Buyers Who Bought Displaced-Person Allotment Land During Cancellation Proceedings Cannot Claim TPA’s Bona Fide-Purchaser Protection: P&H HC

Beant Singh received a land allotment as a displaced person. Part of the allotment was cancelled in 1977 as excess; after successive proceedings, the cancellation was reaffirmed in 1994 and attained finality up to the Supreme Court.

The petitioners had purchased portions of the land from Beant Singh’s successors between 1982 and 1987, while proceedings concerning cancellation were pending.

They challenged orders rejecting their revisions and review, arguing that they were bona fide purchasers protected by Section 41 of the Transfer of Property Act, 1882.

They also sought exclusion of land in Khasra No. 469, measuring 3 Bigha 17 Biswas, on the basis that its allotment had not been cancelled.

The Court applied the Displaced Persons (Compensation and Rehabilitation) Act, 1954, as a special statute governing the allotment and cancellation of displaced-person land, and relied on the Full Bench decision in Smt. Niranjan Kaur v. Financial Commissioner, Revenue & Secretary to Government, Punjab, 2010(4) RCR (Civil) 610.

The Full Bench held that the special statute prevails over the general provisions of the Transfer of Property Act, including Section 41, and that a purchaser cannot invoke Section 41 to defeat an order made under the special statute.

Section 41 ordinarily requires, among other things, that the transferor be an ostensible owner with the real owner’s consent and that the transferee act in good faith after taking reasonable care; however, it cannot operate contrary to a statutory scheme.

The petitioners’ purchases occurred between 1982 and 1987, during the period in which cancellation proceedings remained pending.

The Court noted that the petitioners’ own 1979 Rojnamcha document disclosed the cancellation and thus showed that the allotment was subject to a cloud, notwithstanding its reference to restoration.

The petitioners had not pleaded that they made inquiries before purchasing the land.

In any event, the Full Bench ruling foreclosed reliance on Section 41 against cancellation under the special statute.

As to Khasra No. 469, the Court held that the sale deed would remain operative if the cancellation order did not affect that land.

It held that the petitioners’ remedy was to seek refund of the sale consideration or damages from their vendors.

The sale deed concerning Khasra No. 469 would remain effective if that land was not covered by the cancellation order; pending applications were also disposed of.