Holding

The State Government may grant exemption under Section 109 either before acquisition or thereafter, and such exemption makes Sections 63, 79‑A, 79‑B and 80 inapplicable to the land; land does not vest in the Government until an enquiry and appropriate order are made.

Summary

Respondent nos. 13‑22 filed a writ petition seeking to restrain Murudeswara Ceramics Ltd. and its associate from constructing a clay processing unit on land in Survey No. 23, Varakodu Village, Shimoga, alleging contravention of the Karnataka Land Reforms Act, 1961. The land had been purchased by the second appellant on 22‑Feb‑1997 and the State Government had granted exemption under Section 109 of the Act from the operation of Sections 63, 79‑A, 79‑B and 80. The Karnataka High Court held the exemption invalid because it was granted after the sale and ordered proceedings under Sections 82 and 83. The Supreme Court held that (1) land does not vest in the Government immediately upon a transaction; an enquiry and order under the Act are required, and none had been initiated; (2) Section 109 exemption may be granted either before acquisition or thereafter when the land is to be used for the enumerated purposes, and it operates with respect to the land, not the transaction, rendering the cited provisions inapplicable. Consequently, the High Court’s finding of contravention was set aside and the appeals were disposed.

Issues considered

Whether a Section 109 exemption under the Karnataka Land Reforms Act, 1961 can be validly granted after the sale of land.
Whether land immediately vests in the State Government upon a transaction that contravenes the Act, or only after an enquiry and order.
Whether the High Court erred in holding that the exemption was of no avail and that the land had already vested in the Government.

Legislation cited

Karnataka Forest Act, 1963s. 17
Karnataka Land Reforms Act, 1961s. 109, s. 63, s. 79-A, s. 79-B, s. 80, s. 82, s. 83

Subjects

Karnataka Land Reforms ActSection 109 exemptionland vestingenvironmental clearanceclay processing industryland acquisitionexemption after sale

Judgment

MIS. MURUDESHWARA CERAMICS LTD. AND ANR. A
v.
STATE OF KARNATAKA AND ORS.

OCTOBER 12, 2001

[S. RAJENDRA BJ\BU AND DORAISWAMY RAJU, JJ.] B

Karnataka Land Reforms Act, 1961 :

Section 109-Exemption-From the operation of Ss. 63. 79-A, 79-B and
• 80-Grant of-State Government granted such exemption after transaction C
took place and not prior to it-Validity of-Held: State Government has power
to grant such exemption before the acquisition of land or thereafter-Once
such exemption is granted these provisions are not applicable.

Respondent Nos. 13 to 22 filed a writ petition in the High Court to
restrain the appellants from putting up any construction, digging of well or D
carrying out any activity or establishing and putting up of a clay processing
industry in the land in question being in contravention of the provisions of
the Kamataka Land Reforms Act, 1961. The land was purchased by appellant
No. 2 under a registered sale deed and the State Government had granted
exemption under Section 109 of the Act from the applicability of Sections 63, E
- 79-A, 79-B and 80 of the Act. The High Court held that the exemption was
of no avail since it was granted subsequent to the event of sale. The High
Court also held that the moment a transaction took place, which was in
contravention of the provisions of the Act, the land would vest in the
Government and, therefore, prior exemption was necessary in the case. The
F
writ petition was accordingly allowed. Hence this appeal.

Disposing of the appeals, the Court

HELD : 1. The land does not immediately vest on the transaction
being entered into because an enquiry has to be held as to the contravention • G
of the provisions of the Karnataka Land Reforms Act, 1961 and thereafter
an appropriate order is made. In the present case, no such proceedings have
been initiated under any of the provisions of the Act. [154-C]

2. Exemption under Section 109 of the Act could be granted before the H
. 151
152 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A acquisition of the land or thereafter when it is actually sought to be put to
those particular uses, which are enumerated under Section 109 of the Act. It
is not with reference to any particular person or transaction such exemption
Is granted but it is with reference to a land such exemption is granted. The
Government has powers to grant exemption from the operation of the
B provisions of Sections 63, 79-A, '79-B and 80 of the Act and those provisions
will be out of place insofar as the land in question is concerned. These
provisions are not applicable in the case of the land in question in view of the
exemption granted. [154-F-GJ

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7136 of 2001.
c
From the Judgment and Order dated 30.5.98 of the Karnataka High Court
in W.P. No. 15727 of 1997 (PIL).

WITH

D C.A. No. 7137 of 2001.

B. Mohan, Sanjay R. Hegde, Rajesh Mahale, R.C. Kohli, Y.P. Mahajan,
M. Vijaya Bhaskar, P. Parmeswaran, N. Ganpathy and C.N. Scee Kumar for
the appearing parties.
E
The Judgment of the Court was,delivered by

RAJENDRA BABU, J. : Leave granted.

Respondent Nos.13 to 22 filed a writ petition in the High Court to
F · restrain the appellants from putting up any construction, digging of well or
carrying out any activitY. or establishing and putting up of a clay processing
industry in the land comprised in Survey No. 23 of Varakodu Village, Hosangar
Taluk, Shimoga District in the State of Karnataka and for a direction to the
appellants and respondent Nos. 1 to 12 to appoint a commission for scientific
study of the environment and ecology in ibe area for establishing of clay
G processing unit in the land in question or in any other land in Sahyadri
mountain range or the entire western ghat with reference to the feasibility of
mining and establishing industry. They also alleged that there has been
contravention of the provisions of the Karnataka Land Reforms Act, 1961
[hereinafter referred to as 'the Act'] in addition to the enactments made for
H protection of the environment and ecology like the Karnataka Forests Act,
MURUDESHWARA CERAMICS LTD. v. STATE [RAJENDRA BABU, J.] 153
Karnataka Preservation of Trees Act and Forests Conservation Act. The land A
was purchased by appellant No.2 from the descendants of one Seetarama
Maruti under a registered sale deed dated 22.2.1997. Appellant No.2 also
happens to be the Executive Director of the appellant No. l company.

The High Court found that various permissions, licences or clearances
obtained from different authorities are not in accordance with law and set them B
at naught. The High Court also held that the acquisition of land by appellant
No.2 is in contravention of the provisions of the Act. As regards sustenance
of ecology and environment, the High Court directed a scientific study to be
conducted. The High Court directed initiating proceedings under Sections
82 and 83 of the Act. Hence these appeals. C

We shall first consider the question regarding the non-compliance with
the provisions of the Act in purchasing the land in question. Section 79-A
of the Act debars certain persons whose annual income is not less than Rs.
2 lakhs from acquiring the land, while Section 79-B of the Act prohibits
holding of agricultural land by a person other than a person cultivating land D
personally or not lawful for educational, religious or charitable institutions or

- society or trust or a company or co-operative society or body of individuals
and associations to hold land. Section 80 of the Act prohibits transfer of land
in favour of non-agriculturists. The High Court is of the view that the second
appellant acquired the land claiming to be an agriculturist ostensibly for his E
personal cultivation but really for the benefit of the first appellant which is
a company which cannot hold land under provisions of the Act.

By an order made on 3.7.1997, the State Government granted exemption
under Section 109 of the Act from the applicability of Sections 63, 79A,
F

-
79-B and 80 of the Act on certain terms and conditions mentioned therein.
· In the view of the High Court, the exemption is of no avail since it has been
granted subsequent to the event of sale. The High Court felt that the scheme
of the provisions of Sections 79-A and 80 of the Act is such that the moment
a transaction takes place which is in contravention of the provisions of the
Act, the land will vest in the Government and, therefore, the prior exemption G
is necessary in the case. Where a person acquires a land in contravention of
Section 79-A of the Act, proceedings are contemplated under Section 79(4)
of the Act and it is only after receipt of declaration and particulars thereof,
the Tahsildar can, by a notification, declare that with effect from the date as
may be specified in the notification such land shall stand transferred to and H
154 SUPREME COURT REPORTS [2001] SUPP. 4 S.C.R.
A vest in the State Government free from all encumbrances and from the date
specified in the notific~tion, so that the Deputy Commissioner may take
possession of such land in the manner as may be prescribed. Where the land
is held in contravention of Section 79-B of the Act, the Tahsildar will have
'•
to hold an enquiry after obtaining a declaration and declare that such land shall
B vest in the State Government free from all encumbrances and take possession
thereof in the prescribed manner. If there is any contravention· of Section 80
of the Act in the matter of transfer of land to non-agriculturists, appropriate
proceedings will have to be taken up under that provision. Therefore, the land
does not immediately vest on the transaction being. entered into because an
enquiry has to be held as to the contravention of the provisions of the A~t
c and thereafter an apQl"opriate order is made. In the present case, as noticed
by the High Court, ri'o such f>roceedings have been initi~ted under any of the
provisions. Therefore, in the writ petition a direction was sought for and issued
for action being taken under those provisions .
•
D Section 109 of the Act confers power on the State Government to grant
exemption in regard to a land in any area from the provisions of Sections 63,

E
79-A, 79-B and 80 of the Act to be used for industrial purposes, educational
institutions, places of worship, a housing project or horticulture including
jloriculture or an agro based industry. Further, the Government. has also the
power even in the absence of 1>uch purposes to grant exemption in public
-
interest. If the aspect that it.is not with reference to any particular person ·or
transaction such exemption is granted but it is with reference to a land such
exemption is granted is borne in mind the interpretation and application of law
becomes clear. It may be that such exemption could be granted before the
acquisition of the land or thereafter when it is actually sought to be put to
F those particular uses, which are enumerated under Section 109 of the Act.
Therefore, once we come to the conclusion tb.at the Government has powers
to grant exemption from the operation of the provisions of Sections 63,
79-A, 79-B and 80 of the Act and those provisions will be out of place insofar
as the land in question is concerned, the examination by the High Court as
G to whether there has been contravention of the provisions thereof was totally
uncalled for. The High Court need not have embarked on the investigation
as to whether the sale is in contravt:ntion of the provisions of the Act and ought
to have h~ld that these provisions are riot applicable in the case of the land
in question in view of the exemption granted. Thus the finding recorded by
H the High Court in this regard is set aside.
MURUDESHWARA CERAMICS LTD. v. STATE [RAJENDRA BABU, J.] 155
During the pendency of the proceedings in this Court, several affidavits A
have been filed by the parties but the affidavit filed by appellant No. l is to
the effect that the china clay processing unit of the appellant is not carrying
out any activity due. to litigation and the machinery and equipment have been
temporarily shifted· elsewhere to save them from corrosion. It is stated that
they have obtained all the approvals already and they will carry out the same
B
after the disposal of this matter. Fact remains that the unit is not commissi.oned
as yet. In the affidavit filed on behalf of the State of Karnataka it is stated
that the 'No Objection Certificates' issued by the Karnataka State Pollution
Control Board in the year 1997 and the Chief Inspectorate of Factories and
Boilers in the year 1999 are being withdrawn and steps in that regard are being
initiated. In the affidavit filed by respondent No. 12 on behalf of the Union c
of India, it is alleged that a plantation has been raised by the Karnataka Forest
Department in the year 1986-87 in continuation block of Survey Nos. 23, 30
and 47 of Varakodu Village and subsequently the land was purchased by the
second appellant by registered deed dated 22.2.1997 and thus out of 7 acres
and 19 guntas of land comprised in Survey No.23 owned by the second D
appellant approximately 2 acres of land are covered under Acacia plantation
raised during 1986-87 by the Karnataka Forest Department. It is also stated
therein that the land in question is surrounded by acacia plantation raised
during 1986-87 by the Karnataka Forest Department in Survey Nos. 23, 30,
42 and 47 of Varakodu Village which is part of Varakodu Reserve Forest Block
E
I and Block II and that area was finally notified under notification dated
27 .10.1994 as Varakodu Reserve Forest Block under Section 17 of the
Karnataka Forest Act, 1963 and as per that notification there is no right over
any roads in this Reserve Forest Block. While raising plantations during 1986-
.
87 only inspection. path was left inside this reserve forest block, just for

.. inspection purpose and not as a road for general public.

Under lse circumstances, the earlier clearances obtained by the
appellants may not be of any use to them and now that the unit has not been
functioning and fresh clearances will have to be obtained, we do not express
F

any opinion on these aspects at this stage of the proceedings. It is open to '"G
the appellants to work out their rights just as the right is open to the respondents
to oppose to the establishment of the unit in the area.. When the Departments
advert to these aspects, the provisions of. the various en·actments protecting the
environment and ecology shall be taken note of and it is only after appropriate
enquiry or assessment due clearances shall be given in accordance with law.
H
156 SUPREME COURT REPORTS [200l] SUPP. 4 S.C.R.
A Subject to setting aside the finding in relation to the contravention of
the provisions of the Act, the other aspects considered in the judgmeiit of the
High Court have become unnecessary for consideration and the contentions
in regard to the same are kept open. Respondent Nos. 1 to 12 shall make
fresh assessment of the matte!:'. uninfluenced by the decision of the High Court
B as indicated above in the eve~ appellants approach them for any of the
clearances.

The appeals shall stand disposed of in the terms stated above. No costs.

v.s.s. Appeals .disposed of.