STATE OF HP vs M/S HINDUSTAN TIN WORKS LIMITED

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IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWP No.7979 of 2022
Decided on: 25.06.2026
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State of Himachal Pradesh …..Petitioner
High Court of H.P.
Versus
M/s Hindustan Tin Works Limited .....Respondent
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Coram
Ms. Justice Jyotsna Rewal Dua
1
Whether approved for reporting? Yes
For the Petitioner: Ms. Menka Raj, Deputy Advocate
General.
For the Respondent: Mr. N.K. Bhalla, Advocate.
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Jyotsna Rewal Dua, Judge
The respondent was granted permission to
purchase 06-11 bighas of land situated at Mauja Katha,
Tehsil Nalagarh (now Baddi), District Solan, H.P. This
permission was granted to set up an industrial unit within a
period of two years. The respondent could not use the land
for the said purpose within the stipulated period. It applied
for extension of period. Its request was allowed by the State
government on 08.06.2009 by granting one year extension.
Since industry was not set up even in the extended period,
the respondent applied for further extension, which was
rejected. Accordingly, proceedings under Section 118 of the
H.P. Tenancy & Land Reforms Act, 1972 (the Act in short)
Act were initiated against the respondent on 22.09.2011.
1
Whether reporters of print and electronic media may be allowed to see
the order? Yes.
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The stand taken by the respondent was that land had
actually been put to use as per law; The development and
High Court of H.P.
leveling work was commenced; Necessary protection had
been put up, retaining wall had been raised, bore-well had
been dug and industrial shed had constructed.
On coming to the conclusion that the respondent
had not actually put the land to use for the purpose for
which, it is granted to him, the Collector, District Solan vide
order dated 30.04.2016 ordered vestment of land in the
State government. The aforesaid order was set-aside by the
Divisional Commissioner on 18.03.2019 allowing the appeal
preferred by the present petitioner.
Petitioner- State carried the matter further by
preferring revision petition before the Financial
Commissioner (Appeals), H.P. The revision petition was
disposed of on 01.12.2021 by remanding the matter to the
Collector for a fresh decision.
It is in the above circumstances, State has
preferred the instant petition, feeling aggrieved against the
order dated 18.03.2019 passed by the Divisional
Commissioner, Shimla and the order dated 01.12.2021
passed by Financial Commissioner (Appeals) whereby the
vestment of respondent’s land in petitioner’s favour was
held to be illegal and the matter was remanded to the
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District Collector, Solan with direction to consider and
decide afresh in accordance with law.
High Court of H.P.
2 . Heard & considered the case file.
3. Section 118 of the H.P. Tenancy and Land
Reforms Act pertain to transfer of land to non-agriculturists,
its relevant portion is as follows:-
118. Transfer of land to non-agriculturist barred.
(1) Notwithstanding anything to the contrary
contained in any law, contract, agreement, custom or
usage for the time being in force, but save as otherwise
provided in this chapter, no transfer of land (including
sales in execution of a decree of a civil court or for
recovery of arrears of land revenue) by way of sale, gift,
will, exchange, lease, mortgage with possession,
creation of a tenancy or in any other manner shall be
valid in favour of a person who is not an agriculturist.
(Explanation. For the purpose of this sub-Section, the
expression “transfer of land” shall not include-
i) transfer by way of inheritance;
ii) transfer by way of gift made or will executed, in
favour of any or all legal heirs of the donor or the
testator, as the case may be;
iii) transfer by way of lease of land or building in a
municipal area;
but shall not include-
(a) a benami transaction in which land is transferred to
an agriculturist of a consideration paid or provided by a
non-agriculturist; and
(b) an authorization made by the owner by way of
special or general power of attorney or by an
agreement with the intention to put a non-agriculturist
in possession of the land and allow him to deal with the
land in the like manner as if he is a real owner of that
land.
“ (2) Nothing in sub-Section (1) shall be deemed
to prohibit the transfer of land by any person in
favour of -
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(a) a landless laborer; or
(b) a landless person belonging to a scheduled caste or
scheduled tribe; or
High Court of H.P.
(c) a village artisan; or
(d) a landless person carrying on an allied pursuit; or
(dd) a person who, on commencement of this Act,
worked and a continues to work for gain in a estate
situated in Himachal Pradesh; for the construction of a
dwelling house, shop or commercial establishment in a
municipal area, subject to the condition that the land to
be transferred does not exceed-
(i) in case of a dwelling house-500 square
Meters; and
(ii) in the case of a shop or commercial
establishment- 300 square meters:
Provided that such person does not own any
vacant land or a dwelling house in a municipal area in
the state.
(e) the State Government or Central Government, or a
Government Company as defined in section 617 of the
Companies Act, 1956, or a Company incorporated under
the Companies Act, 1956, for which land is acquired
through the State Government under the Land
Acquisition Act, 1894 or a statutory body or a
corporation or a board established by or under a statute
and owned and controlled by the State of Central
Government; or
(f) a person who has become non-agriculturist on
account of-
(i) acquisition of his land for any public purpose
under the Land Acquisition Act, 1894; or
(ii) vestment of his land in the tenants under this
Act; or
(g) a non-agriculturist who purchases or intends to
purchases land for the construction of a house or shop,
or purchases a built up house or shop, from the
Himachal Pradesh Housing and Urban Development
Authority, established under the Himachal Praedesh
Housing and Urban Development Authority Act 2004,
or from the Development Authority constituted under
the Himachal Pradesh Town and Country Planning Act,
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1977 or from any other statutory Corporation set up for
framing and execution of house accommodation
schemes in the State under any State of Central
enactment; or
High Court of H.P.
(h) a non-agriculturist with the permission of the State
Government for the purposes that may be prescribed:
Provided that a person who is non-agriculturist
but purchase land either under (Clause (dd) or clause
(g) or with the permission granted under clause (h) of
this sub-Section, shall, irrespective of such purchase of
land, continue to be a non-agriculturist for the purpose
of the Act.
Provided further that a non-agriculturist (who
purchases land under clause (dd) or) in whose case
permission to purchase land is granted under clause (h)
of this sub-Section, shall put the land to such use for
which the permission has been granted within a period
of two years or a further such period not exceeding one
year, as may be allowed by the State Government for
the reasons to be recorded in writing to be counted
from the day on which the sale deed of land is
registered and if he fails to do so or diverts, without the
permission of the State Government, the said user for
any other purpose or transfer by way sale, gift or
otherwise, the land so purchased by him shall, in the
prescribed manner, vest in the State Government free
from all encumbrances.”
Learned Additional Advocate General highlighted
the second proviso to sub-Section 118(2) to submit that
same placed an obligation upon the respondent to put to
use the property/land within two years or further such
period not extending one year as may be allowed by the
State government for the reasons to be recorded in writing
from the date on which the sale deed of the land was
registered and in case the respondent failed to do so or
diverted without the permission of the State government,
the land so purchased by it was to vest in the State
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Government from all encumbrances. Prayer was made for
quashing of the impugned orders. Learned counsel for the
High Court of H.P.
respondent while defending the impugned orders also
highlighted para 4 of the reply filed by the respondents
wherein reference has been made to several approvals/no
objection certificates issued to the petitioner in furtherance
of setting up the industiral unit. As per pleadings, the
Electricity and water connection No Objection Certificate
was granted to the respondent on 26.11.2014, single
window clearance was granted on 16.12.2014, the H.P.
State Pollution Control Board issued provisional certificate
on 03.02.2015, consent to establish was granted by the
H.P. Pollution Control Board on 10.03.2015, consent to
operatate was granted on 25.04.2015, No Objection
Certificate was issued by the Fire Department on
06.05.2015, power release certificate was issued on
18.05.2015, consent to operate was renewed on
29.09.2016, GST application for enrollment of existing tax
payer made on 30.03.2017, fire NOC was renewed on
11.12.2017, land utilization was certified on 19.01.2019,
consent to operate was further renewed on 15.11.2021 and
Fire NOC was renewed on 26.08.2022.
4. The Divisional Commissioner as also the
Financial Commissioner have justly interpreted Ravinder
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2
Chauhan and others versus State of H.P . to hold that
the vestment could not be automatic . The failure to put to
High Court of H.P.
use has to be on account of conscious default, negligence
or refusal on the part of a person concerned. The
circumstances of non-compliance for reasons beyond
grantee’s control or due to the fact that it was incapable
or impossible to performe due to operation of other
provisions of law in force, would not result in vesting of
land with the State. After going through the facts of the
case, it was observed by the Divisional Commissioner as
under:-
“9. The present case revolves around the
interpretation of the words "shall put the land to such
use" as employed in second proviso to sub section (2)
of Section 118 of the Act. The words "shall put the land
to such use" as used in second proviso to sub section
(2) of section 118 have not been defined in the Act. The
meaning to these words has to be assigned by following
the settled principles of statutory interpretation. A plain
and precise meaning has to be assigned to these words
to give effect to the provision of second proviso to sub
section (2) of section 118 of the Act. In Oxford
dictionary the word "put" has been assigned a meaning
as "move something to". Further the word "to" has
been assigned a meaning as "in the direction so as to
reach a particular state" Thus the words "put the land
to use as used in the second proviso can only mean to
move in the direction to use the land so as to reach a
particular stage i.e. to establish the project. From the
above, it is clear that from the precise and plain words
2
AIR 1999 HP 43
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used in the second proviso, the legislative intention is
that within statutory period of two years or within
extended period of one year, the purchaser has to
High Court of H.P.
move in the direction to use the land for the purpose
for which it was purchases so as to form an opinion in
the mind the State Govt. who had granted permission
to purchase land to the effect that the purchaser is
ready and willing to put the land to such use for which
permission was granted and nothing else. This proviso
nowhere provides for bringing into existence and to
make the project operational within statutory period of
two years on the land. The words "put to use" cannot
be given the extended meaning to bring into operation
the project within period of two years. Within two years,
the purchase has to take steps in the direction of
utilizing the land to disclose its intent that he is ready
and willing to establish the project said and nothing
more. Had the legislative intent been that the land has
to be used completely for the purpose for which
permission was given within statutory period then in
place of words "shall put the land to such use" the
words "shall use the land" should have been employed
in the said proviso. There is substantial distinction in
the meaning of words "shall put the land to use and the
words "shall use the land". The legislative while
enacting second proviso to sub section (2) of Section
118 has intentionally used the words "shall put the land
to use" instead of words" shall use the land" because
Legislative was aware of the fact that after permission
to purchase the land is given there are number of
procedural formalities which are to be completed
before steps are taken to establish the project/industry
such as preparation of building plans, various no
objection certificates from concerned departments of
the State, Essentiality Certificates, Sanction of building
plans from the competent authorities. These procedural
formalities take a long time, may be, due to
bureaucratic delay or some other reasons which may
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not be under the control of the person establishing the
project which may also be due to statutory
impediments including operation of other laws.
High Court of H.P.
10. The findings recorded by the Ld. District
Collector that the land has not been used for the
purpose for which permission was given within
statutory period is erroneous and wrong. The Ld.
District Collector while passing the impugned order has
not understood the real legislative intent behind second
proviso to sub section (2) of Section 118 and
particularly the purpose of permitting a non-
agriculturist to purchase land. The real legislative intent
is that the land must be used for the purpose for which
permission was given and vestment of land is not
automatic on the expiry of two years or the extended
period as may be granted by the State Govt.
11. The Instruction regarding excluding the period
for which a person was prevented from putting the land
into use due to statutory hindrance of some action of
the Government, from two/three years as stipulated in
the H.P. Tenancy and Land Reforms Act, 1972 issued by
the Govt. of H.P dated 5th February 2016 which
provides as under:-
“However, certain cases have been brought to
notice of this Department where permission have
been granted under Section-118 of H.P. Tenancy
and Land Reforms Act, 1972 but the buyers have
failed to put the land into use as provided under
proviso mentioned above due to some statutory
hindrances or operation of other provisions of law
in force or a policy or any other action on the part
of Government itself. Due to this reason, the
prescribed time period in these cases has expired.
Such affected firms/applicants have represented
to the Government through concerned
Department(s), who have issued essentiality
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certificates in their favour. The relevant cases for
departments have also recommended these
consideration, with cogent reasons and
High Court of H.P.
justification to consider these sympathetically and
allow them to utilize the land for the purpose for
which permission was granted as there was no
fault on their part in its non utilization.”
A Division Bench of the Hon'ble High Court of Himachal
Pradesh in CWP No. 254 of 1995 (AIR 1993 H.P. 43),
titled "Ravinder Chauhan and others Vs. State of
Himachal Pradesh and others" decided on 18.09.1998,
while considering and interpreting the provision of
second proviso sub section (2) of section 118 of the Act
ibid has held as under:-
"In our view when the statute contemplated the
failure on the part of the person, who has been
granted with permission to purchase, as a
condition precedent for bringing into the force of
the operation of the vesting clause, the failure
should be on account of the conscious default,
negligence or refusal on the part of the person
concerned and where the non compliance was for
reasons beyond his control or due to the fact that
it was incapable or impossible of performance due
to the operation of other provisions of law in force
and that the authorities, who accorded the
permission with such conditions, which are not
capable of being complied with and performed and
were equally at fault, it is not permissible for the
respondents or for that matter anybody from
public including the petitioners to insist or assert
th
that despite the obvious and for no fault of the 6
respondent, he should be condemned as having
failed to comply with the conditions, that which
otherwise he could have complied with, and
thereby take over his property by enforcing the
vesting clause engrafted in the second proviso."
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12. The suit land was allotted to M/s Vrla
Manufacturing Company. for the construction of an
industrial unit. The objective was to support and
High Court of H.P.
encourage industrialization in the State of H.P. which, in
turn, would generate employment and revenue for the
State Government. The appellant has invested
considerable amount to purchase the land as well as to
make operational the unit for which purpose the
permission has been grantedby the State Govt. It is
evident from the revenue record i.e Jamabandi for the
year 2008-09 that the classification of land has been
recorded as "Gher mumkin Factory". Therefore, it
reveals that the report made by the patwari is not clear
about the existence of the Factory on spot. There
is contradiction between the revenue record and the
report of patwari. The concerned Kanoongo as well as
Tehsildar Kasauli have admitted their statements which
is placed on lower court case file that without visiting
the spot they made the report on the basis of report of
patwari, and the patwari has also admitted that he did
not informed to appellant at the time when he visited
the Spot. The impugned order overlooks the said fact
and also overlooks statement of the appellant that as
on date the industrial unit is in operation which is
providing employment and generating revenue for the
State of H.P.
13. The record of case file and the photographs placed
on record clearly reveals that the suit land has been put
in use by the appellant for which permission was
granted by the Govt. of H.P. after obtaining the NOCs
from the competent authorities. No proper inquiry was
got conducted by the Deputy Commissioner Solan and
merely on the letter No. Ewc-B-F-(10)-175/2007 Part-II
dated 10.9.2010 from the Government of H.P. the
proceedings were initiated against the appellant.
14. The provisions of under Section 118 of the H.P.
Tenancy and Land Reforms Act are very stringent and
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every caution should have been exercised while
initiating the proceedings under Section 118 of the Act
The provisions in the Act are for the confiscation of the
High Court of H.P.
land along with the semi built/built structures of any
running business/residence on the said land in dispute,
which is purchased by the individual persons/company
by spending their own money under this Act The
confiscation of the movable/immovable property of the
said land owned by the individual is without any
compensation. Therefore, the District Collector has to
take utmost due care while considering all the aspects
of information related to the case. providing proper
opportunity appreciation of evidence of the case. ”
The Financial Commissioner while affirming the
above view held as under: -
“8. I n the instant case, permission was granted in
favour of the respondent on 19.6.2007 to purchase 6-
11 bighas of land, detailed above, for setting up an
industrial unit. Thereafter, on the request of the
respondent the Government vide letter dated 8.6.2009
had provided extension for utilization of the land for the
permitted purpose. It is pertinent to note that the State
Government has issued instructions, vide letter dated
th
15 February, 2016, wherein it has been decided that
the period of 2 years extendable by another one year to
"put the land to use as provided under second proviso
of Section 118 (2)(h) of the H.P. Tenancy and Land
Reforms Act, 1972, should be counted after excluding
the period for which a person was prevented from
putting the land into use due to some mandatory
statutory hindrances or operation of other provisions of
law in force or policy or any other such action on the
part of the Government itself. The perusal of the order
of the Ld. District Collector, Solan dated 30.4.2016
shows that he has not determined such statutory
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hindrances in accordance with the instructions issued
by the State Government, while taking final decision in
the matter. This point has also been missed out by the
High Court of H.P.
Ld. Divisional Commissioner, Shimla. Therefore, it
would be appropriate to remand the matter to the
District Collector, Solan with the direction to decide the
matter afresh keeping in view the instructions issued by
the State Government vide letter dated 15.2.2016 and
subsequent instructions, if any.
9 Keeping in view the observations made herein
above, the matter is remanded to the District Collector,
Solan, with the direction to consider the matter afresh
in accordance with the instructions dated 15.2.2016
and subsequent instructions, if any, issued by the State
Government Accordingly, the revision petition is
disposed off alongwith miscellaneous application, if
any.”
3
Reliance upon Ravinder Chauhan was justly
placed for holding that merely because respondent could not
start the actual construction of the resort within two years
from the date of execution of the sale deed for which he was
granted permission under Section 118 of the Act would not
result in automatic vestment of the land in the State. Here it
would also be pertinent to take note of M/s Springdale
Resorts and Villas Pvt. Ltd. versus State of Himachal
3
Pradesh & Others wherein while relying upon Ravinder
3
Chauhan it was observed that the words “shall put the land
to such use for which the permission has been granted” are
3
CWP No.3363/2025, decided on 26.09.2025
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not to be interpreted myopically. Period of two years
prescribed in the Statute cannot be construed in myopic
High Court of H.P.
manner so as to mean that everything with regard to the
project has to be completed before the expiry of the period.
The intent of legislation behind Section 118(2) was to ensure
that steps are taken to put the land to use for the purpose for
which the permission is granted before the expiry of the
period prescribed in the Statute. The Court also took judicial
notice of the fact that various permissions are granted under
Section 118 of the Act for big and small projects by the State
Government. For coming up of these projects, many further
permissions/approvals/ sanction are required from several
departments/ authorities. Various other formalities are also
needed to be completed. The actual construction work can
start only after all the permissions are in place in favour of
the proponent. Therefore, if the words “shall put the land to
such use for which permission has been granted” are given
strict interpretation i.e. the entire project activities shall
have to be completed from A to Z within the period
mentioned in the second proviso to Section 118(2) of the Act,
in such scenario majority of the projects would fall in the trap
paving way for vestment of the land in State. Therefore, only
meaningful interpretation can be given to these words. That
beneficiary of the permission has to demonstrate taking
cogent and meaningful steps for putting the land to use for
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the purpose for which the permission was granted and if this
test is satisfied, the same has to be construed and read that
High Court of H.P.
the permission holder has put the land to such use for which
the permission was granted. In the instant case, the
respondent has taken steps for putting the land to use. It is
not the case of the petitioner that respondent had diverted
the land for any other use. The mechanical order passed by
the District Collector ordering vesting of respondent’s land in
the State on the ground of it having failed to construct resort
within period of two years was rightly set-aside by the higher

authorities. The impugned orders therefore do not call for any
interference. Petition is dismissed. Pending application(s), if
any, also stand disposed of accordingly.
Jyotsna Rewal Dua
June 25, 2026 Judge
yogesh

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