Village Land, Earnest Money, and Income Tax

 What a seller should know before filing ITR

Ramesh owned agricultural land in a village, outside the Nagarparishad limits. After holding it for more than 25 years, he agreed to sell it and received earnest money from the buyer. He then asked the most practical question: should this amount be shown in the Income Tax Return? For rural agricultural land, the answer is usually no, because such land is not treated as a capital asset under section 2(14) of the Income Tax Act.

The important point is that the legal character of the land matters more than the label in the agreement. If the land is genuinely rural agricultural land and the documents support that position, the sale generally falls outside capital gains tax, and the advance received under the agreement is not taxable merely because it was received.

Ramesh’s Story

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Is permission from the Central government necessary for land development if the collector has declared it non-forest land?

 8.2. The Petitioners have placed on record sufficient material to prove that the said lands admittedly are agricultural lands and not 'forest land'. Admittedly, there is no documentary proof available with the Respondents to establish that the said lands are "private forest" or "reserved forest". In fact, the Respondents never treated the said lands as 'forest land'. The Petitioners submit that admittedly, no notification and/or notices, either under Section 35 or 38 of the Act of 1927 or under Section 21 of the State Act were ever published and/or issued in respect of the said lands; that no entry is made in the "Golden Register" maintained by the Respondent No. 1 recording that the said lands stood acquired as "forest lands."

8.3. Section 2 of the Central Act refers to restrictions on the de-reservation of forests or use of forest land for non-forest purpose. Perusal of this Section shows that the said provision applies to forests or use of forest land for non-forest purpose and clearly implies that the land in question to which the said provision applies should be reserved forests or forest land or any portion of forest land. The said Section states that no State Government shall make except with the prior approval of the Central Government any order directing any reserved forest or any forest land or any portion thereof to be dealt with or de-reserved. It is implicit by the bare reading of the Section that the said provision applies in the case of reserved forest/forest land or any portion thereof. In the present case Respondent No. 2 - Collector by his draft speaking order dated 13.11.2011 has conclusively determined that the said lands are not forest lands. This determination is pursuant to the statutory inquiry as contemplated under the provisions of Section 6 of the State Act. This determination has been done on 13.01.2011. The State Government has not filed any Appeal challenging the decision of the Collector within the prescribed period of sixty days before the Tribunal and as such the decision of the Collector in respect of the said lands has become final. The said lands therefore cannot be deemed to be forest land/reserved forest or any portion thereof as forest for the purpose of obtaining prior approval of the Central Government for its de-reservation and use for non-forest purpose under the Central Act.

9. In the above backdrop it is stated that for the provisions of Section 2 of the Central Act to come into force, a jurisdictional fact that the land in question is a 'forest' needs to exist. If the land in question is 'not a forest', then the provisions of Section 2 of the Central Act cannot be invoked or made applicable. Section 2 of the Central Act come into play only if the subject land is a forest and not otherwise. In the present case, the decision of the Collector under the provisions of Section 6 of the State Act adjudicating that the said lands are 'not private forest' having become final, the State Government cannot invoke the provisions of Section 2 of the Central Act for seeking de-reservation of the said lands.

IN THE HIGH COURT OF BOMBAY

Writ Petition No. 95 of 2020

Decided On: 15.03.2022

Sankalp Resorts Limited and Ors.  Vs. State of Maharashtra and Ors.

Hon'ble Judges/Coram:

S.J. Kathawalla and Milind Narendra Jadhav, JJ.

Authored By : S.J. Kathawalla, Milind Narendra Jadhav

Citation: MANU/MH/0881/2022

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Whether agricultural land can be treated as private forest land?

  In the present case, admittedly there is no declaration /

notice / notification in respect of the said lands being classified and

declared as 'private forest'. Further under the provisions of Section 2

read with Section 3 of the State Act, the said lands have to be a 'forest' before it could be classified as a 'private forest' and thereafter declared to be a 'reserved forest'. According to the Petitioners the provisions of Section 3(2) of the State Act expressly excludes land under cultivation i.e. 'agricultural land' even if it is comprised in a 'private forest'. The said lands stand outside the purview of the provisions of Section 2 of the Central Act as they are not a forest and if that be so there can be no question of de-reservation or denotification or seeking approval for the use of forest land for non-forest purpose. {Para 12}

13. The entire controversy in the present case has arisen due to

the unilateral Mutation entry No.720 recorded in the Mutation

Register pertaining to the said lands which classified the said lands as 'forest lands'; this mutation entry was solely based on the

communication dated 11.11.2005 addressed by the Respondent No.3 - Deputy Conservation of Forest to the Respondent No.2 - Collector

without any substantive basis / evidence as observed by us.

13.1. We have noted that the said Mutation entry was effected

with reference to the State Act. The Petitioners therefore filed the

statutory appeal seeking adjudication under the provisions of Section 6 of the State Act. However, once the Respondent No.2 - Collector has declared the said lands as 'not private forest' under Section 6 of the State Act, the applicability of the Central Act to the said lands does not arise. As seen, the said lands have been certified as 'agricultural lands' in the various revenue records and as such under Section 3(2) of the State Act, on this count also they cannot be deemed to be 'forest land' much less private forest land. Save and except the unilateral Mutation entry, admittedly there is no other evidence or material placed on record by the Respondents to classify, certify or notify the said lands as 'forest land'. The reasoned decision/order passed by the  Respondent No.2 - Collector declaring the said lands as 'not private forest' under the State Act therefore decides the status of the said lands.

14. Under Section 2 of the Central Act the approval of the

Central Government is necessary only if the land is a forest and if the State Government passes an order directing that any reserved forest shall cease to be reserved; or any forest land is used for non-forest purpose; or any forest land is assigned to a private person or a nongovernment organization; or any forest land may be cleared of trees or re-afforestation. Thus it is clear that for the provisions of Section 2 of the Central Act to apply, it it necessary in the first place that the said lands have to be 'forest land'. However if the said lands are not forest land then the provisions of Section 2 of the Act of 1980 are inapplicable and thus the permission sought by the Respondent No.2 - Collector from the Central Government with respect to its decision of

declaration of the said lands as 'not private forest' is wholly illegal.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 95 OF 2020

 Sankalp Resorts Limited  Vs State of Maharashtra,

CORAM : S. J. KATHAWALLA & MILIND N. JADHAV, JJ.

PRONOUNCED ON : 15.03.2022.

JUDGMENT (Per : S.J. Kathawalla & Milind N. Jadhav, JJ.)

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Supreme Court: Bar On Transfer/Assignment Of Agricultural Land To Non-Agriculturist is Applicable To Testamentary Disposition Also

The questions that arose for consideration and

the circumstances in which the matters were referred to it were set out by

the Division Bench as under:-.

“We are called upon to decide as to whether Section 63 of

the Bombay Tenancy and Agricultural Lands, Act, 1948

(for short ‘the Bombay Tenancy Act’) debars an

agriculturist from parting with his agricultural land to a

non-agriculturist through a “Will” so also, whether Section

43(1) of the Tenancy Act restricts transfer of any land or

interest purchased by the tenant under Sections 17B, 32,

32F. 321. 320, 32U, 33(1) or 88E or sold to any person

under Section 32P or 64 of the Tenancy Act through the

execution of a Will by way of testamentary disposition.

Learned Single Judges of this Court have taken a

consistent view that such transfer of property through

testamentary disposition would not violate Section 43 or

63 of the Tenancy Act.

31. If the provisions referred to in Section 43 of the Act and allied

provisions are considered in light of the settled principles extracted earlier,

it emerges that the primary concern of those provisions is to see that the

legislative scheme of granting protection to persons from disadvantaged

categories and conferring the right of purchase upon them, and thereby

ensure direct relationship of a tiller with the land. The provisions, though

lay down a norm which may not be fully consistent with the principles of

Indian Succession Act, are principally designed to attain and sub-serve the

purpose of protecting the holdings in the hands of disadvantaged

categories. The prohibition against transfers of holding without the

previous sanction of the concerned authorities, is to be seen in that light as

furthering the cause of legislation. Even if by the process of construction,

the expression “assignment” is construed to include testamentary

disposition, in keeping with the settled principles, the incidental

encroachment cannot render the said provisions invalid. In pith and

substance, the legislation and the concerned provisions are completely

within the competence of the State Legislature and by placing the

construction upon the expression “assignment” to include testamentary

disposition, no transgression will ensue.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2573 OF 2020

VINODCHANDRA SAKARLAL KAPADIA Vs  STATE OF GUJARAT 

Uday Umesh Lalit, J.

Dated:June 15, 2020.

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Supreme Court: Presumption of truth attached to record of right can not be rebutted by oral evidence

 Therefore, we find that the presumption of truth attached to the
record-of-rights can be rebutted only if there is a fraud in the entry
or the entry was surreptitiously made or that prescribed procedure
was not followed. It will not be proper to rely on the oral evidence to
rebut the statutory presumption as the credibility of oral evidence
vis-a-vis documentary evidence is at a much weaker level.
25. In view thereof, we find that the High Court has erred in law in
allowing the defendant's appeal relying upon oral evidence to rebut
the statutory presumption of truth attached to the revenue record.
The onus of proof was placed on the defendant by the learned trial
court. The burden is on the person who asserts such a relationship
as per Section 109 of the Evidence Act. The defendant has failed to

rebut the presumption of truth on the basis of reliable, trustworthy
and cogent documentary evidence to prove the relationship of a
tenant.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1511 OF 2020

SHRI PARTAP SINGH  Vs  SHIV RAM 

Dated:FEBRUARY 20, 2020.
HEMANT GUPTA, J.

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Provisions of Sarfaesi Act is not applicable in following cases

31. Provisions of Sarfaesi Act not to apply in certain cases.—The provisions of this Act shall not apply to—

(a) a lien on any goods, money or security given by or under the Indian Contract Act, 1872 (9 of 1872) or the Sale of Goods Act, 1930 (3 of 1930) or any other law for the time being in force;

(b) a pledge of movables within the meaning of Section 172 of the Indian Contract Act, 1872 (9 of 1872);

(c) creation of any security in any aircraft as defined in clause (1) of Section 2 of the Aircraft Act, 1934 (24 of 1934);

(d) creation of security interest in any vessel as defined in clause (55) of Section 3 of the Merchant Shipping Act, 1958 (44 of 1958);

(e) 183[* * *]

(f) any rights of unpaid seller under Section 47 of the Sale of Goods Act, 1930 (3 of 1930);

(g) 184[any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act)] or sale under the first proviso to sub-section (1) of Section 60 of the Code of Civil Procedure, 1908 (5 of 1908);

(h) any security interest for securing repayment of any financial asset not exceeding one lakh rupees;

(i) any security interest created in agricultural land;

(j) any case in which the amount due is less than twenty per cent of the principal amount and interest thereon.

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Whether preferential right given U/S 22 of Hindu succession Act is applicable to agricultural land?

 When the Parliament thought of conferring the rights of succession in
respect of various properties including agricultural holdings, it put a
qualification on the right to transfer to an outsider and gave preferential
rights to the other heirs with a designed object. Under the Shastrik Law, the
interest of a coparcener would devolve by principles of survivorship to
which an exception was made by virtue of Section 6 of the Act. If the
conditions stipulated in Section 6 were satisfied, the devolution of such

interest of the deceased would not go by survivorship but in accordance with
the provisions of the Act. Since the right itself in certain cases was created
for the first time by the provisions of the Act, it was thought fit to put a
qualification so that the properties belonging to the family would be held
within the family, to the extent possible and no outsider would easily be
planted in the family properties. In our view, it is with this objective that a
preferential right was conferred upon the remaining heirs, in case any of the
heirs was desirous of transferring his interest in the property that he received
by way of succession under the Act.
21. We, therefore, conclude that the preferential right given to an heir of a
Hindu under Section 22 of the Act is applicable even if the property in
question is an agricultural land. 
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2553 OF 2019

Babu Ram Vs Santokh Singh

Dated:March 7, 2019.
Citation: AIR 2019 SC 1506

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When land should not be treated as agricultural land even if revenue record shows that it is agricultural land?

 In the present case, security interest was created in respect of several parcels of land, which were meant to be a part of single unit i.e. the five star hotel in Goa. Some parcels of land now claimed as agricultural land were apparently purchased by the debtor from agriculturists and are entered as agricultural lands in the revenue records. The debtor applied to the revenue authorities for the conversion of these lands to non-agricultural lands which is pending till date due to policy decision.

40. It is undisputed that these lands were mortgaged in favour of the creditor under a deed dated 26.02.2010. Obviously, since no security interest can be created in respect of agricultural lands and yet it was so created, goes to show that the parties did not treat the land as agricultural land and that the debtor offered the land as security on this basis. The undisputed position is that the total land on which the Goa Hotel was located admeasures 182225 sq. mtrs. Of these, 2335 sq. mtrs. are used for growing vegetables, fruits, shrubs and trees for captive consumption of the hotel. There is no substantial evidence about the growing of vegetables but what seems to be on the land are some trees bearing curry leaves and coconut. This amounts to about 12.8 % of the total area.

The mortgage is thus intended to cover the entire property of the Goa Hotel. Prima facie, apart from the fact that the parties themselves understood that the lands in question are not agricultural, it also appears that having regard to the use to which they are put and the purpose of such use, they are indeed not agricultural.

44. In 'Commissioner of Wealth Tax, Andhra Pradesh v. Officer-in-Charge (Court of Wards) Paigah MANU/SC/0232/1976 : (1976) 3 SCC 864, this Court interpreted the definition of the term 'Agricultural Land' with respect to Section 2(e) of the Wealth Tax Act, 1957 that excluded the said term from the definition of assets. This Court observed:

We agree that the determination of the character of land, according to the purpose for which it is meant or set apart and can be used, is a matter which ought to be determined on the facts of each particular case. What is really required to be shown is the connection with an agricultural purpose and user and not the mere possibility of user of land, by some possible future owner or possessor, for an agricultural purpose. It is not the mere potentiality, which will only affect its valuation as part of "assets", but its actual condition and intended user which has to be seen for purposes of exemption from wealth-tax. One of the objects of the exemption seemed to be to encourage cultivation or actual utilisation of land for agricultural purposes. If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owners or possessors, so as to connect it with an agricultural purpose, the land could not be "agricultural land" for the purposes of earning an exemption under the Act. Entries in revenue records are, however, good prima facie evidence.

Similarly, in the case of Kunjukutty Saheb v. State of Kerala MANU/SC/0634/1972 : (1972) 2 SCC 364, this Court held as follows:

We suppose that something or other can be, and often is, grown on any vacant land, but that would not necessarily make it agricultural land for our purposes. To give an example the possibility of cultivating, or even the actual cultivation of, what is essentially a building site in the heart of a town would not make it agricultural land. It is the purpose for which it is held that determines its character and the existence of a few coconut trees or a vegetable patch on the land cannot alter the fact that it is held for purposes of building and not for purposes of agriculture.

In any event, having regard to the character of the land and the purpose for which it is set apart, we are of the view that the land in question is not an agricultural land. The High Court mis-directed itself in holding that the land was an agricultural land merely because it stood as such in the revenue entries, even though the application made for such conversation lies pending till date.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 2928-2930 of 2018 

Decided On: 19.03.2018

 ITC Limited Vs.  Blue Coast Hotels Ltd. and Ors.

Hon'ble Judges/Coram:

S.A. Bobde and L. Nageswara Rao, JJ.

Citation: 2018(6) MHLJ 42

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Whether class 2 occupant is entitled to sell agricultural land after converting it to non agricultural land without paying unearned income?

A perusal of Government Resolution dated 08.09.1983 shows that when agricultural land held by a person as occupant Class II is allowed to be sold, this GR is attracted. Here, respondent Nos. 1 & 2 were holding agricultural land as occupant Class II and they wanted permission to put it to non-agricultural purposes. After that permission was secured, land ceased to be agricultural land and, therefore, also ceased to be subject to 1958 Act. It, therefore, became amenable to Government Resolution dated 08.09.1983. This Government Resolution specifically stipulates payment of unearned income at 75% when such occupant Class II sales the land for non-agricultural use. The unearned income is difference between market value on the date of sale and occupancy price at which land was original granted to agricultural tenant as owner.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 2551 of 2004

Decided On: 28.03.2018

Dilip Vs.  Dyaneshwari and Ors.

Hon'ble Judges/Coram:

B.P. Dharmadhikari and Arun D. Upadhye, JJ.

Citation: 2018(4) MHLJ 462

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Whether it is permissible to convert occupancy class II land to class I land?

One of the conditions is that the transferee would continue to occupy the land as Occupant Class-II. The said GR having been issued by the State Government can be modified or varied only by the State Government and the officers exercising the powers under the Maharashtra Land Revenue Code are required to follow the said GR and not tinker with the terms and conditions mentioned in the said GR. In the instant case, as can be seen, the Secy. & OSD in spite of the mandate of the said GR dated 08/09/1983 has in breach and violation of the said GR directed conversion of the land from Occupancy Class II to Occupancy Class I which was impermissible. Hence it would have to be held that the order passed by the Secy. & OSD to the said extent is illegal as having been passed without jurisdiction and therefore the said condition though in favour of the Petitioner herein would be of no avail.
IN THE HIGH COURT OF BOMBAY

Writ Petition No. 6747 of 2016

Decided On: 10.01.2017

 Niketan Land and Estate Pvt. Ltd. Vs. State of Maharashtra and Ors.

Hon'ble Judges/Coram:
R.M. Savant, J.
Citation: 2017(2) ALLMR 222

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What is procedure for transfer and conversion of Occupancy Class II government land?

 The writ jurisdiction of this Court is invoked against the order
dated 24/02/2010 passed by the Respondent No.2 i.e. the Collector, Nashik by

which order the application filed by the predecessor of the Petitioner for grant
of permission to transfer the land and for its conversion from agricultural to
non­agricultural came to be allowed on the terms and conditions mentioned
therein.  The terms and conditions mentioned in the impugned order entail the
payment of unearned income to the State Government, as also the condition
that the land in question would continue to remain as Occupancy Class II land.
The Petitioner is principally aggrieved by the aforesaid condition mentioned in
the impugned order.
 In the instant case it would have to be borne in mind that the land in
question was allotted to the father of the original owner Namdeo Bankar on a
new and impartible tenure i.e. Class II.  The father of the said Nameo Bankar
had also executed a Kabuliyat wherein he had given an undertaking that the
allottee and his successor were bound by the terms and conditions of the
allotment and that if he commits a breach, he is liable to be evicted.  Hence the
instant case is not a case where the renewal of lease was sought but is the case
where   the   original   allottee   had   sought   permission   to   transfer   and   for
conversion of the agricultural land to non­agricultural.   In so far as the said
aspect is  concerned,  the  GR  dated  08/09/1983 regulates  the  transfer  and
conversion of agricultural lands belonging to Class II.  The said GR therefore
supplements the Maharashtra Land Revenue Code in so far as the transfer and
conversion of the land belonging to agricultural Class II is concerned. Hence

the instant case can be distinguished on facts from the case before the Division
Bench.
24 It would also have to be noted that the Petitioner and original
Owner by their conduct are now estopped from contending that the said GR
dated 08/09/1983 has no application.   It is required to be noted that the
Petitioner/original Owner has applied for conversion in the year 1989 as per
the then extant policy.  The original owner and the Petitioner had prosecuted
the proceedings before the authorities and this Court also as regards quantum
of the unearned income payable under the said GR for transfer and conversion
of  the land. The original  owner and the  Petitioner  have also shown  their
willingness to pay the unearned income and in fact have now deposited the
said unearned income with the Collector, Nashik.   It was also contended on
behalf of the Petitioner in the said Writ Petition No.5740 of 2007 that the GR
dated   08/09/1983   has   been   fully   implemented,   meaning   thereby   that   the
applicability of the said GR was accepted. The aforesaid facts therefore act as
an estoppel against the Petitioner and the original owner from contending that
the said GR dated 08/09/1983 would have no application.  The conduct of the
Petitioner amounts to approbation and reprobation i.e. on one hand apply
under the said GR for transfer and conversion whereas on the other hand
contend that it is not liable to pay unearned income as premium which is
contemplated by the said GR. It also cannot be lost sight of that the tenor of

the above Petition is only as regards the challenge to the condition appearing
in  the  impugned order dated 24/02/2010 passed by the  Collector, Nashik
wherein it is stated that the transferee would continue to occupy the land as a
Class II Occupant.   The Petitioner or the original Owner therefore never did
once question the applicability of the said GR dated 08/09/1983 and therefore
the submissions advanced on the basis of the judgment of the Division Bench
cannot be countenanced in the facts of the instant case.   The judgment in
Mohinder Singh Gill's  case (supra) would also have no application having
regard to the facts of the instant case.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.6747 OF 2016 
M/s. Niketan Land and Estate Pvt. Ltd.
v
State of Maharashtra  
CORAM : R. M. SAVANT, J.

Pronounced on : 10th January 2017

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Whether it is mandatory to annex certified copy of record of right along with plaint in suit relating to land?

In fact, as per Section 132(1) of the Land Revenue Act, 1964, the plaintiff or applicant in a suit or application should annex to the plaint or application, a certified copy of the record of rights relevant to such land, provided the suit or application is in respect of an agricultural land. Sub-section (2) mandates that if the plaintiff or applicant fails to do so, the court should give some time within which the same will have to be complied with, lest, the plaint will have to be rejected in terms of VII Rule 11(d), C.P.C. It is unfortunate that the trial court has not looked into these mandatory provisions found in Section 132 of the Land Revenue Act, which is very much relevant to a suit relating to agricultural land. Therefore, all the civil courts of original jurisdiction are expected to look into whether this mandatory requirement is complied with before the registering the suit.

23. Production of a certified copy of the record of rights or a copy of mutation is essential for the court to know as to whether the land is an agricultural land and whether any acquisition is made by the competent authorities. If such record is produced and it is shown that the land in question is already acquired under the relevant provisions of the Land Acquisition Act or any other law in force, the question of grant any relief does not arise. Similarly if the agricultural land is already converted into non-agricultural use, and it is depicted in column Nos. 9 and 10 of RTC, the court can call upon the plaintiff to value the suit under Section 24(b) of the Karnataka Court Fees and Suits Valuation Act, provided the relief of declaration of title is sought. If the land is agricultural land assessed to land revenue, then the court fee will be reckoned for valuation under Section 7(2) of the Court Fees and Suits Valuation Act. Therefore, all the civil courts must put up in the check sheet/slip as to whether certified copy of mutation records or index of lands is produced, and if not, to put up a note about the bar of law contemplated under Order VII Rule 11(d), C.P.C. read with Section 132 of the Karnataka Land Revenue Act.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

R.S.A. Nos. 1952/2005 and 220/2006

Decided On: 18.03.2016

 Chennappa Gowda  Vs.  N.C. Rajashekara and Ors.

Hon'ble Judges/Coram:A.V. Chandrashekara, J.

Citation:AIR 2016 (NOC)622 Kar

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Whether it is duty of sub Registrar to inform talathi about transfer of land as per S 154 of maharashtra land revenue code?

The first Appellate Court seems to have been swayed away with the certification of the mutation entry after about one year. The first Appellate Court blamed the plaintiff for not moving the authority concerned for certification of the mutation entry. In this context, look to Section 154 of the Land Revenue Code is necessary. It provides that intimation of transfer by registering officer, in relation to document purporting to create, assign or extinguish any title to or in charge of land used for agricultural purposes or in respect of which the record of right has been prepared as registered under the Indian Registration Act, be given to the Talathi of the village in which the land is situated and to the Tahsildar in such format and at such times as may be prescribed by the Rules under the Act. The document in the case on hand is a registered sale deed. This fact cannot be disputed. In view of Section 154 of the Land Revenue Code, it is in fact the duty of the Sub-Registrar/Registering Officer to inform the transaction in question to the Talathi as well as to the Tahsildar. Thus, it is not an obligation on the part of plaintiff, on the case on hand, to report the transaction to the Village Officer or to the Revenue Officer. Section 149 has to be read withSection 154 and conjoint reading shows that in case of acquisition otherwise than registered instrument, party has to make a written application to the Village Officer. Suffice to say that in case of registered instrument, it is a legal obligation on the registering authority. If registering authority commits an error or fails in its duties, citizen like the plaintiff cannot be blamed or made to suffer. The finding of the first appellate Court is thus, suffers jurisdictional error. Any of the Courts below did not refer to the provisions of the Maharashtra Land Revenue Code, despite the fact that they were dealing with the transaction of agricultural land, mutations and record of rights.

Bombay High Court

Shamrao Ganpat Chintamani vs Kakasaheb Laxman Gorde on 19 October, 2007

Equivalent citations: 2008 (2) MhLj 819

Bench: S Deshmukh

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When agricultural land will have non agricultural potentiality for grant of compensation under land acquisition Act?

 The sale instances in relation to the small residential plots covered in the sale deeds Exhs. 20-21 are situated in the same area, which sales were prior to the issuance of the preliminary notification i.e. before 14.06.1990 and it has similar topographical and physical characteristics and the fact is that the land of the appellants is acquired for the purpose of industrial development, which has got the potentiality for development of the land as industrial estate and to carve out industrial plots in it. That the acquisition of the land is for commercial purpose should be the relevant criteria for determining the market value by both the Land Acquisition Officer and reference Court placing reliance upon the sale instances even in relation to small plots of land, though it is shown from the records that the acquired land on the date of notification is an agricultural land. But the acquired land has got non agricultural potentiality as the said land was proposed by the District Collector after identifying the land for acquisition and stated that it is suitable for the purpose of industrial development. Therefore, the principles laid down at para 16 of Sabhia Mohammed Yusuf Abdul Hamid Mulla's case and the principles laid down in Viluben Jhalejar Contractor’s case referred to supra laid down the criteria for determination of the market value of the acquired land. Also, in Atma Singh’s case (supra) it was stated that the criteria for the determination of the market value the potentiality of the acquired land should also be taken into consideration which has been explained stating that potentiality means capacity or possibility for changing or developing into a state of actuality. Further, the legal principles laid down in the case of Atma Singh (supra)at para 5 which portion is extracted above, gives us the criteria to be followed for determination of the market value of a property keeping in view its existing condition with all its existing advantages and its potential possibility when let out in its most advantageous manner. The various criteria laid down in the above referred case namely, the existing amenities like water, electricity, possibility of their further extension, whether near about the acquired land, town is developing or has prospect of development in future, have to be taken into consideration by both the Land Acquisition Collector and the courts for determination of the market value. The aforesaid advantages are very much abundantly available in respect of the acquired land as the said land is within the proximity of New Venkateshnagar Layout, wherein residential sites are formed, and it is on record and there is a school and college near the Highway. Therefore, the principles laid down in the aforesaid case are aptly applicable to the fact situation of the case in hand. Hence, we have to apply the aforesaid principles laid down in the cases of Atma Singh & Sabhia Mohammed Yusuf Abdul Hamid Mulla (supra) to the case on hand.

  REPORTABLE

Supreme Court of India

Digamber & Ors vs State Of Maharashtra & Ors on 1 August, 2013

Bench: G.S. Singhvi, V. Gopala Gowda

Citation:2013 AIR SC 3532

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Whether security interest created under SARFAESI Act in respect of agricultural land can be enforced?

Having held hereinabove that security interest created was in agricultural land, we have no hesitation to hold that all the proceedings initiated under the SARFAESI Act are nullity, as the security interest in agricultural land cannot be enforced inasmuch as the same is exempted under the provisions of Section 31(i)
IN THE HIGH COURT OF JUDICATURE AT MADRAS


DATE OF DECISION: 05.04.2016

CORAM:

THE HON'BLE MR.JUSTICE SATISH K. AGNIHOTRI
AND
THE HON'BLE MR.JUSTICE M.VENUGOPAL

W.P. Nos.26633 and 32208 of 2014 and M.P. Nos.1 & 1 of 2014

W.P. No.26633 of 2014:

A. Akthar Hussain Petitioner
Vs.
K. Pappireddiyar

Citation:AIR 2016 Madras 114

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When court should adopt capitalization method for valuation of agricultural land?

Undoubtedly, when the sale instances from the locality from which the land is acquired or in the neighbourhood areas are available, question of adopting capitalization method for the purpose of valuation may not arise. However, when such evidence is not forthcoming from the claimant, the Court is left with no alternative than to adopt the method of capitalization and, for that purpose, it is necessary for the claimant to bring on record evidence regarding annual income from the agricultural land. The Apex Court in Special Land Acquisition Officer v. P. Veerabhadrappa etc. etc. has

elaborately described the procedure to be followed while adopting the method of capitalization for the purpose of arriving at the market value of the agricultural land. It was held therein that "it is axiomatic that the best evidence to prove what a willing purchaser would pay for the land under acquisition would be the evidence of sales of comparable properties, proximate in time to the date of acquisition, similarly situate, and possessing the same or similar advantages and subject to the same or similar disadvantages. Market value is the price the property may fetch in the open market if sold by a willing seller unaffected by the special needs of a particular purchase. Where definite material is not forthcoming either in the shape of sales of similar lands in the neighbourhood at or about the date of notification under Section 4(1) or otherwise, the Court has no other alternative but to fall back on the method of valuation by capitalization. In valuing land or an interest in land for purposes of land acquisition proceedings, the rule as to number of years' purchase is not a theoretical or legal rule but depends upon economic factors such as the prevailing rate of interest in money investments. The return which an investor will expect from an investment will depend upon the characteristic of income as compared to that of idle security. The main features are : (1) Security of the income : (2) fluctuation : (3) chances of increase (4) cost of collection etc. The most difficult and yet the most important and crucial part of the whole exercise is the determination of the reasonable rate of return in respect of investment in various types of properties. Once this rate of return and accordingly the rate of capitalization are determined, there is no problem in valuation of the property." After reiterating the law laid down in Rustom Cavasjee Cooper v. Union of India to the effect that, "capitalization of the net annual profit of the property at a rate equal in normal cases to the return from giltedged securities. Ordinarily value of the property may be determined by capitalizing the net annual value obtainable in the market at the date of the notice of acquisition", it was held by the Apex Court that "it is thus clear from the above enunciation that the method of determining the value of the property by application of multiplier to the net annual income or profit should only be adopted when there is no evidence of comparable sales or similar lands in or about the neighbourhood at the relevant time i.e. on the date of notification under Section 4(1) of the Act. In certain circumstances however the Court has no other alternative but to fall back on the capitalized value".

16. The above decision of the Apex Court, therefore, clearly lays down the law that in case of failure on the part of the claimant to bring on record the comparable sale instances, the Court is left with no alternative than to fall back on the method of valuation by capitalization. The capitalization would involve application of multiplier to the net annual income from the land acquired.

Bombay High Court

State Of Maharashtra vs Posha Rangu Mhatre Since Deceased ... on 30 September, 2005

Equivalent citations: 2006 (2) MhLj 149

Bench: R Khandeparkar, V Kanade

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Whether it is mandatory for court to send Decree for partition of agricultural land be sent to collector for partition?

GENERAL DIRECTIONS TO ALL THE CIVIL COURTS

By way of general directions, all the civil Courts are directed to remit, to the Collector, within four months from the date of signing the decree under Section 54 of CPC, all the relevant papers for partition of property or a separate possession of undivided estate assessed to the payment of revenue to the Government, without there being any application or request or prayer for the same; so as to follow the mandate of Section 54 of CPC.

Any application seeking direction to send necessary papers to the Collector, should be disposed of within 30 days from the receipt thereof, treating it as an application filed in the disposed of suit, without opening any independent proceeding in this behalf. Such application should be treated as a request to a Judge or Court to send necessary papers to the Collector for effecting partition under Section 54 of CPC. Such application is really nothing but a request to the Judge or Court to discharge his ministerial duty. In view of this, even no notice to any of the parties to the application is necessary as it is not a petition seeking any adjudication of any of the rights of the parties.

Bombay High Court

Annasaheb Rajaram Nagane And Anr. vs Rajaram Maruti Nagane And Ors. on 21 February, 2001

Equivalent citations: AIR 2001 Bom 303, 2001 (3) MhLj 53

V.C. Daga, J.

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