STATE OF ANDHRA PRADESHversusS.B.P.V. CHALAPATHI RAO ETC.

A                       STATE OF ANDHRA PRADESH
                                          v
                       S.B.P.V. CHALAPATHI RAO ETC.

                               OCTOBER 24, 1994

B
      [KULDIP SINGH, B.L. HANSARIA AND S.B. MAJMUDAR, JJ.]


          Andhra Pradesh Land Refonns (Ceiling) on Agriculture Holdings Act,
    1973--Section,s 7( 1) aitd 21-220 acres of land sold between December 16,
C   1971 and December 27, 1971-Transfers made in anticipation of and with a
    view to avoid and defeat provisions of the Act-He/d: Transfers to be dis-
    regarded for purpose of computation of ceiling area.

          Respondents sold 220.25 acres of land by way of fourteen sale deeds
    executed on five different days between December 16, 1971 and December
D   27, 1971. The transfers made were disregarded for the purpose of the
    computation of ceiling area of the respondents under the Andhra Pradesh
    Land Reforms (Ceiling) on Agrtcultnral Holdings Act 1973 by the Land
    Reforms Tribunal holding that the transfer were made in anticipation of
    and with a view to awaiting or defeating the objects of the Act. This finding
    was reversed by the Lands Reforms Appellate Tribunal while holding that
E   the lands were sold to raise funds for setting up of indnstries. The High
    Court upheld the finding of the Appellate Tribunal by dismissing the
    revision petitions in limine these appeals by the State are against the order
    of the Appellate Tribunal as upheld by the High Court.

F         The respondents contended that there is no justification whatsoever
    to reverse the finding of the Appellate Tribunal to the effect that the sales
    in dispute were made in good faith to meet the expenses to be incurred for
    the expansion of sugar industry. On the other hand, it was stated by the
    State that the proposal for the expansion of the sugar industry was mooted
    sometime in June 1970 but it was thereafter in April 1972 that the applica-
G   lion for license to expand the industry was made and the license was
    granted on November 26, 1973. According to the State, in December 1971,
    when the Lands were sold there was no question·of sending any money on
    expansion of the industry. It was contended that the only reason to sell the
    land in December 1971 was to defeat the provisions of the Act which came
H   to be enforced on May 2, 1972.
                                        714
                      STATE v. CHALAPATHI RAO                           715

      The question for consideration was whether the transfers were to be      A
disregarded for the purpose of computation of the ceiling area of the
respondent under the Act.

      Allowing the State appeal, this Court

      HELD : 1.1. Under the Andhra Pradesh Land Reforms (Ceiling) on           B
Agricultural Holdings Act, 1973, the bonafide or genuine nature of the
transfer or the sale being in goods faith has no relevance at all. What is
required to be proved under the Act by the land owner is that the transfer
was not made in anticipation of and to avoid or defeat the provisions of the
Act. Section 7(1) of the Act not only requires the transfer to be valid and    C
genuine but also makes it obligatory for the transferor to prove that there
was some compelling reason to sell the land at that point of time. Some sort
of necessity or compulsion to sell the land has to be proved. [721-C-D]

      Meria Venkata Rao v. State of Andhra Pradesh and ors., Civil Appeal      D
No. 2649177 decided on 11-2-1992 by Supreme Court, relied on.

      Brijendra Singh v. State of U.P. and Ors., [1981] 2 SCR287 andlagmal
Singh v. State of U.P., AIR (1991) SC 1928, distinguished.

       1.2. In the present case the respondents might be wanting to raise      E
money for the'expansion of the sugar industry but there is nothing on the
record to show as to why they chose December 1971 ·when the Act was in
the legislative process to sell more than 220 acres of land. They ·applied
for the licence sometime in 1972 and the licence was in fact granted to
them in November 1973. There was no question of making any •xpansion           F
till the time the licence was granted. They could have waited till November
1973 when they obtained the licence. The only logical conclusion which can
be drawn is that they sold huge chunk of lands in December 1971 in
anticipation of, and with a view to avoid and defeat the provisions of the
Act which came into force on May, 1972. The Appellate Tribunal acted
illegally in exercise of its jurisdiction in reversing the order of the        G
Tribunal. The impugned order of the Appellate Tribunal and that of the
High Court are set aside. [722-A-D-F]

      Forest Officer, Thanjavur and Anr. v. S. Nagnatha AY.Y"' and Ors.,
[19791 3 sec 466, distinguished.                                               H
    716                   SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.

A         CIVIL N'PELLATE JURISDICTION: Civil Appeal No. 3353-61
    of 1981.

          From the Judgment and Order dated 6.7.78, 27.9.78, 11.9.78 & 3.4.79
    of the Andhra Pradesh High Court in C.R.P. Nos. 3463-64, 3466, 3462,
    3465, 4455, 34Q7 and 5459 of 1978.
B
          T.V.S.N. Chari for the Appellant.

         K.K. Venugopal, M. Seshadari and Ms. Seita Vaidyalingam for the
    Respondent CA Nos. 3353-54, 3357 and 3358/81.

c         Ms. Seita Vaidyalingam, for the Respondent in C.A. Nos. 3355, 3356
    & 3359-61/81.

          B. Kanta Rao for the Respondent No. in C.A. No. 277-78/83.

          K.R. Chowdhary for the Respondent in C.A. No. 2245-46/79.
D
          A. Subba Rao, B. Parthasarthy and K.K. Gupta for the Respondent.

          The Judgment of the Court was delivered by

E          KULDIP SINGH, J, Chalapathi Rao and his son Ananda Mohan,
    respondents in the appeals herein, sold 220.25 acres of land by way of
    fourteen sale-deeds executed on five different days between December 16,
    1971 and D~cember 27, 1971. The question for consideration is whether
    the transfers are to be disregarded for the purpose of computation of the
    ceiling area of the respondents under the Andhra Pradesh Land Reforms
F   (Ceiling) on Agricultural Holdings Act, 1973 (the Act). The Land Reforms
    Tribunal (the Tribunal) by its order dated April 14, 1977 answered the
    question in the affirmative and held that the transfers were made in
    anticipation of and with a view to avoiding or defeating the objects of the
    Act. The Lands Reforms Appellate Tribunal (the Appellate Tribunal),
G   however, by its order dated December 17, 1977 reversed the findings of the
    Tribunal and held as under:

            "Tlierefore, in these cases we hold that the declarant had given a
            reasonable explanation for the sale of the lands and there was no
            intention to avoid the provisions of the Land Ceiling Act. Accord-
H           ingly, we hold on point-1 that all the sales effected by the appellant,
                  STATE.v. CHALAPATIIIRAO[KULDIPSINGH,J.]                        717

                his wife and his son are true, genuine and supported by considera-      A
                tion and they were effected for the expansion of their industry and
                actually the amounts were invested for such expansion of the Sugar
                Factory and it cannot be said that they were intended to defeat or
                avoid the provisions of the Land Ceiling Act. It follows that all the
                extents covered by all the sale deeds have to be excludedfrom the       B
                holding of the appellant's family unit, for the purpose of computa-
              . tion of the ceiling area of the appellants."

       Revision-petitions filed by the State of Andhra Pradesh under Section 21
       of the Act were admitted by the High Court on July ii, 1978 on the limited
       question regarding "the treatment of the lands as single crop wet lands"         C
       and in respect of all other qµestions the revision petitions were dismissed.
       The High Court, therefore, upheld the above quoted findings of the
       Appellate Tribunal. These appeals by the State of Andhra Pradesh are
       against the order of the Appellate Tribunal as upheld by the High Court

                                                                                        D
            Sections 7(1) and 21 of the Act, which are relevant, are reproduced
       hereunder:

               7'. S#ecial provision in respect of cenain transfers, etc. already
               made:- Where on or after the 24th January, 1971 but before the
               notified date, any person has transferred whether by way of sale,        E
               gift, usufructuary mortgage, exchange, settlement surrender or in
               any other marmer whatsoever, any land held by him or created a
               trust of any land held by him, then the burden of proving that such
               transfer or creation of trust has not been effected in anticipation
               of, and with a view of avoiding or defeating the objects of any law      F
               relating to a reduction in the ceiling on agricultural holdings, shall
               be on such person, and where he has not so proved, such transfer
               or creation of trust, shall be disregarded for the purpose of the
               computation of the ceiling area of such person.'
....                                                                                    G
               (May 2, 1972 is the notified date under the Act)

               21. Revision : An application for revision from any party aggrieved,
               including.the Government, shall lie to the High Court, within the
               prescribed period, from any order passed on appeal by the Ap-
               pellate Tribunal on any of the following grounds, namely' :              H
    718                  SUPREMECOURTREPORTS [1994]SUPP.4S.C.R.

A           (a) that it exercised a jurisdiction not vested in it by law, or

            (b) that it failed to exercise a jurisdiction so vested, or

            (c) that it acted in the exercise of its jurisdiction illegally or with
            ml\leriaj irregularity."
B
          The Ordinance, which preceded the Act, came into force on May 2,
    1972. Section 7(1) of the Act provides that any transfer of land made during
    the period. from January 24, 1971 to May 2, 1972 which was made in
    anticipation of, and with a view to avoiding or defeating the objects of any
    law relating to reduction in the ceiling of agricultural holdings, shall be
C   disregarded for the purpose of the computation of the ceiling area under
    the Act. It further provides that onus to prove that the transfer was not
    with a view to avoiding or defeating any such law would be on the land
    owners.

D       The case of the respondents before the Tribunal was that as early as
  1946 they obtained two licences for setting up of textile industry and sugar
  industry. According to them during the period from 1939 to 1960 large
  areas of lands were sold by them for the purposes of setting up of the two
  industries. The precise reason, according to the respondents, for the sale
  of the Ian~ in dispute was to expand the sugar industry for which a valid
E licence wa8 obtained.
          The Tribunal on appreciation of the evidence before it and taking
    into consideration the relevant material on the record come to the follow-
    ing conc111$ions :
F            (1) That the recitals in the sale deeds did not mention that the
             purpose for the sale of lands was to invest the proceeds in the
             expansion of sugar industry rather it was mentioned that the lands
             were not convenient for personal cultivation and reasonable price
             was offered by the purchasers ;
G
             (2) That in respect of all the sales only initial payments were
             aClcepted and pronotes were got executed in favour of the respon-
             dents for the major portion of the sale amounts.

             (3) That the purchasers were employees or relatives of the respon-
H            d~nts;
                STi,\TE. v. CHALAPATHIRAO [KULDIP SINGH,J.]                719
                   ;
              (4) That the lands were sold at the rate of Rs. 300 to Rs. 1000    A
              which according to the Tribunal was not the market price of the
              Janka lands;

              (5) That more than 220 acres of lands were transferred on five
              different dates during the period from December 16, 1971 to B
              December 27, 1971; and

              (6) That the disposal of large chlinks of lands in December 1971
              goes to show that the same might not have been sold but for the
              impending legislation on the land ceiling.

    Supported by the above conclusions the Tribunal reached the finding that
                                                                                 c
    the transfers were made in anticipation of and with a view to avoid and
    defeat the provisions of the Act.

           The Appellate Tribunal, however, came to the conclusion that the
    conduct of the respondents regarding the sale of lands owned by them was D
    consistent. They have been selling the land< to raise funds for setting up of
    industries and the transfers in dispute were effected to raise money to meet
    the expenses for the expansion of the sugar industry. The Appellate
    Tribunal did not agree With the Tribunal that the price for which the lands
    were sold was not the market price. The Appellate Tribunal felt fully E
    satisfied that the disputed sales were with a view to meet the expenditure
    to be incurred by the respondents on the expansion of the sugar industry.
    The Appellate Tribunal, therefore, held that the transfers in dispute were
    not made in anticipation of and with a view to avoid or defeat any
    provisions of the Act. As mentioned above the High Court upheld the
    finding of the Appellate Tribunal by dismissing the revision petitions in F
    limine.

          Mr. K.K. Venugopal, learned counsel appearing for the respondents,


-   has vehemently contended that there is no justification whatsoever to
    reverse the finding of the Appellate Tribunal to the effect that the sales in G
    dispute were made to meet the expenses to be incurred for the expansion
    of sugar industry. According to him the finding of the Appellate Tribunal
    being a finding of fact, this Court in exercise of its jurisdiction under
    Article 136 of the Constitution of India read with Section 21 of the Act
    should not ordinarily interfere with the same. Mr. T.V.S.N. Chari, learned
    counsel appearing for the State of Andhra Pradesh, on the other hand H
    720                         SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.

A contend~d that the proposal for the expansion of the sugar industry was
  mooted $Ometime in June 1970 but it was two years thereafter in April
  1972 that the application for licence to expand the industry was made and
  the licence, in fact, was granted on November 26, 1973. According to the
  learned ¢onnsel, in December, 1971, when the lands were sold, there was
B no question of spending any money on expansion of the industry because
  even the application for licence was made on April 26, 1972 and the licence
  was granted as late as November 26, 1973. It was forcefully contended by
  Mr. Chati that the only urgency to sell the land in December, 1971 was to
  defeat the provision of the Act which was on its way and came to be
  enforced on May 2, 1972. Needless to say that from May 2, 1972 there was
C total projiibition on the sale of the lands which were subject matter of the
  Act. There is plausibility in the argument of Mr. Chari but we proceed on
  the assumption that the sales in dispute were made with a view to meet the
  expenses to be incurred on the proposed expansion of the sugar industry.

          Mr. Venugopal contended that the sales in dispute, being valid and
D genuine, were made in good faith. According to him the sales made in good
    faith, caiµiot be considered to have been made with a view to avoid or
    defeat the provisions of the Act. To support his contention he relies on the
    judgments of this Court in Brijendra Singh v. State of U.P. & Ors., (1981] 2
    SCR 287 and Jagmal Singh v. State of U.P., AIR (1991) SC 1928. In these
E   cases thi$ Court was called upon to interpret sub-section (6) of Section 5
    of the Uttar Pradesh Imposition of Ceiling on Land Holdings Act, 1960
    (U.P. Act) which is reproduced herennder:

            1(6) In determining the ceiling area applicable to tenure-holder,
             ~y transfer of land made after the twenty-fourth of January, 1971,
F            which but for the transfer would have been declared surplus land
             lJflder this Act, shall be ignored and not taken into acconnl :




G
             Provided that nothing in this sub-section shall apply to -

                (a) ...............................

                 (b) a transfer proved to the satisfaction of the prescribed
                                                                                   -
             authority to be in good faith and for adequate consideration and
             jlnder an irrevocable instrument not being a benami transaction or
             for immediate or deferred benefit of the tenure-holder or other
H            members of his family.
           STATE. v. CHALAPA1HIRAO [KULDIP SINGH,J.)                    721

           Explanation I ............................ .                        A
            Explanation II. - The burden of proving that a case falls within
        clause (b) of the proviso shall rest with the party claiming its
                11
        benefit.

The provisions of the Act and the U.P. Act are not pari materia. Under B
the U .P. Act where it is proved to the satisfaction of the prescribed
authority that the transfer of land in a giving case is in good faith, and
satisfies other conditions laid down in clause (b) of the proviso to sub-sec-
tion (6} of Section 5, the transfer is valid and cannot be ignored while
determining the ceiling area of the land owner. On the other hand, under C
the Act the bona fide or genuine nature of the transfer or the same being
made in good faith has no relevance at all. What is required to be proved
under the Act by the land owner is that the transfer was not made in
anticipation of and to avoid or defeat the provisions of the Act. We are of
the view that Section 7(1) of the Act not only requires the transfer to be
valid and genuine but also makes it obligatory for the transferor to prove D
that there was some compelling reason to sell the land at that point of time.
Some sort of necessity or compulsion to sell the land has to be proved.

      The view we have taken on the interpretation of Section 7(1) of the
Act, is supported by a three Judge-Bench order of this Court in Meria          E
Venkata Rao v. State of Andhra Pradesh & Ors., Civil Appeal No. 21)49/77
decided on February 11, 1992. In the said case while interpreting Section
7(1) of the Act this Court held as under :

        "As far as the transactions between 24.1.1971 and 2.5.1972 are
        concerned, the High Court has accepted the conclusions reached F
        by the Tribunal. The High Court has pointed out that a large extent
        of over 220 acres of land was alienated by the appellant and his
        wife within a short period of eight months between 4.6.1971 and
        1.2.1972. It was not the case of the appellant that there was any
        pressure on the estate for the discharge of debts or that the G
        alienations were in fact made for discharge of, or meeting any
        binding debts, or for meeting the marriage or educational expenses
        of any member of the family. It was on the basis of this finding
        that the Tribunal came to the conclusion that the said transactions
        were made in anticipation of the said Act and the High Court was,
        in our view, justified in declining to interfere with the same."    H
    722                   SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.

A          In the present case the respondents might be wanting to raise money
    for the expansion of the sugar industry but there is nothing on the record
    to show as io why they choose December, 1971 - when the Act was in the
    legislative )1rocess to sell more than 220 acres of land. They applied for the
    licence sonje time in 1972 and the licence was in fact granted to them in
B   November, 1973. There was no question of making any expansion till the
    time the licence was granted. Needless to say that keeping in view the
    continuous rise in land-prices the respondents - prudent as they are -
    should have ordinarily waited till the time it became absolutely necessary
    for them to sell the land. In any case they could have waited till November,
    1973 when they obtained the licence. The only logical conclusion which can
C   be drawn is that they sold huge chunks of lands in December, 1971 in
    anticipation of and with a view to avoid and defeat the provisions of the
    Act which came into force on May 2, 1972. We are, therefore, of the view
    that the appellate tribunal acted illegally in exercise of its jurisdiction in
    reversing the order of the Tribunal.
D          Mr. Chari sought further support from the judgment of this Court in
    Forest Officer, Thanjavur and Anr. v. S. Naganatha A)Yar & Ors., (1979] 3
    SCC 466 wherein this Court interpreted Section 22 of the Tamil Nadu
    Reforms (Fixation of Ceiling of Land) Act, 1961 (Tamil Nadu Act). The
    provisions of the Tamil Nadu Act and the Act are entirely different.
E   Therefore, the judgment of this Court in S. Naganatha A)Yar's case relating
    to Tamil Nadu Act has no relevance whatsoeyer.

         The *ppeals are allowed. The impugned orders of the Appellate
    Tribunal "*d that of the High Court are set aside. The order of the
    Tribunal is restored. The respondents shall pay the cost of the proceedings
F   which we qiJantify as Rs. 11,000.

    A.G.                                                       Appeals allowed.