Research › Search › Judgment

Gauhati High Court · body

2014 DIGILAW 521 (GAU)

Pallorbund Tea Limited v. State of Assam

2014-05-15

HRISHIKESH ROY

body2014
JUDGMENT AND ORDER Heard Mr. S.K. Kejriwal, the learned Counsel appearing for the petitioner. The respondents are represented by Mr. J. Handique, the learned Government Advocate, Assam. 2. The petitioner is a Company duly incorporated under the Companies Act, 1956. They own Tea Estates (T.E.) in Assam and challenge the legality of the Government Notification dated 12.8.2008 (Annexure-A), whereby, the rate of land revenue for tea lands in Barak Valley was enhanced to Rs.16/- from Rs.9/- per Bigha. For the Tea Estates in Assam Valley, increase is from Rs.12 to Rs.22 per Bigha. The classification of the tea estate lands on which the tea factory is located is changed to Industrial Site and such re-classification is also challenged by the petitioner. The 3rd challenge is to the levy of fine @ Rs.200/- per annum for the Government land encroached by the T.E. The imposition of the enhanced land revenue with retrospective effect from 1.7.2003 through the impugned notification of 12.8.2008 is also under challenge in this proceeding. 3.1 The petitioner contends that the imposition of higher rate of revenue under Section 11A of the Assam Land Revenue Re-Assessment Act, 1936 (hereinafter referred to as the Re-Assessment Act) is unjustified since the condition precedent for enhancing the rate of revenue is not satisfied in the instant case. To be specific, the impugned decision is not relatable to Government’s opinion based on relevant materials and accordingly the increase in the rate of land revenue is contended to be unjustified. For ready reference Section 11A is quoted below : “11.A. Revision of rates of revenue by the State Government – Notwithstanding anything contained in Section 11 or in any other law for the time being in force the State Government may, if it is of the opinion that it is necessary to do so, by notification, assess a higher rate of revenue in all classes of lands not exceeding 30 times of the existing rate of revenue in case of tea land and tea groups and 20 times of existing rate of revenue in case of other lands in rural areas.” 3.2 Challenging the categorization of the T.E factory area as Industrial Site under Section 11A, the petitioner argues that without declaration of a specified area is Industrial Site under Section 3A of the Re-Assessment Act, the re-classification of any part of T.E land as Industrial Site is contrary to law. The petitioner contends that when the pre-conditions under Section 3A of the Re-Assessment Act for declaration of a specified area as Industrial Site is not satisfied, the re-classification of the tea factory area within the tea estates for assessment of higher revenue is contrary to due process. Since Section 3A is relevant the same is extracted : “3A. Declaration of any specified area as trade site, commercial site, industrial site or residential site.- Notwithstanding anything contained in this Act, the State Government may, if it is of the opinion on that a particular area as assumed importance for trade, commerce, industry or residential use, declare such area as trade site, commercial site, industrial site or residential site, as the case may be, for the purpose of assessment of land revenue at enhanced rates as may be applicable.” 3.3. Mr. S.K. Kejriwal, the learned Counsel refers to definition of “Tea Lands” under Section 2 (xiii) of the Re-Assessment Act to submit that land used for purpose ancillary to cultivation of tea should also be considered as “Tea Lands” and to explain ancillary purpose for special cultivation, the Counsel refers to the Explanation given in Section 4(2) of the Assam Fixation of Ceiling on Land Holdings Act, 1956 (hereinafter referred to as the Ceiling Act). The explanation to Section 4(2) of the Ceiling Act being relevant is extracted as under : “Section 4(2) ....................... The explanation to Section 4(2) of the Ceiling Act being relevant is extracted as under : “Section 4(2) ....................... Explanation – Purposes ancillary to special cultivation shall mean the following : (i) land used for factory buildings, (ii) land used for staff building including labour line, (iii) land used for roads, bridges, and drains within the tea estate, (iv) land used for nurseries including shade trees, (v) [land used for hospitals, dispensaries, crèches, recreation centres and play grounds.] (vi) land used for religious institution, burial or cremation ground, (vii) land used for any other building built by management as a statutory requirement under any law for the time being in force, (viii) land used for seed bari; (ix) land used as may be needed for rotational plantation to maintain the planted areas as on the commencement of this Act but no exceeding 7½ per cent of the planted area; (x) lands lying within the boundaries of the actual planted area excluding tenanted khet lands; and (xi) lands used for bamboos baris but not exceeding 50 bighas” 3.4 Since the liability to higher revenue at higher rate is created only through the impugned Notification dated 12.8.2008, the petitioner contends that levy has to be prospective and therefore they challenge the retrospective imposition of the enhanced levy, by placing reliance on Panchi Devi vs. State of Rajasthan reported in (2009) 2 SCC 589 . 3.5 The levy of fine on alleged encroachment of Government land by the tea estate is challenged on the ground that exercise of powers in the Re-Assessment Act to levy fine for encroached Government land is legally impermissible as the T.E. is neither a Proprietor or Settlement Holder over the encroached Government land and moreover Section 4 bars application of the Re-Assessment Act when the affected party is neither a Proprietor or Settlement Holder of the concerned Government land. As Section 4 & Section 8 are to be considered they are reproduced: “4. Bar to application of Act to certain land.- Nothing in this Act shall apply to the settlement of land over which no person has the right of a proprietor or settlement holder.” “8. As Section 4 & Section 8 are to be considered they are reproduced: “4. Bar to application of Act to certain land.- Nothing in this Act shall apply to the settlement of land over which no person has the right of a proprietor or settlement holder.” “8. General proposals of re-assessment.-In the framing of general proposals of re-assessment for each assessment group the Settlement Officer shall have regard to the changes which have occurred in the locality since the fixing of the existing assessment, more particularly in respect of – (i) the economic condition of those who live mainly be agriculture, (ii) the value of agricultural produce, (iii) the cost of production, and (iv) the letting and selling value of land.” 4.1 Although the legality of the Government Notification dated 12.8.2008 is challenged in multiple proceedings, the Government has not filed any counter affidavit and therefore Mr. J. Handique, the learned Government Advocate is unable to make any argument of substance. However he submits that the petitioner has belatedly challenged the Notification dated 12.8.2008, four years after it was notified and therefore the case shouldn’t be entertained. 4.2 The Government advocate refers to the representation given by the Assam Tea Planters Association on 5.10.2009 to project that the representative body of the Tea Companies requested for a moderate hike and that too from a prospective date and on this basis, Mr. Handique submits that raising of the land revenue for the T.E. land can’t be challenged by individual Tea Companies whose parent Association expressed limited grievance through their representation to the Government. 5. Before proceeding any further on the merit of the other contentions, it must be recorded that the legality of enhanced levy is questioned on strong legal grounds. Therefore such challenge should not in my view, be thrown out at the threshold. By addressing the representation through their umbrella organization, the tea companies can’t be said to have waived their legal right to challenge the Government notification. Furthermore restricting their challenge to the contents of the representation given by the Assam Tea Planters Association would also be harsh. Since that representation was not acted upon by the Government it would be appropriate in my view to answer the arguments of the petitioner on merit. 6.1 The Assam Land Revenue Re-Assessment Rules, 1936 (hereinafter referred to as the Re-Assessment Rules) provides for the mechanism for revision of land revenue. Since that representation was not acted upon by the Government it would be appropriate in my view to answer the arguments of the petitioner on merit. 6.1 The Assam Land Revenue Re-Assessment Rules, 1936 (hereinafter referred to as the Re-Assessment Rules) provides for the mechanism for revision of land revenue. The sine qua non for exercise of powers under Section 11A is the rate report under Section 24 of the Re-Assessment Act to be given by the Settlement Officer, which is required to be considered by the Divisional Commissioner and the rate report should then be published for inviting objections from the affected T.E. owners. Section 24 being relevant is quoted below : “24. Rate report of the Settlement Officer.- (1) The Settlement Officer shall embody his proposals for each assessment group in a rate report as nearly as may be in the prescribed form and shall submit the report to the Commissioner of the Division. (2) Subject to rule, the Commissioner, shall publish the report and after considering any objections that may be received, and after such further enquiry, if any, as he may deem necessary submit the report with his recommendations for the orders of the State Government.” 6.2 The Rule 10 of the Re-Assessment Rules provides that the rate report should contain a general outline of the physical and agricultural conditions and must take into account the capacity of the people to shoulder the proposed levy. The character of the land, the nature of the cultivation, cost of cropping, previous revenue history, the productivity of the land, inter alia, are to be specified in the rate report and these are the materials for the formation of the Government opinion to justify exercise power under Section 11A to revise the rate of land revenue. Since Rule 10, Rule 11, Rule 12, 12A are being considered, they are extracted as under: “10. What rate report should contain – The Settlement Officer’s rate report for each assessment group shall contain his proposal for the assessment of each village within the group. The report besides giving a general outline of the physical and agricultural condition of the Group, shall deal succinctly with such of the following subjects as may throw light upon the pressure of the existing assessment and the capacity of the people to bear the propose assessment. The report besides giving a general outline of the physical and agricultural condition of the Group, shall deal succinctly with such of the following subjects as may throw light upon the pressure of the existing assessment and the capacity of the people to bear the propose assessment. As far as possible, present circumstances should be compared with those obtaining when the existing assessment rates were fixed – (i) Position and boundaries of the Group; total and surveyed area; number of village. (ii) Natural feature; (iii) Character cultivation; modes of cultivation; rainfall; irrigation, manering, and double cropping; liability to damage by natural causes, including wild animals and insect pests; (iv) Cost of cultivation; cattle; agricultural labour and grazing facilities; (v) Population. (vi) Communications, trade and industry markets for disposals of surplus agricultural produce; prices of agricultural produces; exports and imports; (vii) Previous revenue history; effect of the existing assessment on the more highly assessed villages; agricultural calamities of the past settlement period; improvements made at either public or private expense; (viii) Settled area; extensions of cultivations; area held by ex-tea garden labourers, other foreigners and immigrants conversion of annual lands into periodic; (ix) Relinquishments; (x) Crop statistics; double cropped and uncropped percentages; (xi) Subletting; percentage of settled area sublet; rates of rent; area held by foreigners as sub-tenants ; price of land; (xii) Soils-their nature and fertility; land classing; (xiii) Average outturn of agricultural produce; estimated value of the gross produce and its relation to the proposed revenue; (xiv) Collection of revenue; coercive processes used; (xv) Economic condition of the people in general and of agriculturists in particular; subsidiary occupations; standard of living; health; water supply; educational facilities; indebtedness; consumption of exciseable articles; (xvi) Proposed assessment with a summary of the ground in support of it; comparison of incidence of past and proposed assessments both for the group as a whole and for its constituent fiscal division; (xvii) Effect of application of provisions relating to deferred enhancements; (xviii) Proposed term of settlement. (xix) Proposed assessment of lands outside towns but used for commercial and industrial purposes, subject to the limitation as regard assessment of revenue, imposed by the terms of any particular instrument of settlement or lease respecting the land covered by that instrument of lease. (xx) Rates proposed for the assessment of waste lands both in surveyed and unsurveyed areas. (xxi) Revised assessment of nisf-khiraj and special estates; lakhiraj lands. (xx) Rates proposed for the assessment of waste lands both in surveyed and unsurveyed areas. (xxi) Revised assessment of nisf-khiraj and special estates; lakhiraj lands. “11. Annexure to the rate – To the rate report shall be annexed – (i) a map of the group showing the villages; (ii) a set of tabular statements, in forms approved by Government, showing the results of present and past classifications the areas held from Government under different tenures; the crops grown; and the proposed assessment; (iii) a draft for the notification of the new rate proposed for the assessment of the group.” “12. Submission of village assessment statement with rate report – With the rate report shall also be submitted a set of village assessment statements in forms similar to those prescribed for the group as the whole in Rule 11 (ii) above, together with short note on the circumstances of each village with special reference to the criteria mentioned in Sections 8 & 9 of the Act. “12-A. Rules 10-12 apply to special cultivation rate report.- The provisions of Rules 10-12 shall apply to rate reports on special cultivation with such modifications as the Settlement Officer may, subject to the approval of Government, consider suitable.” 7. As can be noticed from Section 24 of the Re-Assessment Act, a rate report must be prepared to consider revision of land revenue through Section 11A. What the rate report must contain are specified under the Re-Assessment Rules. That apart, opportunity must be made available to the stake holders to comment on the rate report which should be published under Section 23(2) of the Re-Assessment Act. These are important safeguards to prevent arbitrary exercise of power by the Government. But what is glaring here is that no material is produced by the respondents to show that the rate report was ever published under Sub-Rule (2) of Section 24 of the Re-Assessment Act. Thus the affected T.E. owners were denied of any opportunity to raise objection to the proposed hike of land revenue. Therefore the pre-condition for formation of opinion by the State Government for exercise of power for fixing higher rate of revenue under Section 11A of the Re-Assessment Act was not followed in this case. Thus the affected T.E. owners were denied of any opportunity to raise objection to the proposed hike of land revenue. Therefore the pre-condition for formation of opinion by the State Government for exercise of power for fixing higher rate of revenue under Section 11A of the Re-Assessment Act was not followed in this case. Moreover no material is placed before the Court by the State which was the basis for formation of the Government opinion and accordingly this Court is unable to fathom the basis of the opinion or the relevancy or adequacy of the materials. The circumstances for the formation of the Government opinion can’t therefore be tested to verify whether the powers under Section 11A of the Re-Assessment Act was exercised bonafide by the Government by basing their opinion on relevant materials. Even when the Government is conferred with power to notify a higher rate of revenue under Section 11A, the law doesn’t confer unfettered discretion and unless there is relevant material to show the basis for formation of the Government opinion, the exercise of power under Section 11A can’t be legally sustained. 8. The Supreme Court in Bhikhubhai Vithlabhai Patel vs. State of Gujarat reported in (2008) 4 SCC 144 and The Amritsar Improvement Trust vs. Baldeva Inder Singh reported in (1972) 1 SCC 165 had held that the opinion to be formed by Government has to be based on relevant materials and the existence of a rate report under Rule 10 of the Re-Assessment Rules and publication of the proposed rate to invite objections of the targeted Tea Companies are sine qua non for exercising the powers under Section 11A. Therefore in the absence of the required exercise under Section 24 of the Act and rate report under Rule 10 of the Re-Assessment Rules, it has to be declared that the exercise of power under Section 11A for enhancing the land revenue is not through due legal process. 9. As can be seen from the Re-Assessment Act and the Rules, a mechanism is provided for raising the rate of land revenue in Assam. Therefore since the statute permits exercise of power under Section 11A of the Re-Assessment Act in a certain manner, the decision to revise the rate of revenue must be preceded by the prescribed exercise. 9. As can be seen from the Re-Assessment Act and the Rules, a mechanism is provided for raising the rate of land revenue in Assam. Therefore since the statute permits exercise of power under Section 11A of the Re-Assessment Act in a certain manner, the decision to revise the rate of revenue must be preceded by the prescribed exercise. In other words, when the law requires the Government to decide things by following a particular method, power must be exercised in the prescribed mode and any contrary procedure can’t be commended by the Court, examining the legality of the exercise. 10. The re-classification of the factory area of the T.E. land as Industrial Site for levying higher land revenue is also found to be irrational in as much as Tea Lands is not necessarily confined to those lands taken up for actual tea cultivation. In fact under Section 2(xiii) of the Re-Assessment Act, Tea Lands include those lands utilized for ancillary activities in the T.E. and although the ancillary activities in the T.E are not defined under the Re-Assessment Act, one can usefully look at the explanation of special cultivation given under the Proviso to Section 4(2) of the Ceiling Act. As can be noticed from the explanation, multiple activities and spaces within the tea estate such as factory, labour quarters, hospital, crèches, religious institutions, cremation ground etc. are covered within the ancillary activities of a tea estate. Therefore when the factory building area is included within the ancillary activities for special cultivation, separate re-classification of the T.E. land as Industrial Site has to be declared as arbitrary and illegal. In support of this conclusion, one can usefully rely upon the ratio in Koomsong Tea Co. Ltd. vs. Assam Board of Revenue reported in 1989 (2) GLJ 170 where the Division Bench held that the expression special cultivation is not confined to growing of tea bushes only but would take within its fold the purposes ancillary thereto. This view was taken by the Court on the ground that growing of tea bushes for running a T.E. and purpose ancillary thereto are absolutely intertwined and therefore the expression special cultivation would include all ancillary activities. 11. On the issue of declaration of the tea factory land as Industrial Site through the impugned notification, the provision of Section 3A of the Re-Assessment Act must be taken into account. 11. On the issue of declaration of the tea factory land as Industrial Site through the impugned notification, the provision of Section 3A of the Re-Assessment Act must be taken into account. Whenever any particular area assumes importance for trade, industrial or residential purpose, the State Government can declare such developing area as commercial site, industrial site or residential site as the case may be and can then order for assessment of land revenue at enhanced rate. But in the present case, there was no declaration of industrial area under Section 3A and therefore re-classification of the land as industrial land and levying higher revenue under Section 11A is found to be contrary to due process and the same is declared to be invalid accordingly. 12. On the retrospective levy of higher land revenue proposed w.e.f. 1.7.2003, it must be observed that land revenue at lower rate was being charged earlier from the tea companies and the enhanced revenue liability is created for the first time through the impugned Government notification. Therefore applying the ratio in Panchi Devi (supra), I am constrained to declare that the extra liability which is created for the first time through the impugned Government Notification dated 12.8.2008 can’t operate retrospectively to collect additional land revenue. 13. The final challenge of the petitioner that is required to be considered is the levy of fine under Section 11A of the Re-Assessment Act by treating the Tea Companies to be encroachers of Government land. But Section 4 debars application of this Act against anyone who can’t be categorized as Proprietor or a Settlement Holder of land. The Tea Company contends that some of the T.E. workers perhaps are utilizing the Government land for their personal cultivation but this doesn’t necessarily mean that the company is encroaching on Government land. Therefore fastening the Tea Company with fine when they are neither Proprietor or the Settlement Holder of Government land is contended to be irrational and impermissible under the Re-Assessment Act. I find sufficient force in this argument since Section 4 bars exercise of power under the Re-Assessment Act unless the targeted entity is of certain character and here the Tea Company can’t be categorized as proprietor or a settlement holder to justify invocation of the Act against them. Therefore recovery of fine from them by exercising power under Section 11A of the Re-assessment Act is held to be illegal. Therefore recovery of fine from them by exercising power under Section 11A of the Re-assessment Act is held to be illegal. 14. In view of the above discussion and reasoning, the impugned notification dated 12.8.2008 (Annexure-A) is found to be legally invalid and accordingly the same is quashed. If any enhanced land revenue/fine is already realised from the Tea Companies under this notification, the same should either be refunded or be adjusted with future revenue dues. But this declaration will not foreclose the option of the Government to hike the rate of revenue for Tea Estate lands through due process, under the Re-Assessment Act or any other permissible law. 15. With the above declaration, the case is allowed in the manner indicated above without any order on cost.