New Delhi: The Supreme Court has set aside an Andhra Pradesh High Court order that had reversed the confirmed auction-sale of 40.65 acres of land belonging to a company in liquidation, holding that a genuine dispute over whether land is 'assigned land' liable to revert to the State cannot be resolved through summary proceedings before a Company Court, especially where the land has been in long, uninterrupted private possession.
The Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran was hearing a batch of civil appeals arising from a dispute over 65.94 acres in Kodurupadu village, Nellore Mandal, of which 40.65 acres was claimed by the State to be assigned land. The land had been in the ownership and possession of M/s Circar Paper Mills Limited, which went into liquidation, following which the Official Liquidator appointed by the Company Court took possession and put the properties up for auction. The auction was won by J.K. Sugar Mills Limited for Rs. 7 crore 80 lakhs, and the learned Single Judge confirmed the sale, but the State's appeal succeeded before the Division Bench, which set aside the confirmation on the ground that the land was assigned land. A connected batch of appeals involved individual appellants who claimed title over an adjacent 17.73 acres derived from the same predecessor-in-interest, whose claim for pattadar passbooks had been rejected by the writ court following the same reasoning.
The title of the entire extent was traced to one B.J. Rao, whose family's possession of the land was said to date back to 1920, with sales made over the decades, including 46.23 acres sold to Circar Paper Mills in 1980 and 17.73 acres eventually settled upon the individual appellants. It was only after the Official Liquidator published a notice of auction in 2004 that the Mandal Revenue Officer, Nellore, raised an objection by telegram, claiming that 40.65 acres of the land was assigned to landless persons and could not be alienated under the Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977. The Company Court, on impleading the Mandal Revenue Officer, found the objection belated, since the land had been purchased before 1986 and an industry had been operating on it for years without any prior claim by the State, and directed the Official Liquidator to pay the Government Rs. 1,50,000 per acre for the 40.65 acres while confirming the sale.
The Supreme Court noted that the State's own counter-affidavit was self-defeating, since it claimed that more than half of the disputed extent had been assigned to B.J. Rao himself, who, having substantial landholdings, could not have qualified as a landless person eligible for assignment in the first place. It also noted that no material had been produced to substantiate the claim of assignment beyond a bare assertion, and that the Government had approached the Company Court belatedly, well after the auction had been published and without seeking any prior orders from that Court.
Relying on its earlier decision in Government of Andhra Pradesh v. Thummala Krishna Rao, the Court reiterated that where a bona fide dispute exists as to the Government's title, it cannot unilaterally treat the property as its own and resort to summary eviction proceedings, and that such a dispute over title must be resolved through a properly constituted suit. Applying the same principle to the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977, the Court held that the long possession itself restrains this Court from accepting any summary proceedings for eviction, particularly where the claimants held title through registered sale deeds and revenue mutations spanning decades.
The Court held that the Company Court's order confirming the auction and directing part-payment to the Government, to protect its interest without derailing the sale process under the Companies Act, did not warrant interference in appeal, and that the Division Bench had erred in setting it aside in a summary manner.
The civil appeals were accordingly allowed, and the order of the learned Single Judge confirming the auction sale was revived, with possession to be handed over to the auction purchaser, J.K. Sugar Mills, if not already done. The writ petition filed by the individual appellants, Sundaramma and others, was also revived and restored to the High Court for fresh consideration on merits, along with connected proceedings challenging orders of resumption issued by the Government.
The amounts earlier directed to be deposited with the Government were ordered to be restored for application towards the liquidation of Circar Paper Mills Limited, with the High Court's fresh consideration to be guided by the Court's observations on summary eviction.
Appearances:
For J.K. Sugar Mills (auction purchaser): Mr. Ranjit Kumar and Mr. Navin Pahwa, Senior Advocates.
For the individual appellants (Sundaramma and others): Mr. B. Adinarayana Rao, Senior Advocate.
For the Official Liquidator, Circar Paper Mills Limited: Mr. K.M. Nataraj, Additional Solicitor General.
For the State: Ms. Prerna Singh, Advocate.
Case Title: M/s Circar Paper Mills Ltd. vs. District Collector, Nellore District & Ors., Civil Appeal No. 699 of 2017 with Civil Appeal Nos. 807-808 of 2017 and Civil Appeal Nos. 809-810 of 2017
