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2008 DIGILAW 369 (JK)

Jammu Metchem Pvt. Ltd. v. State Of J. &K.

2008-10-10

J.P.SINGH

body2008
1. Petitioner, a Private Limited Company, incorporated under the Companies Act, 1956 with its Registered office at Legate Morh District Kathua, has filed this writ petition seeking quashing of Director Industries and Commerce Jammu and Kashmir Govt. Exhibition Ground, Jammu, respondent no. 2s communication no. DICK/Dev/4132 dated 19th September 2007 informing the petitioner to get Land on Lease through SICOP/SIDCO for Permanent Registration of its unit, and a writ of mandamus commanding the respondents to accord Permanent Registration to its unit. 2. The petitioner-company says that allured by the Jammu and Kashmir Industrial Policy 2004 promulgated by the State of Jammu and Kashmir vide its Government Order no. 21-Ind of 2004 dated 27th January 2004, it contemplated setting up a Small Scale Industrial Unit for manufacturing Mettalic Stearate, Antimony Triacetate and PVC Stabilizer including Zinc Oxide and Zinc Alloys, and for this purpose obtained Provisional Registration of the Unit from General Manager District Industries Centre Kathua which was valid until 28.10.2010. 3. In order to set up the Unit, land measuring 10 kanals 10 marlas comprised in Khasra nos. 717 and 725 situated at village Logate Tehsil and District Kathua was acquired by it on lease from the owner thereof. It completed all requisite formalities including securing its registration under various laws in force in the State. Jammu and Kashmir State Pollution Board too issued its consent order no. 731 of 2007 dated 24th July 2007 for establishment of the Unit. 4. Completing all post provisional registration requisites, the petitioner applied to respondent no. 2 for according Permanent Registration to its Unit which is stated to have been completed after spending an amount of about one crore rupees. 5. Respondent no. 3, informed the petitioner vide its communication no. DICK/Dev/4132 dated 19.09.2007 that in order to seek Permanent Registration of its Unit, it will have to obtain registration of the lease deed through SICOP/SIDCO and for that purpose the lease of land was required to be executed with SICOP/SIDCO. 6. Aggrieved by respondent no. 3s aforementioned communication, the petitioner has invoked this Courts extra ordinary civil writ jurisdiction to seek reliefs mentioned at the threshold. 7. 6. Aggrieved by respondent no. 3s aforementioned communication, the petitioner has invoked this Courts extra ordinary civil writ jurisdiction to seek reliefs mentioned at the threshold. 7. Respondents contest the petitioners writ petition and oppose the grant of relief to it on the solitary ground that land acquired by the petitioner on lease was impermissible as lease of land being transfer of immovable property cannot be acquired by a non-State Subject in the State of Jammu and Kashmir and being a non-State Subject, the petitioner could seek Permanent Registration of its Unit only after approaching the Government and seeking allotment of land through S1DCO if it was available with it. 8. Respondents, therefore, justify their refusal to accord Permanent Registration to the petitioners Unit on the ground that being a non-State Subject, it cannot acquire immovable property on lease in the State of Jammu and Kashmir. 9. Petitioners counsel, Mr. Shukla submitted that respondents plea that land obtained by the petitioner, a non-State Subject, on lease, was in violation of the provisions of the Transfer of Property Act, was untenable in view of the law settled by this Court in Estate Officer v. K. K. Amla reported as 1989 SLJ, 105 and respondents refusal to accord Permanent Registration to petitioners Unit was unjustified besides being arbitrary and discriminatory, in that, they had allowed Permanent Registration to Jammu and Kashmir Pigments Limited, a similarly situated Non-State Subject which had obtained Provisional Registration along with the petitioner and had obtained land on lease hold basis, like the petitioner, from the private owners. 10. Projecting respondents case that the petitioner was not entitled to seek Permanent Registration for its Unit which had been established on immovable property which it had acquired on lease from private persons, which was prohibited under the provisions of the Transfer of Property Act, 1977 (1920 A.D), Learned Advocate General submitted that the State cannot be commanded to provide Permanent Registration to petitioners Unit against the mandate of the provisions of the Transfer of Property Act, 1977 (1920 A.D) which prohibits lease of private land(s) to Non-State subjects, like the petitioner. 11. According to Mr. 11. According to Mr. Naik "Transfer of property", as defined in Section 5 of the Transfer of Property Act includes in its ambit, Lease of immovable property too and in view of the prohibition contained in the commands and Irshads mentioned in Section 139 of the Act, lease hold rights obtained by the petitioner, a Non State Subject, in immovable properly, for setting up and commissioning its Small Scale Unit was illegal and impermissible and the land covered by the lease was liable to be escheated to the State. 12. Referring to the provisions of Section 140 of the Act and the amendment introduced to it vide Act No. VII of 2004, learned Advocate General submitted that the Legislature had demonstrated its intention in clear terms that Transfer of property in terms of Section 5 of the Act would include Lease of immovable property also. 13. Petitioners plea that the respondents had accorded Permanent Registration to Jammu and Kashmir Pigments Private Limited, a similarly situated Non-State Subject, has been sought to be supported by the respondents saying that Permanent Registration accorded to the Unit was illegal and on coining to know about the illegality, the respondents had put on hold the request of the Unit for change of its constitution and were in the process of obtaining requisite instructions in the matter. 14. I have considered the submissions of learned counsel for the parties. 15. Petitioners case seeking Permanent Registration for its Unit by Director Industries and Commerce, has been contested by the respondents on the solitary ground that it is not entitled to seek Permanent Registration of its Unit because the Lease of land obtained by it for setting up its Unit was illegal and impermissible, in that, being a Non Permanent Resident of the State, it cannot acquire any immovable property on Lease in the State of Jammu and Kashmir. 16. The question that, therefore, falls for consideration, in this petition is, as to whether there exists any law in the State of Jammu and Kashmir which prohibits Lease of immovable property in favour of Non-Permanent residents of the State? 17. I had an occasion to deal with the issue while deciding K. P. Paper v. State of Jammu and Kashmir and ors, 2008 (3) JKJ HC-206 [OWP no. 17. I had an occasion to deal with the issue while deciding K. P. Paper v. State of Jammu and Kashmir and ors, 2008 (3) JKJ HC-206 [OWP no. 292/2008], where, while answering the question it had been observed as follows: "Provisions of the Transfer of Property Act do not create any specific bar, as such, prohibiting lease of immovable property in favour of Non State Subjects. It is only Section 139 of the Act which saves certain Regulations, Hidayats, Resolutions, Allan, Rule and valid custom, which regulate transfer of immoveable property or any right therein, in any part of the Jammu and Kashmir State. 18. The question as to whether the Regulations, Hidayats, Resolutions, Allans etc., enact any bar for Transfer of property in favour of Non State Subjects, does not appear to be res Integra in view of the Full Bench decision of this Court in Lala Devi Dass versus Panna Lal, reported as AIR 1959 J&K, 62 where their lordships had held as follows: "Our attention has been drawn to another Irshad of 29th Magh 1943 and Irshad dated 23rd Magh 1962 by which sales and mortgages of land in favour of residents of British India have been prohibited and it is argued that as it had been the consistent policy of the State not to transfer immovable property in favour of non-State Subjects either by sale or mortgage, therefore, the alienation of the property by will also by implication should be deemed to have been prohibited. 19. The learned counsel has not been able to show any authority or law for the proposition that disposal by will of immovable property consisting of a house in favour of a non-State Subject is prohibited. He has, however, referred to S.4 of the Land Alienation Act which prohibits the transfer of land in favour of any person who is not a State Subject. The word "transfer" is not specifically defined in the Land Alienation Act but a definition of "permanent alienation" is given in sub-sec. (3) of S.2 of the Act which is as follows: - "The expression "permanent alienation" includes sale gift, bequest, grant of occupancy rights and exchange other than an exchange made for the purpose of consolidation of holdings". 20. The word "transfer" is not specifically defined in the Land Alienation Act but a definition of "permanent alienation" is given in sub-sec. (3) of S.2 of the Act which is as follows: - "The expression "permanent alienation" includes sale gift, bequest, grant of occupancy rights and exchange other than an exchange made for the purpose of consolidation of holdings". 20. The expression "land" is defined by Sub-clause (2) of S. 2 as land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes sub-servant to agriculture or for pasture. As bequest is specifically included in "permanent alienation" which is synonymous to the term transfer, so the permanent alienation of land as defined in the Land Alienation Act by bequest is prohibited under the provisions of the Land Alienation Act. But there is no law prohibiting disposal of immovable property other than land as defined in the Land Alienation Act by will in favour of a non-State Subject. The mere fact that transfer by sale or mortgage of immovable properly in favour of non-State Subjects is prohibited cannot be considered to be a bar to the disposal of immovable property other than land as defined in the Land Alienation Act by will. There must be a clear and unambiguous provision of law prohibiting the disposal of all kinds of immovable property by will and in the absence of such a provision the Courts will not interpret the latent intention of the legislature which is not embodied in express provisions of law." 21. In view of the legal position settled by the Full Bench Judgment (supra), it may be concluded that the prohibition on transfer of land which is provided in the Irshads mentioned in Section 139 of the Act is only on the Sale and Mortgage of lands in the State of Jammu and Kashmir. 22. The next issue which needs to be considered is as to whether transfer of a right to enjoy property by way of lease would attract the provisions of the Commands/ Irshads prohibiting Transfer of Immovable Property by Sale or Mortgage, And whether Transfer of right to enjoy property, by way of Lease would be Transfer of Property in terms of Section 5 of the Act. 23. 23. Transfer of property has been defined in Section 5 of the Act to mean, an act by which a living person conveys property, in present or in future, to one or more persons, whether living or unborn or to himself, or to himself and one or more other such persons; and "to transfer property" is to perform such act. 24. Living persons, in terms of the definition, include a Company or Association or body of individuals, whether incorporated or not. It has been explained in Section 5 of the Act that nothing contained in it would affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals. 25. Lease of immovable property, as defined in Section 5 of the Act, is a transfer of a RIGHT TO ENJOY such property, made for a certain term, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. 26. Perusal of the definitions of `Transfer of Property appearing in Section 5 and `lease in Section 105 of the Transfer of Property Act unambiguously demonstrates a well defined distinction. 27. Whereas Lease is a transfer, only of a "right to enjoy" the property, which is one of various rights which the owner or authorized occupier thereof possesses therein, the ownership remaining vested in the transferor-lessor, the "transfer of property" on the other hand, is the "transfer of ownership of the property itself vesting it absolutely and exclusively in the Vendee(s) thereby divesting Owner-Vendor of all his rights in the property. 28. The above view gets support from the intention of the legislature expressed as such in enacting Section 8 of the Transfer of Property Act which indicates about the effects post transfer of immovable property, which one may not find in case of "transfer of right" alone in the property, as in case of lease of the immovable property. 28. The above view gets support from the intention of the legislature expressed as such in enacting Section 8 of the Transfer of Property Act which indicates about the effects post transfer of immovable property, which one may not find in case of "transfer of right" alone in the property, as in case of lease of the immovable property. Section 8 of the Act, is reproduced hereunder, for facility of reference: - "Operation of transfer Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property, and in the legal incidents thereof. Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefore (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer; and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect." In view of the marked distinction in the expression "transfer of property" appearing in Section 5 and "transfer of right to enjoy" the property appearing in Section 105 of the Transfer of Property Act, it may be concluded that lease of immovable property cannot, by any stretch of reasoning, be construed as transfer of property in terms of Section 5 of the Transfer of Property Act which may in turn attract the prohibition on transfer of immovable property to Non State Subjects. Merely because the legislature has by Act No. 7 of 2004 introduced, by way of amendment to Section 140 of the Act, which refers to exemptions of certain instruments from restriction imposed on transfer of immovable property, lease of immovable property in favour of (1) Shri Mata Vaishno Devi University established under the Jammu and Kashmir Shri Mata Vaishno Devi University Act, 1999 and (2) Baba Ghulam Shah Badshah University established under the Jammu and Kashmir Baba Ghulam Shah Badshah University Act, 2002, would not even remotely suggest that lease of immovable property in favour of Non State Subjects had been intended to be prohibited. This is so because introduction of "leases in favour of Shri Mata Vaishno Devi University and Baba Ghulam Shah Badshah University" in Section 140 of the Transfer of Property Act, requires to be viewed in the context of any restriction on transfer of immovable property in favour of a person who is not a Permanent Resident of the State, as contemplated by Irshad dated 29th Maghar 1943 or any Law, Rule, Order, Notification, Regulation, Hidayat, Alian, Circular, Robkar, Yadasht, Irshad, State Council Resolution or any oilier instrument having the force of law. As already held in the earlier part of this judgment that none of these commands as mentioned hereinabove had created any bar on lease of immovable property in favour of Non State Subjects and the bar created therein pertained only in respect of Sale and Mortgage of immovable property, so introduction of "leases in favour of Shri Mata Vaishno Devi University and Baba Ghulam Shah Badshah University" in Section 140 of the Transfer of Property Act, would not in any way change the settled position of law that lease of immovable property would not amount to transfer of property itself so as to attract the bar enacted by the above commands for transfer of property in favour of Non State Subjects. In view of the above discussion, it, therefore, needs to be concluded that the Transfer of Property Act, 1977 (1920 A.D), does not as such enact any bar prohibiting lease of immovable property in favour of Non State Subjects. Submissions made by learned Advocate General are thus rejected as utterly frivolous. In view of the above discussion, it, therefore, needs to be concluded that the Transfer of Property Act, 1977 (1920 A.D), does not as such enact any bar prohibiting lease of immovable property in favour of Non State Subjects. Submissions made by learned Advocate General are thus rejected as utterly frivolous. Learned Advocate General had not referred to any other law in force in the State which prohibited Lease of immovable property in favour of Non State Subjects and rightly so because even the Jammu and Kashmir Alienation of Land Act, 1995 (1938 A.D), does not provide any prohibition for lease of land as defined in the Jammu and Kashmir Alienation of Land Act in favour of Non State Subjects. Prohibition contained in Section 4 of the Jammu and Kashmir Alienation of Land Act on transfer of land in favour of Non State Subjects applies only to permanent alienation of land and not to transfer of right to enjoy the land by way of lease. I am, therefore, inclined to hold that the laws in force in the Stale of Jammu and Kashmir do not prohibit lease of immovable property in favour of Non Permanent Residents of the State." 29. For similar reasons, I would accordingly hold as unjustified and illegal, the respondents action of refusing Permanent Registration to petitioners Unit on the ground that lease of land obtained by it from private persons was illegal being transfer of land in favour of Non-State Subjects. 30. Petitioner has, therefore, succeeded in establishing a case for issuance of command to the respondents to consider according it Permanent Registration because the respondents had failed to discharge their legal duty in refusing to consider registration of petitioners Unit in terms of the Cabinet decision of the State Government and Government orders issued in this behalf to achieve promotion of industrialization in the State, on misconceived and vexatious grounds. 31. Before concluding, it needs to be observed that a welfare State like ours and its functionaries whose duty it is to serve the people and act bonafide, cannot afford to permit contest of litigation on vexatious and frivolous pleas. It is because of such type of defence of the respondents that the petitioner had to suffer in business for its no fault. The respondents are, therefore, liable to be burdened with exemplary costs. 32. It is because of such type of defence of the respondents that the petitioner had to suffer in business for its no fault. The respondents are, therefore, liable to be burdened with exemplary costs. 32. Petitioner, therefore, succeeds in this petition which is, accordingly, allowed with costs quantified at Rs. 10,000/-, quashing respondent no. 3s communication no. DICK/Dev/4132 dated 19.09.2007 directing the petitioner to get lease deed executed with SICOP/SIDCO for seeking Permanent Registration of its Unit And a command is issued to the respondents to consider according Permanent Registration to petitioners Unit which stands provisionally registered for manufacturing Mettalic Stearate, Antimony Triacetate and PVC Stabilizer including Zinc Oxide and Zinc Alloys, within a period of one month.