V.D. Misra, C.J.
1. The Full Bench was constituted to reconsider some of the points deckled by a Division Bench of this Court in Bercy Chauhan v. State, ILR (1979) Him Pra 35.
2. We may notice the relevant facts of Civil Writ Petn. No. 219 of 1980. The petitioner was granted land measuring 7 bighas 9 biswas in village Suka Bag, Tehsil Jogindernagar, District Mandi, vide order dated 23rd August, 1972 of the S.D.O. (Civil), Jogindernagar, District Mandi, under the Himachal Pradesh Nautor Land Rules, 1968. Thereafter a patta was issued under Rule 18 (c) on 19th June, 1973. Respondents Nos. 3 and 4 challenged the grant by way of an appeal before The Special Collector, District Mandi. This appeal was dismissed on 27th June, 1975. Though the Special Collector found that the petitioner was holding land in excess of 20 bighas at the time of the grant of the land, he refused to interfere on the ground that the petitioner had already built a house and a shop on a part of the land granted to him. These respondents went in revision to the Divisional Commissioner who by his order dated 16th Feb., 1977 recommended the revision to the Financial Commissioner. The petitioner also appealed against the order of the Divisional Commissioner to the Financial Commissioner. The Financial Commissioner by his order dated 15th July, 1980 revoked the grant to the extent of 4 bighas 9 biswas and allowed the petitioner to retain 2 bighas 9 biswas of land on which he had constructed a shop and a house. He further directed that since the shop had been constructed without authority, the petitioner should pay the prevailing market price of the land. The Financial Commissioner had revoked the grant on the ground that the petitioner had sufficient income and was holding more than 20 bighas of land
3. The petitioner contends, amongst others, that respondents Nos. 3 and 4 never raised any objections before the grant of the nautor land and issuance of patta and, therefore, had no right to challenge the grant, and that, the Financial Commissioner had no jurisdiction or auihority to cancel or modify the grant after the issuance of patta. It is contended that the only alternative for the State after the issuance of patta is to refer the matter for arbitration of the competent authority. The case of Percy Chauhan is made the basis of the contention that after one year of the grant of patta the grant cannot be cancelled by the authorities and the only remedy is to have the matter decided by an Arbitrator.
4. We allowed other lawyers to intervene in view of the fact that similar points were raised by them in other writ petitions.
5. The Himachal Pradesh Nautor Land Rules, 1968 define what a nautor land is. Rule 3 is the definition section. Clause (a) of this rule defines nautor land thus:
' 'Nautor Land' means the right to utilize, with the sanction of the competent authority waste land owned by the Government outside the towns, outside the reserved and demarcated protected forests, and outside such other areas as may be notified from time to time by the State Government in this behalf for any of the purposes mentioned in Rule 5 ...... ......'
6. Clause (d) defines 'resident' in the following words:
' 'Resident' means a bona fide resident of Himachal Pradesh who either holds land in a revenue estate or has seasonal abode and has been living there from generation to generation and includes such bona fide estate artisan, landless agricultural labourer permanently settled in the particular Revenue Estate for not less than 10 years and works there for profit or gain ..... .....'
7. Rule 5 lays down the purposes for which the nautor land may be granted. Rule 6 provides for the maximum limit of grant for various purposes. Rule 7 lays down the categories of persons eligible for the grant of nautor land. This rule reads:
'Eligibility for nautor land-- Save for the widow and the children of a member of an armed force or semi-armed force, who has laid down his life for the country (whose widow and children will be eligible for grant anywhere within the Tehsil subject to the conditions mentioned in the Wajib-ul-arj in respect of the areas where the land applied for is situated) no one who is not the resident in the estate in which the land applied for is situate, shall be eligible for the grant. Every resident of the estate in which the land applied for lies will be eligible in the following order of preference --
(a) Such persons who have less than ten bighas of land, whether as owners, or as tenants, or as lessees either individually or collectively, or have an income of less than Rs. 2,000/- per annum from all sources including lands. Provided that in this, category a dependant of one who has laid down his life for the defence of the country shall get preference over his counterparts;
(b) Scheduled Castes and Scheduled Tribes applicants;
(c) The dependants of those who have laid down their lives for the defence of the country. Service for the defence of the country will mean service in a uniformed force as well as in the capacity of civilian, so long as the death occurs on a front, be it military or civil;
(d) Serving personnel in the armed forces and Ex-service men;
(e) Panchayats; and
Provided that a bona fide landless resident of Spiti shall be eligible for the grant of land in Nautor within the Spiti Sub Division.'
8. Rule 8 lays down the exceptions to Rule 7 and we are not concerned with this rule nor with Rule 8 (A). Rule 9 lays down the charges which have to be paid by the persons to whom the land is granted. The next provision with which we are concerned in this case is Rule 12 which lays down the circumstances under which the grant may be cancelled and the land resumed. This is in the following terms:
'Resumption -- The grant of nautor land shall be cancelled and the land granted resumed by the State Government without payment of any compensation in the following events --
(a) If in the case of ordinary agriculture, the grantee fails to break the land granted to him within two years from the date of the patta;
(b) If, in the case of horticulture, the grantee fails to plant the area with fruit trees within two years from the date of the patia;
(c) If, in the case of a water-mill and a water channel, the grantee fails to set up the water-mill, or to dig out the water channel, as the case may be, within two years from the date of the patta;
(d) If, in the case of nautor for any other purpose the grantee fails substantially to start utilisation of the land for the purpose for which the nautor land has been granted to him within two years of the grant of the patta;
(e) If the grantee, at any time, uses the land for any purpose other than the; purpose for which the grant was made to him;
(f) If the grantee or his legal representative successor alienates the land granted in nautur; within 15 years from the date of the patta. or if he alienates it, at any time, for a purpose other than one for which the land was granted to him. In the event of other kind of alienation the power of the State Government to cancel the grant and to resume the land shall govern the alienee also; and
(g) If the grantee secures the sanction of the nautor by suppression of material facts in his nautor application.
Provided that the periods laid down in (a), (b), (c) and (d) shall in each case, to counted after the removal of trees by the Forest Department/Deputy Commissioner whenever it becomes the responsibility of that Department/Deputy Commissioner to dispose of trees under these rules.'
9. Rules 13, 14 and 15 lay down the procedure for applications for grant of nautor land. An application ' for grant of nautor land has to be made in the prescribed form. It has to be in triplicate. It has to be made to the S.D.O. (Civil) of the Sub-Division in whose jurisdiction the land applied for is situated. The application has to he accompanied by a Tatima-Shajra (Supplementary map) indicating the boundaries of the land applied for. On receipt of the application the concerned S.D.O. (Civil) is required to cause it to be entered in the special register referred to in the Rules. The original application is to be retained by the office of the S.D.O. (Civil) white one of the copies is to be sent to the Girdawar Kanungo, and second to the Gram Panchayat of the area and the Forest Officer of the territorial range for their comments. It is the duty of the Girdawar Kanungo to visit the spot and check the Tatima-Shajra and make a special note of the 'proximity of any forest, road, path, existing cultivation water channel, a public spring, the slope of the land and record a detailed report in respect of trees standing or lying on the land applied for, if any, with particulars of their kind'. He is also to report, amongst others whether the plot applied for is suitable for the purposes for which it is intended to be used, and the extent, nature and validity of the objections, if any Clause (e) of Rule 14 lays down the duly of the Gram Panchayat in the following words:
'The Gram Panchayat on receipt of the application shall issue a proclamation calling on any person who may have any objection to the grant of the nautor, to make his objection. A period of one month shall be allowed for receiving objections, if any. After the expiration of the said period of one month the Gram Pancbayat shall consider these objections and record its report on the existing rights in the land and the objections to its grant, if any, and return the application lo the Tehsil Revenue Officer Within 6 months from the date of receipt thereof.
In case the Gram Panchayat fails to make Its report and return the application within the stipulated period of 6 months, it shall be presumed that the Gram Panchayat has no comments to offer and the application shall be processed further accordingly.'
10. The Forest Range Officer is required to return the application with bis comments within 6 months. He is required to give full details of the trees standing or lying on the land and their value. All the reports are to be put up before the S.D.O. (Civil) within 9 months from the date of the application. Within 3 months of the pulling up of the application with the reports the S.D.O. (Civil) is to decide about the grani of nautor land.
11. Rule 18 lays down the procedure after sanction of the nautor lands. It is in the following terms:
'Procedure after sanction of nautor lands --
(a) After nautor land has been sanctioned by the S.D.O. (Civil) or the Deputy Commissioner where there is no S.D.O. (Civil) under Rule 16 for any of the purposes mentioned in Rule 5 (a) and (b) ante after the creation of the demand shall communicate the dues payable to the Government by the grantee as decided by the S.D.O. (Civil) or the Deputy Commissioner where there is po S.D.O. (Civil) in quarterly instalments not exceeding four thereof; interest free with advice to the grantee for depositing the first instalment within one month from the date of receipt of notice by him. In case the grantee chooses to pay the dues in lump sum he will have the option to do so. The grant of the patta and mutation in such cases where the grantee will avail himself of the concession of making payments in in-statments shall stand postponed until full payment has been made. .But the possession of the land granted to him shall be delivered on deposit of the first instalment. The failure of the grantee to pay any of the instalments punctually will render the grant liable to resumption and the amount already paid to forfeiture. Patta will be issued forthwith in such cases where full payment may be made in lump sum after the expiry of the period for filing an appeal;
(b) After the expiry of the period prescribed for filing an appeal/revision the patta shall be issued under the seal and signature of the Collector of the District to whom it will be put up by the Tehsil Revenue Officer, after due completion;
(c) After the execution of the patta in Form (D) for purposes other than Horticulture and in Form (E) for Horticulture, the mutation memorandum in Form (B) shall be completed in the office of the S.D.O. (Civil) and issued under his signatures to the Revenue Officer of the area concerned for entry and attestation of mutation. After the needful has been done, the mutation memorandum shall be returned to the S.D.O. (Civil) who will have it placed on the original Nautor File;
(d) Government dues payable in respect of the grant of nautor lands for the water-mills, thrashing floor and for building subservient to agriculture or construction of residential houses will have to be paid in lump sum; and
(e) The amount realised from the grantee will be credited into the treasury in the following manner:--
(i) The nazrana on land, under bead 'IX-Land Revenue'.
(ii) The price of trees, as 'Forest Income'.'
12. Rule 19 reads thus;
'Grantee bound by the conditions of the Patta-- Subject to the provisions of these rules, the grantee shall be bound by the conditions of the patta.'
13. Rule 21 requires the S.D.O. (Civil) to send a copy of the order passed by him within 15 days of the sanction of the nautor land to the Gram Panchayat and the department concerned in every case in which the resident/residents of the area or the department had opposed the grant to enable the objectors to file an appeal to the Deputy Commissioner.
14. Rule 22 grants a period of two years to the grantee to utilize the land for the purpose for which it has been granted. It reads:
'Report to be submitted by the patwari --In the case of nautor land granted for agricultural or horticultural purposes, the patwari of the area shall report, immediately on the expiry of two years from the grant of the nautor land, whether the land has been brought under cultivation/plantation by the grantee. In the case of nautor land granted for a water-mill, he shall report, immediately on the expiry of two years whether the mill has been started, and, if not, yet whether at least construction of the mill has substantially begun. In other case he shall report at the expiry of two years, whether any substantial start has been made for the use of the land for the purpose it was granted giving details thereof. The date on which the above report is due from the Patwari shall be entered in the appropriate column of the Misal Band Register.
Explanation-- The Patwari shall at the time of inspection of each harvest (Girda-wari) make specific entries about the use of which each field number granted as nautor land has been put to.'
15. Rule 24 gives a right to the grantee to be heard before the grant is cancelled and the land resumed. It reads:
'Defaulter to be called before resumption.-- When the S.D.O. (Civil) is satisfied that a grantee has committed a breach of the conditions of his grant, he shall before ordering resumption under these rules, give the grantee an opportunity to appear and state his objections to the cancellation and resumption, and, having recorded the statement, he may either (a) extend the period for the fulfilment of the conditions of the grant by one year for valid reasons to be recorded in writing or (b) recommend to the Deputy Commissioner that a longer extension of time may be granted within which to fulfil the conditions or that the breach of conditions may be condoned with or without payment at penalty, or that the (rant may be resumed.'
16. Rule 26 relates to resumption of possession. It is in the following terms:
'Resumption of possession.-- When an order for resuming the grant has been passed by the competent authority, possession of the nautor land shall be taken back by the Tehsil Revenue Officer in accordance with these rules and delivered back to the department to whom it originally belonged.'
17. Rule 28 gives a right of an appeal to the aggrieved person whereas Rule 29 gives a right of review and Rule 30 provides for revisions.
18. The first question which falls for determination is about the time within which the powers of review and revision can be exercised. It is necessary at this stage to read Rules 29 and 30:
'29. Review -- The Financial Commissioner or the Commissioner or the Deputy Commissioner or the Revenue Assistant may either of his own motion or on the application of any party interested, review, and on so reviewing, modify, reverse or confirm any order passed by himself or any of his predecessors in office, provided as follows :--
(a) When the Revenue Assistant thinks it necessary to review any order, he shall first obtain the sanction of the Deputy Commissioner.
(b) When the Commissioner or the Deputy Commissioner thinks it necessary to review any order which he has not himself passed, he shall first obtain the sanction of the Financial Commissioner in the case of the Commissioner and the Commissioner in the case of the Deputy Commissioner.
(c) The application for review of an order shall not be entertained unless it is made within 90 days from the passing of the order and unless the applicant satisfies the Financial Commissioner or the Commissioner or the Deputy Commissioner or the Revenue Assistant, as the case may be, that he had sufficient cause for not making the application within that period.
(d) An order shall not be modified or reversed in review unless reasonable notice has been given to the parties affected thereby to appear and be heard in support of the order.
(e) An order against which an appeal has been preferred shall not be reviewed.
30. Revisions.-- (i) The Financial Commissioner may at any time call for the record of any case pending before, or disposed of by any officer subordinate to him;
(ii) The Commissioner may at any time call for the record of any case pending be-fore or disposed of by any officer subordinate to him.
(iii) If, in any case, in which the Commissioner has called for the record, he is of the opinion that the proceedings taken or order made should be modified or reversed, he shall report the case with his opinion thereon for the orders of the Financial Commissioner.
(iv) The Financial Commissioner may in any case called for by himself under Sub-rule (i) or reported to him under Sub-rule (iii), pass such orders as he thinks fit:-- Provided that he shall not under this rule pass any order reversing or modifying any proceedings or orders of the subordinate Revenue Officer without giving the parties concerned an opportunity of being heard.'
19. It will be noticed that powers of revision and review can be exercised suo motu An application for review can also be made within 90 days. But there is no time limit for exercising suo motu powers.
20. The Division Bench in Percy Chauhan's case, (ILR (1979) Him Pra 35) after considering various authorities observed thus:
'In view of this position we conclude that the power of review contemplated by Rule 29, and of revision contemplated by Rule 30, could be exercised only within a reasonable time. What is a reasonable time is a question of fact depending upon the peculiar facts and circumstances of each case, if a land is given for agriculture or horticulture or for constructing water-mill or water channel, we think that ordinarily a period of one year to exercise the power of review or revision may be considered reasonable in view of the fact that the fruits of these operations could be reaped within one year. However if the Nautor land is granted for other purposes, such as construction of building for residence or construction of Dharamsala, etc., then having regard to the facts of the case the period of time would be even less.'
21. Now. there is no dispute that the peculiar facts and circumstances of each case should determine 'a reasonable time'. For example, if a grantee has suppressed material facts or has obtained the allotment by playing a fraud or a deception 'the reasonable time' will have to be determined with reference to the time when the fraud or deception came to light. Various cases where a party had concealed material facts and succeeded in obtaining the allotment have come to our notice. We cannot allow a party to reap the fruits of his deception or fraud simply on the ground that it had successfully kept them concealed over a sufficiently long period of time. However, once the fraud is uncovered then action is required to be taken within a reasonable time thereafter. Article 56 of the Limitation Act lays down a limitation of three years from the date of the knowledge of fraud, and we are of the opinion that it will be reasonable to lay down that ordinarily within a period of three years from the date of knowledge of fraud the suo motu powers can be exercised.
22. We, however, do not agree with the (Division Bench that a period of one year is a reasonable time to exercise such powers where the land is given for agriculture, horticulture, or for constructing water-mill or water channel. It appears that the reason given by the Division Bench is that the fruits of these operations could be reaped within one year. The Bench seems to have overlooked the provisions of Rule 12. This rule grants a period of two years to the grantee for carrying on the operations for which the land has been granted. In other words, a grantee may wait for more than one year before carrying out the necessary operations. Proviso to this rule extends a period of two years in certain cases. It is only after the grantee has started utilising the land granted to him that the grant will become public knowledge. And it is only thereafter that persons affected by it may challenge the grant. We are, therefore, of the opinion that ordinarily a period of three years should be considered reasonable for exercising the powers of review or revision where the grantee had not played a fraud or deception in obtaining the grant.
23. The next question which falls for decision is whether the order of the grant of land can be reviewed or revised after the grant of patta, or the only remedy after the grant of patta is arbitration under condition No. 7 of the patta. It will be recalled that under Rule 18 the patta has to be granted after the grantee has paid the full amount demanded from him though possession of the land is to be delivered on the deposit of the first instalment in case the grantee is not in a position to pay the full amount forthwith Clause (c) of Rule 18 requires the patta to be executed in various forms depending on the purposes for which the land has been granted. Rule 19 lays down : 'Subject to the provisions of these Rules, the grantee shall be bound by the conditions of the patta.' Now Clause (7) is the arbitration clause in form D. It reads:
'(i) If any question of difference whatsoever shall at any time hereafter arise between Government and the grantee in any way touching or concerning this grant, or the constructions, meaning, operation or effect thereof or of any clause therein contained or as to the right, duties or liabilities of either parties under or by virtue of this grant or touching the subject matter of the grant or arising out of or in relation thereto then save in so far as the decision of any such matter has been hereinbefore provided for and has been so decided the matter in difference shall be referred to the arbitration of the Judicial Secretary to the Government of Himachal Pradesh who shall have power to decide any matter so referred including the following questions:
(a) Whether any other provision has been made in these presents for the decision of any matter and if such provision has been made whether it has been finally decided accordingly, and
(b) Whether the grant should be terminated or has been rightly terminated, and what are or will be the rights and obligations of the parties as the result of such termination.
(ii) The decision of the arbitration shall be final and binding and when any matter so referred to arbitration involves a claim for the award, increase or reduction of a sum of money by way of compensation or any other payment or recovery of money, only the amount decided by Arbitrator shall be recoverable in respect of the dispute so referred.'
24. It will be noticed that only where the differences have arisen 'in any way touching or concerning this grant .. ... ...' the matter shall be referred to arbitration. If the differences are arising in respect of 'this grant' then the matter has to be referred to the arbitration. This intention is clear also from the use of the words: 'save in so far as the decision of any such matter has been hereinbefore provided for ... ... ...' Moreover, Rule 19 unambiguously provides that the conditions of the patta are to be enforced subject to the provisions of the rule's Since Rules 29 and 30 provide for suo motu review and revision, this power could not be taken away by the arbitration clause. It has to be remembered that in the scheme of things the patta may be granted at a very early stage and the aggrieved persons may be filing the appeals etc. in terms of Rule 28. An application for review can also be made under Clause (c) of Rule 29. It cannot be held that the moment the patta is granted the rights of other persons to file appeals and applications for review are automaticaly taken away. Indeed they are not parties to the patta and they cannot be held bound by the arbitration clause. The arbitration clause cannot also take away the suo motu powers of review and revision granted to various authorities. We may at this stage also record that this arbitration clause has since been deleted by a gazette notification dated 21st September, 1974.
25. The Division Bench in Percy Chauhan's case held that once the patta has been granted the arbitration clause will come into play on the basis of the Supreme Court decision in Mithoo Shahani v. The Union of India, AIR 1964 SC 1536. The Bench while holding that Mithoo Shahani's case lays down that where an order making an alistment is set aside the title which is obtained on the basis of the continuing of that order also [alls with it observed that: 'the only exception which is carved out by the Supreme Court to this principle is of the cases where anything contrary is found either in the rules or in the terms of the patta or sanad itself.' We have perused the judgment of the Supreme Court in Mithoo Soahani's case. The principle has been laid down in para 9 of the judgment. The relevant portion reads thus:
'It is manifest that a sanad can be lawfully issued only on the basis; of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that that grant should be valid it should have been effected by a competent officer under a valid order. If the validity of that order is effectively put an end to it would be impossible to maintain unless there were any express provision in the Act or in the rules that the grant still stands.
26. The only exception carved, therefore, was a provision to the contrary in the Act or in the Rules. We do not find any reference being made to the patta or to the sanad.
27. As already observed, in the instant case Rule 19 makes the terms of the patta binding on the grantee except as provided in the Rules, Rule 12, which has been reproduced above, lays down in Clause (g) that if the grantee secures the sanction of nautor by suppression of material facts in his nautor application then the grant shall be cancelled. Now this provision goes to the very root of the order sanctioning the grant. In other words where the grant has been obtained by fraud or deception or suppression of material facts, the patta itself shall be treated to have been obtained by fraud. It is now well settled that fraud not only vitiates the contract but also the arbitration clause (Shiva Jute Bailing Limited v. Hindley and Company Limited, AIR 1959 SC 1357). It is, therefore, not correct to say that the word 'grant' appearing in the arbitration clause Includes the original order passed by the S.D.O. (Civil) under Rule 16 to grant nautor land.
28. The matter may be looked at from another perspective. The order of grant under Rule 16 and the subsequent execution of a patta on payment of dues under Rule 18 are two separate acts. The arbitration clause is not contained in the rules and until and unless patta is granted the arbitration clause is not binding on the parties. The patta specifically lays down the purpose of the grant and specially describes the land granted. It also lays down the obligations of the grantee in Clause (4). It will be noticed that the grounds of resumption contained in Clauses (a) to (f) of Rule 12 are mentioned under the heading 'obligations of the grantee'. However, Clause (g) of Rule 12 does not find any mention in Clause (4) of the patta. Moreover, other obligations have also been put on the grantee.
29. Clause (5) of the patta specifically states:
'If the grantee fails to perform or commits a breach if any of the terms and conditions of the grant or suffers or permits such a breach of non-performance, the State Government may at any time thereafter terminate the grant and resume possession of the land.
30. It is in these circumstances that Clause (7) containing the arbitration clause comes into play. The reference of 'this grant' is a specific reference to the patta which after the recitals records: 'Now this grant witnesses as follows'. We do not, therefore, agree with the Division Bench that condition No. 7 of the patta 'is wide enough to cover even those cases where, in exercise of suo motu powers of revision and review, the grant is terminated or is proposed to be terminated on the ground that the order passed by the Revenue Assistant under Rule 16 was bad.' We also do not agree with the Division Bench that after the order of grant has been set aside in exercise of the suo motu powers conferred by Rules 29 and 30 and if the Government thereafter was to resume the land then the only remedy with the Government is to invoke the arbitration clause and get the decision of the Arbitrator. This indeed would be making the Arbitrator sit on the judgment passed by the competent authorities under the Rules. Neither there is any express provision in the Rules nor do we find any intendment in condition No. 7 of the patta that the Arbitrator is clothed with the powers of sitting on judgment or orders passed by the authorities under Rules 29 and 30 As already discussed, the conditions of the patta have to be subject to the provisions of the Rules (R. 19).
31. The last question which falls for decision is as to who can be an objector to the grant of nautor land to an applicant? Some of the provisions of these Rules do give an indication. Clause (e) of Rule 14, which has already been reproduced, shows that any person can object to the grant of nautor land within one month from the issuance of a proclamation by the Gram Panchayat on receipt of the application for grant of nautor land. The objections are to be considered by the Gram Panchayat. After the S.D.O. has made a grant under Rule 16 he is required to send a copy of the order passed by him within 15 days of the sanction of the nautor land to the Gram Panchayat concerned so that the objectors may get a proper opportunity to file the appeal to the Deputy Commissioner against the decision of the S.D.O. (Civil) (Rule 21). Rule 28 does not specifically lay down the category of persona who can appeal. Evidently any person whose interest has been adversely affected can appeal.
32. Having answered all the points raised by the learned counsel for the parties, we direct that the petitions be placed before a Single Bench of this Court for disposal.