Holding

The proviso to Rule 81(2) is invalid because Section 48 of the Bombay Land Revenue Code does not empower the State to levy land revenue for the non‑use of land, and any breach of the Ceiling Act must be dealt with under that Act.

Summary

The State of Gujarat challenged the validity of the proviso to Rule 81(2) of the Gujarat Land Revenue Rules, 1972 (as amended 1977), which imposed double land‑revenue rates on lands in urban agglomerations covered by the Urban Land (Ceiling and Regulation) Act, 1976, if the land was not put to the non‑agricultural use for which permission had been granted. The High Court struck down the proviso, holding it beyond the State’s rule‑making power and violative of Article 14. On appeal, the Supreme Court affirmed the High Court’s decision, observing that Section 48 of the Bombay Land Revenue Code authorises revenue based on the actual use of land, not on its non‑use, and that any breach of conditions under the Ceiling Act must be dealt with under that Act, not by imposing a revenue penalty. Consequently, the proviso was held ultra vires and unconstitutional. The appeals were dismissed.

Issues considered

Whether the proviso to Rule 81(2) of the Gujarat Land Revenue Rules, 1972 (as amended) is ultra vires Section 48 (and Sections 45, 52) of the Bombay Land Revenue Code.
Whether the proviso violates Article 14 of the Constitution by imposing a classification without a rational nexus.
Whether the State can levy double land‑revenue rates for the non‑use of land covered by the proviso.
Whether breach of conditions under the Urban Land (Ceiling and Regulation) Act, 1976 can be remedied under the Bombay Land Revenue Code.

Legislation cited

Subjects

Land revenueUrban land ceilingArticle 14Ultra viresDouble assessmentNon‑agricultural landPenaltyClassification

Judgment

STATE OF GUJARAT A
v.
M/S. ARV IND MILLS AND ORS.

DECEMBER 4, 2002

[SHIV ARAJ V. PATIL AND ARIJIT PASAYA T, JJ.] B

Land Laws:

Gujarat Land Revenue Rules, 1972-Rule 81(2) Proviso (as amended
by Gujarat Land Revenue (Amendment) Rules, 1977)-lmposition of revenue C
on non-agricultural land-On breach of condition of permission granted
under Urban Land Ceiling Act-Validity of -Held, not valid-Action for
breach of Ceiling Act can be taken under that Act itself and not required to
be taken by virtue of the proviso-Urban Land (Ceiling and Regulation) Act,
1976-P.ombay Land Revenue Code. 1879-Section 48. D
Present appeals challenge the order of High Court whereby, it had
struck down proviso to rule 81(2) of Gujarat Land Revenue fAmendment)
Rules, 1977. It had held that ifthe purpose of Rule 81(2) of the Rules is to
penalize, for converting the land to any non-agricultural use other than the
one for which permission is granted, it would amount to penalty and would be E
beyond the rule making power of the State Government; and if its object is
not to penalize, it would be violative of Article 14 of the Constitution; and that
the classification envisaged in the proviso has no rational nexus with the object
of the Land Revenue Code, 1879 which is to collect the revenue according to
use of the land.
F
Dismissing the appeals, the Court

HELD: The proviso to Rule 81(2) of Gujarat Land Revenue Rules, 1972
as amended by Gujarat Land Revenue (Amendment) Rules, 1977 covers the
land falling within the Urban Agglomerations to which the Urban Land
(Ceiling and Regulation) Act, 19i6 applies and the assessment in respect of G
such lands shall be at double the rates mentioned in the table so long such
land is not put to the non-agricultural use for which permission is granted
or deemed to be granted. Section 48 of Bombay Land Revenue Code, 1879
does not authorize levy of land revenue for the non use of the land covered by

559 H
560 SUPREME COURT REPORTS [2002] SUPP. 4 S.C.R.

A the proviso. If after taking permission under the provisions of Ceiling Act, a
person does not put the land for the non-agricultural use, it is.open to 'he
authority under the said Act to take appropriate action for non-compliance of
the conditions imposed while granting p~rmission under the provisions ofJ.he
said Act. It cannot be sai~ that for breach of condition of permission granted
B under the Ceiling Act, action can be taken under the provisions of the Bombay
Land Revenue Code by virtue of the proviso in question. Under Section 48 of
the Code, land revenue can be imposed for the use of the land and not for the
non-use of the land. Finding of the High Court in striking down the proviso
to rule 81(2) is correct. [563-C, D; 564-G, H; 565-Al

C CIVIL APPELLATE JµRISDICTION : Civil ~ppeal No. 3665-3758 of
1995.

From the Judgment and Order dated 28. l 0.1983 of the Gujarat High
Court in Spl. C.A. Nos. 583, 584 to 601, 716 to 721, 781to783, 788, 956, 1021,
1039, 1160, 1196, 1234 to 1236, 1332, 1333, 1367, 1382, 1412, 1338, 1527, 1528,
]) 1454, 1455, 1679, 1852, 1884, 1895,2123,2647,2668,2669/78, 190,410,462,463,
535,594,852, 1041, 1240, 1665, 1753, 1962, 1824,2145,2147,2458,2497,2517,
2697, 2698, 2699179, 197, 200, 332, 693, 867, 1015, 1041, 1348/80, 931, 364/82,
1040/79, 417, 947, 1588/81, 779/80, 918, 2518of1979.

R.P. Bhatt, Ms. Hemantika Wahi and Ms. Monika Bapra, for the Appellant.
E
Anip Sachthey, Ms. Indu Malhotra, Ms. Pooja Vij, M.N. Shroff, (NP) and
Shri Narain, for the Respondents.

The Judgment of the Court was delivered by

F SHIV ARAJ V. PATIL J. These appeals are by the State of Gujarat,
aggrieved only by that part of the common order dated 28.10.1983 passed by
the High Court of Gujarat in Special Civil Application No. 583 of 1978 and
several connected applications by which the proviso to Rule 81(2) of the
Gujarat Land Revenue Rules, 1972 as Amended by the Gujarat Land Revenue
(Amendment) Rules, 1977 was quashed.
G
The few facts necessary for the disposal of these appeals are that
several Special Civil Applications were filed before the High Court of Gujarat
challenging the validity of Gujarat Land Revenue (Amendment) Rules, 1977
(for short 'the Rules') on various grounds but during the hearing only the
H following issues were pressed before the High Court:-
STATE v. MIS. AR VIND MILLS [SHIVARAJ V. PATIL,J.] 561

"(3) Whether the impugned Amendment Rules of 1977 are bad in law A
and void since they seek to levy revenue on the land used for non-
agricultural purposes retrospectively, that is, with effect from September
l, 1976 without the power or authority to enact the rules retrospectively
under Section 214 of the code at all the relevant times.

(4) W\iether the attempt to validate the levy, assessment and collection B
of the non-agricultural assessment by the Gujarat Ordinance No. 20
of 1980 or for that matter by the Gujarat Act No. 2 of 1981 was to all
intents and purposes abortive.

(5) Whether the impugned· Amendment Rules of 1977 are ultra vires C
Section 48 and/or Section 45 and/or Section 52 of the Code.

(6) Whether the impugned Amendment Rules 1977 are violative of
Article 14 of the Constitution oflndia inasmuch as they are arbitrary,
unjust and discriminatory.
D
(7) In any view of the matter proviso to Rule 81 (2) of the impugned
Amendment Rules of 1977 enjoining the assessment of the land, with
effect from August 1, 1979, situate within the urban agglomerations
to which the Urban Land (Ceiling and Regulation) Act, 1976 applies,
at double fhe rates prescribed in Table 'A' for not putting such land E
to non-agricultural use for which permission is granted or deemed to
be granted is ultra vires Article 14 of the Constitution. We will take
up for consideration the first four. points simultaneously since they
are interconnected."

The High Court answered issue nos 3 to 6 against the applicants in F
Special Civil Application No. 583 of 1978 and held issue no. 7 in favour of
the applicants and struck down the proviso to Rule 81 (2) of the Rules. The
applicants in Civil Applications, aggrieved by the common order of the High
court as against findings on issue nos. 3 to 6 came before this Court. This
Court dismissed the Civil Appeal No. 82 of 1985 and other connected appeals G
affirming the judgment of the High court.

The State of Gujarat, as already stated above, has filed the present
appeals to the extent it was aggrieved by the common judgment of the High
Court. In this view, in these appeals, we are required to examine the correctness
·1
of the order of the High Court so far as it relates to striking down proviso H
562 SUPIU!ME COURT REPORTS [2002) SUPP. 4 S.C.R.
,._
A to Rule 81(2) of the Rules.
The learned counsel for the State of Gujarat in support of the appeals
urged that the High Court committed an error in quashing proviso to Rule
81(2) of the Rules. According to him, the said proviso was valid; if the
persons after taking pettnissiofi failed to comply with the conditions of
B permission by not puttittg the laiid for the purpose for which permission was
obtained, land revenue llt the double rate could be levied; there was no
question of imposing atty penalty. He tried to support the appeals pointing
out to provisiotts of the Lllttd Re\'ertlle Code and Rules and the provisions
of the µrban Land (Ceilittg afld Regulations) Act, 1976.
c
Per contra, the learn-ed t:Ulilisel for respondents made submissions
supporting the impugned judgment of the High Court adding that there was
no source of power to the State for collecting the land revenue at double the
rate as is sought to be done under the proviso to Rule 81(2) in respect of the
D land specified therein.

In order to appreciate the rival contentions, it is necessary to look at
Rule 81 to the extent it is relevant. It reads thus:

"81. Rates of non-agricultural assessment : (1) For the purpose of
E detennining generally the rate of non-agricultural assessment leviable,
the Collector shall from time to time by a notification in the Official
Gazette, divide villages, towns and cities into the following classes:-

(A) ................ ..

F (B) ................ ..

(C) ................ ..

(0) .......:........ ..

G (E) ................ .

(2) The A_ssessment shall then be fixed by the Collector at the following
rates with effect from the commencement of the revenue year 1976-77,
namely:

H
Provided that in respect of lands falling within the urban
agglomerations to which the Urban Land (Ceiling and Regulation)
Act, 1976 applies, assessment at double the rates mentioned above
shall be fixed so long as the land in question is not put to the non· D
agricultural use for which permission is granted or deemed to be
granted."

The source of power to impose land reve•ue flows from Section 48 of
the Bombay Land Revenue Code. It reads thus:-

"48. Manner of assessment and alteration of assessment Prohibition
E
of use of land for certain purposes (I) The land revenue leviable on ·
any land under the provisions of this Act shall be assessed, or shall
be deemed to have been assessed, as the case may be, with reference
to the use of that land-
F
(a) for the purpose of agriculture,

(b) for the purpose of building, and
. (c) for a purpose other than agriculture or building.

(2) Where land assessed for use for any purpose is used for any other G
purpose, the assessment fixed under the provision of this Act upon
such land shall, notwithstanding that the term for which such
assessment may have been fixed has not expired, be liable to be
altered and fixed at a different rate by such authority and subject to
such rules as the State Government may prescribe in this behalf. H
564 SUPREME COURT REPORTS [2002) SUPP. 4 S.C.R.

A (3) Where land held free of assessment or condition of being used fot
any purpose is used at any time for any other purpose, it shall be
· liable to asse.ssment.

(4) The Collectpr or a survey officer may, subject to any rules made
in this behalf under Section 214, prohibit the use for certain purposes
B of any unalienated land liable to the payment of land revenue, and
· may summarily evict any holder who uses or attempts to use the same
for any such prohibited purpose."

The High Court while·dealing with the validity of the proviso to Rule
81(2) has stated that· it has not been able to appreciate as to what is the
c purpose underlying the said proviso; if it is to penalize any occupant converting
the land to any non-agricultural use other than the one for which permission
is granted or deemed to have been granted, it would certainly amount to
penalty and wo4ld be beyond the rule making power of the State Government;
"~
if object is not to penalize any occupant, then it would be certainly violative
D of Article 14 inasmuch as the classification of the land not put to non-
agricultural use for which permission is granted are deemed to be granted and
subjecting it tQ the assessment at double the rate prescribed by tl}e respective
use in Table-A would not be an intelligible and rational classification because
on the plain reading of the proviso, it was capable of being interpreted and
applied to the class of innocent occupants, who may be, for reasons beyond
E control, unable to put the. land to the non-agricultural use for ~hich permission
is granted or deemed to be granted. The High Court further observed the
classification envisaged in the proviso has no rational nexus with the object
of the Code which is to collect the revenue according to the use of the land.

The proviso in question covers the land falling within the Urban
F
Agglomerations to which the Urban Land (Ceiling and Regulation) Act, 1976
(for short 'the Ceiling· Act') applies and the assessment in respect of such,
lands shall be at double the rates mentioned in the table so long such land
is not put to the agricultural use for which permissfon is granted or deemed
to be granted. It is clear from the provisions contained in Section 48 extracted
G above, the land revenue leviable on any land under the provisions of the
Land Revenue Act shall be assessed or shall be deemed to have been
assessed, as the case may_ be, with ref~rence to the use of the land falling
under different categories stated therein. In our view, Section 48 does not
authorize levy of land revenue for the non use of the land covered by the

H
proviso. If after taking permission un.der the provisions of Ceiling Act, a ·'·
STATE v. M/S. AR VIND MILLS [SHIVARAJV. PATIL, J.) 565
person does not put the land for the non-agricultural use, it is open to the A
authority under the said Act to take appropriate action for non-compliance
of the conditions imposed while granting permission under the provisions of
the said Act. We find it difficult to agree with the argument of the learned
counsel for the State that for breach of condition of permission granted under
the Ceiling Act, action can be taken under the provisions of the Land Revenue B
Act by virtue of the proviso in question. Under Section 48 of the Act, land
revenue can be imposed for the use of the land and not for the non-use of
the land. We also find substance in the reasons recorded by the High Court
in striking down the proviso to Rule 81 (2).

Thus, for the aforementioned reasons, we do not find any merit in these C
appeals. Consequently, they are dismissed. No order as to costs.

K:KT. Appeals dismissed.