State cannot use summary eviction to reclaim land as ‘assigned’ when a bona fide title dispute exists, Supreme Court rules

The dispute concerned 65.94 acres of land in Kodurupadu Village, Nellore District, of which 40.65 acres were claimed by the State to be “assigned lands” liable to reversion upon unauthorised transfer under the Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977.

The appellants traced title to B.J. Rao and his predecessors through transactions dating from 1920, registered conveyances, wills, settlements, and continuous mutation in the revenue records.

B.J. Rao sold portions of the property to private purchasers, and Circar Paper Mills Ltd. purchased 46.23 acres in 1980; its name was mutated in the revenue records, and it used the land for industrial purposes.

After Circar Paper Mills entered liquidation, the Official Liquidator took possession of the properties pursuant to orders of the Company Court on 27 March 2001.

The Company Court thereafter authorised a public auction, in which J.K. Sugar Mills Ltd. emerged as the successful bidder for ₹7.80 crore.

The State objected to the auction only after its publication, asserting that 40.65 acres were assigned lands.

The Company Court nevertheless confirmed the sale, directed payment of ₹1,50,000 per acre to the Government in respect of the disputed land, and ordered delivery of possession to the auction purchaser.

The appellate court set aside that order, whereupon the Official Liquidator, the auction purchaser, and the private claimants appealed to the Supreme Court.

Whether the State could, in summary proceedings and without conclusively establishing the assignment, treat the disputed privately possessed lands as assigned lands and resume them under the Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977.

Whether the appellate court was justified in interfering with the Company Court-approved auction of properties that were in the custody of the Official Liquidator pursuant to judicial orders.

Whether disputed questions concerning title, assignment, acquisition, and the effect of prior land-ceiling proceedings could be adjudicated summarily in the liquidation or writ proceedings.

Section 3 of the Andhra Pradesh Assigned Lands (Prohibition of Transfer) Act, 1977 renders void a transfer of land assigned by the Government to a landless poor person for cultivation or a house site, while Section 3(4) authorises the District Collector or a prescribed officer to resume possession after eviction upon satisfaction that Section 3(1) has been contravened.

However, the Court applied the principle in Government of Andhra Pradesh v. Thummala Krishna Rao, (1982) 2 SCC 134, that summary eviction proceedings cannot be used where a bona fide and substantial dispute exists regarding the Government’s title; such disputes must be resolved in a properly constituted civil proceeding.

The Court further held that property taken into the custody of the Official Liquidator under orders of the Company Court could not be proceeded against by the State without approaching that Court.

It also recognised that concluded proceedings of the Land Reforms Tribunal could not be reviewed by the Mandal Revenue Officer or the Collector.

The State failed to establish unequivocally that the disputed properties were assigned lands.

Its own tabulation stated that 20.94 acres had allegedly been assigned to B.J. Rao, although B.J. Rao was not a landless person and therefore could not ordinarily have been an eligible assignee under the 1977 Act.

Apart from general assertions regarding revenue entries, the State produced no adequate material proving the original assignment or the alleged statutory reversion.

The long chain of registered transactions, mutation entries, uninterrupted private possession, industrial use, governmental permissions, and the earlier acquisition of part of the property by the Government indicated a bona fide dispute regarding title rather than a case amenable to summary resumption.

Applying Thummala Krishna Rao, the Court held that the State could not unilaterally determine its title and evict the persons in possession through summary proceedings.

The Court further held that the properties had been lawfully taken into the custody of the Official Liquidator under orders of the Company Court and were auctioned pursuant to that Court’s directions.

The State, despite being aware of the proposed auction, merely sought exclusion of the land by telegram and did not properly establish its claim before the Company Court or seek appropriate orders from it.

The Company Court had adequately protected the State’s asserted interest by directing payment of the disputed land’s assessed value, and the appellate court therefore erred in summarily invalidating the auction.

The order of the Company Court was restored; possession, if not already delivered, was directed to be handed over to J.K. Sugar Mills, and any possession already obtained was protected from interference.

The writ proceedings of Sundaramma and the other private appellants were restored to the High Court for fresh consideration on merits, including the challenge to the summary resumption proceedings, uninfluenced by the findings in the judgments set aside but with due regard to the Supreme Court’s observations on summary eviction.

Amounts deposited with the Government pursuant to the Company Court’s order were directed to be returned for application in the liquidation of Circar Paper Mills Ltd.