Sri Rajah Velugoti Venkata Sesha Varda Raja Gopala Krishna v. The State of Andhra Pradesh

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

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

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

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

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

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

1^st 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

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

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

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

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

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

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 1^st 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 1^st 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.

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 1^st 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 1^st 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 13^th 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 1^st 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

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

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

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.