1. This is a petition under Article 226 of the Constitution of India challenging the original, appellate and revisional orders passed by the different Revenue Courts (Vide Petitioner's Annexures 1, 2, 3 and 5) assessing the petitioner to enhanced land revenue in respect of land said to have been diverted for non-agricultural purposes.
2. The lands in question were formerly held by the Associated Cement Company Limited in Malik-makbuzarights. The said Company had been granted a mining lease in respect of the said lands for a period of 30 years starting from the year 1920 and ending in the year 1950. According to the report appended to the order of the Sub-Divisional Officer an area of 2,20948 square feet had been diverted for non-agricultural purposes for constructing residential quarters for labourers after 1-10-1955 on which date the M. P. Land Revenue Code, 1954, was brought into force. It is pertinent to note that under the Central Provinces Land Revenue Act, 1917, a Malik-makbuza holder intending to divert his holding to non-agricultural purposes was not required to take the permission of a Revenue Officer, but all the same, he was liable for enhanced land revenue as re-assessed under Section 88(ii) of the C. P. Land Revenue Act, 1917. Similar was the position with respect to a Malguzar. The tenants whether absolute occupancy holders or occupancy holders were required to take the permission of a revenue officer for diverting the land to non-agricultural purpose under Section 104 of the C.P. Land Revenue Act, 1917. For the first time the M. P. Land Revenue Code, 1954, introduced the necessity of Tenure holders seeking such permission and that provision is now embodied in Sections 59 and 172 of the M. P. Land Revenue Code, 1959. According to the finding of the Sub-Divisional Officer, an area of 15,61,532 square feet had been diverted to non-agricultural purposes prior to 1-10-1950. Thus, the total diverted area is 18,29,520 square feet, out of the lands held by the petitioner and its predecessor. The petitioner's predecessor had been assessed to land revenue of Rs. 16.19 ps. in respect of 42 acres of land held by it. The lands were transferred by the Associated Cement Company. Limited to the present petitioner sometime in the year 1935. However, in spite of the diversion the lands have throughout been assessed to land revenue on the basis that they continued to be lands used for agricultural purposes.
3. The measurer reported to the revenue authorities that the lands had been diverted by the petitioner-company and, therefore, proceedings for re-assessment of land revenue in respect of such diverted lands were initiated against the petitioner under Section 59 (2) of the M. P. Land Revenue Code, 1959. It is necessary to note as to what the Sub-Divisional Officer did. He specifically found that the entire land was being used for non-agricultural purposes and, therefore, it was liable to be re-assessed at non-agricultural rate. For residential purposes land revenue on an area 17,89,480 square feet was calculated at Rs. 1782.50 ps. at the rate of 10 paise per100 square feet and in respect of land diverted for industrial purposes, the assessment was made at Rs. 94.00 per year regarding 47040 square feet, calculating at the rate of 20 paise per 100 square feet. Thus, the petitioner was made liable to pay the annual land revenue of Rs. 1782.50 paise and Rs. 94.00 for residential and industrial purposes respectively. As 16,08,572 square feet of land had been diverted to non-agricultural purposes prior to 1-10-1955, the petitioner was exempted from levy of premium and penalty. As regards the remaining land measuring 2,20,948 square feet, the petitioner was held liable for payment of premium as the land had been diverted after 1-10-1955 and it lay within the limits of Kymore town which had been duly declared as an urban area by a Notification. Therefore, the petitioner was required to pay premium of Rs. 500/- per acre in respect of that area. The total premium thus was determined at Rs. 2536.11 paise. The petitioner was also given the rebate of land revenue for one year under Section 59 (3) of the M. P. Land Revenue Code, 1959. Thus, the total premium determined was Rs. 2315.21 paise. The Sub-Divisional Officer also imposed a penalty of Rs. 200.00 under Section 172 (4) of the M. P. Land Revenue Code, 1959. The Sub-Divisional Officer had also directed that the re-assessed land revenue be recovered from the agricultural year 1959-60 onwards. Similarly, the Additional Collector and the Board of Revenue confirmed that order. On a reference to the said orders, it is to be seen that the appellate authority or the revisional authority made a wrong assumption that no penalty had been imposed. In fact the Sub-Divisional Officer had imposed a penalty under Section 172 (4) of the M.P. Land Revenue Code, 1959.
4. The learned counsel for the petitioner urged that the diversion having taken place at the time when the mining operations had started, it could not be asserted on behalf of the State that there was any fresh diversion when the petitioner diverted the lands to residential or industrial purposes. It was pointed out that Section 59 of the M. P. Land Revenue Code, 1959, contemplates re-assessment on the first diversion only and not on any subsequent diversion that may be made from one non-agricultural to another non-agricultural purpose. Therefore, the contention is that the present re-assessment proceedings are without jurisdiction and not warranted by the provisions of the M. P. Land Revenue Code, 1959.
5. So far as this argument of thelearned counsel is concerned, we mayobserve that it is based on a mis-apprehension of the implication of grant of aquarrying lease to the petitioner or its predecessor. In fact the quarrying lease not being inconsistent with agricultural purposes, there was no diversion by the starting of quarrying operations. That was also the view taken by the different revenue Courts. We are in agreement with that view. It was for that reason that throughout the lands continued to be recorded as lands used for agricultural purposes. It is futile to contend that there was any diversion by the starting of quarrying operations. It is pertinent to note that the quarrying operations might be carried on in some portion of the land and rest of the land would still continue to be used for an agricultural purpose. Therefore, no diversion can be said to have taken place merely because of grant of a quarrying lease. It is clear that the diversion took place partly before 1-10-1950 and partly after 1-10-1955, when the petitioner constructed residential quarters and other constructions for industrial purposes. Thus, in our opinion, the present proceedings for re-assessment of land revenue in respect of the diverted lands were perfectly tenable and the same cannot be said to be without jurisdiction. As per the finding of the Sub-Divisional Officer, the petitioner never intimated to the revenue authorities about such diversion and for the first time, an application under Section 59 (2) of the M.P. Land Revenue Code. 1959, was made by the petitioner sometime in the year 1963 much after the re-assessment proceedings had been initiated by the Sub-Divisional Officer in the year 1959.
6. It may be relevant to note the provisions of Section 59 of the M.P. Land Revenue Code, 1959, which are as follows :--
'Section 59. Variation of land revenue according to purpose for which land is used.--
(1) The assessment of land revenue on any land shall be made, with reference to the use of land--
(a) for the purpose of agriculture;
(b) as sites for dwelling houses;
(c) for purposes other than those specified in items (a), (b) or (d);
(d) for industrial or commercial purpose.
(2) Where land assessed for use for any one purpose is diverted to any other purpose, the land revenue payable upon such land shall, notwithstanding that the term for which the assessment may have been fixed has not expired, be liable to be altered and assessed in accordance with the purpose to which it has been diverted.
(2a) The alteration or assessment referred to in Sub-section (2) shall be carried out by the Sub-Divisional Officer.
(3) Where the land held free from the payment of land revenue on condition of being used for any purpose is diverted to any other purpose it shall become liable to the payment of land revenue and assessed in accordance with the purpose to which it has been diverted.
(4) The assessment made under Sub-sections (2) and (3) shall be in accordance with the rules made by the State Government in this behalf and such rules shall be in accordance with the principles contained in Chapter VII or VIII, as the case may be.
(5) Where land for use for any one purpose is diverted to any other purpose, and land revenue is assessed thereon under the provisions of this section, the Sub-Divisional Officer shall also have power to impose a premium on the diversion in accordance with rules made under this Code:
Provided that no premium shall be imposed for the diversion of any land for charitable purposes.
(6) Notwithstanding any usage or grant or anything contained in any law, the right of all persons holding land, which immediately before the coming into force of the Madhya Pradesh Land Revenue Code, 1954 (II of 1955), was held in Malik-makbuza right, to exemption from payment of premium on diversion of such land is hereby abolished; but every such person shall, on diversion of such land be entitled in lieu of such right to a rebate equal to the land revenue for one year payable for such land from the amount of premium determined under Sub-section (5).'
7. The purposes for which the land can be used are agriculture, residential and other general purposes not covered by any of the sub-clauses and lastly for industrial or commercial purposes. This is not a case of diversion of land from one non-agricultural purpose to another non-agricultural purpose, but purely a case of diversion of land from agricultural purposes to non-agricultural purposes. Similarly, it is also pertinent to note that a Notification, dated 7-8-1964, published in the M. P. Government Gazette, dated 21-8-1964 had been issued including the areas covered by these lands within the limits of Kymore town. In view of this Notification, Sub-section (4) of Section 59 of the Code will be attracted; with the result that lands being situated in an urban area will have to be re-assessed according to the provisions of Chapter VIII of the M. P. Land Revenue Code, 1959. For this reason also reassessment of land revenue would be necessary. It is also pertinent to note the provisions of Sub-section (6) of Section 59 of the Code, according to which the immunity of the petitioner from payment of premium was taken away, and it was for that reason that the petitioner was granted a rebate of land revenue for one year.
8. The next contention of the learned counsel for the petitioner was that by virtue of Section 264, of the M. P. Land Revenue Code, 1959, the provisions of the Code would be inapplicable to such lands. Attention was invited to the provision of Section 264 of the Code, which is as follows :--
'Section 264. Code not to apply in certain cases.-- Nothing contained in this Code shall apply to a person who holds land from the Central Government.'
9. It was urged that as the petitioner held a mining lease in respect of the lands, the petitioner should be deemed to be holding the land from the Central Government. We are unable to accept that contention for the simple reason that the grant of a mining lease over some land does not vest the title to the land in the lessee. The title continues to be with the holder of the land. Of course, in this case the petitioner's predecessor was the holder of the land. But, we are of opinion that title to the land and a mining lease to do something over the land ought not to be confused with each other. As regards the title to the land, the petitioner's predecessor as also the petitioner held the lands in Malik-makbuza rights from the State Government or from the Malguzar prior to the abolition of proprietary rights. As such, it cannot be asserted that the petitioner held the lands from the Central Government. We may further observe that the meaning of the phrase 'holding land from the Central Government' would imply the title of the Central Government to such land, which might be competent to transfer any lesser rights. Indisputably, this was not the land held by the Central Government. For this reason Section 264 of the Code would not at all be attracted.
10. The most important question raised on behalf of the petitioner is that the revised assessment would be effective from the next agricultural year after the order of the revised assessment is passed. As such, it is suggested that the revised assessment could not be ordered to be recovered retrospectively from the agricultural year 1959-60.
11. In this connection, we might advert to the observations of a Division Bench of the Bombay High Court, presided over by Broomfield and Tyabji, JJ. in Ahmedabad Ginning and . v. Secretary of State, AIR 1937 Bom 226, wherein the Division Bench laid down that where land was appropriated to non-agricultural purposes with the permission of the Government onpayment of fine, the mere fact that assessment had not been altered, would not limit the Government's power to revise the assessment. However, the assessment would remain the same on the expiry of period of guarantee unless and until it were to be revised. Therefore, unless the assessment were to be revised, the old assessment would continue and the Collector would have no power to levy the revised assessment retrospectively. The clear implication of the view expressed by the Division Bench in the said case would be that an order of revised assessment would be operative from the date it is made and not from any anterior date.
12. In Radheshyam Maniklal Agrawal v. State of M.P., 1963 MPLJ 636, a Division Bench, presided over by Dixit, C. J. and Pandey, J. was not required to consider the question of retrospective operation of Section 59 (2) of the M. P. Land Revenue Code, 1959, as the assessment proceedings had been instituted before the 1959 Code came into force. The Division Bench, therefore, expressed the opinion that the matter would be governed by Section 53 of the M. P. Land Revenue Code, 1954. Under the M. P. Abolition of Proprietary Rights Act, 1951, the petitioner, in that case, held the land under Section 5 (a) of the said Act as Abadi site, which he had converted to non-agricultural use. The Division Bench laid down that the conversion of the Abadi site into the use for commercial purposes would amount to diversion for another purpose.
13. In our opinion, the matter would stand concluded by the pronouncement of their Lordships of the Supreme Court in Rangildas Varajdas Khandwala v. Collector of Surat, AIR 1961 SC 291, where the holder of a former Inam had diverted his land to a non-agricultural purpose and the question came up for consideration about re-assessment under Sections 45 and 48 of the Bombay Land Revenue Code, 1879, read with Sections 4 and 5 of the Bombay Personal Inam Abolition Act, 1953. An argument was-advanced that as the diversion had taken place earlier than the coming into force of the Abolition of Personal Inam Act, 1953, there could be no re-assessment. That contention was negatived by their Lordships with the following observations :--
'The next contention on behalf of the appellant is that the Collector has no power to assess this land to non-agricultural assessment under Section 52 read with Sections 45 and 48 of the Code. Section 45 lays down that all land unless specially exempted is liable to pay land revenue. Section 48 lays down that the land revenue leviable on any land shall be assessed with reference to the use ofthe land (a) for the purpose of agriculture, (b) for the purpose of building and (c) for any purpose other than agriculture or building. Reading the two sections together it is obvious that the assessment depends upon the use to which the land is put and is to be made according to the rules framed under the Code. In the present case it is not disputed that the land of the appellant is not being used for agriculture and is actually being used for non-agricultural purposes, namely for the purpose of building; therefore, if the land is to be assessed, as it must now be assessed in view of Section 5 of the Act to full assessment, it can only be assessed as non-agricultural. For the purpose of such assessment it is immaterial when the non-agricultural use of the land started. It was in a special category being a personal inam land and was upto the time the Act came into force governed by the law relating to personal inams. The personal inams and all rights thereunder were abolished by the Act and the land is now to be assessed for the first time to full assessment under Section 5 of the Act read with the provisions of the Code; it can only be assessed as non-agricultural land for that is the use to which it is being put now when the assessment is to be made. Section 48 makes it clear that the assessing officer when assessing the land should look to the use to which it is being put at the time of the assessment and assess it according to such use. As the assessment is to be made after the coming into force of the Act it has to be on non-agricultural basis for that is the use for which the land is being put at the time of assessment.'
14. The clear implication of the observations of their Lordships of the Supreme Court is that it would be immaterial as to when the diversion might have taken place. But the re-assessment would operate prospectively even in respect of such past diversion.
15. Relying on the said pronouncement of their Lordships of the Supreme Court a Division Bench of this Court, presided over by Dixit, C. J. and Bhave, J. had taken a similar view in State of Madhya Pradesh v. Poonam Chand Shiv Ratan Maheshwari, 1967 MPLJ 891. Therefore, it is clear that as laid down by their Lordships of the Supreme Court in AIR 1961 SC 291 (supra), although diversion might have taken place at a point of time anterior to the coming into force of the M. P. Land Revenue Code, 1959, re-assessment can be made in respect of such diverted land for a period subsequent to the coming into force of the said Code and such re-assessment will be prospective and in no sense, can it be made retrospective. To that extent, we would affirm the viewof the learned Member of the Board of Revenue expressed in the order impugned.
16. But the question is as to what should be understood by the phrase 'prospective' -- whether it relates to the date when the assessment proceedings were initiated or to the date when the original authority actually passed an order of revised assessment. Section 59 (2-a) would clearly indicate that the assessment referred to in Sub-section (2) has to be carried out by the Sub-Divisional Officer. This provision read with Section 140 of the M. P. Land Revenue Code, 1959, would clearly indicate that the order of re-assessment is to come into force from the next revenue year, as provided by Section 140 of the Code, which means the First of October shall be the first date of the revenue year, as per the Notification No. 5259-290. VII-N-Rules, dated the 30th May 1960, published in the M. P. Rajpatra, dated the 10th June 1960. The original order of the Sub-Divisional Officer was passed on 11-1-1965. Therefore, according to the clear provisions of the Code, the order of revised assessment will come into force with effect from the First day of October next, which means 1-10-1965. The revenue Courts had made the order of reassessment effective from 2-10-1959 onwards, which was the date of coming into force of the M.P. Land Revenue Code, 1959. Although the re-assessment could be made under Section 59 (2) of the Code, it is clear that the order of re-assessment could not be made to act retrospectively and the same would be effective from the date it was passed. Till then the old assessment will remain in force.
17. The orders of the revenue Courts are accordingly modified to the extent indicated and subject to the modification made, this petition fails and is accordingly dismissed. However, under the circumstances of the case, especially when the petitioner has partly succeeded, we do not think it proper to make any order as to costs, which shall be borne as incurred. The balance of the security deposit shall be refunded to the petitioner.