Holding

The Authority cannot invoke clause 4(xiv) or its statutory powers under the Bihar Industrial Areas Development Authority Act to cancel or repossess land transferred under the 1969 grant, as the clause applies only to total failure of use and the grants are governed by the Government Grants Act, not the Transfer of Property Act.

Summary

The State of Bihar (later Jharkhand) granted Tata Steel 350 acres of land in 1969 (Grant‑I) for a 99‑year lease, requiring use of the land for a specified industrial purpose within one year. Tata Steel utilized about 200 acres for its alloy and steel plants. In 1973 the State transferred 1,266 acres to the Bihar Industrial Areas Development Authority (the Authority) under Grant‑II. The Authority later issued a show‑cause notice invoking Section 6(2‑a) of the Bihar Industrial Areas Development Authority Act and clause 4(xiv) of Grant‑I, demanding surrender of 150 unutilized acres and cancelling 100 acres. The High Court dismissed Tata Steel’s writ petition. On appeal, the Supreme Court held that the Authority’s power under the Act applies only to allotments it itself makes, not to land transferred under the earlier Grant‑I, and that clause 4(xiv) can be invoked only for total failure to use the land, not for partial non‑utilisation. The rights and obligations of the grants are governed by the Government Grants Act, 1895, not the Transfer of Property Act. Consequently, the order cancelling the allotment was set aside and the writ petition allowed.

Issues considered

The extent of the Authority’s statutory power under Section 6(2‑a) and (2‑b) of the Bihar Industrial Areas Development Authority Act to cancel or recover land transferred under the earlier Grant‑I.
Whether clause 4(xiv) of the 1969 lease (Grant‑I) can be invoked to terminate the lease for partial non‑utilisation of the allotted land.
Whether the Government Grants Act, 1895 governs the rights and obligations arising from the 1969 and 1973 grants, thereby excluding the Transfer of Property Act, 1882.
Whether the land in dispute falls within the ‘industrial area’ or ‘development area’ notified under the Act, affecting the Authority’s jurisdiction.

Legislation cited

Bihar and Orissa Municipal Act, 1922s. 196, s. 197, s. 198, s. 199, s. 200, s. 201, s. 202
Bihar Industrial Areas Development Authority Act, 1974s. 3, s. 4, s. 6, s. 9
Government Grants Act, 1895s. 2, s. 3
Land Acquisition Act, 1894
Transfer of Property Act, 1882s. 106, s. 111

Subjects

Government Grants ActTransfer of Property Actlease terminationindustrial area development authoritypartial land utilisationstatutory powerslease cancellationclause interpretation

Judgment

(2015) 14 S.C.R. 1

TATA STEEL LTD. A
v.
STATE OF JHARKHAND & OTHERS
(Civil Appeal No. 7929 of 2015)
B
SEPTEMBER 24, 2015
[J. CHELAMESWAR AND
ABHAY MANOHAR SAPRE, JJ.]
Bihar Industrial Areas Development Authority Act, 1974: c
State of Bihar (predecessor-in-interest of the respondent
State) transferred an interest in land admeasuring 350 acres
for a period of 99 years by a document dated 18.3. 1969-To
appellant-Company for setting up industry- One of the terms 0
and conditions for transfer [Condition No. 4 (xiv)] stipulated
that the land was to be used by the appellant for the specified
purpose within a period of one year failing which lease was to
be terminated - Appellant utilized only 200 acres of land for
setting up industry- Enactment of 1974 Act with the object E
of planned development of industrial areas - Respondent-
Authority constituted under an ordinance which preceded the
Act- State of Bihar as per document dated 18. 07. 1973 made
another grant of 1266 acres of land to the Authority, to own,
possess and hold the same forthe development of Industries F
- Show Cause Notice issued by the Authority to appellant for
surrender of unutilized 150 acres of land out of the allotted
350 acres of land by taking action u/s. 6(2-a} of the Act and
Clause 4 (xiv) of the document dated
18. 03. 1969 - Subsequently 100 acres of the land out of the G
150 acres was cancelled by order dated 17. 11.2008 -
Appel/ant~Company's writ petition against the order dated
17. 11.2008 dismissed - On appeal, held: The respondent-
Authority has the power u/s. 6(2-a) to cancel the allotment of
H
1
2 SUPREME COURT REPORTS (2015] 14 S.C.R.

A land only in the case of allotment made by it - In the case of
property transferred by the State (prior to the Act) can be dealt
with by the Authority only in terms of the original document
by which the property was transferred - Clause (xiv) of the
terms and Conditions of the document dated 18.3. 1969 (by
B which the property in question was transferred by the State)
does not contemplate taking possession of part of the land-
It only contemplates termination of the Grant in the event of
failure to use the land for specified purpose - Thus, it can
only be invoked in case of total failure - The allottee-
C Company in the present case, since established the industry,
cannot be said not to have utilised the land for specified
purpose - Clause (xiv) r/w clause (v) shows that it was never
intended by the Grant that every inch of the land must be
utilised for the purpose of establishment of industry.
0
Government Grants Act, 1895:

Applicability of the Act - Held: The Act does not apply
to instrumentalities and bodies corporate controlled by the
. E State.
s.2 - Transfer of land or any interest therein by the
Government - Is not governed by the Transfer of Property
Act, 1882- They are to be ascertained from the tenor of the
F document made by the Government evidencing such
transfer.

Allowing the appeal, the Court
HELD: 1. As per section 2 of the Government Grants
G Act, 1895, when Government transfers land or any
interest therein to any person, such a transfer is not
governed by the Transfer of Property Act, 18~2. The
rights and obligations flowing from the transfer of either
a piece of land or an interest therein by the Government
H cannot be determined on the basis of the rights and
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 3

obligations specified under the Transfer of Property Act, A
1882. They are to be ascertained only from the tenor of
the document made by the Government evidencing such
a transfer. The transaction dated 18.3.1969 is a grant
(Grant-I) covered by the Government Grants Act.
·Therefore, the rights and obligations created by the B
documents dated 18.03.1969 (Grant I) and the document
dated 18.07.1973 (Grant II) are regulated only by the terms
of the documents by which those grants were made.
[Paras 6, 16, 17] [11-A; 17-8-D; 18-A, F]
c
Hajee S. V.M. Mohamed Jamaludeen Bros. & Co.
v. G.overnment of Tamil Nadu 1997 (2) SCR 413
: (1977) 3 sec 466 - relied on.
2.1 The power (legal authority) of the respondent
0
Authority to deal with any land can flow from two.
sources, (i) the statutory powers conferred on it under
various provisions of the Bihar Industrial Areas
Development Authority Act, 1974 over the areas notified
under the Act to be either "industrial area" or E
"development area". The powers and functions of the
respondent Authority are not common with reference to
those two categories; and (ii) holding of land - The
Authority is a body corporate by virtue of Section 3(2) of
the Act. (It is capable of holding and disposing of F
properties both movable and immovable and the
expression holding can mean holding either as owner
or lessee or mortgagee etc.). Such right to hold
immoveable property extends to holding of such
property even beyond the areas which are notified under G
the Act either as "industrial area" or "development area".
[Para 27] [22-F-G; 23-A·D]
2.2 It is not correct to say that a transfer of land
evidenced by Grant-II could not have been legally made H
4 SUPREME COURT REPORTS [2015] 14 S.C.R.

A insofar as the property in dispute is concerned without
the State of Bihar first resuming the lands which are in
the possession of the appellant pursuant to Grant-I.
Though the State of Bihar did not have possession of
the land in dispute when it made the Grant-II in favour of
B the Authority, the second grantee (i.e. the Authority) takes
the property covered by the Grant-II subject to the rights
of the earlier grantee. There is no need in law for the
termination of the interest created under Grant-I in favour
of the appellant, before the State of Bihar chose to
C transfer the property covered by the Grant-II, because
the interest created under Grant-I was a limited interest
and the title of the property still vested with the State of
Bihar. [Para 29] [24-D-G]
D 2.3 The power to terminate the lease in exercise of
the statutory power under Section 6(2-a) can be resorted
to only in one contingency that is "necessary effective
steps are not taken within the fixed period to establish
the industry". Section 6(2) authorizes the respopdent
E Authority to make an allotment of land and execute a
lease deed. It also authorises the Authority to cancel
"such allotment or lease", obviously meaning allotments
and leases made by the Authority. The expression
"allotment" in the context only means a formal
F administrative decision of the Authority to lease a
particular piece of land in favour of an applicant who is
desirous of establishing industry thereon. Once such a
decision is taken, the respondent Authority can transfer
an interest in such a piece of land by way of a lease. The
G expression lease in the context of sub-section (2) can
only mean a 'lease' as defined under the Transfer of
Property Act because the Government Grants Act does
not apply to instrumentalities and bodies corporate
H controlled by the State. A lease of immovable property
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 5

granted for the agricultural or manufacturing purposes A
is terminable only in the manner indicated under Section
106 of the Transfer of Property Act. [Para 33] [25-D-G;
26-A·B]
2.4 Section 111 of the Transfer of Property Act B
specifies various contingencies in which a lease of
immovable property determines. Sub-section (h)
stipulates that expiration of a notice to determine the
lease duly given by the lessor (in compliance with the
requirements of Section 106) is one of such c
contingencies but Transfer of Property Act does not
authorize the lessor to physically recover possession
of the property on the determination of the lease. The
lessor is still required to approach the competent court
for the recovery of the possession of the property over D
which the lease is terminated. Section 6(2-b) of the Act
on the other hand authorizes the respondent Authority
to take possession of the property which it had allotted
and leased out earlier in exercise of the power under sub-
section (2). Sub-sections (2-a) and (2-b) do not make E
any mention of the termination of lease. They only speak
of the "cancellation of allotment" made, which clearly
indicates that the cancellation of allotment and taking of
possession of the "plot/shed" can be resorted to only ii'!
the case of allotment made by the respondent Authority. F
[Para 33] [26-B; 27-A·EJ
2.5 In the cases of property transferred by the State
(prior to the Act by whatever name such transfer is called)
can be dealt with by the respondent Authority only in G
terms of the original document by which the property
was transferred because such a transfer is a grant within
the meaning of Government Grants Act, i.e. Grant-I
transfer by the document dated 18.3.1969 insofar as the
appellant is concerned. Therefore the Authority is entitled H
6 SUPREME COURT REPORTS [2015] 14S.C.R.

A to deal with the land in question only as a 'grantee' under
the 'Grant-II' dated 18.07.1973 and holder of the land.
[Para 33] (27-E-F]
3.1 Clauses (iv), (v), (xiv) and (xvii) of Condition No.4
8 of the Terms and Conditions of the 'lease' under Grant-I
dealt with the termination of the grant made in favour of
the appellant. The only clause, invoked in the show cause
notice dated 15.1.2002 of the Authority is clause (xiv).
Clause (xiv) stipulates that in the event of the appellant
c . failing to "use the land for the specified purpose within
a period of one year from the date of the lease" (Grant-I),
the same may be terminated and the appellant be evicted
from the lands without notice. (Paras 34, 41, 43] (27-G-
H; 28-A; 31-F-G; 32-C]
D
3.2 To understand the meaning and scope of clause
(xiv), the following factors are required to be examined ;
(i) purpose for which the Grant was made, (ii) the terms
and conditions upon which the Grant was made, (iii) the
E various contingencies under which the Grant could be
terminated in .full or in part etc. (iv) the scheme of the
Grant. The land in dispute was transferred to the
appellant for a specific purpose under Grant-I. The
appellant did in fact establish the industry for the
F establishment of which the Grant-I was made and has
been successfully running the industry for the last about
40 years (approximately). For the said purpose, the
appellant utilised a substantial portion of the land
covered by the Grant and therefore, it cannot be said
G that the appellant did not utilise the land for the purpose
specified under the Grant-I. Such a Grant was made for
a consideration (Salami of Rs. 24,48,670/-) apart from an
annual rent for the land which the appellant has
admittedly been paying. [Para 44] [32-F-H; 33-A·C]
H
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 7

3.3 Analysis of the scheme of clauses (iv), (v), (xiv) A
and (xvii), reveals that only clauses (iv) and (v) speak
about "any part" or "parts'! of the land which the
appellant is liable to transfer on demand by the Authority
under clause (iv) or voluntarily under clause (v). Clause
(xvii) stipulates the right of the respondent-Authority "to B
resume and enter upon the whole of the said land" in
the event of breach by the appellant of any of the terms
and conditions of ·Grant-I, whereas clause (xiv)
significantly does not employ the expression "part" or .
"parts of the land". [Para 44] [33-D-E] · C
3.4 Clause (xiv) does not contemplate 'taking
possession of parts of the land' in contra-distinction to
clauses (iv) and (v). It only contemplates the termination
of the Grant-I in the event of the failure on the part of the o
appellant to use the land for the specified purpose and
eviction of the appellant from the land. Therefore, it can
only be invoked in the case of total failure to utilise the
land for the specified purpose. Clause (xiv) read with
the right of the appellant.under clause (v) to sell a part of E
the land covered by the Grant-I which is no longer
required by him, can lead to only one conclusion that it
was never intended by the Grant-I that every inch of the
land must be utilised for the purpose of the
establishment of the industry. Any other construction F
of clause (xiv) would simply render the clause (v)
meaningless and destructive of the right created
thereunder in favour of the appellant. Therefore, the
respondent-Authority is not entitled to invoke clause (xiv)
in support of its impugned decision. [Para 44] [33-F-H; G
34-A-C]
Case Law Reference
1997 (2) SCR 413 relied on Para 16
H
8 SUPREME COURT REPORTS (2015] 14 S.C.R:

A CIVIL APPELLATE JURISDICTION: Civil Appeal No.
7929 of 2015.
From the Judgment and Order dated 10.09.2012 of the
High Court of Jharkhand at Ranchi in Writ Petition No. 6042 of
2008.
B
A. M. Singhvi, Gaurab Banerjee, Sr. Advs., Amar Dave,
Ms. Nandini Gore, Abhishek Roy, Ms. Tahira Karanjawala,
Ms. Trishala Kulkarni, Amit Bhandari, Sahil Tagotra,
M//s. Karanjawala & Co. for the Appellant.
c Ajit Kumar Sinha, Neeraj Kr. Jain, Sr. Advs., Tapesh
Kumar Singh, Mohd. Waqvas, Manish Mohan, Aniket Jain,
Ardhendumauli Kumar Prasad, Umang Shankar for the
Respondents.
The Judgment of the Court was delivered by
D CHELAMESWAR, J. 1. Leave granted.
2. Aggrieved by the judgment of the Jharkhand High Court
dated 10.09.2012 in Writ Petition No. 6042 of 2008, the
unsuccessful petitioner therein preferred the instant appeal.
E 3. The writ petition was filed aggrieved by an order dated
17.11.2008 of the Managing Director (respondent no.3 herein)
of the Adityapur Industrial Area Development Authority,
(respondent no.2- hereinafter referred to as the "AUTHORITY"),
a body corporate created under Section 3 of the Bihar Industrial
F Areas Development Authority Act, 1974 (hereinafter referred
to as "the ACT").
4. The first respondent (the State of Jharkhand) is carved
out of the State of Bihar on 15'h November 2000 by a
parliamentary enactment called 'the Bihar Reorganization Act,
G 2000'. The first respondent is the successor-in-interest of the
State of Bihar insofar as the property in dispute is concerned.
5. The appellant herein is a company running various
. industries. At the request of the appellant, the State of Bihar
H transferred an interest in land admeasuring 350 acres at
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 9
[CHELAMESWAR, J.]

Adityapur for a period of 99 years. It appears from the A
impugned judgment that the said land was divided into "a few
hundreds of plots of different dimensions in various small
areas". The transfer is covered by a document dated
18.03.1969, purported to have been executed on behalf of the
Governor of Bihar.in favour of the appellant company. Parties B
have been described as LESSOR and LESSEE in the said
document. The crux of the transaction is described in the
document as follows:
"WHEREAS the lessee has applied for the lands C
described and specified in Part 1 of the Schedule
appended hereto together with all rights, covenants and
appurtenances thereto belonging except and reserving
unto the lessor all mines, minerals in and under the said
land or any sort thereof for establishing (i) Alloy Tool D
and Special Steel Plant (ii) the Roll Foundry Project.
NOW THIS INDENTURE WITNESS ETH:
In consideration of the payment to the lessor by the
lessee of the premium or salami of Rs.24,48,670/- E
(Rupees Twenty four lacs forty eight thousand six
hundred seventy only) calculated at Rs.7000/- (Rupees
Seven thousand only) per acre (including proportionate
development case of the area on or before the execution
of these presents and of the rent hereby reserved and · F
of the covenants and agreements on the part of the
lessee and fully mentioned in Part II of the Schedule,
the lessor doth hereby demise unto the lessee all the
piece of land mentioned and described in Part I of the
Schedule." G
The transfer is subject to various terms and conditions specified
in Part-II of the said document. Under condition No.1, the
"lease" is given for 99 years subject to renewal at the option of
either party for s-uch period as may be mutually agreed upon. H
10 SUPREME COURT REPORTS (2015) 14 S.C.R.

A Condition No.2 stipulates annual payment of Rs17,490.50 at
the rate of Rs.50/- per acre in one installment payable on or
before 31st March every year. Rent is liable to be revised every
twenty years.

8 "1. That the lease of land detailed in Part I of the Schedule
is given for ninety nine (99) years to the lessee by the
lessor subject to renewal at the opti"on of either Party
for such period as may be mutually agreed upon.

2. That the lessee shall pay annually to the State
c Government or their nominee as rent, the sum of
Rs.17,490.50 (Rupees Seventeen Thousand Four
Hundred Ninety and Fifty Paisa only) at the rate of Rs.50/
- per acre in one installment on or before 31st March,
every year. The said rent is liable to be revised every
D
twenty years in accordance with provisions of law or
any Rules framed by Government of Bihar as may be in
force for the time being and in the absence of any such
law rules then as may be fixed by the lessor."

E 6. Condition No.4 contains various "covenants" between
the parties. Clause (xiv) stipulates that the land shall be used
by the appellant for the specified purpose within a period of
one year from the date of the lease failing which the lease may
F be terminated and the appellant evicted from the land without
notice.

"4.(xiv) That the lessee shall use the land for the specified
purpose within a period of one year from the date of the
•
lease, failing which the lease may be terminated and
G the lessee evicted from the lands without notice. In case
extension is required it can be granted within the
discretion of the lessor."

The transaction, in our opinion, is a grant (hereinafter referred
H to as GRANT-I for the sake of convenience~ covered by the
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 11
[CHELAMESWAR, J.]

Government Grants Act 1895. We shall deal with the said Act A
and the reasons for our conclusion that the so called lease
dated 18'h March, 1969 is a grant in some detail later in this
judgment.

7. Admittedly, the appellant herein utilized an extent of B
about 200 acres of the abovementioned 350 acres of land for
setting up (i) Alloy Tool and Special Steel Plant (ii) the Roll
Foundry Project, the specified purpose for which the
GRANT-I was made to the appellant.

8. In the year 1974, the State of Bihar made the ACT. C
The object of the ACT is to "provide for planned development
of Industrial Areas and promotion of Industries and matters
appurtenant thereto". (The ACT was preceded by an Ordinance
of 1972) The ACT was adopted by the State of Jharkhand.
D
9. By a document dated 18.7.1973, the Governor of Bihar
made another grant (hereinafter referred to as GRANT-II for
the sake of convenience) of an extent of 1266 acres-of land,
described in. the Schedule attached to the said document, to
the AUTHORITY "to own, possess and hold the same for the E
purposes of the development of industries of that area".

"Now, therefore, the Governor of the State of Bihar, the
GRANTOR, does hereby make this grant of an area
of land together with structures and appurtenance F
thereto measuring more or less 1266 acres, fully
described in the schedule below UNTO the GRANTEE
to own, possess and hold the same for the purposes of
the development of industries of that area with powers
to use the said lands for the purposes of development G
of industry in planned manner and in that connection to
lease out pieces of lands structures and appurtenance
thereto to entrepreneurs for a period of not exceeding
99 years on such terms and conditions as the Authority
may deem fit; H
12 SUPREME COURT REPORTS [2015) 14 S.C.R.

A And further whereas this grant is made subject to the
condition that in the event of the GRANTEE ceasing to
function or in the event of the lands hereby granted being
of no· use for the purposes for which the grant is made,
the lands granted will automatically revert to the
B GRANTOR and the GRANTEE will be divested of all
the rights, title and interest would get vested in the
GRANTOR but subject to the rights created in the
entrepreneurs and further subject to the condition that
the GRANTEE would abide by the instructions of the
c Government from time to time."

10. By a letter dated 01.09.2000 of respondent no.3, the
appellant herein was called upon to surrender an extent of 150
acres of land on the ground that out of 350 acres of land 'leased'
D to the appellant, about 150 acres of land was still lying vacant
for more than 25 years and there was demand for land from
other entrepreneurs for setting up industries. After some
correspondence in this regard, respondent no.3 issued notice
dated 15.01.2002 asking the appellant herein to show cause
E why action under Section 6(2-a) of the ACT and Clause 4 (xiv)
of the 'lease deed' (GRANT-I) be not taken for resuming 150
acres of land which remained unutilized. Thereafter, there was
lot of correspondence between the parties, the details of which
are not necessary.
F
11. On 17.11.2008, respondent no.3 passed an order.
purporting to cancel the allotment of 100 acres out of 150 acres
of land lying vacant in the possession of appellant and
terminating the GRANT-I interestingly without any qualification
G with regard to the extent. The relevant part of the order reads
as follows:

"Clearly, Tata Steel has failed to utilize the allotted land
even after the lapse of almost 40 years and is only trying
H to keep the land in its custody thus denying the
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 13
[CHELAMESWAR, J.)

opportunity of land allotment to other entrepreneurs. A
Mentionable, that all the small and medium sector units
located in AIADA area are governed by the same rules
for setting up the industries and utilization of the land.
Hence there appears to be no reason for any special
consideration to be given to the Tata Steel for violating B
the conditions of lease. However, taking considerate
and liberal view of the whole issue and also the all-round
performance of TISCO LTD and finally the Jharkhand
Industrial Development Authority Act and provisions of
allotment and lease deed arid by the powers confirmed C
upon me u/s. 6 sub clause 2(a) 2(b) of Jharkhand
Industrial Area Development Authority allotment of 100
acres of land out of 150 acres lying unutilized and
vacant is cancelled, lease terminated and cost D
forfeited.
Further the unit is directed to utilize the remaining portion
of vacant land within six months failing which necessary
action would be taken to cancel the land. A copy of this
order may be sent to the company." E
12. Aggrieved by the order dated 17.11.2008, the
appellant herein filed Writ Petition No.6042 of 2008 in the High
Court of Jharkhand. By the impugned judgmeh~ the writ petition
was dismissed, holding: f
"29. A bare perusal of Sub-Clause(iv) will clearly indicate
that it deals with two subjects one is based· on the
requirement of the State Government/or its successor
which may require for resuming the lease or part of the
lease "for public purpose". Here in this case the G
proceeding was not initiated under this provisions as it
is not the case of the Government / lessor that the
Government requires the land in question for any "public
purpose". The lessor has started proceeding !or eviction
H
14 SUPREME COURT REPORTS [2015]14S.C.R.

A of the lessee under proviso to Sub-Clause (iv) of
Condition 4 because of non-use of the part of the lease
land therefore., in view of the proviso to Clause (iv) of
the lease condition No. 4 of Part II of the lease, the lessor
had right to proceed for determining the lease of the
B part of the property which has not been utilized for the
purpose for which it was acquired by the lessee on
lease."
Hence, the appeal.
c 13. The following principal submissions are made before
us on behalf of the appellant:
(i} That, in view of the GRANT-I the State of Bihar could not
have made GRANT-II in favour of the AUTHORITY without
first resuming the lands covered by GRANT-I.
D
(ii) That, GRANT-II dated 18.7.1973 does not include the
land which is subject matter of GRANT-I between the
appellant and the State of Bihar.
(iii) Assuming for the sake of argument that the land in
E occupation of the appellant is also a part of the GRANT-
11, the AUTHORITY can only exercise such rights as are
available to it as a successor-in-interest of the State of
Bihar under the GRANT-I. The third respondent could
not invoke the powers conferred under the ACT insofar
F as the lands which are in occupation of the appellant
are concerned.
(iv) The sources of legal authority relied upon for taking the
impugned action against the appellant, the show-cause
notice dated 15.01.2002 and the final order dated
G
17 .11.2008 purporting to cancel the allotment and
terminate the GRANT-I are different. Therefore, there
is a denial of reasonable opportunity to the appellant to
effectively represent its case before the AUTHORITY.
H (v) The High Court justified the impugned order dated
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 15
[CHELAMESWAR, J.]

17.11.2008 on a totally new ground not relied upon either A
in the show-cause notice or the final order i.e. violation
of sub-clause (xiv) of condition No.4 contained in Part-
. II of GRANT-I. Such a process is impermissible in law
·as the same would have the effect of denying a
reasonable opportunity to the appellant to effectively win B
the case.
(vi) It is submitted that sub-clause (xiv) of condition No.4
authorizes the AUTHORITY to 'terminate the lease' and
evict the 'lessee' from the land only on the failure of the C
lessee to use the land for the 'specified purpose' within
a period of one year from the date of the GRANT-I. The
appellant used the land for the purpose specified in the
GRANT-I within a period of one year. Therefore, sub-
clause (xiv) of the Condition No.4 could not be invoked. 0
(vii) There is no requirement in the covenants contained in
Part-II of GRANT-I that every inch of the land leased to
the appellant is required to be utilized by making
construction and establishing industries thereon.
14. The respondents argued that there is no need to E
interfere with the impugned judgment as it is a well reasoned
judgment in support of the conclusion recorded by the High
Court.
15. Before we proceed to examine various submissions F
made by the appellant, it is riecessary to examine:
L the character of the two documents i.e. 'lease deed'
dated 18.03.1969 (GRANT-I) and the 'grant dated
18.07.1973' (GRANT-II) referred to earlier; and
II. the Scheme of the ACT insofar as it is relevant for our G
purpose;
16. It is almost becoming a forgotten proposition of law
that the Government is not bound by the Traosfer of Property
Act 1882, when it seeks to transfer any land vested in it or any H
16 SUPREME COURT REPORTS [2015) 14S.C.R.

A interest therein. It may not be possible to trace out the entire
history of the vesting of lands in the Government and the legal
rights and obligations flowing from such vesting as it is a huge
topic by itself. It is sufficient to state that Articles 294' to 296 of
the Constitution of India provide for vesting of property (which
B includes land) and assets in the Union of India and various
States. Article 294 deals with the development of the property
and assets which vested (prior to the coming into force of the
Constitution) in His Majesty for the purposes of the Government
of the Dominion of India and for the purposes of the Government
c of each Governor's Province. Article 2952 provides for the
1 294. Succession to property, assets, rights, liabilities and obligations in certain cases
as from the commencement of this Constitution
(a) all property and assets which immediately before such commencement were vested
in His Majesty for the purposes of the Government of the Dominion of India and all
property and assets which immediately before such commencement were v8sted in
D His Majesty for the purposes of the Government of each Governors Province shall
vest respectively in the Union and the corresponding State, and
(b) all rights, liabilities and obligations of fhe Government of the Dominion of India and
of the Government of each Governors Province, whether arising out of any contract
or otherwise, shall be the rights, liabilities and obligations respectively of the Government
of India and the Government of each corresponding State,
subject to any adjustment made or to be made by reason of the creation before the
E commencement of this Constitution of the Dominion of Pakistan or of the Provinces of
West Bengal, East Bengal, West Punjab and East Punjab

2 295. Succession to property, assets, rights, liabilities and obligations in other cases
(1) As from the commencement of this Constitution
(a) all property and assets which immediately before such-commencement were vested
in ahy Indian State corresponding to a State specified in Part B of the First Schedule
F shall vest in the Union, if the purposes for which such property and assets were held
immediately before such commencement will thereafter be purposes of the Union
relating to any of the matters enumerated in the Union List, and
(b) all rights, liabilities and obligations of the Government of any Indian State
corresponding to a State specified in Part B of the First Schedule, whether arising out
of any contract or otherwise, shall be the rights, liabilities and obligations of the
Government of India, if the purposes for which such rights were acquired or liabilities
G or obligations were incurred before such commencement will thereafter be purposes
of the Government of India relating to any of the matters enumerated in the Union List,
Subject to any agreement entered into in that behalf by the Government of India with
the Government of that State
(2) Subject as aforesaid, the Government of each State specified in Part B of the First
Schedule shall, as from the commencement of this Constitution, be the successor of
the Government of the corresponding Indian State as regards all property and assets
and all rights, liabilities and obligations, whether arising out of any contract or otherwise,
H other than those referred to in clause (1)
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 17
[CHELAMESWAR, J.]

succession to the property and assets which vested prior to A
the commencement of the Constitution in any Indian State3 •
Article 2964 deals with accrual of properties by escheat or
lapse or as bona vacantia. The imperial legislature recognised
the need of a law to regulate the method and manner by which
the governments could transfer or create any interest in the B
land vested in the Government. Section 25 of the Government
Grants Act declares that "nothing contained in the Transfer of
Property Act, 1882 applies to any grant or other transfer of
land or any interest therein" made by or on behalf of the
Government either prior to or after the commencement of the C
said Act. In other words, when Government transfers land or
any interest therein to any person, such a transfer is not
governed by the Transfer of Property Act, 1882. The rights and
obligations flowing from the transfer of either a piece of land
0
or an interest therein by the Government cannot be determined.
on the basis of the rights and obligations specified under the
Transfer of Property Act, 1882. They are to be ascertained .
3 Article 366 (15). '"Indian State'" means any territory which the Government of

the Dominion of India rP.cognised as such a State.
E
' 296. Property accruing by escheat or lapse or as bona vacantia Subject as
hereinafter provided any property in the territory of India which, if this
Constitution had not come into operatron, would have accrued to His Majesty
or, as the case may be, to the Ruler of an Indian State by escheat or lapse, or
as bona vacantia for want of a rightful owner, shall, if it is property situate in a
State, vest in such State, and shall, in any other case,-vest in the Union: F
Provided that any property which at the date when it would have so accrued to
His Majesty or to the Ruler of an Indian State was in the possession or under
the control of the Government of India or the Government of a State shall,
according as the purposes for which it was then used or held were purposes
of the Union or a State, vest in the Union or in that State
Explanation In this article, the expressions Ruler and Indian State have the
same meanings as in Article 363. G·
5
Section 2. Nothing m the Transfer of Property Act, 1882 contained shall
apply or be deemed ever to have applied to any grant or other transfer of land
or of any interest therein heretofore made or hereafter to be made by or on
behalf of the Government to or in favour of any person whomsoever but every
such grant and transfer shall be construed and take effect as if the said Act
had not been passed. H
18 SUPREME COURT REPORTS [2015) 14 S.C.R.

A only from the tenor of the document made by the Government
evidencing such a transfer. This position is clearly recognized
by this Court in Hajee 5. V.M. Mohamed Jamaludeen Bros.
& Co. v. Government of Tamil Nadu, (1997) 3 SCC 466 as
follows:
B
"10. The combined effect of the above two sections of
the Grants Act is that terms of any grant or terms of any
transfer of land made by a Government would stand
insulated from the tentacles of any statutory law. Section
c 3 places the terms of such grant beyond the reach of
any restrictive provision contained in any enacted law
or even the equitable principles of justice, equity and
good conscience adumbrated by common law if such
principles are inconsistent with such terms. The two
D provisions are so framed as to confer unfettered
discretion on the Government to enforce any condition
or limitation or restriction in all types of grants made by
the Government to any person. In other words, the rights,
privileges and obligations of any grantee of the
E Government would be completely regulated by the terms
of the grant, even if such terms are inconsistent with the
provisions of any other law."

17. In the light of the above legal position, the rights and
F obligations created by GRANTS-I & II are regulated only by
the terms of the documents by which those grants were made.

18. Section 3(1) of the ACT authorizes the State
Government to constitute an authority "for any area or areas
G for development and promotion of industry" known as "the
Industrial Area Development Authority". Sub-section (2)
declares that such authorities are to be bodies corporate with
all incidental attributes, such as, the power to acquire, hold
and dispose of properties etc.
H
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 19
[CHELAMESWAR, J.]

19. Section 4(1 )6 of the ACT authorizes the State to A
declare "any area adjacent to an industrial area" to be a
"development area". The expressions "industrial area" and
"development area" are defined under Section 2(e)7 and 2(f)"
of the ACT respectively. Section 4(2) 9 prohibits a person,
company or business house including a department of the B
State Government to undertake or carry out any construction,
modification or demolition of any structure or building within
such development area once an area is notified as
development area without obtaining the prior approval of the
Authority ·constitute~'Jnder Section 3 of the ACT. C
20. Section 6 stipulates various duties and powers of
the Authority.
21. Section 9 of the ACT authorizes the State
Government to acquire any land required for the purpose of D
the Authority. Section 9( 1) declares that any acquisition of land
by the State Government for the purpose of the Authority is
deemed to be a public purpose under the Land Acquisition
Act, 1894. Sub-section (2) stipulates thatthe State Government
may transfer, on such terms and conditions, to the Authority by E
a deed of lease any developed or undeveloped land vested in
6 Section 4(1). The State Government may by a notification in the Official
Gazette declare any area adjacent to an industrial area a "development area"
for the purposes of this Act after taking into consideration any objection that
may be raised in the manner prescribed in the Rules: F
Provided that no objections need be invited for any area already declared
as "controlled area" under sub-section (1 )·of Section 3 of the Bihar Restriction
of Uses of Land Act, 1948. ·
7
Section 2( e). "Development Area" means any area declared to be a
development area under Section 4.
6 Section 2(f). "Industrial Area" means an area for which an Authority is

constituted under Section 3. G
' Section 4(2). After an area has been notified as development area under
sub-section (1) of Section 4 of this Act, no person or company or business
house or anybody (including a department of the State Government) shall
undertake or carry out any construction, modification or demolition of any
structure or building within such development area without the prior approval
of the Authority in accordance with the procedure laid down in the Rules H
prescribed.
20 SUPREME COURT REPORTS (2015] 14 S.C.R.

A the State Government. Sub-sections (2) and (3) read as
follows:
"(2) The State Government may by a deed of lease,
transfer on terms of conditions as may be decided by
the State government, to the Authority any developed or
B
undeveloped land vested in the State of Bihar for the
purpose of development or use in accordance with
provisions of this Act.
(3) If any land so placed at the disposal of the Authority
c under sub-section (2) is required at any time by the State
Government, the Authority shall restore it to the State
Government."
22. In substance, the State Government is authorised to
0 constitute an 'Authority' for any area or areas for development
and promotion of industries by a notification. By definition of
Section 2(f), the area so notified becomes an "industrial area".
Once an industrial area is notified, the State is also authorized
to notify any other area adjacent to such industrial area to be a
E "development area". The consequences of an area being
notified as a "development area" under Section 4(1) are
prescribed under Section 4(2), the contents of which are
already taken note of.
23. Under Section 610 , an Authority constituted under
F Section 3 of the ACT is responsible for -
10
6. General duties and powers of the Authorlty-(1) Subject to the
provisions of this Act, the Authority shall be responsible for the planned
development of the Industrial Areas (including preparation of the Master Plan
of the area) and promotion of industries in the area and other amenities
incidental thereto.
G (2) The Authority shall be responsible for planning, development and
maintenance of the Industrial Area and amenities thereto and allotment of
land, execution of lease and cancellation of such allo{ment or lease,
realisation of fees, rent charges and matters connected thereto.
xxx xxx xxx xxx
(3) The State Government may from time to time entrust the Authority with
any other work that is connected with planned development, or maintenance
H of the Industrial Area and its amenities and matters connected thereto.
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 21
[CHELAMESWAR, J.]

(i) planned development, A
(ii) promotion of industries, and
(iii) other amenities incidental thereto in the industrial
areas falling within its jurisdiction.
Under Section 6(2), the Authority is responsible for planning, B
development and maintenance of the industrial area and the
amenities thereto. The Authority is also responsible for
allotment of land and execution of lease. Such power of
allotment of land and execution of lease is expressly declared
to carry the power to cancel such allotment or lease. In other C
words, Section 6(1) obligates an Authority to formulate policy,
6(2) obligates that Authority to execute the policy formulated
under Section 6(1 ). It must be noted here that Sections 6(1)
and (2) authorise the Authority only to deal with 'industrial area'
but not 'development area'. Sub-section 3 authorises the State D
Government to entrust the Authority with any other work
connected with the responsibilities mentioned in Section 6(1)
and (2) with respect to the industrial areas.

24. Sub-section (4) 11 on the other hand expressly confers E
on the Authority certain powers enumerated in the various
sections of the Bihar and Orissa Municipal Act, .1922 with
regard to the development area. Remaining sub-sections deal
with other matters, the details of which are not necessary for
the present purpose, except noticing that the duties and powers F
of the Authorities are not common with respect to "industrial
area" and "development area" under the Act.

25. It is in the background of the abovementioned
Scheme of the Act, the various issues involved in this appeal G
are required to be examined. The second respondent
" 6(4). The Authority shall have the powers of the Commissioner of a
Municipality as specified in Sections 196, 197, 198, 199, 200, 201 and 202 of
Bihar and Orissa Municipal Act, 1922, for purposes of removal of encroachment
on roads, houses, gullies, any land in the development area and properties
of the Authority. H
22 SUPREME COURT REPORTS [2015] 14 S.C.R.

A AUTHORITY was constituted by notification dated 29.06.1972
under the Ordinance which preceded the ACT. By GRANT-II
dated 18. 7 .1973, the Government of Bihar transferred an area
of 1266 acres of land alongwith structures, appurtenance etc.
in favour of the AUTHORITY "to own, possess and hold the
B same for the purposes of the development of industries of that
area". The appellant disputes that the land transferred to them
under GRANT-I is not part of the above-mentioned 1266 acres
of land. The second respondent AUTHORITY asserts to the
contra. However, the High Court12 declined to go into that
C question on the ground that it is a question of fact which was
never raised by the appellant herein any time earlier. We see
no reason to take a different view.

26. We, therefore, proceed on the basis that the land in
D dispute is part of the 1266 acres of the land covered by the
"GRANT-II" dated 18.7.1973. But the question still remains
whether the land in question is a part of either the "industrial
area" or the "development area" or beyond both the areas.
We do not find any material on the record to reach any definite
E conclusion on the above question. It goes without saying that
the responsibility to establish that fact is on the respondents
by producing the appropriate notification. Unfortunately, none
is produced. Therefore, we proceed on the presumption that
the land in dispute is not part of any notified industrial or
F development area.

27. The power (legal authority) of the second respondent
AUTHORITY to deal with any land can flow from two sources,
" "Para 20. Learned counsel for the AIADA vehemently submitted that the
G question of identity of the property which has been handed over to the AIADA
or the plea that the lease land of the petitioner is not included in the notification
was never raised by the petitioner before any authority even after several
notices to the petitioner and, therefore, this question of fact cannot be raised
in the writ jurisdiction that too, without laying down the factual foundation for
which particularly the petitioner did not even annex the map which was part of
H the lease deed by which the lease was granted to the writ petitioner, reference
of which map is already there in the lease deed."
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 23
[CHELAMESWAR, J.]

(i) the statutory powers conferred on it under various A
provisions of the ACT over the areas notified under the
ACT to be either "industrial area" or "development area".
We have already noticed even with the reference to
those two categories, the powers and functions of the
second respondent AUTHORITY are not common; and B
(ii) holding of land - The AUTHORITY is a body corporate
by virtue of Section 3(2) 13 of the ACT. (It is capable of
holding and disposing of properties both movable and
immovable and the expression holding can mean c
holding either as owner or lessee or mortgagee etc.).
Such right to hold immoveable property extends to
holding of such property even beyond the areas which
are notified under the ACT either as "industrial area" or
"development area". D
28. From the tenor of GRANT-II, the powers of the second
respondent AUTHORITY are said to be the "powers to use
the said lands for the purposes of development of industry in
planned manner and in that connection to lease out pieces E
of lands, structures and appurtenance thereto to entrepreneurs
for a period of not exceeding 99 years on such terms and
conditions as the Authority may deem fit". It is obvious from
the language of GRANT-II that the second respondent
AUTHORITY is conferred with the right to lease out pieces of F
land for the purpose of development of industry. But, such right
enables the AUTHORITY to lease out pieces of land only from
a date subsequent to the date of 'GRANT-II' (i.e. 18.07 .1973)
because a non-sovereign body cannot create or destroy rights
with retrospective effect. However, the right of the second G
respondent AUTHORITY over the land transferred to it "to own,
possess and hold the same for the purposes of the
13 Section 3(2). The Authority shall be a body corporate by name aforesaid
having perpetual succession and a common seal with powers to acquire,
hold and dispose of properties, both movable and immovable, and to contract
and shall by the said name sue and be sued. H
24 SUPREME COURT REPORTS (2015] 14 S.C.R.

A development of industries of that area", can only be subject to
the pre-existing legal rights and obligations of the grantor
because the grantor could not convey any interest which the
grantor did not hold at the time of the GRANT-II. The State of
Bihar created a legal interest in favour of the appellant herein
B and parted with possession of the land in dispute by virtue of .
GRANT-I for a specified period. Without determining such a
legal interest created by GRANT-I in accordance with law,
neither the grantor (State of Bihar) nor the subsequent grantee
under GRANT-II (the AUTHORITY) could create a fresh lease.
C Because a lease in the context of the AUTHORITY can only be
a lease contemplated under the Transfer of Property Act, which
in the context necessarily requires possession of land to be
given to the lessee by the lessor.
D 29. The first submission made on behalf of the appellant
is that a transfer of land such as the once evidenced by GRANT-
11 could not have been legally made insofar as the property in
dispute is concerned without the State of Bihar first resuming
the lands which are in the possession of the appellant pursuant
E to GRANT-I. In our opinion, the said submission is required to
be rejected for the reason that though the State of Bihar did
not have possession of the land in dispute when it made the
GRANT-II in favour of the AUTHORITY, the second grantee
(i.e. the AUTHORITY) takes the property covered by the
F GRANT-II subject to the rights of the earlier grantee. There is
no need in law for the termination of the interest created under
GRANT-I in favour of the appellant, before the State of Bihar
chose to transfer the property covered by the GRANT-II.
Because the interest created under GRANT-I was a limited
G interest and the title of the property still vested with the State of
Bihar.
30. The next submission that is required to be examined
is-whetherthe second respondent AUTHORITY can exercise
H the power vested in it by the ACT vis-a-vis the lands in dispute
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 25
[CHELAMESWAR, J.]

as the said land is held by it only by virtue of GRANT-II. We A
have already recorded that there is nothing on record to
establish that the land in question is part of either "industrial
area" or "development area".
31. This question assumes importance because the
8
show-cause notice dated 15.01.2002 issued by the
AUTHORITY invokes the powers both under Section 6 (2-a) of
the ACT and Clause 4 (xiv) of GRANT-I and the final order
dated 17.1 L2008 relied upon clause 4(xiv) of GRANT-I and
Section 6 (2)(a) and 2(b) of the ACT. c
32. It is necessary to identify the source of power which
authorizes the second respondent AUTHORITY to recover
possession of 100 acres of land from the appellant. Because
depending upon the source, the consequences and the
procedure by which such recovery of possession can be made D
varies.
33. The power to terminate the lease in exercise of the
statutory power under Section 6(2-a) can be resorted to only
in one contingency that is "necessary effective steps are not E
taken within the fixed period to establish the industry". Section
6(2) 14 authorizes the second respondent AUTHORITY to make
an allotment of land and execute a lease deed. It also
authorises the Authority to cancel "such allotment or lease",
obviously meaning allotments and leases made by the F
AUTHORITY. In our opinion, the expression "allotment" in the
context only means a formal administrative decision of the
AUTHORITY to lease.a particular piece of land in favour of an
applicant who is desirous of establishing industry thereon.
Once such a decision is taken the second respondent G
AUTHORITY can transfer an interest in such a piece of land by
way of a lease. The expression lease in the context of sub-
" 6(2) The Authority shall be responsible for planning, development and
maintenance of the Industrial Area and amenities thereto and allotment of
land, execution of lease and cancellation of such allotment or lease,
realisation of fees, rent charges and matters connected thereto. H
26 SUPREME COURT REPORTS [2015) 14 S.C.R.

A section (2) can only mean a lease as defined under the Transfer
of Property Act because the Government Grants Act does not
apply to instrumentalities and bodies corporate controlled by
the State. A lease of immovable property granted for the
agricultural or manufacturing purposes is terminable only in
B the manner indicated under Section 10615 of the Transfer of
Property Act. Section 111 16 of the Transfer of Property Act
15 Section 106. Duration of certain leases in absence of written contract or local
usage.-
(1) In the absence of a contract or local law or usage to the contrary, a lease of
c immovable property for agricultural or manufacturing purposes shall be deemed to be
a lease from year to year, terminable, on the part of either lessor or lessee, by six
months' notice; and a lease of immovable property for any other purpose shall be
deemed to be a lease from month to month, terminable, on the part of either lessor or
lessee, by fifteen days' notice.
(2) Notwithstanding anything contained in any other law for the time being in force,
the period mentioned in sub-section (1) shall commence from the date of receipt of
notice.
D (3) A notic~ under sub-section (1) shall not be deemed to be invalid merely because
the period mentioned therein falls short of the period specified under that sub-section,
where a suit or proceeding is filed after the expiry of the period mentioned in that sub-
section.
(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the
person giving it, and either be sent by post to the party who is intended to be bound by
it or be tendered or delivered personally to such party, or to one of his family or
servants at his residence, or (it such tender or delivery is not practicable) affixed to a
E conspicuous part of the property.

16
Section 111. Determination of lease.- A lease of immoveable property determines -
(a) by efflux of the time limited thereby;
(b) where such time is limited conditionally on the happening of some event - by the
happening of such event:
(c) where .the interest of the lessor in the property terminates on, or his power to
F dispose of the same extends only to, the happening of any event-by the happening
of such event;
(d) in case the interests of the lessee and the lessor·in the whole of the property
become vested at the same time in one person in the same right;
(e) by express surrender; that is to say, in case the lessee yields up tiis interest under
the lease to the lessor, by mutual agreement betwee.n them;
(f) by implied surrender;
(g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition
G which provides that, on breach thereof, the lessor may re-enter; or (2) in case the
lessee renounces his character as such by setting up a title in a third person or by
claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease
provides that the lessor may re-enter on the happening of such event; and in any of
these cases the lessor or his transferee gives notice in writing to the lessee cf his
intention to determine the lease;
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit,
H the property leased, duly given by one party to the other.
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 27
[CHELAMESWAR, J.]

specifies various contingencies in which a lease of immovable A
property determines. Sub-section (h) stipulates that expiration
of a notice to determine the lease duly given by the lessor (in
compliance with the requirements of Section 106) is one of
such contingencies but Transfer of Property Act does not
authorize the lessor to physically recover possession of the B
property on the determination of the lease. The le~sor is still
required to approach the competent court for the recovery of
the possession of the property over which the lease is
terminated. Section 6(2-b) 17 of the ACT on the other hand
'
authorizes the second respondent AUTHORITY to take c
possession of the property which it had allotted and leased
out earlier in exercise of the power under sub-section (2). Sub-
sections (2-a) and (2-b) do not make any mention of the
termination of lease. They only speak of the "cancellation of
D
allotment" made which to our mind clearly indicates that the
cancellation of allotment and taking of possession of the "plot/
shed" can be resorted to only in the case of allotment made by
the second respondent AUTHORITY. In the cases of property
transferred by the State (prior to the ACT by whatever name
E
such transfer is called) can be dealt with by the second
respondent AUTHORITY only in terms of the original document
by which the property was transferred because such a transfer
is a grant within the meaning of Government Grants Act, i.e.
GRANT-I insofar as the appellant is concerned. We therefore F
conclude that the AUTHORITY is entitled to deal with the land
in question only as a 'grantee' under the 'GRANT-II' dated
18.07.1973 and holder of the land.

34. In the light of our above conclusion, it is necessary
for us to examine the terms of GRANT-I made in favour of the G
appellant herein (the so called "lease" dated 18.03.1969).
Clauses (iv), (v), (xiv) and (xvii) of Condition No.4 of the Terms

" 6(2-b) The authority shall, after cancellation of allotment of the plot/shed
take possession of the said plot/shed. H
28 SUPREME COURT REPORTS -[2015] 14 S.C.R.

A and Conditions of the 'lease' are relevant in this context, which
read as follows:
"(iv) That if subsequently any part or parts of the said land
is/are required by the State Government for a public
B purpose, (of which matter .... ). the State Government
shall be the sole judge, the lessee shall on being asked
by the State Government transfer to them such part or
parts of the said land as the State Government shall
specify, to be necessary for the purpose aforesaid and
c in consideration of such transfer the State Government
shall pay back to the lessee a sum proportionate or
equal as the case may be, to the cost of land and its
development if any earlier realized from him, together
with compensation for the buildings and other structures
D erected with approval in writing of the lessor or its
nominee on such part or parts of the land at a valuation
to be determined by the State Government on a report
from a Civil Engineer authorized in this behalf and the
decision of the State Government will not be questioned
E by any authority ....
Provided that for the purpose of this sub-clause the State
Government would be entitled to resume only such part
or parts of the land leased out to the lessee as were not
F actually being used for the purposes of the manufacture
or/are not essentially required for any purpose
connected with the Industry ..
(v) If at any time the said land or any part or parts thereof
G shall no longer be required by the lessee for the purpose
for which it is leased out to him. the lessee shall, while
selling or assigning the said land or such part or parts.
thereof as aforesaid first make an offer of the same to
the State Government at a price proportionate or equal,
H as the case may be, to the cost of the land and its
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 29
[CHELAMESWAR, J.]

development, of any realized earlier from him, and he A
shall not make any sale or assignment thereof to any
other party unless such offer shall have been declined
by the State Government.
When such offer has been made by the lessee the State B
Government may accept of in respect of such part or
parts of the land so offered as it may deem fit and decline
it in respect of the remainder.
When the first offer of selling or assigning said land or C
such part or parts thereof as aforesaid has been
declined by the State Government, the lessee, while
selling or assigning the said land or such part or parts
thereof as aforesaid to any other party shall do so with
prior approval of the State Government. · D
(xiv)That the lessee shall use the land for the specified
purpose within a period of one year from the date of the
lease, failing which the lease may be terminated and
the lessee evicted from the lands without notice. In case
extension is required it can be granted within the E
discretion of the lessor. ,
(xvii) In case of breach by the lessee of any of the terms and
conditions, the lessor shall have right to resume and
enter upon the whole of the said land without F
payment of any compensation to the lessee and upon
such a re-entry the interest of the lessee in the said land
shall cease and determine.
35. It can be seen from the above extracted clauses of G
GRANT-I that under condition 4(iv) the appellant is obliged to
transfer to the granter (the state of Biharor its successor in
interest - the AUTHORITY) such parts of the land required by
the AUTHORITY when the AUTHORITY requires the same for
a "public purpose". It is further. stipulated that in the event of H
30 SUPREME COURT REPORTS (2015] 14 S.C.R.

A any such demand by the AUTHORITY, the AUTHORITY is
required to pay to the appellant certain amounts. Thirdly, such
power cannot be exercised even for a public purpose with
reference to that portion of land which is either actually "being
used for the purposes of the manufacture" or "essentially
B required for any purpose connected with the industry".
36. Condition No. 4(v) recognizes the right of the
appellant to sell or assign the said land. On a true and proper
construction of the clause, such a right 'to sell or assign'
c obviously means only the right to see the interest created in
favour of the appellant under GRANT-I and nothing beyond that.
Whenever the appellant chooses either to sell or assign such
interest in any part of the land covered by the GRANT I, the
appellant is required to make an offer to the AUTHORITY at a
D price described in the said clause. Unless such an offer is
declined by the AUTHORITY, the appellant cannot sell or assign
its interest to a third party. Further, such sale or assignment
cannot be made by the appellant without the prior approval of
the AUTHORITY.
E
37. Condition No. 4(xiv) authorizes the AUTHORITY to
terminate the lease and evict the appellant without notice if the
appellant does not use the land for the purpose specified in
the lease within a period of one year from the date of lease.
F
38. Condition No. 4(xvii) authorizes the AUTHORITY to
resume and enter upon the land covered by the 'lease' in the
event of a breach by the appellant of the terms and conditions
of the GRANT I.
G 39. The substance of the four clauses is that appellant
would be obliged to transfer the property by virtue of Condition
No. 4(iv) when a part of the property covered by GRANT-I is
needed for a public purpose. Such stipulation perhaps implies
an obligation on the part of the appellant to give possession of
H
TATASTEELLTD. v. STATEOFJHARKHAND&OTHERS 31
[CHELAMESWAR, J.]

the property without the need for the State to resort to a civil A
court for recovering the possession. We do not wish to give
any final opinion in this regard as this issue does not arise in
this case and not argued before us. In the contingency
contemplated under Condition No.4 (v), since it would be a
transfer at the instance of the appellant, obviously the question B
of the mode of recovery of possession does not arise as it
would be a voluntary act of the appellant. On the other hand, in
the contingencies contemplated under condition Nos.4 (xiv)
and 4 (xvii), the language of the grant expressly authorizes the
AUTHORITY ''to evict the lessee from the lands" or "resume C
and enter upon the whole of the land". Whether such right "to
evict" or "resume", of the AUTHORITY includes the right to
recover possession without the need to resort to a civil suit is
also a question we need not decide in this case as that issue
0
does not arise.
40. We have discussed the Scheme of GRANT-I dated
18.03.1969 only to indicate the difference between the nature
of the rights of the AUTHORITY against the appellant because
we have already recorded a conclusion.that the AUTHORITY E
cannot invoke any statutory powers flowing from the ACT
against the appellant and could only exercise such rights that
are a,vailable to it under the GRANT-I. ·
41. We have already set out the four clauses under · F
GRANT-I in paragraph 34 supra which deal with the termination
of the grant made in favour of the appellant. The only clause,
invoked in the show cause notice dated 15.1.2002 of the
AUTHORITY is clause (xiv).
G
42. ·Even the respondents do no claim thatthe impugned
action could be justified under the other three clauses. Clause
(xiv) purports to enable the AUTHORITY to terminate the
GRANT-I and evict the appellant in only one contigency. At the
cost of repetition, we extract clause (xiv) again; H
32 SUPREME COURT REPORTS [2015] 14S.C.R.

A (xv) That the lessee shall use the land for the specified
purpose within a period of one year from the date of the
lease, failing which the lease may be terminated and
the lessee evicted from the lands without notice. In case
extension is required it can be granted vyithin the
B discretion of the lessor.
43. Clause (xiv) stipulates that in the event of the appellant
failing to "use the land for the specified purpose within a period
of one year from the date of the lease" (GRANT-I), the same
c may be terminated and the appellant be evicted from the lands·
without notice. It is an undisputed fact that the appellant was
given the land in dispute for the purpose of establishing "alloy
tool and special steel plants and the roll foundry" project. That
is the purpose specified under the GRANT. Admittedly, the
D appellant utilized 200 acres of land out of 350 acres of land for
the establishment of the said project. The question is whether
clause (xiv) obligates the appellant to utilise every inch of the
350 acres for the "specified purpose within a period of one
year". Whether the appellant is liable to be evicted from a
E portion of the land on the ground that portion of the land is not
physically utilised for the specified purpose?
44. In our view, the answer must be in the negati.ve for
the following reasons;
F (i) To understand the meaning and scope of clause (xiv),
the following factors are required to be examined ; (i)
purpose for which the GRANT was made, (ii) the terms
and conditions upon which the GRANT was made, (iii)
G
the various contingencies under'which the GRANT could
be terminated in full or in part etc. (iv) the scheme of the
GRANT
· (ii) The land in dispute was transferred to the appellant
for a specific purpose under GRANT-I. The appellant
H
TATA STEEL LTD. v. STATE OF JHARKHAND & OTHERS 33
[CHELAMESWAR, J.]

did in fact establish the industry for the establishment of A
which the GRANT-I was made and has been
successfully running the industry for the last about 40
years (approximately). For the said purpose, the
appellant utilised a substantial portion of the land
covered by the GRANT and therefore, it cannot be said B
that the appellant did not utilise the land for the purpose
specified under the GRANT-I. Such a GRANT was made
for a consideration (Salami of Rs. 24,48,670/-) apart
from an annual rent for the land which the appellant has
admittedly been paying. · · C
(iii) Analysis of the scheme of clauses (iv), (v), (xiv) and
(xvii), reveals that only clauses (iv) and (v) speak about
"any part" or "parts" of the land which the appellant is ·
liable to transfer on demand by the AUTHORITY under D
clause (iv) or voluntarily under clause (v). Clause (xvii)
stipulates the right of the second respondent "to resume
and enter upon the whole of the said land" in the event
of breach by the appellant of any of the terms and
conditions of GRANT-I, whereas clause (xiv) significantly E
does not employ the expression "part" or "parts of the
land".
(iv) Clause (xiv) does not contemplate 'taking
possession of parts of the land' in contra-distinction to F
clauses (iv) and (v). It only contemplates the termination
of the GRANT-I in the event of the failure on the part of
the appellant to use the land for the specified purpose
and eviction of the appellant from the land. In our
opinion, the language of the clause is significant. It can G
only be invoked in the case of total failure to utilise the
land for the specified purpose. Clause (xiv) read with
the right of the appellant under clause {v) to sell a part of
the _land covered by the GRANT"I which is no longer
H
34 SUPREME COURT REPORTS (2015] 14 S.C.R.

A required by him, can lead to only one conclusion that it
was never intended by the GRANT-I that every inch of
the land must be utilised for the purpose of the
establishment of the industry. Any other construction of
clause (xiv) would simply render the clause (v)
B meaningless and destructive of the right created
thereunder in favour of the appellant. We are, therefore,
of the opinion that the second respondent is not entitled
to invoke clause (xiv) in support of its impugned
decision ..
c
45. In view of the above conclusion, the other submission
of the appellant need not be examined.

46. The appeal is allowed. The impugned judgment is
set aside. Consequentially, the writ petition is allowed and the
D
order dated 17.11.2008 of the third respondent is quashed.
No order as to costs.

Kalpana K. 'fripathy Appeal allowed.