Holding

The 1976 Act does not apply to the facts as there is no prohibited loan transaction, and therefore the orders directing restoration of the land are set aside.

Summary

Respondent No.1 filed a complaint under the Madhya Pradesh Samaj Ke Kamjor Vargon Ke Krishi Bhumi Hadapane Sambandhi Kuchakron Se Paritran Tatha Mukti Adhiniyam, 1976, alleging that land transferred to the appellants was obtained through a prohibited loan transaction and should be restored. The appellants contended that the land was purchased at a court auction for non‑payment of revenue and that no loan transaction existed, rendering the Act inapplicable. The Sub‑Divisional Officer, the Collector and the High Court held otherwise and ordered restoration of the land. On appeal, the Supreme Court examined the statutory provisions, particularly Sections 2, 5, 6 and 15, and found no material showing any loan‑related transaction concerning the lands. Consequently, the Court held that the Act did not apply, set aside the orders of the lower authorities and dismissed the claim of the respondent. The appeal was allowed without any order as to costs.

Issues considered

The applicability of the Madhya Pradesh Samaj Ke Kamjor Vargon Ke Krishi Bhumi Hadapane Sambandhi Kuchakron Se Paritran Tatha Mukti Adhiniyam, 1976 to land purchased at a court auction where no loan transaction is alleged.
Whether the transfer of such land is void under Section 15 of the Act.
Whether the complaint filed by the respondent is maintainable given the absence of a prohibited loan transaction.

Subjects

land restorationcourt auctionprohibited loan transactionMadhya Pradesh agricultural land actsub‑divisional officersection 15 void transferlimitation period

Judgment

[2008] 2 S.C.R. 443

BABOOLAL SHARDA & ANR. A
v.
SMT. SAVITRIBAI & ORS.
(Civil Appeal No. 1669 of 2002)
FEBRUARY 5, 2008
B
[DR. ARIJIT PASAYATAND P. SATHASIVAM, JJ.]
~ '
,.._ Madhya Pradesh Samaj Ke Kamjor Vargon Ke Krishi
Bhumi Hadapane Sambandhi Kuchakron Se Paritran Tatha
Mukti Adhiniyam, 1976 - ss. 2 and 5 - Land purchased in c
court auction - Complaint seeking restoration of the land
alleging transfer thereof being in violation of Adhiniyam -
Authorities concerned as well as High Court directing
restoration - On appeal, held: Adhiniyam is not applicable in
the facts of the case - Lands in question had no relation with 0
transaction of loan.
Respondent No. 1 filed a complaint under Madhya
Pradesh Samaj Ke Kamjor Vargon Ke Krishi Bhumi
Hadapane Sambandhi Kuchakron Se Paritran Tatha Mukti
Adhiniyam, 1976, stating that the land purchased by the E
appellants needed to be restored to her as the transfer
thereof to the appellants was in violation of the provisions
of the Adhiniyam. Stand of the appellant was that
purchases in question were in court auction and hence
the Adhiniyam has no application. Authorities concerned F
decided the case in favour of respondent No. 1. In writ
petition, High Court upheld the view taken by the
· authorities. Hence the present appeal.
Allowing the appeal, the Court
G
HELD: A holder of agricultural land who is a party to
any transaction of loan subsisting on the appointing date
or entered into thereafter can apply to the SDO in the
prescribed form and manner for protection and relief
443 H
444 SUPREME COURT REPORTS [2008] 2 S.C.R.

A under Madhya Pradesh Samaj Ke Kamjor Vargon Ki Krishi
Bhumi Hadapane Sambandhi Kuchakron Se Paritran
Tatha Mukti Adhiniyam, 1976~ Undisputedly the purcf)ases
made by the appellants were at court auctions. There was
no material whatsoever placed before the authorities to
B show that the lands in question had any relation to any
transaction of loan. On the contrary the court auctions
were for non-payment of revenue in respect of the lands.
There was no material before the SDO or the Collector or
the High Court to show that the appellants had any role
c to. play in the court auction or that they were responsible
for non-payment of revenue for which court auctions were
held. Therefore, the Adhiniyam ~ad no application to the
facts of the case and therefore the impugned orders
passed by the SDO, the Collector and the High Court
cannot be maintained. [Paras 4, 5 and 6] · [449-D, E, F, G;
0
450-A]
CIVILAPPELLATE JURISDICITON : Civil Appeal No .. 1669
of 2002.
From the final Judgment and Order dated 14:11.2600 of
E theHigh CouitofMadhya Pradesh, Bench at Indore in W.P. No.
as1of1991~ · · · ·
A.K ..Chitale, Niraj Sharma for the Appellants.
C.D. ·singh·, Merusagar Samantaray, Vairagy~ Vardhan,
-F Sunny Chowdhary and Prerna Kumari for the Respondents.
,' The Judgment of the.Court was delivered by
Dr. ARIJIT PASAYAT; J. 1. Challenge in this appeal is to
the order passed by a learned Single Judge of the Madhya
G Pradesh High Court, Indore Bench dismissing the writ petition
filed by the appellants under Article 227 of the Co11stitution of
India,. '1950 (in short the 'Constitution'). The· appellants had
challenged the appellate order passed by the Collector _in
exercise of appellate powers conferred by the Madhya Pradesh
H Samaj Ke Kamjor Vargon .Ke Krishi Bhumi Hadapane
BABOOLAL SHARDA & ANR. v. SMT. SAVITRIBAI 445
& ORS. [PASAYAT, J.]

Sambandhi Kuchakron Se Pa.ritran Tatha Mukti Adhiniyam, A
1976 (in short the '1976 Adhiniyam'). The original order was
I passed by the SDO on 20.11.1990. The complaint was filed by
' respondent No. 1 stating that under Section 5 of theAdhiniyam,
the land purchased by the appellants needs to be restored to
her as transfer to appellants was in violation of the stipulations B
contained in the Adhiniyam. It was alleged that Ram Prasad
... Sharda, father of the appellant No. 1 had grabbed the land and
.... after his death the land was in possession of his successor-the
appellant No.1. The appellants took the stand that the purchases
in question were in court auctions and therefore the Adhiniyam c
has no application. The SDO did not find any substance in it.
According to him, Section 15 of the Adhiniyam clearly applied
to the facts of the case. It was also held that Section 6 is also
relevant. The SDO did not accept the stand that the purchase
being under court auctions, the Adhiniyam had no application
D
holding that under the definition of "lender of money" and
"prohibited transaction of loan" the appellants were required to
restore the possession of the land to the applicant-respondent
No.1. Appeal filed before the Collector as noted above did not
bring any relief.
E
2. Before the High Court the stands taken before the SDO
and the Collector were reiterated. But the High Court had
abruptly concluded that the appellate order clearly established
that the Act was applicable. It did not examine the various points
'
raised. F
3. It may be noted at this juncture that there was a period
of limitation fixed for filing the claim after enactment of the
Adhiniyam. Appellants' specific stand was that the application
was filed much beyond the prescribed time. The High Court
merely noted that the time for filing the claims was eXtended. It G
did not record any positive finding that the appHcation was filed
1-- within the extended time.
'
Section 2 of the Adhiniyam so far as relevant reads as
follows:
H
/~
446 SUPREME COURT REPORTS [2008] 2 S.C.R.

~
A "2. Definitions - In this Act, unless the context otherwise
requires ;
,.
I

xx xx xx
(c) "holder of agricultural land" in the weaker sections of
B the people means a holder of land used for purposes of
Agriculture not exceeding eight hectares of unirrigated
land within the State whether as a Bhumiswami or an _. . ~

occupancy tenant or a Government lessee either in any
one or all of the capacities together within the meaning of
c the Code.
Explanation.- One hectare of irrigated land shall be equal
. to two hectares of unirrigated land and vice versa.
(d) "lender of money" means a person advancing loan to
a holder of agricultural land, whether registered under the
D
Madhya Pradesh Money Lenders Act, 1934 (No. 13 of
1934) or not;
(f) "prohibited transaction of loan" means a transaction
in which a lender of money advances loan to a holder of
E agricultural land against security of his interest in land,
whether at the time of advancing the loan or at any time l)
thereafter during the currency of the loan in any of the
following modes, namely;
(i) agreement to sell land_ with or without delivery of
F possession; -+
(ii) outright sale of land with or without delivery of
possession accompanied by separate agreement to re-
sell it.
.G
(iii) outright sale of land with or without delivery of
possession with a distinct oral understanding that the sale
~
shall not be acted upon if the loan is re-paid; ,
(iv) outright sale of land with or without delivery of
possession with a condition incorporated in the sale deed
H
~
"
BABOOLAL SHARDA & ANR. v. SMT. SAVITRIBAI 447
& ORS. [PASAYAT, J.]

),
to re-sell it on re-payment of the Loan; A·
(v) transaction in any modes other than those specified in
clauses (i) to (iv) affecting interest in land including a
fraudulent transaction designed to defeat the provisions
of any law regulating money lending to defeat the
provisions of any law regulating money lending or interest, B
for the time being in force, and includes all those
... transactions in which a lender of money has, after the
~
appointed day but on or before the date of publication of
this Act in the Gazette, obtained possession of land of the
holder of agricultural land through court or, by force or c
otherwise or obtained a decree for such possession
towards satisfaction of loan;"
Section 6 of the Adhiniyam reads as follows:
"(1) The Sub-Divisional Officer may, on his own motion in D
any transaction of loan and shall on receipt of an application
under Section 5 in the transaction of loan referred to
~ therein, make preliminary enquiry as he may in the
-t circumstances of the case deem fit, to ascertain whether
the transaction of loan is a prohibited transaction of loan E
and notice in From II to furnish information in the form
enclosed with the notice in respect of the land within such
time, not exceeding 1 days as may be specified in the
notice.
as per sub-sections (2), (3) and (4) of this section which F
are reproduced below:
(2) The Sub-Divisional Officer shall by a notice served on
the parties to the prohibited transaction of loan call upon
them to place all relevant facts and documents before him
G
at such place, on such date and at such time as may be
...
+ specified in the notice.
( 3) The Sub-Divisional Officer shall at the place and on
the date and time specified in the notice, afford an
opportunity to the parties of being heard in person and H
~
448
'SUPREME COURT REPORTS [2008] 2 S.C.R.

A may, if necessary, examine all of the parties interested in ~
land to elucidate information relevant to the transaction of
loan.
(4) During the enquiry the sub-divisional Officer shall, for
thee purpose of ascertaining the true nature of transaction'
B of loan, try to collect, as far as, may be, information with
respect to the following facts, namely:
(i) the amount of principal money; ). '"
. (ii) the market value of the land at the time of transaction;
c
(iii) adequacy of the amount of principal money as
consideration for sale in the context of the market value
under clause (ii);
(iv) whether the consideration shown in the document was
D paid whole or in part privately or before the Sub-Registrar;
(v) whether possession of the land was actually delivered
to the lender of money as per recitals in the said document.
If not, when and in what manner the lender of money
obtained possessed of the land;
E
(vi) What were the terms of the actual agreement between
the lender of money and the holder of agricultural and
including the rate of interest;
(vii) the extent of urgency for the loan and availability of
F other sources to the holder of agricultural land to obtain
the same;
(viii) payment, if any, made by the holder of agricultural
land to the lender of money towards the loan;
G (ix) whether the lender of money is registered money lender
or not;
(x) any other surrounding circumstances which the Sub-
-+ I

Divisional Officer may deem fit to consider."
H Section 15 of the Adhiniyam reads as follows:
~

BABOOLAL SHARDA & ANR. v. SMT. SAVITRIBAI 449
& ORS. [PASAYAT, J.]

"15. Transfer of land which is subject matter of prohibited A
transaction of loan to be null and void -Notwithstanding
anything contained in any law for the time being in force
where a lender of money transfers any land, which may be
a subject matter of a prohibited transaction of loan, by
way of sale, gift, exchange, lease or otherwise, such transfer B
shall be deemed to have been made to defeat to provisions
of this Act and be null and void."
~ .
..4.
Section 5 deals with the application for protection and
seeking relief under the Act and the same reads as follows:
c
"5. Application for protection and seeking relief under this
Act - A holder of agricultural land who is a party to any
transaction of loan subsisting on the appointed day or
entered into thereafter may apply to the Sub-Divisional
Officer within such time; and in such form and manner as
D
may be prescribed for protection and relief under this
Act."
4. A bare reading of the various provisions makes the
position clear that a holder of agricultural land who is a party to
any transaction of loan subsisting on the appointing date or E
entered into thereafter can apply to the SDO in the prescribed
form and manner for protection and relief under the Statute.
Undisputedly the purchases made by the appellants were at
court auctions. There was no material whatsoever placed before
the authorities to show that the lands in question had any relation F
to any transaction of loan. On the contrary the court auctions
"
were for non-payment of revenue in respect of the lands.

5. Learned counsel for the respondent-State vehemently
submitted that theAdhiniyam specifically referred to "Kuchakron"
that means manipulation and ill-design. There was no material G
before the SDO or the Collector or the High Court to show that
-+ the appellants had any role to play in the court auction or that
they were responsible for non-payment of revenue for which court
auctions were held.
H
450 SUPREME COURT REPORTS [2008] 2 S.C.R.

A 6. Above being the position, the Adhiniyam had clearly no
application to the facts of the case and therefore the impugned
orders passed by the SDO, the Collector and the High Court
cannot be maintained and are set aside. The claim made by
respondent No.1 deserves .to be dismissed.
B 7. The appeal is allowed but without any order as to
costs.
K.K.T. Appeal allowed.