Holding

The State may validly exercise its option to purchase the land under Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976 even though the ceiling declaration has not been finalised, and the intended purchaser cannot set aside such purchase.

Summary

The owner of a plot in Jabalpur applied to the competent authority for permission to alienate 16,500 sq ft of land with building to a purchaser. The authority exercised its option under Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976 to purchase the property on behalf of the State, and the owner executed a sale deed in favour of the State. The intended purchaser filed a writ petition challenging the purchase, arguing that the ceiling declaration had not been finalized and that the transfer was void under Sections 5(3) and 10(4) of the Act. The High Court held the purchase illegal, but on appeal the Supreme Court ruled that the State may exercise its option and complete the purchase even before the ceiling declaration is finalized, and that the purchaser cannot contest the State’s exercise of the option. The Court also held that the appeal was not abated despite the death of the owner, as the vendor had not objected to the State’s purchase. Consequently, the appeal was allowed, the High Court order reversed, and the writ petition dismissed.

Issues considered

Whether the State can exercise its option to purchase land under Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976 when the ceiling declaration has not been finalized
Whether a transfer of land made before finalisation of the ceiling declaration is void under Sections 5(3) and 10(4) of the Act
Whether an intending purchaser can challenge the State’s exercise of the option
Whether the appeal stands abated due to the death of the owner and absence of legal representatives

Legislation cited

Urban Land (Ceiling and Regulation) Act, 1976s. 10(4), s. 25(2)(a), s. 27(1), s. 5(3)

Subjects

Urban land ceilingOption to purchaseAlienation of landCeiling proceedingsWrit petitionState purchaseAbatement

Judgment

A STATE OF MADHYA PRADESH
v.
--+-
SURENDRA KUMAR AND ANR.
'
JANUARY 18, 1995

B [K.RAMASWAMY AND N. VENKATACHALA, JJ.]

Urban Land (Ceiling and Regu.lation) Act, 1976-Sections 27(1), ..._
25(2)(a), 5(3) and 10(4}-Application seeking permission to alienate
•
land-Competent Authority exercising its option to purchase proper-
c ty-Legality. of-Whether State could purchase property though declaration
was not finalised-Held, yes--lntending purchaser cannot complain against
exercise of option by State.

An application was submitted before the competent authority seek-
Ing permission to alienate land to respondent. The competent authority
D exercised option to purchase the property. The owner executed the sale ~

deed in favour of the State in respect of the property which was agreed to
be sold to the first respondent. The first respondent filed a writ pefttion
in the High Court impugning the legality of the purchase made by the
government. The High Court held that until the ceiling proceedings were
E completed in accordance with law and the surplus area was determined,
the owner was not entitled to sell the land and thus purchase of the land
by the government was not valid in law. Hence this appeal by the State.

The respondent submitted that sub s.(3) of section 5 of Urban Land
(Ceiling and Regulation) Act, 1976 prohibited a person from alienating fr
F any vacant land by way of sale, etc., until he had furnished the statement •
u/s 6 and a notification regarding the excess vacant land held by him had
beea published and any such transfer made in contravention thereof shall
be deemed to be null and void. It was next contended that since the land
proposed to be sold was within the ceiling limit, no permission u/s 27(1)
G was needed. It was alleged that since the owner died and the legal repre-
sentatives had not been brought on record, the appeal stood abated. l
->-
Allowing the appeal, this Court
,
HELD : 1.1. After the application seeking permission to alienate the
H · land by a person has been made, two options are open to the competent
396
STATEOFM.P.v. S.KUMAR 397

authority. In a case where the State· intends to purchase the property A
exercising its option, there is.no prohi.bition for the State to purchase the
,..... property, though the declaration has not been finalised and exercise of
option as envisaged under sub-s. (S)(a) of s.27 and complete the sale
transaction in the manner contemplated therein. Thereafter they can
finalise the excess area include the area purchased by it while as calculat·
ing excess land as the total holding of the person and accept only other
B
excess area held by the person and deduct the land or building purchased
by it from the ceiling area which the person is entitled to retain under the
i
Act. (400-A, BJ

The second option is that since the proceedings have not been c
finalised, either to return the application, the draft declared should be
taken up and declaration should be finalised and thereafter the option can
be exercised to purchase the land and building or to permit the sale of the
land to the third parties. [400-C]

In the instant case, the State exercised the first option and pur- D
chased the property. There was no illegality in the exercise of the option
by the State to purchase the property sought to be sold by the owner. The
respondent, being only an intending purchaser, could not complain that
until the draft proceedings were finalised and the declaration under sub-
s.(3) of Section 10 had been published, the State could not exercise the
option to purchase the property. [400-D, E]
E

1.2. The proposed vendor had not objected to the exercise of the
option. She had already soid the land to the State Government and only
the intending purchaser had objected to it. Therefore, on the death of
~ owner even when her legal representatives were not brought on record, the F
t· appeal had not been abated. [400-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4452 of
1984.

From the Judgment and Order ~ated 22.9.81 of the Madhya Pradesh G
High Court in Misc. P.No. 271of1980.
A.
U .N: Bachawat, Sakesh Kumar and S.K. Agnihotri for the Appel-
lants.

S.V. Deshpande for the Respondents. H
I

398 SUPREME COURT REPORTS [1995) 1 S.C.R.

A The following Order of the Court was delivered :

This appeal by special leave arises from the order of the Division
Bench of the Madhya Pradesh High Court in Misc. Petition No. 271/80
dated September 22, 1981. One Km. Leila Violet Manorama Laxamanan,
B daughter of Dr. P.N. Laxamanan, submitted an application before the·
competent authority (Annex 1 filed in this court on October 31, 1979)
seeking permission to alienate 16,500 sq. feet of the land together with
4,141 sq. ft. built up area situated in Plot No. 7/1, Block No. 32 of Jabalpur
city bearing Municipal No. 578, South Civil Line, Jabalpur to the respon-
dent. On receipt thereof, the competent authority on December 29, 1979
C exercised option to purchase the property. In furtherance thereof the
owner executed the sale deed on May 16, 1980 in favour of the State of
Madhya Pradesh of the property which was agreed to be sold to the first
respondent. The first respondent thereafter approached the High Court by
way of above writ petition impugning the legality of the purchase made by !
D the government. The High Court in the judgment held that the sal~ was
not legal. In reaching this conclusion, the High Court held that until the
ceiling proceedings are completed in accordance with law and the s_urplus
area is determined, the owner is not entitled to sell the land and thus
purchase of the land by the government is not valid in law. Thus this appeal
by special leave.
E
The relevant provisions, which require mention for rendering the
Controversy, are ss.27(1), 25(2)(a), 3(5) and 10(4) of the Urban Land
(Ceiling and Regulation) Act, 1976, (for short, 'the Act'). Section 27(1)
postulates that "notwithstanding anything contained in any other law for
F the time, being in force, but subject to the provisions of sub-s.(3) of S.5
and sub-s.(4) of s.10, no person shall transfer by way of sale ........ any
urban or urbanishable land with a building ........ or a portion only of such
building for a period of ten years of such commencement or from the date
on which the building is constructed, whichever is later, except with the
previous pennission in writing of the competent authority. On receipt of such
G an application seeking permission by the person, sub-s.S(a) gets attracted
which envisages that the competent authority shall have the first option to
purchase such land with building or a portion only of such building, on
behalf of the State Government at such price as may be agreed upon
between the competent authority and the applicant. In case such option
H has not been exercised within 60 days fiom the date of the receipt of the
STATE OFM.P. v. S. KUMAR 399'

.application, clause (b) gives power to the person of that buµding or a .A
portion only of such building that it shall be lawful for such person to
transfer the land to whomsoever he may like, provided that where the
competent authority exercises within the period aforesaid the option to
purchase such land with building or a portion only of such building, the
ex~cution of· the sale deed shall be completed and the payment of the B
purchase price thereof shall be made within a period of three months from
the date on which such option is exercised. It would thus be clear that
subject to the provisions of sub-s.(3) of s.5 and sub-s.(4) of Sec.10 and
notwithstanding anything contained in any law for the time being in force,
the person holding land in excess of ceiling area shall not alienate such
area except with the previous permission in writing by the competent C
authority.

It is true; as rightly contended by Sri Deshpande, the learned counsel
for the respondent that sub-s.(3) of s.5 prohibits a person from alienating
any vacant land by way of sale, etc. until he has furnished the statement D
under s.6 and a notification regarding the excess vacant land held by him
has been published under sub- s.(1) of s.10 and any such transfer made in
contravention thereof shall be deemed to be null and void. Equally under
sub-s.(4) of s.10 during the period commencing on the date of publication
of the notification under sub-s.(1) and ending with the date specified in the E
declaration made under sub-s.(3) the person holding excess of vacant land
including any portion thereof specified in the notification has sold the land
by way of sale or transfer, etc. in contravention oUhe Act, such transfer
sh~ be deemed to be null and void and no person shall alter or cause to
be altered the use of such excess vacant land during that period. Sub-sec-
tion (1) of s.5 gives power to the competent authority in calculating the F
excess land that any land so transferred shall also be taken into account in
calculating the extent of vacant land held by such person and the excess
vacant land in relation to such person shall, for the l'urposes of the
Chapter, be selected out of the vacant land held by him after such transfer
and in case the entire excess vacant land has been sold or cannot be so G
selected, the balance, or, where no vacant land is held by him after the
transfer, the entire excess vacant land, shall be selected out of the vacant
land held by the transferee. Thus, it could be seen that during the pendency
of the proceeding an application could be made under sub-s.(1) of s.27 of
the Act for seeking permission for transfer. / H
400 SUPREME COURT REPORTS [1995) 1 S.C.R.

A After the applic3:tion has been made, two options are open to t~e
competent authority. In a case where the State intends to purchase the . +
property exercising its option, there is no prohibition for the state to
purchase the property though the declaration has not been finalised and
exercfac option as envisaged under sub-s.(5)(a) of.s.27 and complete the
B ~ale transaction in the manner contemplated therein. Thereafter they can
finalise the excess area include the area purchased by it while as calculating
excess land as the total holding of the person and accept only other excess
area held by the person and deduct the land or building purchased by it
from the ceiling area which the person is entitled to retain under the Act.
The person in this case is entitled to L5,000 sq.meters as ceiling ·area.
c
The second option is that since the proceedings have not been
finalised, either to return the application, the draft declaration should be
taken up an,d declaration should be finalised and thereafter the option can
be exercised to purchase the land and biiilding or to permit the sale of the
land to the third parties. In this situation, the State appears· to have
D exercised the first option and purchased the property. Therefore, we find
that there is no illegality in the exercise of the option by the State to
purchase the property sought to be sold by the owner. The respondent,
being an intending purchaser, cannot complain that until the draft proceed-
ings have been finalised and the declaration under sub-s.(3) of s.10 has
E been published, the State cannot exercise the option to purchase the
property. It is next contended that since the land proposed to be sold is
within the ceiling limit, no permission. under. s.27(1) is needed. There is no
substance in the contention on the statement made hy the person she was
admittedly in possession of more than the ceiling area. So permission under
s.27(1) is niandatory and she had rightly filed the application. ..,
F
It is next contended that since the owner died and the legal repre-
sentatives have not been brought on record, the appeal stands abated. We
find no force in the contention. The proposed vendor had not objected to
the exercise of the option. She had already sold the. land to the State
Government and only the intending purchaser has objected to it. There-
G fore, the appeal has not been abated. The appeal is accordingly, allowed.
The order of the High Court is reversed. The writ petition stands dis-
missed. In the circumstances, the parties are directed to bear their own
costs throughout.

A.G. Appeal allowed.