State Cannot Use Summary Eviction to Unsettle Company Court Auction of Land Held for Decades
A Supreme Court bench of Justices J. B. Pardiwala and K. Vinod Chandran restores the auction sale of 65.94 acres in Nellore, holding that summary proceedings under the Andhra Pradesh Assigned Lands (Prohibition of Transfers) Act, 1977 cannot displace a bona fide private title claim traced to 1920, and that the State's belated challenge to a Company Court-confirmed auction was impermissible.
How the Dispute Reached the Supreme Court
The land at the centre of these three sets of civil appeals — 65.94 acres spread across several survey numbers in Kodurupadu village, Nellore Mandal, District Nellore — has a title chain the appellants trace to a purchase made in 1920. Of the total, 40.65 acres became the subject of the Government's claim that they are “assigned lands” that revert to the State on any unauthorised transfer.
The land's history runs through several hands. One Perumraju Naidu purchased 82.35 cents in 1920. He settled the property on his son B. Janardhana Naidu in 1932, whose name was mutated in revenue records. Janardhana Naidu bequeathed the properties by a registered Will dated 14.04.1962 to his son Balasada Jagannada Rao (B.J. Rao). After his father's death, B.J. Rao's name was mutated by Taluk Office Nellore proceedings dated 31.03.1965.
B.J. Rao sold the land in three lots. The first lot of 17.73 acres went to P. Ramanarayana and P. Kalyana Sundar Rao. The Government proposed to acquire that parcel for Pennar Steels Limited and issued a Section 4(1) notification dated 26.06.1976, which was successfully challenged before the High Court. In the writ petition, the Government filed a counter-affidavit admitting the land in certain survey numbers as “private patta lands.” Pennar Steels eventually took over 18 acres in 1977. The Land Reforms Tribunal, Nellore, by an order dated 17.11.1982 found that B.J. Rao was not holding any excess lands as on 01.01.1975.
B.J. Rao's last sale was in 1980 — 46.23 acres to M/s Circar Paper Mills Limited. Circar Paper Mills mutated their name in revenue records, converted the land from agricultural to industrial use, constructed a factory, and operated it until the company went into liquidation. By order dated 14.02.2001, the Company Judge of the High Court of Judicature at Andhra Pradesh wound up the company. The Official Liquidator (O.L.) took possession of approximately 64 acres on 27.03.2001.
After a valuation report, the Company Judge on 13.07.2004 permitted sale by public auction with an upset price. J.K. Sugar Mills Limited was the highest bidder at Rs. 7 crore 80 lakhs. The Company Judge confirmed the auction sale. On appeal by the State, the Division Bench set aside the confirmation, accepting the Government's claim that 40.65 acres were assigned lands. Separately, Sundaramma and others — who hold the adjacent 17.73 acres through a registered settlement deed dated 17.05.1990 from P. Kalyana Sunder Rao and P. Ramanarayana — were denied pattadar passbooks, and the writ court decided against them by following the Division Bench judgment in the OSA. Both decisions were challenged before the Supreme Court.
Senior Counsel Sri Ranjit Kumar and Sri Navin Pahwa appeared for J.K. Sugar Mills. Sri B. Adinarayana Rao, Senior Counsel, appeared for Sundaramma and others. Additional Solicitor General Sri K.M. Nataraj appeared for the O.L. of Circar Paper Mills Limited. Ms. Prerna Singh appeared for the State.
The State's Conduct Before the Company Court
When the O.L. published the auction notice, the Mandal Revenue Officer, Nellore issued a telegram dated 16.08.2004 to the O.L. asking that 41.65 acres be excluded from the auction as Government lands. The O.L. placed this communication before the Company Judge. The Mandal Revenue Officer was suo motu impleaded as a party-respondent. Despite being impleaded, the revenue officer expressed no objection to the sale initially, then filed an affidavit asserting that 40.65 acres had been assigned to landless people and could not be alienated under the A.P. Assigned Lands (Prohibition of Transfer) Act, 1977.
The Company Judge rejected the objection as belated. The lands had been purchased by the Company prior to 1986, an industry had been operated there for years, and no proceedings had been taken before the O.L.'s auction publication. The Company Judge directed the O.L. to pay the Government Rs. 1,50,000 per acre for the 40.65 acres from the auction proceeds — a protection of the State's interest, if any — without disturbing the auction. The District Collector successfully appealed that confirmation order before the Division Bench of the High Court.
The Supreme Court found this sequence significant. The properties were in the custody of the Company Court. Any proceedings against those lands had to be pursued before the Company Court. The Government never approached the Company Court; it merely sent a telegram to the O.L. The Mandal Revenue Officer, even after being impleaded, did not attempt to prove the State's case before the Company Court.
Why the State's Assigned Land Claim Failed on the Facts
Before the Supreme Court, the State filed a counter-affidavit only in Civil Appeal Nos. 809–810 of 2017. The Court described it as containing “a bland statement” in tabular form listing the survey numbers and asserting they were assigned lands alienated in violation of the 1977 Act, which would cause possession to revert to the Government.
The Court found one entry in the State's own tabular statement self-defeating. More than half the total extent claimed — specifically 20.94 acres — was stated to have been assigned by the Government to B.J. Rao himself. The Court noted that assignment under the Act is only to landless poor persons. B.J. Rao, who held substantial lands, was plainly not a landless person. The State's own pleading therefore undermined its core contention.
Beyond that internal contradiction, no documentary evidence was produced to substantiate the assignment. No assignment orders, no records of original assignees were placed before the Court. The ceiling proceedings against B.J. Rao had already been settled by the Land Reforms Tribunal's order of 17.11.1982 and the Mandal Revenue Officer or Collector had no authority to reopen them. The Government had also filed a counter-affidavit in an earlier writ petition admitting certain survey numbers to be private patta lands, which the appellants produced as Annexure P6.
The Legal Bar Against Summary Eviction Where Title Is Genuinely Disputed
The Court anchored its reasoning in the Constitution Bench decision in Government of Andhra Pradesh v. Thummala Krishna Rao and Another, (1982) 2 SCC 134, which arose from the same State. In that case the Court had examined the Andhra Pradesh Land Encroachment Act, 1905. It drew a distinction between land covered under Section 2(1) and 2(2) of that Act — where the Government's title admits of no doubt — and land covered under Section 3, where unauthorised occupation is alleged. For Section 3 land, the Court held that where a bona fide dispute of title exists, the Government cannot take a unilateral decision in its own favour and resort to the summary eviction process under Section 6 to dispossess a person holding under a genuine claim of title. A dispute going back decades required a properly constituted suit, not summary proceedings.
The present Court held that the A.P. Assigned Lands (Prohibition of Transfers) Act, 1977 is in pari materia with the Land Encroachment Act as regards the summary character of its proceedings. Section 3 of the 1977 Act declares that a transfer of assigned land shall be deemed never to have been made, and Section 3(4) empowers the District Collector or an officer not below Mandal Revenue Officer to take possession after evicting the person in possession. The Court held that this summary power cannot be exercised where, as here, the title itself is disputed and private parties have been in possession since 1920 on the basis of registered deeds and mutation entries made over decades.
The Court added that even if documentary evidence of assignment had been produced, it had serious doubts whether the assigned-land claim and its consequences could be adjudicated in liquidation proceedings before the Company Court, which only dealt with auctioning assets admittedly in the company's possession for years. The Appellate Court ought not to have interfered with the auction in a summary manner.
On the position of Circar Paper Mills and J.K. Sugar Mills specifically: the O.L. took possession on the orders of the Company Court; the auction was conducted on the Company Court's orders; the Company Court confirmed the sale. The Government's only step was a telegram to the O.L., not an application to the Company Court. The State's argument that it had taken over the land before the auction was expressly rejected.
The Court also observed that the Government had acquired a portion of these very lands for APIIC — an acquisition that itself evidenced the ownership of those parcels being in private hands. The company had converted the land to industrial use, obtained sanctions and permissions from the Government, and operated a factory. The Government could not claim ignorance of either the permissions it had granted or the mutation entries it had recorded.
Order
The Supreme Court allowed all the civil appeals. The order of the Division Bench of the High Court in OSA No. 21 of 2005 — which had set aside the Company Judge's confirmation of the auction sale — was set aside. The order of the learned Single Judge confirming the auction revives. Possession of the auctioned property is to be handed over to J.K. Sugar Mills Limited if not already done, and if J.K. Sugar Mills is already in possession, that possession shall not be disturbed.
The writ petition filed by Sundaramma and others, which the writ court had decided against them by following the now-reversed Division Bench judgment, was restored to the High Court for fresh consideration on merits. The resumption orders issued by the Government after the summary proceedings concluded — which have been challenged before the High Court by the other appellants — and the writ petition of Sundaramma and others are to be considered on merits by the High Court.
The amounts that the O.L. had been directed to deposit to the Government are to be immediately restored to the O.L., to be applied towards the liquidation of Circar Paper Mills Limited.
The Court made clear that the High Court's fresh consideration shall be untrammelled by any observations in the judgments now set aside, but the Supreme Court's observations on the impermissibility of summary eviction — and the precedent in Thummala Krishna Rao — shall be given precedential weightage. All parties retain the right to agitate all contentions, including the invalidity of the summary proceedings. Pending applications in the civil appeals were disposed of.