BRIJENDRA SINGH v. STATE OF U.P & Ors.

On the other hand, Shri 0. P. Rana stontly dclcnds the finding of the Appellate Authority (District Judge), which has been upheld by the High Court, that the sale coul<l not be said to be in 'good faith' merely because no it had been established. impelling necessity for making Before <lcaling with these co11tentions, let us have a look at material part of sub-section (1) of Section 5, which reads thus: .. (l) On and from the conunencement of the Uttar Pra desh Imposition of Ceiling on Land Holdings (Amendment) Act, 1972, no tenure-holder shall be entitled to hold in the aggregate throughout Uttar Pradesh, any land in excess of the ceiling area applicable to him. Explanation !.-In detennining the ceiling area applica ble to a tenure-holder, all land held by him in his own right, whether in his own name, or ostensibly in the name of any other person, shall be taken into account." Explanation II is not material for our present purpose. The Amendment Act, 1972 (Act No. 18 of 1973) (for short call- ed the Ceiling Act) came into force with effect from June 8, 1973. It tenure-holder is is clear that the crucial date on or from whifh no. in excess of the ceiling area is June 8, J 973. entitled to hold land Keeping this in view, let us now examine sub-section (6), the relevan\ part of which reads as under : - " ( 6) In determining the ceiling area applicable to a tenure holder, any transfer of land made after the twenty-fourth of January, 1971, which but for the transfer would have been declared surplus land under this Act, shall be ignored and not taken into account : A B c 0 E F Provided that nothing in this sub-section shall apply G to-- {a) ........................................ . (b) a transfer proved to the satisfaction of the pres cribed authority to be in good faith and for adequate con- ~ideration and under an irrevocable instrument not being a benami transaction or for immediate or deferred benefit of !he tenure-holder or other members of bis family. H 292 SUPREME COURT REPORTS [1981] 2 S.C.R. A Explanation ! .. ..................... · · ...... · · · · · · Explanation 11.-The burden of proving that a case within clause (b) of the proviso shall rest with the party claiming its benefit." B D E F It will be seen that when sub-section ( 6) of Section 5 provides that in determining the ceiling area and surplus area, any transfer of land which but for the transfer would have been declared surplus land under the Act, shall be ignored, it proceeds on the presumption that the tenure-holders being aware of the resolution or manifesto adopted by the ruling All India Congress Party on January 24, 1971, and of the consensus at the Chief Minister Conference held in July 1972, to take measures to lower the ceiling on agricultural holdings, might make attempts to defraud, defeat and evade the ceiling 1aw, then in offing, by making fictitious transfers of land in favour of other persons. The presumption which underlies the main provision in Section ~ ( 6) can be displaced, as the Legislature has itself indicated, on proof of the conditions set out in Proviso (b). Although the strength of the aforesaid presumption and the nature and quantum required to satisfy the conditions of Proviso (b) may vary accon:ling to the circumstances of the particular case, yet it can be said as a general proposition that in the case of transfers made prior to the decision of the Chief Minister's Conference in July 1972 to lower the ceiling the burden under Explanation II on the tenure-holder to establish the facts bringing his case within clause (b) of the Proviso, would be lighter than the one in the case of a transfer made after the aforesaid decision in July 1972. In order to bring his case within the purview of Proviso (b) , the tenure-holder has to show- ( i) that the transd'er has been made in 'good faith'; (ii) that it is a transfer for adequate consideration; G (iii) that it has been made under an irrevocable instrument: (iv) that it is not a henami transaction or for immediate tenure-holder or other or deferred benefit of members of bis family. R There is no dispute in regard to the connotation, construction and existence of ingredients (ii), (iii) and (iv) in the instant case. Con- troversy, however centres round the true meaning and scope of the ( • • BRIJENDRA SINGH v. U.P. STATE (Sarkaria, /.) 293 • expression 'good faith' within the contemplation of clause (b) of the In the instant case, the Appellate Authority appeats to have Proviso. taken the view-a view which has been upheld by the High Court-· that a transfer cannot be said tO, have been made in 'good faith' merely because it has been honestly or genuinely made and satisfies the aforesaid conpitions (ii), (iii) and (iv), unless it is proved further that it was made for a valid pressing necessity. A B • - - ( The thrust of the arguments of the learned counsel for the appellant is that the expression 'good faith' within the contemplation of Proviso (b) only means that the transfer is honestly and genuinely made, and is not designed to circumvent the Ceiling Act or defeat its object, and that this expression cannot be import into Proviso (b), as a requirement of law, an additional obli gation to prove that the transfer was made for a pressing necessity, or valid personal need of the transferor. The argument is not devoid of merit. legitimately stretched so as to C The expression 'good faith' has not been defined in the Ceiling Act. The expression has several shades of meaning. Jn the popular "honestly, without sense, the phrase 'in good faith' simply means fraud, collusion, or deceit; really, actually. without pretence and with out intent to assist or act in furtherance of a fraudulent or otherwise unlawful scheme". (See Words & Phrases, Permanent Edition, Vol. l 8A, page 91). Although the meaning of "good faith" may vary in the context of different statutes, subjects and situations, honest intenb free from taint of fraud of fraudulent design, is a constant element of its connotation. Even so, the quality and quantity of the honesty requisite for constituting 'good faith' is conditioned by the context and object of the statute in which this term is employed. It is a cardinal canon o,f construction that an expression which has no uni form, precisely fixed meaning, takes its colour, light and content from the context. The meaning and scope of the expression 'good faith' is therefore, to be considered in the light of the scheme and purpose of Section 5, in general, and the context of Proviso (b) to sub-section (6), in parti cular. We have already noticed that the primary object of the Ceiling Act, as adumbrated in the pivotal provision in Section 5 (I) is to prohibit and disentitle a tenure-holder from holding land aggregate in the State of Uttar Pradesh, in excess of the ceiling area, in his own right, whether in his own name, or ostensibly in name of any other person. The ceiling area and snrplus land of a tenure-holder under the Ceiling Act, as already mentioned, are to be determined as on June 8, 1973 when the U.P. (Amendment) Act. 3-57 SCI/81 D E F G H A B c D E F G H 294 SUPREME COURT REPORTS [1981j 2 S.C.R. No. 18 of 1973 came into force. A transfer, therefore, made after January 24, 1971 which is designed to serve as a cloak for retention of a right or interest of the transferor in the ostensibly transferred land in excess of the ceiling area, even on or after June 8, l 973, will be patently not in 'good faith'. But the Proviso (b) to sub section ( 6) of Section 5 extends the negative aspect of the concept 'good faith' a little further by indicating, that even if the transfer is not an ostensible transfer and the transferor divests himself of all interest and rights in presenti in the transferred land, bnt reserves some benefit in futuro for himself or other members of his family, then also the transfer will be not in 'good faith'. A transfer solely for the purpose of converting surplus land into cash without any kind of need (not to be confused with legal necessity) may also lack good faith. therein transferee, Broadly speaking, the benefit of clause (b) of the Proviso to sub section. ( 6) is available to a transfer made in good faith, that is, to a bona fide transfer whereby the tenure-holder genuinely and irrevo cably transfers all right, title and interest in the land in favour of the ordinary course of management, of his affairs and which is not a collusive arrangement, or device or subterfuge to enable the tenure-holder to continue to hold the surplus land or any reserved interest in presenti or in futuro, (or merely to convert it into cash), and thus circumvent the ban under Section 5 (1) of the Ceiling Act. In order to be entitled to the bene fit of Proviso (b), a transfer made in good faith, must satisfy the further conditions, (ii) to (iv), enumerated in the Proviso (bl. The positive conditions laid down in Proviso (b) are : that the transfer should be for adequate consideration; that it should have been made under an irrevocable instrument. The negative conditions set out in clause (b) of the Proviso are : that it must not be a benami transaction; that it must not be for immediate or deferred benefit of the transferring tenure-holder or other members of his family. These tests or conditions (ii), (iii) and (iv) provided in Proviso (b) may not by themselves be conclusive to bold that 'good faith'. For instance, another important test for judging the genuineness or otherwise of a sale would be whether or not cultivatory possession and enjoyment of the land has passed under the sale to the vendee. transferring tenure-bolder that the transfer in question effected in the course of ord!nary management of his affairs, was made for adequate considera tion and he bas genuinely, absolutely and irrevocably divested himself of all right, title and interest (including cultivatory possession) in the land in favour of the transferee, the onus under Explanation TI. in Even so, once it is established by the transfer was • • • ' - BRIJENDRA SINGH v. U.P. STATE (Sarkaria, J.) 295 the fact the absence of any circumstances suggestive of collusion, or an inten tion or design to defraud or circumvent the Ceiling Act, on the tenure. holder to show that the transfer was effected in 'good faith', will stand discharged, and it will not be necessary for the tenure-holder impelling need that the transfer was made for an to prove further or to raise money for meeting a pressing legal necessity. Although that a transfer was made for a valid pressing proof of necessity, may highlight or strengthen the inference in favour of the genuineness of the transfer, it is not an indispensable constituent o~ 'good faith', nor is the proof of legal necessity requisite, as a matter of law, to enable a tenure-bolder to avail of the br, nefit of clause (b) of the Proviso. It may be remembered that at the time when such a transfer was made, there was no legal restriction on his power to alienate the whole or any part of his holding. In other words, at the time when such a transfer was made it was not unlawful, even if it were made without any pressing necessity. It became unlawful by the subsequent enactment of a legal fiction introduced in Section 5 (6) of the O~iling Act (No. 18 of 1973) with retrospective effect from January 24, 1971. Even so, under this statutory fiction, a transfer of land made after January 24, 1971 does not become wholly void for all purposes; it can be ignored and would not be taken into account in determining the ceiling area of the tenure holder for purposes of the Ceiling Act, and that too, if the following two conditions are satisfied: transferring (a) that the land but for the transfer would have been declared surplus land under tbe U.P. Act 18 of 1973; and (b) that the transfer is not of a kind covered by Pro viso (b) to Section 5(6) of the Act. A B c D E ) -~- , ·1 This being the position, once a transfer is shown to be bo11a fide and further satisfies all the other positive and negative conditions laid down in the Proviso (b) to Section 5 ( 6), there is no justification in law to stretch the legal fiction further and to spell out from the . / expression 'good faith' an additional requirement of proving pressing necessity for the transfer before the enture-holder is entitled to the G. benefit of the aforesaid Proviso (b). F In the instant case, the two sales in question have not only been found to be genuine and for adequate consideration, but it has been further accepted that the sales were made by the tenure-holder to meet an ordinary need of every house-holder i.e. for raising funds for con structing a residential house in New Delhi. The sales have been held by the Appellate Authority to be not in 'good faith' merely on the - .. , ( 296 SUPREME COURT REPORTS [1981] 2 S.C.R. A B c D ground that the construction of a residential house in New Delhi bv the tenure-holder could not, in the opinion of the Authority, be said to be an "impending" (impelling?) necessity. This approach and finding is manifestly erroneous. As discussed above, in order to get the protection of Proviso (b) to Section 5 ( 6), it is not legally necessary to proviso, in addition to the conditions set out in the Proviso (b), that the sales were for valid pressing necessity. Even so, in the instant case, it had been shown that the sales were made to raise funds for building a resi dential house in New Delhi which was obviously a valid necessity. The necessity and its urgency was to be judged from tenurc hnlder's point of view. The tenure-holder at the material time was serving in the Army in the rank of Brigadier which implies that he It is not shown was nearing the age of retin; ment from Army Service. that he had any other house where he could live. He had, in fact, cost of construction from the Government. borrowed part of the There was therefore nothing sinister in his intention if he arranged to sell his lands to other cultivators to raise funds to acquire a site and build a residential house in New Delhi where he would live in rea~onable comfort after retirement from Army service. E For all the foregoing reasons, we allow this appeal, set aside the orders of the High Court and of the Appellate Authority and the Pres- crihcd Authority in so far as they relate to these two sales in question of 12.5 acres each, and hold that both these sales were entitled to the exemption of Proviso (b) to Section 5 ( 6) of the Ceiling Act. The Prescribeµ Authority is, therefore, directed not to ignore these two transfers, but after taking them into account determine afresh the the Prescribed ceiling area of the appellant. We make it clear that F Authority shall determine the ceiling area and surplus area of the. appellant on the basis that the whole of the land held hy the tenure land, as the holder (appellant) on the crncial date was unirrigated decision of the Appellate Authority (which was upheld by the High Court) on that issue has become res iudicata. G In the circumstances of the case, there will be no order as to costs of this appeal. These, then, are the reasons for our Order dated November 13, 1980, whereby we had allowed this appeal. H N.K.A. Appeal allowed.