The Supreme Court has held that the State cannot resort to summary eviction proceedings where there is a genuine dispute over the title and character of land, particularly when private parties trace their possession and ownership over several decades through registered documents and revenue records.

The bench of  Justice J.B. Pardiwala and Justice K. Vinod Chandran observed that long-standing possession coupled with a bona fide claim of title cannot simply be displaced through summary proceedings on the State’s assertion that the property constitutes assigned land which reverted to the Government following an unauthorised transfer.

The litigation arose from properties belonging to Circar Paper Mills Limited, which had gone into liquidation. The Official Liquidator appointed by the Company Court took possession of the company’s lands and subsequently put them up for auction.

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The total land purchased by J.K. Sugar Mills from the Official Liquidator measured 65.94 acres. Out of this, the State claimed 40.65 acres as assigned land, while another 25.29 acres was stated to have been acquired for APIIC Limited. The appellants traced the title over the larger property to B.J. Rao.

The appellants’ case was that the lands had historically been privately held. They traced the ownership to transactions going back to 1920 and relied upon subsequent mutation entries, a registered Will, sale transactions and other revenue records.

The judgment records that B.J. Rao eventually sold different portions of the property. Circar Paper Mills purchased 46.23 acres in 1980 and its name was subsequently mutated in the revenue records. The Land Reforms Tribunal, Nellore, had also passed an order in November 1982 finding that B.J. Rao was not holding excess land as on January 1, 1975.

The Supreme Court noted that Circar Paper Mills had purchased the lands from the original owners through sale deeds executed in 1980. The company got its name mutated in the revenue records, converted the land from agricultural to industrial use, constructed a factory and operated the industrial undertaking until it went into liquidation.

Pursuant to an order of the Company Judge dated February 14, 2001, the Official Liquidator took possession of around 64 acres belonging to Circar Paper Mills on March 27, 2001.

Thereafter, following valuation, the Company Judge permitted sale of the lands and fixed an upset price. A public auction was conducted in which J.K. Sugar Mills Limited emerged as the successful bidder for ₹7.80 crore.

The publication of the auction triggered an objection from the revenue authorities. The Mandal Revenue Officer claimed that a substantial portion of the property was Government land and should therefore be excluded from the auction.

The Company Judge nevertheless examined the objection. The Mandal Revenue Officer was impleaded as a respondent after the State contended that 40.65 acres had originally been assigned to landless persons and could not have been alienated in view of the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977.

The Company Judge considered the objection belated, noting that the lands had been purchased by the company years earlier, an operational industry had existed on the property and no proceedings had been initiated before the revenue authorities objected to the auction. The sale was ultimately confirmed, while the Official Liquidator was directed to pay the Government ₹1.50 lakh per acre for the disputed 40.65 acres.

The District Collector successfully challenged that decision before the appellate court, resulting in the appeals before the Supreme Court.

Examining the competing claims, the Supreme Court observed that the lands had been privately held according to the appellants and that their predecessors had been in possession long before the companies acquired an interest in the properties.

The claim of the private parties was based upon title deeds and mutation entries, with their asserted interest traceable to 1920 and continuing until the auction without Government objection.

The Court further noticed that Circar Paper Mills had purchased the lands from the earlier owner, mutation had been effected, and the properties were in the company’s ownership and possession when the Official Liquidator took them over on March 27, 2001.

The Supreme Court also found significance in the fact that the properties had already been taken over by the Official Liquidator pursuant to the Company Court’s orders.

According to the Court, if proceedings were intended to be initiated against those lands, appropriate orders should first have been obtained from the Company Court.

Instead, despite knowing that the auction publication had been issued by the Official Liquidator under orders of the Company Court, the Government merely sent a communication asking that 40.65 acres be excluded from the auction.

The Company Court subsequently impleaded the Mandal Revenue Officer, but the revenue authority did not pursue the objection or establish the State’s claim before that court.

A crucial observation came when the Supreme Court examined the material relied upon by the State to describe the disputed property as assigned land.

The Court noted that the State’s counter-affidavit essentially contained a statement in tabular form asserting that different parcels totalling 40.65 acres were assigned lands whose alienation violated the 1977 Act.

Significantly, 20.94 acres were stated to have been assigned to B.J. Rao. The Supreme Court observed that this assertion itself weakened the State’s case because B.J. Rao had substantial landholdings, whereas the assignment contemplated under the relevant framework was to landless persons.

The Court further noted that apart from assertions concerning assignment and references to revenue entries, nothing had been produced to substantiate the Government’s case.

The Supreme Court consequently held that the appellate court ought not to have interfered with the auction proceedings in a summary manner.

The Supreme Court relied upon its earlier decision in Government of Andhra Pradesh v. Thummala Krishna Rao and Another, which dealt with summary eviction proceedings under the Andhra Pradesh Land Encroachment Act, 1905.

The Court reiterated the principle that where a bona fide dispute exists regarding Government title, the State cannot unilaterally decide in its own favour that the property belongs to it and then invoke a summary eviction mechanism against a person who is in possession under a bona fide claim of title.

Such questions of title, the Court noted while discussing the earlier precedent, require adjudication in properly constituted proceedings rather than through summary eviction.

Turning specifically to the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977, the Supreme Court observed that its provisions were comparable insofar as summary proceedings were concerned.

Section 3 provides consequences where land assigned by the Government to a landless poor person for cultivation or as a house site is transferred contrary to law. The legislation also empowers the competent revenue authority, upon being satisfied about a contravention, to take possession after evicting the person occupying the assigned land.

However, the availability of such a statutory mechanism did not mean that a genuinely contested question about whether the land was assigned land in the first place could automatically be resolved through summary proceedings.

Applying these principles, the Supreme Court observed that the disputed lands were claimed to have remained in possession of the predecessors-in-interest of the private parties since 1920.

Such land, the Court held, could not be taken over through the summary procedure adopted by the Government merely on the allegation that it had vested in the State following an unauthorised transfer of assigned land.

Importantly, the Supreme Court found that the alleged assignment itself had not been unequivocally established.

The Court observed:

“The long possession itself restrains this Court from accepting any summary proceedings for eviction.”

The Court also took into account that registered deeds and mutation entries supported the private parties’ claim, while the Government could not plead ignorance of the permissions and sanctions granted for the industrial use of the property or of mutations made in the revenue records.

The Supreme Court made a pointed observation about the timing of the State’s action.

The properties had been taken into custody by the Official Liquidator pursuant to the Company Court’s orders, and the auction itself had been conducted and confirmed under judicial supervision.

The Court observed that the direction requiring a portion of the auction proceeds to be deposited with the Government was intended to protect whatever interest the Government might ultimately establish without interfering with otherwise lawful liquidation proceedings.

Referring to the prolonged absence of action by the authorities, the Supreme Court observed that the Government had, “for whatever reason, woke up from a long slumber” only when the auction was published by the Official Liquidator.

It further noted that the Government had not approached the Company Court to properly advance its claim. The Court also held that neither the Mandal Revenue Officer nor the Collector could review the land ceiling proceedings that had already concluded against B.J. Rao through an order of the Land Tribunal.

The Supreme Court set aside the appellate order and revived the order passed by the Single Judge/Company Judge.

The Court directed that possession, if not already handed over, should be given to auction purchaser J.K. Sugar Mills. If the purchaser was already in possession, the Court directed that such possession should not be interfered with.

As regards the connected litigation brought by Sundaramma and others concerning the adjacent properties, the Supreme Court set aside the impugned order and restored their writ petition before the High Court for fresh consideration.

The Court further directed that the amount earlier ordered to be deposited with the Government should immediately be restored for application in the liquidation proceedings of Circar Paper Mills Limited.

While restoring the pending proceedings, the Supreme Court clarified that the High Court should consider the matters on their merits without being influenced by observations contained in the judgments that had now been set aside.

At the same time, the Supreme Court specifically directed that its observations concerning summary eviction, together with the precedent discussed in the judgment, must be given “precedential weightage”.

The parties were left free to advance all available contentions, including their challenge to the validity of the summary proceedings initiated by the Government.

Accordingly, the Supreme Court allowed the civil appeals and disposed of the pending applications.

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