Holding

Land obtained by exchange after the appointed date is to be ignored for ceiling‑area calculation, so the appellant is not in excess of the ceiling limit.

Summary

Sharanappa Basappa Dindawar owned 15 acres 6 gunthas in Survey No. 102 and 28 acres 10 gunthas in Survey No. 28/2. By a registered exchange deed dated 18 August 1971 he swapped the 28 acres 10 gunthas for 30 acres 24 gunthas of land in Survey No. 175, increasing his total holding to 45 acres 30 gunthas, still within the ceiling limit of 54 acres under the Karnataka Land Reforms Act, 1961. The Karnataka High Court held that the land acquired by exchange after 24 January 1971 must be added to his holding, deeming him in excess of the ceiling and ordering surrender of the surplus. On appeal, the Supreme Court examined Section 63(10) and its explanation, concluding that any inter‑vivos transfer, including exchange, made after the appointed day is to be ignored for ceiling‑area computation when it does not intend to defeat the Act. Since the appellant merely enlarged his holding and did not seek to evade the law, the exchanged land cannot be counted, and he is not in excess of the ceiling. The Court allowed the appeal and set aside the High Court’s order.

Issues considered

Whether land acquired by exchange after 24 January 1971 is to be included in the calculation of ceiling area under Section 63 of the Karnataka Land Reforms Act, 1961.
Whether the explanation to sub‑section (10) of Section 63 treats an exchange as a transfer for the purpose of determining surplus land.

Legislation cited

Karnataka Land Reforms Act, 1961s. 2(7), s. 63, s. 66, s. 76
Registration Act, 1908s. 17
Transfer of Property Act, 1882s. 118

Subjects

land ceilingland reformsexchange of landsurplus landKarnatakaSection 63Transfer of Property Actstatutory interpretation

Judgment

SHARANAPPA BASAPPA DINDAWAR A
v.
STATE OF KARNATAKA AND ORS.

AUGUST 28,-1996

[K. RAMASWAMY AND K. VENKATASWAMI, JJ.) B

Land Laws:

Kamataka Land Refonns Act, 1961:

Sections 2(7), 63, 66 and 76-Rural land-Ceiling limit-..!'E.xchange of C
land" after the appointed day-Whether could be added to the other land
retained by the holder in calculating the ceiling area-High Court holding that
it should be included-On appeal held, the appellant did not intend to defeat
·the provisions of the Act-Nor did he alienate the holding he had p1ior to the
exchange-On the other hand he enlarged his holdinfj17ierefore the land D
held by him by exchange cannot be included in his holding.

Words & Phrases :

"E.xchange"-Meaning of in the context of S.118 of the Transfer of
Property Act, 1882. E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3809 of
1990.

From the Judgment and Order dated 17.11.89 of the Karnataka High
Court in W.A. No. 1830 of 1984. F
Ms. Kiran Suri for the Appellant.

M. Veerappa for the Respondents.

The following Order of the Court was delivered :
G
This appeal by special leave arises from the judgment and order of
the Karnataka High Court made on November 17, 1989 in Writ Appeal
No. 1830/84. The admitted position is that under Section 66 of the Kar-
nataka Land Reforms Act, 1961, as amended by 1974 Amendment Act (for
short, the 'Act') the ceiling area has been determined as 54 acres. "fhe H
317
318 SUPREME COURT REPORTS (1996) SUPP. 5 S.C.R.

A appellant had in his· possession 15 acres 6 gunthas in Survey No. 102 and
28 acres 10 gunthas in Survey No. 28/2 in Ankalagi Village in Bijapur taluk.
By a registered exchange deed dated August 18, 1971, the appellant had
exchanged 28 acres 10 gunthas of land with Gurappa Bhimaraya Birdar's
30 acres 24 gunthas of land in Survey No. 175 of the same village. Earlier,
he had total extent of 43 acres 16 gunthas and by virtue of the exchange
B
deed, he had 45 acres 30 gunthas. Thus, he remained within the ceiling
limit of rural land.

The question that arises is : whether the 30 acres 24 gunthas of land
obtained by the appellant in exchange of 28 acres 10 gunthas could be
C included in his .total holding of 43 acres 16 gunthas? The High Court relying
upon the explanation to sub-section (10) of Section 63 construed that since
the appellant had 30 acres 24 gunthas by exchange after January 24, 1971,
the said land should also be included in his holding in addition to 15 acres
6 gunthas and 28 acres 10 gunthas situated in the aforestated survey No.
D Thereby, the appellant was found in excess of the ceiling limit. Accordingly,
the surplus land was directed to be surrendered. Thus, this appeal by
special leave.

The Act had come into force on March 15, 1962. The Amendment
Act came into force on March 1, 1974. Section 2(7) defines 'ceiling area'
E to mean an extent of land which a person or family is entitled to hold under
Section 63. The Act does not define the word "exchange". Section 118 of
the Transfer of Property Act, 1882 defines "exchange" and provides that
where two persons mutually transfer the ownership of one thing for owner-
ship of another, neither thing or both things being money only, the trans-
F action is called an 'exchange'. It would thus be clear that transfer of the
property is complete between two persons in the manner provided under
the transfer of the property by way of exchange duly registered under the
Registration Act. The exchange deed having been duly registered between
the two persons by operation of Section 17 of the Registration Act, the
right, title and interest of the land held by the two persons stood mutually
G transferred to each other. Consequently, 28 acres 6 gunthas of land held
by the appellant in Survey No. 28/2 stood exchanged with 30 acres 24
gunthas of the land in Survey No. 175 belonging to Gurappa Bhimaraya
Birdar; thereby, the appellant got 30 .acres 24 gunthas while Gurappa
Bhimaraya Birdar had 28 acres 10 gunthas of the land. The appellant by
H virtue of exchange came to possess land to the extent of 45 acres 30
S.B. DINDAWAR v. STATE 319

gunthas. A
The question then emerges : whether the appellant has come to
possess land in excess of the ceiling limit? It is true that by virtue of
exchange, on and after January 24, 1971, if the land which was found to be
in excess of the ceiling limit but stood transferred, necessarily, by operation
of the explanation to sub-section (10) of Section 63 has to be ignored and B
the same should be included in the holding of the owner disregarding such
an exchange. Section 63 sub-section (10) reads as under :

"Notwithstanding anything in the preceding sub-section, if any
person has:
c
(i) after the 18th November 1961 and before the 24 January, 1971
transferred any land the extent of which if added to the other land
retained by him could have been deemed to be surplus land before
the date of commencement of the Amendment Act; or
D
(ii) after the 24th .T anuary, 1971 transferred any land, otherwise
than by partition or by donation to the Karnataka Bhoodan Yagna
Board established under the Karnataka Bhoodan Yagna Act, 1963.
(Karnataka Act 34 of 1963) or by sale to the tenant of such land
in conformity with any law for the time being in force, then in
calculating the ceiling area which that person is entitled to hold, E
the area so transferred shall be taken into account and the land
exceeding the ceiling area so calculated shall be deemed to be in
excess of the ceiling area notwithstanding that the land remaining
with him may not in fact be in excess of the ceiling area.

If by reason of such transfer the person's holding is less than the F
area so calculated to be in excess of the ceiling area, then all his
lands shall he deemed to be surplus land and the provisions of
Sections 66 and 76 shall as far as may be, apply to the surrender
to and vesting in the State Government of such excess land.
G
Explanation : For purposes of this sub-section the land shall be
deemed to have been transferred if it has been transferred by act
of parties (whether by sale, gift, mortgage with possession, ex-
change, lease or any other kind of disposition made inter vivos)".

A reading of it would clearly indicate that notwithstanding anything H
320 SUPREME COURT REPORTS [1996] SUPP. 5 S.C.R.

A in sub-section (9) of Section 63, on and after January 24, 1971, on transfer
of land the extent of which, if added to the other land retained by him,
could have been deemed to be surplus before the commencement of the
Act, in calculating the ceiling area which that person is entitled to hold the
[
area so transferred shall be taken into account and the land exceeding the
ceiling area so calculated shall be deemed to be in excess of the ceiling
B area notwithstanding that the land remaining with him may not in fact be
in excess of the ceiling area. If by reason of such transfer, the person's
holding is less than the area so calculated to be in excess of the ceiling
area, then all his lands shall be deemed to be surplus land and the
provisions of Sections 66 and 76 shall as far as may be, apply to the
c surrender to and vesting in the State Government of such excess land. For
the purpose of computation of the excess land, the Explanation envisages
that if exchange or transfer of any kind took place disposing of the land
inter vivas then necessarily such an exchange shall be excluded and ignored
while computing the excess land. The legislative intention and purpose is
D that the land held by a holder should stay where it lay prior to January 24,
1971 and the offending transfer would be treated as tainted with the
fraudulent intention to defeat the object. The reason is that the person who
had the land by offending transfer does not acquire legal and valid title
and the transferor does not denude him of his right, title and interest. Take,
for instance, a transfer by way of sale or gift etc. the transferee or donee
E does not get title since he acquires title for the first time, through the
offending transfer. This Court has held in various decisions that it should
be included in the holding of both transferor and transferee. Such situation,
in case of exchange, would be different. Both had pre-existing right and
title. But if it would have the effect of reducing the ceiling area to the extent
p of exchanged land, the exchange should be ignored and computation
should be made as if the land did not get transferred so as to be included
in the holding of both parties to the extent of excess so that the object of
avoidance is nailed fathom deep.

In this case, the appellant did not intend to defeat the provisions of
G the Act nor he alienated the holding he had prior to the exchange. On the
other hand, he enlarged his holding by 2 acres 12 gunthas of land by way
of exchange. In either case, he is within the ceiling limit. It cannot be said
that by exchange, he intended to defeat the provisions of the Act. On the
other hand, if the other person reduces his holding, it should be ignored.
H Consequently, the land had by the appellant by exchange cannot be in-
S.B. DINDAWAR v. STATE 321

eluded in his holding in addition to his holding of an extent of 28 acres 10 A
gunthas in Survey No. 28/2 possession of which he had already parted with
and obtained, by way of exchange, possession of 30 acres 24 gunthas. The
High Court, therefore, was in error in directing inclusion of both the land
holdings in his holding and treating him to be holding the land in excess
of the ceiling area.
B
The appeal is accordingly allowed. It is declared that the appellant
is not in excess of the ceiling limit. No costs.

G.N. Appeal allowed.