http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: PARASHRAM THAKUR DASS & OTHERS

       Vs.

RESPONDENT: RAM CHAND S/O SHRI RADHUMAL & OTHERS

DATE OF JUDGMENT17/02/1982

BENCH: PATHAK, R.S. BENCH: PATHAK, R.S. REDDY, O. CHINNAPPA (J)

CITATION:  1982 AIR  872            1982 SCR  (3) 288  1982 SCC  (1) 627        1982 SCALE  (1)148

ACT:      Madhya Pradesh  Land Revenue  Code, 1954 Ss. 149(2) and 164(3) & Madhya Pradesh Land Revenue Code Rules, 1956, Rules 2 to 26.      Allotment  of   nazul  land   to   displaced   persons- Applications  from   claimants-State  Government   initially deciding not  to grant  plots-Subsequent decision  to  allot plots taken-Plots allotted to some claimants-Claims of other parties not considered-Such action-Whether valid.      Grant  of   lease-Hold  right  in  nazul  land  without auction-Reasons to be recorded in writing-Whether essential.

HEADNOTE:      Respondents Nos. 1 to 16 applied for the grant of plots of land  for purposes  of constructing  shops, alleging that they were  displaced persons  and entitled  to the  grant of plots. The appellants also made a similar application. There were applications from other claimants. The State Government acting on  the report  of the  Commissioner rejected all the applications. Subsequently the Government at the instance of the appellants who had sought a review, reversed its earlier order and  decided to  grant plots on permanent lease to the appellants. The decision was conveyed in a memorandum by the State Government, who granted the plots to the appellants as shop sites  in Bhumidhari  rights without auction on payment of premium.  The allotment  was assailed  by the respondents and they represented to the State Government that only after further inquiry  should the  land be  reserved for deserving claimants.      The respondents filed a writ petition in the High Court challenging the  allotment made  by the Government in favour of the  appellants contending that no reasonable opportunity had been  given to  them to  press their  claim for grant of plots, after  reversal of  the earlier decision not to grant land, that the appellants had been unduly favoured, and that the power to grant plots was vested in the Collector and not in the  State Government.  The appellants contested alleging that they  had acquired  a right to the land that they could not be  divested of those rights. The High Court quashed the order granting  plots to  the appellants  and  directed  the State Government  to take  appropriate action on the several claims for allotment of land. It held that under sub-section

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

(2) of  section 149 read with sub-section (3) of section 164 of the  Madhya Pradesh Land Revenue Code, 1954, and rules 22 and 26  framed under  the Code  it was not open to the State Government to  dispose of the plots without holding a public auction unless  there were  reasons recorded  in writing for doing so and that after initially deciding not to 289 grant the  plots, the  subsequent decision to allot them was contrary to  law as  the  claims  of  others  had  not  been considered.      Dismissing the appeal, ^      HELD :1. The High Court was right in quashing the order granting plots  to the  appellants and  directing the  State Government to  consider the  several claims  for  allotment. [296 C-D]      2. The grant cannot be attributed to clause (c) of sub- section (2)  of section  149. The  land was  disposed of  in Bhumidhari right.  It was  not given  on favourable terms to the appellants,  the market value of the plots was taken for fixing the  premium. From  the nature  of the  grant, it was clear that  action under  subsection (1)  of section 149 was intended. [293 E]      3. Under  Rules 24  to 26  of the  Land  Revenue  Code, lease-hold rights  in nazul  land are  to be  disposed of by public  auction.   If  in  any  particular  case  the  State Government or  the Collector  considers that  there is  good reason for  granting the  land without  auction the  reasons must be  recorded in  writing. The  existence of good reason for departing  from the  general principle and the recording of the  reason in  writing are essential prerequisites which must be  satisfied before  lease  hold  rights  are  granted without auction. [295 A-C]      In the instant case there is no evidence that the State Government  has   recorded  any   reasons  in   writing  for preferring  the  mode  of  disposing  of  the  land  without auction. It had also no good reason for favouring that mode. In these  circumstances the  grant of land to the appellants was rightly quashed by the High Court. [295 E-F]      4. The  State Government  had  decided  earlier,  as  a matter of  policy, not  to allot  nazul  land  to  displaced persons, and  pursuant to  the decision all the applications for allotment  were  rejected.  The  applications  were  not rejected  on   the  merits   of  their   respective  claims. Subsequently, when the State Government made an allotment of the  plots  to  the  appellants,  it  was  consequent  to  a decision, which  must be  regarded as  a  composite  of  two decisions, one  a policy  decision to throw open the land to allotment in  reversal of  the earlier  policy and,  two, to allot the  land to  the appellants.  The applications of the respondents for  allotment of  plots were  rejected  on  the ground that  the land  was not available for allotment. That was a policy decision. When it was reversed it was incumbent on the  State Government to reconsider those applications or to notify  that the  land was available for allotment and to invite fresh applications in that behalf. It was not open to the State Government to allot the plots to the appellants in disregard of  the claims  of others who had also applied for allotment.[295 G-H; 296 A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 440 (N) of 1970.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

    Appeal by  special leave  from the  judgment and  order dated the  18th June  1969 of the Bombay High Court in Misc. Civil Appln. No. 139 of 1968. 290      Naunit Lal, for the Appellant.      A.G. Ratnaparkhi for Respondents Nos. 1-6.      M.N. Shroff, for Respondents Nos. 17-19.      The Judgment of the Court was delivered by      PATHAK, J.  This appeal  by special  leave is  directed against the  judgment of the Nagpur Bench of the Bombay High Court quashing  the grant of Nazul land to the appellants on a writ petition filed by the respondents Nos. 1 to 16.      The respondents  Nos. 1 to 16 applied on March 15, 1963 for  the   grant  of  sixteen  plots  of  land  included  in Government Nazul  Plot No.  31/1 (Sheet No. 49-D) in Yeotmal Town for  the purpose  of constructing  shops thereon.  They alleged that  they had  not been  allotted any  land yet for carrying on  business at Yeotmal, and inasmuch as land sites were being  released to  refugees or  displaced persons they claimed that  having been  compelled to  migrate  from  West Pakistan to  India during  the partition  of 1947  they were entitled to  the grant  of such plots. The appellants made a similar application  on May  16, 1964  and it  is their case that they  had also  applied earlier  in the  same behalf on February  27,  1962.  There  were  applications  from  other claimants also.  The State  Government, acting on the report of the  Commissioner,  Nagpur  Division,  rejected  all  the applications. The  appellants say  that they sought a review of the  order of  the Government,  and on  June 28, 1965 the Government reversed  its order and decided to grant plots on permanent lease  to the  appellants. The  Collector, Yeotmal submitted a  report to the Government pointing out that each plot would  be 192  sq. ft. in area and having regard to its market value  each allottee  should be  required  to  pay  a premium of  Rs. 960.  The State Government granted the plots to the  appellants as shop sites in Bhumidhari right without auction on payment of premium, and the decision was conveyed in a  Memorandum dated  March 3,  1966.  The  allotment  was assailed by  the respondents,  and they  represented to  the State Government  that after further inquiry the land should be reserved for deserving claimants.      The respondents filed a writ petition before the Nagpur Bench of the Bombay High Court challenging allotment made by the Government  in favour of the appellants. They urged that no reason- 291 able opportunity  had been  given to  them  to  press  their claims for  grant of plots after the Government had reversed its earlier  decision not to grant land, that the appellants had been  unduly favoured  and that the order was bad in law because the  plots  had  been  granted  without  holding  an auction. It  was also  contended that the power to grant the plots  was  vested  in  the  Collector  and  not  the  State Government.      During the  pendency of  the writ  petition a statement was made  on behalf  of the  State Government  that  it  was prepared to  consider the  claims of  the  respondents.  The appellants, however,  maintained that  they had  acquired  a right to  the land in terms of the order dated March 3, 1966 and that they could not be divested of those rights.      By its  judgment dated  March 14,  1968 the  High Court allowed the  writ petition, quashed the order granting plots to the  appellants and directed the State Government and its officers to  take appropriate  action on  the several claims for allotment  of land.  The High Court held that in view of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

sub-s. (2)  s. 149  read with  sub-s. (3)  of s.  164 of the Madhya Pradesh  land Revenue  Code, 1954,  as applied to the Vidharba region  of Maharashtra,  and rules 22 and 26 framed under the  Code, it  was not open to the State Government to dispose of the plots without holding a public auction unless there were  reasons recorded  in writing  for doing  so, and that after  initially deciding  not to  grant the  plots the subsequent decision  to allot  them to  the  appellants  was contrary to  law inasmuch  as the  claims of  others had not been considered.      In this  appeal, it is urged by the appellants that the High Court  erred in  applying sub-s. (3) of s. 164 and rule 26, and  therefore in  holding that  the lease  of the plots without  auction  and  without  recording  any  reasons  was invalid.      When the  Government  decided  to  grant  land  to  the appellants, it  thought that  the grant should take the form of a  permanent lease  in their  favour. The  Collector  was requested to  frame suitable proposals and to submit them to the Government.  The  Collector  submitted  a  report  dated November 23,  1965 suggesting the allotment of plots for the construction of  shops on  the footing  that each plot would measure 192  sq. ft. and its market value, worked out on the basis of  recorded sale transactions, and taking into regard the commercial  purpose for  which the  land  was  intended, indicated a  premium of Rs. 960. He recommended further that the plots may 292 be granted  without  auction  and  in  Bhumidhari  right  on payment  of  premium  for  constructing  shops  thereon  for carrying on  business. On March 3, 1966 the State Government made an order accordingly.      Now s. 149 of the Madhya Pradesh Land Revenue Code 1954 provides:           "149. (1)  Subject to  rules made under this Code,      land belonging  to the State Government, not being land      herein after  mentioned in  sub-section (2),  shall  be      disposed of  in Bhumidhari  or Bhumiswami rights by the      Deputy  Commissioner  who  may  require  payment  of  a      premium for such right or sell the same by auction.      (2)   The land  referred to in sub-section (1) shall be           the following, namely:-           (a) land situate in the bed of a river of a tank;           (b)   land reserved  for communal purposes such as                common grazing ground and cremation grounds;           (c)   land given  out on  favourable terms for the                promotion    of     religious,    charitable,                educational, public or social purposes;           (d)   land given  out to  persons on the condition                that  it  shall  be  used  only  for  grazing                cattle;           (e)   land given out for temporary purposes or for                limited periods  or for  mining and  purposes                subsidiary  thereto   or  for  industrial  or                commercial purposes;           (f)  land given out to persons on favourable terms                for rendering service as a kotwar;           (g)   any other  land which  the State  Government                may, by  notification issued  in this behalf,                specify." Section 164 of the Code may also be set forth: 293 "164. (1)  Every  person  who  holds  land  from  the  State           Government or  to whom  a right  to occupy land is           granted by  the State  Government  or  the  Deputy

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

         Commissioner and  who is not entitled to hold land           as a  tenure-holder shall  be called  a Government           lessee in respect of such land.       (2)  The  Government  lessee  shall,  subject  to  any           express provision  in this  Code, hold his land in           accordance with  the terms  and conditions  of the           grant which  shall be  deemed to be a grant within           the meaning of the Government Grants Act, 1895.       (3) The State  Government or  the Deputy  Commissioner           may,  subject  to  rules  made  under  this  Code,           dispose of  the right to occupy the land specified           in sub-section  (2) of section 149 on payment of a           premium  or  by  auction  or  on  such  terms  and           conditions as may be prescribed." It is apparent that the grant cannot be attributed to clause (c) of  sub-s. (2)  of s.  149. The  land was disposed of in Bhumidhari right.  Moreover, it  was not given on favourable terms to  the appellants;  the market value of the plots was taken for  fixing the premium. From the nature of the grant, it is  clear that  action under  sub-s. (1)  of s.  149  was intended. Now Part III of the Notification No. 1118-1832-55- XXVIII dated  May 22,  1956 sets forth the rules framed with reference to  sub-section (1) of s. 149. These rules provide for the  grant of  Bhumiswami and Bhumidhari rights in nazul land for  dwelling houses  and ancillary  purposes. Rule  24 defines the  expression "Nazul  Land" to mean land belonging to the  State Government  which is  used for building on, or for roads,  markets  and  other  public  purposes.  Rule  26 applies the provisions of rules 18 to 36 contained in Part V of the  Notification No.  1119-1832-55-XXVIII dated  May 22, 1956 to  the disposal  of nazul  land under  Part  III.  The provise to  rule 26 declares that where nazul land is put to auction it  should normally  be granted in Bhumiswami right, and where  it is  disposed  of  without  auction  it  should normally be  granted in  Bhumidhari right. Rule 22 of Part V defines the  power  of  the  State  Government  and  of  the Collector to dispose of nazul plots with or without auction. Rule 22 provides:- 294           "22. Power  to dispose  of  nazul  plots  with  or      without auction  shall be  exercised in accordance with      these Rules-      (1) by the State Government in the case of-           (i)   plots of  which the freehold market value is                not less than Rs. 5,000;           (ii) plots  within the  limits  of  the  Municipal                Corporation of the City of Nagpur, whether or                not  included   in  the   Schemes  of   Nagur                Improvement Trust;            (iii) plots  reserved for specific purposes under                rule 20;           (iv) strips of land not being independent plots to                be settled  with the  occupants of  adjoining                land where the freehold value of the strip is                not less than Rs. 5,000;           (v)   small strips  of land  adjacent to  occupied                plot,  which  cannot  be  disposed  of  as  a                separate site  and in  respect of which there                is  a   difference  of  opinion  between  the                Collector and  the  Officer-in  charge,  Town                Planning and Valuation:           (vi)  independent   plots  not   included  in  the                approved lists where there is a difference of                opinion  between   the  Collector   and   the                Officer-in-charge,    Town    Planning    and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

              Valuation;          (vii) plots granted without auction.      (2) by the Collector, in case of the other plots."      Sub-rule (1) of rule 26 in Part V declares:- "26. (1)   Leasehold  rights in nazul land shall be disposed           of by public auction except when in any particular           case the  State Government  or as the case may be,           the Collector thinks for reasons to be recorded in           writing that there is good reason for granting the           land without auction." 295      It seems indisputable that under the Rules as a general principle leasehold  rights in nazul land are to be disposed of by  public auction.  If in  any particular case the State Government or,  as the  case may be, the Collector considers that there  is good  reason for  granting the  land  without auction  the  reasons  must  be  recorded  in  writing.  The existence of  good reason  for departing  from  the  general principle, and  the recording  of the  reason in writing are essential  prerequisites  which  must  be  satisfied  before leasehold rights  are granted without auction. It is pointed out that  under clause  (vii) of sub-rule (1) of rule 22 the State Government  is empowered  to dispose  of  nazul  plots without auction.  We have  no doubt  it can  do so, but only after full compliance with sub-rule (1) of rule 26. The sub- rule  (1)   controls  the  power  of  the  State  Government conferred by  clause (vii)  of sub  rule (1)  of rule 22. To hold otherwise  would be to confer an arbitrary power on the State Government  to dispose  of nazul plots. It would be in the absolute  discretion of  the State  Government to decide whether nazul  plots  should  be  granted  with  auction  or without auction.  If that  construction is  accepted, it  is clear that  sub-rule (1)  of rule 26 would be negatived. The only reasonable construction, it seems to us, is to read the two provisions together.      In the present case there is no evidence that the State Government  has   recorded  any   reasons  in   writing  for preferring the mode of disposing of the land without auction and we  are not  satisfied  that  it  had  good  reason  for favouring that  mode. In the circumstances the grant of land to the  appellants has  been rightly  quashed  by  the  High Court.      There is also sufficient justification in the grievance of  the  respondents  that  the  State  Government  did  not consider  the   claims  of   other  persons,  including  the respondents, when  making an  allotment of  the  plots.  The State Government had decided earlier, as a matter of policy, not to  allot nazul  land to displaced persons, and pursuant to that  decision all  the applications  for allotment  were rejected. The  applications were  not rejected on the merits of the  respective claims set out therein. Subsequently when the State  Government made  an allotment of the plots to the appellants,  it   was  consequent   to  a   decision   which analytically  must   be  regarded  as  a  composite  of  two decisions, one, a policy decision to throw open 296 the land to allotment in reversal of the earlier policy and, two, to  allot the  land  to  the  appellants.  It  will  be remembered that  the applications  of  the  respondents  for allotment of plots were rejected on the ground that the land was not available for allotment. That was a policy decision. When  it  was  reversed,  it  was  incumbent  on  the  State Government to  reconsider those  applications or  to  notify that the  land was  available for  allotment and  to  invite fresh applications  in that  behalf. It  was not open to the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

State Government  to allot  the plots  to the  appellants in disregard of  the claims  of others who had also applied for allotment.      In quashing  the order granting plots to the appellants and  directing  the  State  Government  or  its  appropriate officers to  consider the  several claims  for allotment the High Court,  in our  opinion, did  that  which  was  plainly right.      The appellants  say that  the respondents must be taken to have  accepted the  rejection of  their applications  for allotment, and  it was  only the  appellants who pursued the matter  and   obtained  a  reversal  of  the  order  of  the Government and  therefore the appellants alone were entitled to the  allotment of  plots. The  submission would  have had force but  for the  circumstance that  the State  Government effected what  was a change of general policy. The change of policy  altered   the  situation  completely,  and  all  the claimants were  entitled to  the benefit  of that change. By adopting the  new policy, the State Government must be taken to have  declared that the land was now open to allotment to the claimants  who were  found most  deserving.  There  were several applicants  for allotment, and a selection had to be made. It  cannot be  contended, as indeed it is urged before us, that  the appellants  constitute a distinct and separate class from  the  respondents  only  because  the  appellants agitated against  the rejection  of their applications while the respondents did not.      The controversy  which remains  is whether  it  is  the State Government  or the  Collector who has power to dispose of the plots in view of their market value. That is a matter on which  we need  express no  opinion, having regard to the quashing  of   the  entire  allotment  proceeding  from  its inception. It will be for the Govern- 297 ment or  the appropriate  authority to decide what should be the nature  of the  rights to  be conferred on the allottees and, therefore, what should be the premium to be fixed.      In the result, the appeal is dismissed with costs. N.V.K.                                     Appeal dismissed. 298