manufactured  and the process of distillation of  liquor  is carried  on.  The outer enclosure consists of an area of  71 bighas  2 kathas and 12 dhurs.  In the statement of land  in the  Khas  possession  of the Company all  these  lands  are described  as  used  for  residential  quarters,   cutcheri, dispensary,   rest-house,   bungalows,   outhouses   kitchen quarters,  latrines, garage, club, control  ’office.  water- tank.  bakery house, cane office quarters, godowns,  cattle- shed weighbridge 10Sup Cl (NP)/70-13 90 6 house, tube-well etc." The dispute raised by the Company  is that  the land on which these buildings stand is  homestead, and is governed by s. 5 of the Act. By  a  notification  issued under s. 3  of  the  Bihar  Land Reforms Act, 1950, the State Government may declare that  an estate  or  tenure  of  the  proprietor  or   tenure-holder, specified  in  the  notification has passed  to  and  become vested  in the State.  The consequences of vesting  are  set out  in s. 4. But the vesting under ss. 3 & 4 is subject  to the provisions of ss. 5, 6 & 7. Under sub-s. ) of s. 5 it is provided :               "With  effect  from the date of  vesting,  all               home  steads comprised in an estate or  tenure               and being in the possession of an intermediary               on the date of such vesting shall, subject  to               the provisions of sections 7A and 7B be deemed

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             to  be settled by the State with  such  inter-               mediary  and  he shall be entitled  to  retain               possession  of  the  land  comprised  in  such               homesteads  and to hold it as a  tenant  under               the State free of rent               Provided  that such homesteads as are used  by               the  intermediary for purposes of letting  out               on  rent  shall be subject to the  payment  of               such fair and equitable ground-rent as may  be               determined by the Collector in the  prescribed               manner."               Section 6 deals with the right of the previous               holder  of  land  used  for  agricultural   or               horticultural  purposes  which  were  in  khas               possession  of an intermediary on the date  of               vesting.   I this case, we are  not  concerned               With any dispute relating to such land.  By S.               7  (1),  insofar  as it  is  relevant,  it  is               provided :               "Such  buildings or structures  together  with               the lands on which they stand, other than  any               buildings   used  primarily  as   offices   or               cutcheries  referred  to  in  clause,  (a)  of               section  4,  as were in the possession  of  an               intermediary  at the commencement of this  Act               and used as golas, factories or mills, for the               purpose  of  trade,  manufacture  or  commerce               or  . . . and constructed or  established  and               used  for  the aforesaid purposes  before  the               first  day of January 1946, shall, . . . .  be               deemed  to be settled by the State  with  such               intermediary  and  he  shall  be  entitled  to               retain   possession  of  such   buildings   or               structures  together with the lands  on  which               they stand as a tenant under the State subject               to  the  payment of such  fair  and  equitable               ground-rent  as  may  be  determined  by   the               Collector . . . ...                             907 It  is clear from a bare perusal of sub-s. (1) of S. 7  that the  buildings  which  are  primarily  used  as  offices  or cutcheries  referred  to in cl. (a) of s. 4 as were  in  the possession of an intermediary at the commencement of the Act are  excluded from the terms of s. 7(1).  Again, sub-s.  (1) only  applies to such buildings or structures together  with the  lands  on  which they stand which are  used  as  golas, factories or mills for the purpose of trade, manufacture  or commerce  or  used for storing grains or keeping  cattle  or implements  for the purpose of agriculture.  The  expression employed by the Legislature is "used as golas, factories  or mills"  and not "used for golas, factories or  mills".   The expression "lands on which they stand" may include the  land which  is necessary for the efficient user of  the  building for the purpose for which it is intended to be used.  We are unable  however to hold that because a factory has, for  the benefit  of the workmen and managerial staff working in  the factory,  constructed buildings used as bungalows,  quarters for  employees, clubs, kitchens, garage, clubs,  dispensary, rest house, outhouses etc., but which are not directly  used as factory or mill buildings, the buildings would be  deemed to fall within s. 7(1) as buildings in the possession of  an intermediary  and used as golas, factories or mills, In  our judgment, these lands are homestead and are claimable by  an intermediary under s.    5  (1) : if they are used  for  the purpose of letting out they would be    liable  to pay  fair

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and equitable ground-rent under the proviso to    sub-s. (1) of s. 5. The High Court was, we think, in error in relying upon the definition  of  "factory" used in the Factories  Act,  1948. The  scheme and object of the Factories Act are different  : the  Act  is intended to regulate labour  in  factories,  to protect workmen from being subjected to unduly long  working hours,  for  making  provision  for  healthy  and   sanitary conditions  of service and for protecting the  workmen  from industrial  hazards.   The definition of  "factory"  in  the Factories  Act cannot be a guide, much less a useful  guide, in  determining the meaning of the expression  "factory"  as used in the Bihar Land Reforms Act,- 1950.  The liability to pay  rent  under the Bihar Land Reforms Act,  1950,  on  the footing  that  the land remained in the  possession  of  the intermediary on which buildings or structures used as golas, factories or mills, for the purpose of trade, manufacture or commerce  must be determined on the terms used in the  Bihar Land  Reforms  Act, and not by incorporating words  used  in another   statute  of  which  the  scheme  and  object   are different. The  revenue  authorities erred in holding that  the  entire area  ,of  83 bighas odd was liable to be assessed  to  rent under  S.  7(1)  of  the  Bihar  Land  Reforms  Act,   1950. Undoubtedly -an area of 908 12   bighas  9  kathas 7 dhurs in liable to be  assessed  to rent under S.  7(1)  of the Act.  If there are  other  lands which  strictly  fall within the  expression  "buildings  or structures together with the lands" used as golas, factories or mills for the purpose of trade, manufacture or  commerce, it  will be open to the Collector to assess those  lands  to rent under S. 7 (1), but the lands not covered by  buildings and  structures used for golas, factories or mills, will  be governed by s. 5 (1) of the Act. We  are, on the materials on the record, unable  to  specify the  buildings and lands falling within S. 7 of the Act  for the  purpose  of determination of assessment of  rent.   The evidence  oft the record before us is not clear as  to  what structures  or  buildings stand on the lands  in  the  outer enclosure  and the purpose for which they are used.  We  are also  not clear as to the precise meaning of the  expression "golas" used in s. 7-the expression not being defined in the Act. The  appeal is allowed and the orders of the Circle  Officer and of the Collector assessing rent in respect of 71  bighas 2  kathas and 12 dhurs in the outer enclosure in respect  of which  rent has been assessed under s. 7 of the  Bihar  Land Reforms  Act,  1950,  are quashed.  The  appellant  will  be entitled to its costs in this Court and in the High Court. Appeal allowed. Y.P. 909