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Judgment
This Civil Revision Petition is filed by the State assailing the order of the Land Reforms Appellate Tribunal, Medak at Sangareddy in L.R.A. No. 34 of 1992, dated 7-2-1994.
The facts giving rise to this revision petition in brief are that the land bearing S.Nos. 450 to 452, 454, 455, 460, 461, 464 and 468, measuring about 300 acres, situated at Kandi village, Sangareddy Mandal, originally belonged to Syed Saduddin and they were in possession of Syed Khaja Azeemuddin and Syed Anwarulla. M/s. Yadavendra Plantations purchased the same and they raised a loan from State Bank of India, Shamsheergunj Branch, Hyderabad by mortgaging the above land for the purpose of effecting development. The Bank filed a civil suit O.S.No.27 of 1973 on the file of Subordinate Judge. Sangareddy for recovery of the said loan. The suit was decreed on 29-8-1975 and a preliminary decree was passed. It culminated into a final decree in I.A.NO. 145 of 1976 on 5-8-1976. However, the decretal amount remained unpaid. Meanwhile, the provisions of A.P.Land Reforms (Ceiling on Agriculture Holdings) Act, 1973 (for short ''the Act'') came into force with effect from 1-1-1975. The defendants in O.S.No. 27/1973 filed declaration u/s S of the Act, vide C.C.Nos. 2325 to 2327/S/75. The Land Reforms Tribunal, Sangareddy after necessary enquiry, held that the said defendants were holding land in excess of the ceiling area and hence they have been directed to surrender the excess land. Accordingly they surrendered an extent of 148,74 acres. As the interest of the decree-holder-Bank was involved in the aforesaid surrendered land of 148.74 acres, the Bank preferred appeals, L.R.A.Nos. 328 to 330 of 1976 against the order accepting the surrender of the same. It was contended that the Bank was not given an opportunity to put forth its case before the Primary Tribunal. The Appellate Tribunal accepted the above contention and remanded the matter for fresh enquiry after giving opportunity to the Bank. The Primary Tribunal held fresh enquiry and gave an opportunity to the Bank and after considering its contentions, it recorded the same findings by its order dated 22-7-1977 and accepted the surrender of the aforesaid 148.74 acres of land. Thereupon the declarants filed L.R.A.No.746/1977 and the Bank filed LRA.Nos. 773 to 775 of 1977 before the appellate Tribunal. On 9-11-1997, the appellate Tribunal disposed of the appeals directing the decree holder-Bank to proceed against the unsurrendered lands which are still in the possession of the judgment-debtors/ declarants in the first instance and if the sale proceeds do not satisfy the claim of the Bank, they may proceed against the lands that are surrendered by the declarants. Armed \\\\itli the above order of the Land Reforms Appellate Tribunal, the Bank filed an Execution Petition and brought the unsurrendered lands to sale. It so happened that no bidders participated in the Court auction even though it was postponed several times. Hence the Judgment-debtor/ declarants filed a petition EA.No.27/1980 in the executing Court (Sub-Judge, Sangareddy) under Order XXI Rule 83 CPC seeking permission to sell the unsurrendered lands by private negotiations and it was allowed on 30-6-1980. Accordingly the unsurrendered lands were sold by private negotiations, but the sale proceeds did not satisfy the decree. Hence, the Judgment debtors-declarant filed another petition EA.No. 51/1981 in the same Court for a similar permission to sell the surrendered lands by private negotiations and it was allowed on 21-7-1981. Thus, the surrendered lands were sold by private negotiations and sale proceeds were deposited in the executing Court on 22-7-1981.
Before the above sale in favour of the purchasers was confirmed and certificates of sale were issued by the executing Court, the State filed an application, EA.No.6S/1991 for setting aside the private sales which were effected pursuant to the permission granted in EA.No.51/1981, dated 21-7-1981 under Order XXI Rule 90 read with Section 151 CPC. In the affidavit of the Joint Collector, Medak District filed in support of that application, it was contended that the surrendered lands have already vested in the State without any encumbrance and hence they are not liable to be sold. It is further contended that the order in EA. No.51/1981, dated 21-7-1981 is an exports order in as much as the State was not given notice of that petition even though the State is in possession of the said lands and hence it is liable to be set aside on this ground also. Several other grounds were raised in the above petition. It was resisted by all the respondents therein. The executing Court considered the contentions of both sides and passed an elaborate order on 7-8-1991 and set aside the order in EA.No.51/1981, dated 21-7-1981.
The Judgment-debtors/declarants preferred CRP.No.3364/1981 assailing the above order. A learned single Judge of this Court heard both sides and held that the matter requires enquiry whether there were any irregularities in conducting the above sale and hence both parties including the Government should be given opportunity- to adduce evidence and accordingly the CRP was allowed and the matter was remanded to the lower Court.
Thus, the matter went back to the same executing Court for fresh enquiry. Exs.A1 to A36 and Exs.B1 to B11 were marked during the enquiry. The executing Court on a scrutiny of the above evidence and after hearing both sides, came to the conclusion that the surrendered lands were sold under private sale for an inadequate consideration by playing fraud and thereby caused substantial injury to the State and hence they are not sustainable, by an order dated 19-12-1984. In other words, the earlier order dated 7-8-1981 setting aside the order in EA.No.51/1981, dated 21-7-1981 stood vindicated. However, the petition insofar as respondent No.10-Rekha Nandlal Tankka, is concerned was dismissed on a technical ground viz., that his legal representatives are not brought on record and hence it has abated against him. Once again the judgment-debtors/declarants carried the matter to this Court in CRP.No.495/1985. A learned single Judge of this Court K.Ramaswamy, J., considered the matter exhaustively and dismissed the CRP. The result is that the order dated 21-7-1981 in EA.No.51/1981 granting permission to the Judgment-debtors-declarants to sell the surrendered lands by private negotiations has been set aside.
It is noteworthy that the above order of K.Samaswamy, J., in CRP.No. 495/1985, dated 18-7-1986 has become final. The only course open to the executing Court thereafter was to treat the proposal of the judgment-debtors/declarants to sell the surrendered lands by private negotiations as closed, but I an shocked to notice that Court entertained EA.Nos.225/1997, 11/1989, 12/1989, 13/1989, 14/1989 and 15/1989 filed by certain purchasers for issue of sale certificates by confirming the sale which as already held to be irregular and set aside. In my considered view, the executing Court did not have jurisdiction to issue the sale certificates in these cases and hence the order dated 21-2-1989 passed by the executing Court is non-est and it is fit to be ignored. It is, therefore, evident that no valid title passed to the so-called auction purchasers by virtue of sale certificates issued in their favour by order dated 21-2-I989. Another shocking revelation is that the aforesaid purchasers who did not have any valid title, chose to sell these lands in favour of third parties and those third parties are now asserting that they arc in possession and enjoyment of those lands and they have also developed the same and raised horticultural gardens etc.
While so, the Land Reforms Tribunal (Revenue Divisional Officer), Sangareddy passed an order directing the Mandal Revenue Officer, Sangareddy to prepare appropriate assignment proposals, to get the proposals approved and to give physical possession to the beneficiaries and report compliance to the Collector, Medak. This order was challenged before the Land Reforms Appellate Tribunal by the said purchasers.
On behalf of the purchasers-appellants it was contended that the aforesaid lands were mortgaged to the State Bank of India who filed OS.No.27/1973 for recovery of the amount due and that the lands were sold by the Court in execution of the decree. It is pointed out that they are second purchasers and they have become/absolute owners. The appeal has been resisted by the Special Government Pleader appearing for the State contending that the respondents have no locus standi to seek setting aside the orders of the Land Reforms Tribunal. It is argued that the vendors of the respondents themselves did not have any valid title and hence they could not have passed any title although registered sale deeds have been executed.
The learned appellate Tribunal considered all the above contentions and passed an elaborate order holding that the respondents received possession from the Bailiff of the Court under panchanamas Exs.A13 to A21; that they developed the lands by clearing bushes and levelling the land and they have done plantation and also constructed buildings. The original sale certificates issued by Subordinate Judge, Medak are filed and marked as Exs.A7 to A12. Thus, the order of Land Reforms Tribunal has been set aside. Hence, the Revision Petition.
Suit. Jayanthi, learned Assistant Government Pleader for Land Reforms contended that the effect of surrender by a land holder is that the land has vested in the Government and hence it is not open to the decree holder to bring them to sale. Her main thrust of argument was that there was collusion between the decree holder and the purchasers and hence the unsurrendered lands were sold for a song, but otherwise sufficient amount could have been realised by sale of the unsurrendered lands and thereby the whole debt under the decree could have been wiped off and there would not have been any necessity to bring the surrendered lands to sale. She brought it to the notice of the Court that a suit has been filed for setting aside the sale of un-surrendered lands and the State proposes to take steps for re-sale of those lands after a decision is rendered in the above suit and in such a case, the surrendered lands should be available for distribution among landless poor persons. She, therefore, urged that the C.R.P. may be allowed and the impugned order may be set aside.
Opposing the revision petition Sri M. Adinarayana Raju, learned Counsel for respondents contended that the entire extent of 300 acres was mortgaged to State Bank of India and u/s 23(f) of the Act, such lands are exempted from the provisions of the Act. According to him the above exemption saves the rights of Nationalised Banks to proceed against the properties in execution of decrees obtained by them and thus, the State Bank of India is entitled to bring the entire extent of 300 acres of land to sate. It is further contended that the suit for cancellation of sales filed by the State is in respect of un-surrendered lands only and not surrendered lands and insofar as the right to proceed against surrendered lands is concerned, the order of the learned Subordinate Judge in E.A.No. 225/1987 and batch, dated 21-2-1989 which has become final authorised the State Bank of India to proceed against those properties and accordingly they were sold in Court auction and that the respondents who are bona fide purchasers from the auction purchasers cannot be made to suffer. Thus, he contended that there is no merit in the revision petition inasmuch as the State is not entitled to distribute the above land and hence, the Land Reforms Appellate Tribunal is justified in setting aside the direction to prepare assignment proposals and to give physical possession to the beneficiaries.
In view of the above contentions, the following points emerge for consideration:
Whether the lands in question are exempt from the operation of the Act?
What is the effect of surrender of the above lands by the land holders-Judgment-debtors?
What are the rights of the mortgagee-State Bank of India in respect of (i) un-surrendered lands and (ii) surrendered lands?
What is the effect of the order dated 21-2-1989 in E.A.Nos. 225/1987 and batch on the file of Subordinate Judge, Medak?
Whether any rights flow to the auction purchasers and whether the same could have been transferred to third parties-respondents?
Points 1 and 2:
It is on record that judgment-debtors-land holders have submitted declarations under the provisions of the Act and they are held to be surplus holders and accordingly they have surrendered an extent of 148.74 acres of land. Sri Adinarayana Raju contended that the lands were mortgaged to the State Bank of India and hence they are exempt from the operation of the Act as provided for in Section 23(0 of the Act. He has, however, conceded that they are liable to be computed to the holding of the mortgagors and accordingly they filed declarations and that these lands cannot be treated on par with any un-encumbered lands. He emphasized that the mortgage in favour of the Bank is an encumbrance that is carried not withstanding the surrender by the land holder. In the first flush my impression was that the lands held by a Bank arc exempted, but there is a proviso to Section 23 and it reads as under:
"Provided further that the exemptions under item (ii) of clause (e) and clause (f) shall be available only in respect of the lands acquired by such Co-operative Societies or Banks in pursuance of the recovery of their dues".
It is evident from the above proviso that only lands acquired by such Banks for recover of their dues arc exempted. In the case on hand it cannot be said that these lands were acquired by the Bank for the purpose of recovery of dues, but on the contrary they have been mortgaged and hence such lands cannot be said to have been ''held by a Bank'' within the meaning of Clause (f). Moreover, proviso thereof makes the position abundantly clear. I, therefore, do not agree with Sri Adinarayana Raju that these lands are totally exempted from the operation of the Act. What is the effect of mortgage and that too a transaction which was anterior to the enforcement of the Act is altogether a different thing. Suffice it to say that the above lands are not exempted from the operation of the Act. It follows that any lands so surrendered are deemed to have been surrendered under the Act shall vest in the Government free from all encumbrances. Insofar as encumbrances attached to such properties are concerned, the Legislature has taken care to add a proviso to Section 11 of the Act. The relevant proviso reads as under:
"Section 11: Provided that any claim of liability enforceable against that land immediately before the date of vesting in the Government may be enforced only:
(i) against the amount payable under this Act in respect of such land; and
(ii) against any other property of the owner; to the same extent to which such claim or liability was enforceable against that land or other property, as the case may be, immediately before the date of vesting."
A bare reading of the above proviso shows that the claim of the decree holder-Bank enforceable against that land even if it be immediately before the date of vesting, may be enforced only against the amount payable under this Act and against any other property of the owner. Accordingly the learned Subordinate Judge in his order dated 21-2-1989 directed that un-surrendered land be brought to sale in the first instance. It so happened that the un-surrendered lands were in fact brought to sale, but the total debt was not realised from out of the sale proceeds of those un-surrendered lands. In that background a mistaken impression was that it was open to the decree holder-Bank in those circumstances was to proceed against the surrendered lands as held by the learned Subordinate Judge on 21-2-1989. It is no doubt true that the above order has become final on account of dismissal of E.A.No.521/1992 filed by the State and no steps have been taken by the State to file a Revision or Appeal, but the above proviso to Section 11 is an impediment for proceedings against the surrendered lands. The Legislature enacted the above proviso to make an alternative relief available to decree holders to enforce their right to proceed against a land which has been surrendered by a land holder. That alternative remedy is to proceed against the amount payable under the Act or any other property of the owner. Section 11 of the Act makes it clear that such lands vest in the Government free from all encumbrances in cases of this type. The encumbrance under the mortgage in favour of the decree-holders/Bank is deemed to have been transformed into the one provided under the proviso. Be it noted that the Act has overriding effect on all oilier laws, including Transfer of Property Act.
Thus, in my view the lands under mortgage to Bank are not exempt from the operation of the Act and the effect of vesting is that they vest in the Government free from all encumbrances including the liability under the mortgage subject to a right to the mortgagee enforcing liability against the amount payable under the Act or any other property of the owner. Points 1 and 2 are answered accordingly.
PointNo.3:
Insofar as un-surrendered lands are concerned, there does not appear to be any difficulty for the mortgagee-Bank to enforce the decree and proceed against these lands. Accordingly the Bank has brought these lands to sale and realised a part of the debt. It is stated that the State has filed a suit O.S.No.2/ 1991 on the file of Additional District Judge, Sangareddy, seeking cancellation of the sales on the ground that there has been collusion between the J.Ds and auction purchasers and thereby the above sale is sham and fit to be set aside. The suit is pending and it has got to be disposed of after full trial. Subject to the result of the suit, the sale of un-surrendered lands appears to be in order having regard to the fact that the J.Ds have obtained permission of the Court to bring them to sale by private negotiations. It may be otherwise if the alleged collusion is made out.
However, the case of surrendered lands is altogether different. As already held in paragraphs 13 an 14 ante, the surrendered land has vested in the State without any encumbrance, and by legal fiction encumbrances by way of mortgage stood transformed into the amount payable under the Act. Thus, I hold that the mortgagee-Bank will be entitled to proceed against the amount under the Act, but not against the lands. Point No.3 is answered accordingly.
Point No. 4:
The learned Subordinate Judge, Medak by an order dated 21-2-1989 in E.A.Nos. 225/ 1987 and batch confirmed sales by private negotiations and issued sale certificates in utter disregard to the order of this Court in C.R.P.No.495 of 1985, dated 18-7-1986 and hence it is without jurisdiction and nonest. It is no doubt true that this order was sought to be set aside. E.A.No.521/1992 was filed by the State u/s 8 of the Limitation Act for condonation of delay in filing an application to set aside the above order was dismissed and thereafter the State has not taken any steps to file a Revision against that order. In my view the above petition is superfluous and unnecessary. Notwithstanding the above order, proviso to Section 11 of the Act makes it abundantly clear that any claim of liability enforceable against the surrendered land which has vested in the Government may be enforced only against the amount payable under this Act. The order of the L.R.A. Tribunal permitting the mortgagee-Bank to proceed against the surrendered lands also will have to be construed and read as the one contemplated by the proviso to Section 11. That appears to be the plain meaning of the proviso to Section 11 and that, in my view, is the only effect of the order dated 21-2-1989 in E.A.No.225/1987 and batch. Moreover, the interest of the mortgagee-Bank can in no way be effected even if the surrendered lands are not available for sale inasmuch as the decree can be treated as a personal decree for the recovery of the balance of the decree debt an it will be open to the Bank to proceed against other properties of the judgment-debtors as per clause (2) of the proviso. Point No.4 is answered accordingly.
Point No.5:
It is evident from the above discussion and findings under points No. 1 to 4 ante that the lands which were mortgaged to State Bank of India are not exempted from the operation of the Act, the land holders have been held to be surplus land holders and accordingly they have surrendered an extent of 148.74 acres and the effect of the surrender is that those lands have vested in the Government without any encumbrances; the mortgagee-Bank is entitled to proceed against the un-surrendered lands without any demur, but not against the surrendered lands and it can only proceed against the amount payable under the Act for the surrendered lands. In may considered view the surrendered lands could not have been put to sale in EP No.9/1984 and therefore, no title passes to the auction purchasers because of the above illegality and when no title has passed to the auction purchasers themselves, they could not have conveyed any title to third parties-respondents. I, therefore, hold that the respondents herein have not acquired any rights under the sale deeds executed by the auction purchasers of the surrendered lands. Point No.5 is answered accordingly.
In view of my findings on points 1 to 5, the surrendered lands have to be distributed among landless poor persons as envisaged by the Act and Rules framed thereunder. The order dated 9-4-1992 by the concerned Revenue Divisional Officer was passed for the purpose of distribution among landless poor persons and accordingly necessary proposals for assignment of the land are called for. There is no illegality or irregularity in the order of the Revenue Divisional Officer, dated 9-4-1992 and hence, the impugned order of the Land Reforms Appellate Tribunal setting aside the order dated 9-4-1992 is not sustainable.
In the result, the Revision Petition is allowed and the order dated 7-2-1994 in LRA No.34/1992 is set aside. There will be no order as to costs.