http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8  

PETITIONER: SRI  RAJAH VELUGOTI VENKATA SESHA VARDA RAJA GOPALA  KRISHNA

       Vs.

RESPONDENT: THE STATE OF ANDHRA PRADESH

DATE OF JUDGMENT: 14/08/1959

BENCH: DAS, SUDHI RANJAN (CJ) BENCH: DAS, SUDHI RANJAN (CJ) DAS, S.K. SARKAR, A.K. WANCHOO, K.N. HIDAYATULLAH, M.

CITATION:  1960 AIR   32            1960 SCR  (1) 552

ACT:        Estates Abolition-Termination of lease-Service of notice and        Payment of compensation, if and when necessary-Madras Estate        (Abolition and Conversion into Ryotwari) Act (Madras XXVI of        1948), s. 20.

HEADNOTE: The  principal question for determination in these  appeals, arising  out  of  writ petitions filed in  the  High  Court, related  to the validity of an order passed by the Board  of Revenue  (Andhra)  terminating  the  appellant’s  lease   in respect   of   certain  state  quarries  situated   in   the Venkatagiri  Estate, which had been notified under s.  3  of the  Madras Estate (Abolition and Conversion into  Ryotwari) Act, 1948 (Mad.  XXVI Of I948), under the second proviso  to S. 20(1) of the Act, on the finding that the said lease  was granted  subsequent  to July I, 1945, and was for  a  period exceeding  one  year,  without giving  the  appellant  three months’  notice under the third proviso to that  section  or providing  for compensation under sub-s. (2)  thereof.   The appellant  had also claimed renewal of., the lease under  r. 47 Of the Mineral Concession Rules, 1949, which was rejected by  the Board as well as by the High Court.  The  contention on behalf of the appellant, in substance, was that the words "such  right" in the third proviso to S. 20(1)  referred  to the right mentioned in the second proviso, namely, the right created  on or after July 1, 1945, and thus made  applicable to it the provision of sub-s. (2)of the section, and  before such  right could be terminated the provisions of the  third proviso relating to notice and sub-s. (2) as to compensation had to be complied with. Held, that the contention raised on behalf of the  appellant was without substance and must be negatived. The scheme of the Act was to render all rights created after July  1,  1945,  and  for  a  period  exceeding  one   year, ineffective  and  s. 20, properly construed, made  it  amply clear that its second proviso was a self-contained provision that  rendered such rights void against the Government  and, even  if  they were voidable and not void, the  aid  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8  

third  proviso was wholly uncalled for.  The  third  proviso must  be  held  to refer solely  to  termination  of  rights created before July i, 1945. A.   M.  S.  S. V. M. & Co. v. The State of  Madras,  I.L.R. (1953) Mad. 1175, referred to. 553 The  rule framed by the Madras Governor in exercise  of  the powers conferred on him by s. 67(6) and (2) of the Act could not attract the operation of the third proviso nor could  it change the true meaning Of S. 20 Of the Act. Held,  further, that r. 47 Of the Mineral Concession  Rules, 1949,  which could at best insert a few terms in the  lease, could  not apply to a case, such as the present  one,  where the  lease itself stood determined under the second  proviso Of S. 20 of the Act and its terms fell with it.

JUDGMENT:        CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos 188 to  190        of 1958.        Appeals from the judgment and order dated November 20, 1957,        of  the Andhra Pradesh High Court, in Writ Petitions Nos.  1        of 1956, 19 and 470 of 1957.        A.   V. Viswanatha Sastri, V. Vedantachari and K. Sundararajan,        for the appellant.        H.   N.  Sanyal, Additional Solicitor-General of -India,  D.        Venkatappiah Sastri and T. M. Sen for respondent No.   1.        K. R. Choudhuri, for respondent No. 2.        1959.   August 14.  The Judgment of the Court was  delivered        by        DAs  C.  J.-These  three appeals are  directed  against  the        judgment  and  order  pronounced by a Bench  of  the  Andhra        Pradesh High Court on November 20, 1957, whereby three  writ        petitions, namely, No. 1 of 1956, No. 19 of 1957 and No. 470        of  1957,  which had been filed by the  appellant  and  were        heard  together, were dismissed with costs.   These  appeals        have been filed with certificates granted by the High  Court        of Andhra Pradesh .        The circumstances under which the three writ petitions  came        to  be  filed by the appellant may now be narrated.   It  is        alleged  that on January 10, 1942, an agreement was  entered        into  between the Rajah of Venkatagiri and one Sri  Balumuri        Nageswara Rao whereby the Rajah agreed to give annual leases        in  respect of certain slate quarries within his estate  for        five  years in succession commencing from February  1942  if        the  Rajah  was satisfied with the work carried  on  by  the        lessee during the preceding year.  It was        551        further   stipulated   that  if  the   leases   were   given        continuously  for  five  years, then  the  lessee  would  be        entitled at the end of the fifth year to obtain a lease from        the  Rajah  for  a period of 20 years  commencing  from  the        termination  of the fifth year.  On the expiry of the  fifth        year,  however, the Rajah granted another lease to the  said        Balumuri  Nageswara Rao for a short period  commencing  from        February  1,  1947,  and ending on November  30,  1947.   On        December 10, 1947 the said Balumuri Negeswara Rao is said to        have  assigned his right, title and interest under the  said        agreement  dated  January 10, 1942, to the appelent  of  the        sons of the Rajah.  The Rajah on the same    day  granted  a        lease  for twenty years to the appellant.  On  September  7,        1949  the Venkatagiri estate was notified under s. 3 of  the        Madras  Estate (Abolition and Conversion into Ryotwari)  Act        1948  (Madras Act XXVI of 1948), hereinafter referred to  as

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8  

      the  abolition Act.  On the same date the appellant  applied        to  the Collector for confirmation of the lease ’granted  by        the  Rajah to him.  Nothing appears to have  happened  until        February 12, 1952, when a notice was issued from the  office        of the Board of Revenue (Andhra) calling upon the  appellant        to show cause within two months from the date of receipt of.        that  notice  as to why the lease should not  be  terminated        without  any  compensation under the second  proviso  to  s.        20(1)  of  the Abolition Act.  The  appellant  showed  cause        which  apparently  did  not satisfy  the  said  authorities.        Instructions  appear to have been issued to the  manager  of        the Venkatagiri estate requiring him to take over possession        of  the slate quarries which were then being worked  by  the        appellant immediately after the expiry of two months’ notice        issued  to  him.   The  appellant  promptly  filed  a   writ        petition,  No. 287 of 1952 in the Madras High Court  praying        for the issue of a writ in the nature of a writ of  mandamus        directing  the Madras State to forbear from terminating  the        leasehold right of the petitioner in the slate quarries  and        from  interfering  with his possession and  working  of  the        slate  quarries  and  other  ancillary  reliefs.   The  writ        petition having come up for hearing before        555        Umamaheswaram, J:., the learned Judge on July 18, 1955, made        an order directing the Government to hold, an enquiry  under        s. 20 of the Abolition Act and decide whether the lease  had        been granted prior or subsequent to July 1, 1945.  The order        required  the  Government to hold the enquiry and  pass  the        appropriate orders within three months from the date of that        order.   The Board of Revenue caused an enquiry to  made  by        the Director of Settlements who, after taking evidence, oral        and  documentary, made his report to the Board  of  Revenue.        The Board of Revenue submitted a report to the Government on        October  20, 1955, and the Government after considering  the        Board’s report instructed the latter to dispose of the  case        on  merits.  Thereupon the Board of Revenue passed an  order        on  December  27,  1955, declaring that  the  lease  to  the        appellant  had been granted subsequent to July 1, 1945,  and        that,  as the lease was for a period exceeding one year,  it        was not enforceable against the Government, according to the        second  proviso to s. 20 (1) of the Abolition Act.  On  that        finding  the Board of Revenue declined to ratify  the  lease        and terminated it under the powers delegated to it under the        Rules framed under the Abolition Act.  The Board of  Revenue        also directed the Collector to take possession of the  slate        quarries  from the appellant.  The appellant promptly  filed        writ petition No. 1 of 1956 praying for the issue of a  writ        of mandamus directing the State of Andhra Pradesh to forbear        from terminating his leasehold right in the slate  quarries.        He  filed  another petition, being writ petition No.  19  of        1957,  for  the issue of a writ of certiorari to  quash  the        order made by the Board of Revenue on December 27, 1955.        In  the  meantime on September 21, 1955, the  appellant  had        applied  to the Board of Revenue, Andhra for renewal of  the        lease  under  r. 47 of the Mineral Concession  Rules,  1949.        That  application  was  dismissed  on  May  23,  1957.   The        appellant  thereupon filed a writ petition No. 476  of  1957        for quashing the last mentioned order passed by the Board of        Revenue  or, in the alternative, for the issue of a writ  of        mandamus        556        directing the State of Andhra Pradesh to issue a fresh lease        in  accordance with r. 47 of the Mineral  Concession  Rules,        1949.  All these writ petitions were heard together and were        disposed of by a common judgment against which these appeals

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8  

      have been filed.        The  principal  question  canvassed before us  is  that  the        termination  of  the appellant’s lease by  the  order  dated        December 27, 1955, was bad as it did not give three  months’        notice  to the appellant or provide for any compensation  as        required  by s. 20 of the Abolition Act.  The answer to  the        question  depends  on a true construction  of  that  section        which  runs  thus:        "20. (1) Saving of rights of certain lessees and others.         In  cases not governed by sections 18 and 19, where  before        the notified date, a landholder has created any right in any        land (whether by way of lease or otherwise) including rights        in  any  forest, mines or minerals, quarries,  fisheries  or        ferries,  the transaction shall be deemed to be  valid;  and        all  rights and obligations arising thereunder, on or  after        the  notified date, shall be enforceable by or  against  the        Government:        Provided that the transaction was not void or illegal  under        any law in force at the time:        Provided further that any such right created on or after the        1st  day of July 1,945 shall not be enforceable against  the        Government, unless it was created for a period not exceeding        one year :        Provided also that where such right was created for a period        exceeding one year, unless it relates to the private land of        the landholder within the meaning of section 3, clause (10),        of  the Estates Land Act, the Government may, if,  in  their        opinion,  it is in the public interest to do so,  by  notice        given  to  the person concerned, terminate  the  right  with        effect from such date as may be specified in the notice, not        being earlier than three months from the date thereof.        (2)  The  person,  whose right has been  terminated  by  the        Government under the foregoing proviso, shall be entitled to        compensation  from the Government which shall be  determined        by the Board of        557        Revenue  in such manner as may be prescribed, having  regard        to  the value of the right and the unexpired portion of  the        period for which the right was created.  The decision of the        Board  of  Revenue shall be final and not be  liable  to  be        questioned in any Court of law.        The  long  title  and  the preamble  to  the  Abolition  Act        indicate,  it  is urged, that the object of the  Act  is  to        provide for the acquisition of the rights of landholders and        that  the  policy of the Act is not to  interfere  with  the        rights  of  other persons in the estate.   This  assumption,        however,  is not borne out by the substantive provisions  of        the Act itself.  Section 3 sets forth the consequences which        ensue on the notification of an estate and it is clear  that        on  an estate being notified the entire estate is  to  stand        transferred  to the Government and all rights and  interests        created  in or over the estate before the notified  date  by        the  principal or any other landholder must, as against  the        Government cease and determine.        We are next reminded that the Abolition Act was enacted when        s.  299 of the Government of India Act, 1935, was in  force.        Under that section no property could be acquired save for  a        public purpose and save by authority of a law which provides        for  compensation.   The Abolition Act was  enacted  by  the        Madras Legislature in exercise of the legislative power con-        ferred  on  it  by  the  Government  of  India  Act,   1935.        According  to learned counsel for the appellant,  the  Court        must  assume that the Madras legislature acted properly  and        within  the  limits of powers conferred on  it.   The  Court        must,  therefore, interpret the provisions of the  Abolition

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8  

      Act  on the footing that it is a valid piece of  legislation        and  that  its  provisions  do not  offend  s.  299  of  the        Government  of India Act, 1935.  The Abolition Act is a  law        for  the compulsory acquisition of property and,  therefore,        the  court  must  put that interpretation  on  the  relevant        sections which will result in the payment of compensation to        the  person  who  is deprived of his property.   It  may  be        conceded        71        558        that  normally this is the correct approach to the  problem,        but the argument loses much of its force.  When we advert to        the provisions of Art. 31(6) and 31 B of the Constitution of        India   read  with  the  Ninth  Schedule   thereto.    Those        provisions  proceed  on  the assumption  that  certain  laws        passed  under the Government of India Act, 1935, did  offend        s.  299  of  that Act and expressly save  those  Acts.   The        Abolition  Act  is  one of the Acts included  in  the  Ninth        Schedule   and   is   protected  by  Art.   31B.    In   the        circumstances, the court must interpret the Abolition Act as        it  finds it by giving the ordinary and natural  meaning  to        the words used by the Madras legislature and uninfluenced by        any  pre-conceived  notion as to validity of  the  Abolition        Act.        provision for payment of compensation for the  determination        of  rights created before the notified date is  provided  in        sub-s.  (2) of s. 20 of the Abolition Act.  Under that  sub-        section a person can claim compensation only when his  right        is  terminated  by  the  Government  under  "the   foregoing        proviso".   The words "foregoing proviso", it  is  conceded,        refer to the third proviso to sub-s. (1).  The endeavour  of        learned  counsel for the appellant, therefore, is to  induce        us to hold that the termination of the appellant’s leasehold        rights  which were created on or after July 1,  1945,  could        only  be  done under the third proviso, for other  wise  the        provisions of sub-s. (2) which provide for compensation will        not be attracted.  Action taken by the Government under  the        third  proviso  to sub-s. (1) can be supported only  if  the        conditions  said down in that proviso can be shown  to  have        been  complied with, namely, that the Government had  formed        the opinion that it was in the public interest to  terminate        such  lease  and that three months’ notice  had  been  given        before  such termination.  The argument is that  the  second        proviso is merely declaratory and the third proviso supplies        the  machinery  for giving effect to the provisions  of  the        second proviso.  According to the argument the third proviso        is  not an independent proviso but is a sort of  proviso  to        the  second  proviso.  In other words,  the  third  proviso,        according to learned counsel        559        for the appellant, merely enables the Government to exercise        the  right  conferred  on  it  by  the  second  proviso  and        therefore, the Government, if it intends to avail itself  of        the  right  under the second proviso, must comply  with  the        conditions laid down in the third proviso.  It is said  that        the words " such right " in the third proviso relate to  the        rights  mentioned  in the second proviso, that  is  to  say,        rights  created on or after July 1, 1945.  The scheme of  s.        20  of the Abolition Act is said to be to  provide,  firstly        that  rights  created by way of lease or  otherwise  by  the        landholder prior to the notified date should be deemed to be        valid  and all rights and obligations arising thereunder  on        or  after  the  notified date should be  enforceable  by  or        against   the   Government.   We  start  with   this   broad        proposition.  Then we come to the provisos.  We may omit the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8  

      first  proviso,  for it has no application to the  facts  of        this case.  The implications of the second proviso,  learned        counsel for the appellant points out, are two fold,  namely,        (a)  that  all rights created before the notified  date  but        after  July  1, 1945, for a period not  exceeding  one  year        would  be  valid  and enforceable both by  and  against  the        Government by the operation of the body of sub-s. (1) itself        and  (b)  that rights created before the notified  date  but        after  July 1, 1945, for a period exceeding one  year  would        also be valid and enforceable by the Government against  the        person in whose favour such right had been created by reason        of  s.  20(1).  Then we have the express  provision  of  the        second  proviso,  namely,  that rights  created  before  the        notified date but after July 1, 1945, for a period exceeding        one  year would not be enforceable against  the  Government.        In  other words, the true meaning of the second  proviso  is        said to be that rights created after July 1, 1945, are  only        voidable  at the instance of the Government and  that  being        the  position,  the  Government must do some  overt  act  to        terminate  the  transaction.   The  machinery  for  such   a        termination,  it  is  urged, is to be  found  in  the  third        proviso  and  the conclusion is pressed upon  us  that  such        termination  can be brought about only on the fulfilment  of        the  conditions laid down in the third proviso.   The  final        step in the argument is        560        that the person Whose rights are terminated under the  third        proviso  which is the " foregoing proviso " referred  to  in        sub-s.  (2)  must, therefore, be  entitled  to  compensation        under  sub-s.  (2).  We are unable to accept  this  line  of        argument as correct.        The  provision  of  s.  20 of the  Abolition  Act  has  been        considered  and  construed  by a Bench of  the  Madras  High        Court.   We  may, with advantage, quote here a part  of  the        views expressed by Venkatarama Ayyar, J., in delivering  the        judgment  of that Bench in A.M.S.S. V.M. & Co. v. The  state        of Madras (1).        "  The argument of the petitioners is that the words "  such        rights  " in the third proviso have reference to the  rights        created after the 1st July, 1945, mentioned in the  previous        proviso and on that construction, the lease in favour of the        petitioners could be terminated only in accordance with that        proviso by giving three months’ notice.  But this is to read        the  third proviso as a proviso not to the section,  but  to        the second proviso and there is no warrant in law for such a        construction.   The words " such rights refer in the  second        proviso  only  to the right dealt with in the  body  of  the        section,  and  those words occurring in the  third  proviso,        should  also bear the same interpretation.  That  the  third        proviso does not govern the second proviso is also clear  if        the scope of the two provisos is examined.  Under the second        proviso, leases for a period exceeding one year and  created        after  1st  July,  1945, are  not  enforceable  against  the        Government.   That  is to say, the Government can  elect  to        disaffirm them and they become, on such disaffirmance, void.        If  the  third proviso also applies to such leases,  as  the        petitioners  contend, then the lease can be terminated  only        if  the  Government is satisfied that it is  in  the  public        interest  that it should be terminated and that further,  in        such cases, the lessee will also be entitled to compensation        under  s.  20(2).  In other words, while  under  the  second        proviso the Government can terminate the lease at its option        and  unconditionally, under proviso (iii) that can  be  done        only if it is in        (1)  I.L.R. (1953) Mad. 1175,1195.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8  

      561        public   interest  and,  in  that  event,  on   payment   of        compensation, and this repugnancy can be avoided,., only  by        construing  them as referring to different  subjects.   Then        again, there is in proviso (iii) an exception with reference        to  rights  created  over private lands;  there  is  nothing        corresponding  to  it in the second proviso  and  that  also        shows that the scope of the two provisos is different.   The        true  effect of the section can be stated in three  proposi-        tions:  (i) Rights validly created prior to 1st July,  1945,        will be valid; (ii) such rights, however, may be  determined        under  the third proviso if it is in the public interest  to        do so and in such cases, compensation will be payable  under        section  20(2);  and (iii) rights created  after  1st  July,        1945,  if  they  are for a period exceeding  one  year,  are        liable  to  be avoided under the second  proviso.   In  this        view,  we are of opinion that the notice, dated  13th  March        1951, falls under the second proviso and is valid."        It  is  pointed out that the attention of  the  Madras  High        Court  was not drawn to the rule framed by the  Governor  of        Madras  in exercise of powers conferred on him by s. 67  (1)        and (2) of the Abolition Act.  That rule runs as follows:-               " Rule        In the case of any right in any land created by a landholder        on or after the 1st day of July 1945 for a period  exceeding        one  year  and falling under the second proviso  to  section        20(1)  of the said Act, the authority to decide whether  the        right  should be terminated or allowed to continue shall  be        the  Board  of Revenue.  Any order passed by  the  Board  of        Revenue under this rule shall be subject to revision by  the        Government."        We  do  not  think  that the rule in  any  way  impairs  the        correctness of the Madras decision.  It will be noticed that        rule  only indicates the authority who is to decide  whether        the  right  falling  under  the  second  proviso  should  be        terminated or allowed to continue.  It ’does not purport  to        lay  down  the  manner in which such termination  is  to  be        brought  about.   In  other words, that rule  does  not,  in        terms, attract the        562        operation  of the third proviso at all.  Even if  that  rule        has the effect contended for, it cannot, in our view, change        the meaning of s. 20 which we gather on a true  construction        thereof.        In  our view the scheme of the Act is to render  ineffective        all  rights  created  after  July  1,  1945,  for  a  period        exceeding  one year.  In one view of the matter it may  well        be  taken as meaning that the creation of rights after  July        1, 1945 is, by the force of the second proviso itself,  void        as against the Government without any further necessity  for        any  overt  act to be done by the Government  to  avoid  the        same.   In  that sense the second proviso would  be  a  self        contained proviso and the aid of the third proviso would  be        wholly  uncalled for.  But assuming that the effect  of  the        second  proviso is to make the rights created after July  1,        1945,  only voidable and not void, all that follows is  that        the Government must do something to avoid them.  There is no        warrant  for  saying that the avoidance must  be  under  the        terms  of  the third proviso.  If the third proviso  at  all        applied  to  rights  created after July 1,  1945,  then  the        second  proviso  would  be otiose and  need  not  have  been        enacted at all.  In our opinion the third proviso deals with        the termination of rights created before July 1, 1945.   The        second  proviso  makes rights created after  July  1,  1945,        unenforceable  as  against the Government.  The  reason  for

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8  

      conferment of such an unconditional right on the  Government        is  well  known, for it was on that crucial  date  that  the        party which came into power later declared its intention  to        abolish  all zemindaries and intermediary interest in  land.        The  second proviso was enacted to nullify the  creation  of        rights  in  anticipation of the  impending  legislation  and        hence  it  was  made unconditional.  If  any  condition  was        intended to be super-imposed on the right of the  Government        to  terminate  the rights created after July  1,  1945,  one        would have expected those conditions to be mentioned in  the        second  proviso  itself.   In  out  opinion,  there  is   no        substance  in the principal point urged by  learned  counsel        appearing for the appellant before us.        It  was somewhat faintly argued by learned counsel  for  the        appellant that the Government should have        563        allowed  the appellant’s application for the renewal of  his        lease  under r. 47 of the Mineral Concession Rules of  1949.        The argument is wholly untenable.  That’ rule provides  that        a mining lease granted by a private person shall be  subject        to   certain  conditions  therein  specified.    The   first        condition  thus  laid  down is that the term  of  the  lease        should be renewed at the option of the lessee for one period        not  exceeding  the  duration of the  original  lease.   The        effect  of this rule is, as it were, to  insert  statutorily        some  new terms in the lease itself.  In other  words,  this        rule  does not do anything more than add some terms  to  the        lease.   When,  however, the lease is determined  under  the        second proviso, these terms must also fall with it.        No  other  point has been urged before us  and  for  reasons        stated  above,  we  think  that  these  appeals  should   be        dismissed with costs and we order accordingly.                                  Appeals dismissed.