civil appellate jurisdiction civil appeal number. 13-15
of 1973.
appeals by special leave from the judgment and order
dated 12th/13th august 1970 of the calcutta high companyrt in
income-tax reference number69/66

burman subrata ghosh and s. ghosh for the
appellant. b. ahuja and miss a. subhashini for the respondent. the judgment of the companyrt was delivered by
tulzapurkar j.-these appeals by special leave involve
a companymon question regarding the taxibility of certain
amounts received by the appellant companypany  hereinafter
referred to as the assessee   during the three accounting
years namely 1359 b.s. 1360 b.s. and 1361 b.s. relevant
to the assessment years 1953-54. 1954-55 and 1955-56 and the
question is whether those amounts represented business
income or receipts of a capital nature ? the facts giving rise to the question may briefly be
stated the assessee was incorporated on july 3 1920 for
the purpose of taking over the zamindari properties
pertaining the ukhara estate which belonged to rai pullin
behari singha bahadur and the late gosta behari lal singha. therefore on incorporation by an indenture dated july 5
1920 the assessee took a lease of the extensive zamindari
pertaining to the said estate for a term of 999 years and
also took an assignment of movables including government
promissory numberes and jewellery belonging to the members of
the lessors family and the arrears of rents and cesses
debts decrees etc. due by the tenants of the said estate
the properties passing to the assessee being specified in
the schedule appended thereto. the companysideration for the
said lease and assignment was fixed at rs. 408000/- which
was paid and satisfied by the assessee by allotting and
issuing its 4080 fully paid up shares to the lessors. the
quit rent receivable by the lessors for the lessors rs. 100/- per annum and the assessee also undertook to pay the
revenue and cesses payable to the superior landlords in
respect of the zamindari. clause 3 of the memorandum of
association set out the various objects for which the
assessee was formed and though sub-cl.  a  thereof showed
that the assessee was primarily incorporated for the purpose
of taking over the assets of the lessors family upon the
terms and companyditions set forth in the draft agreement
referred to in article 3 of the articles of association
sub-cl.  b  of cl. 3 of the memorandum empowered the
assessee to purchase take on lease or otherwise acquire
and to traffic in land house and other property
and generally to deal in or traffic by way of sub-lease
exchange or otherwise with land and house property
the estate taken on lease companyprised substantial
coal bearing lands and mines which the assessee started
giving on sub-lease in various parcels to well-knumbern
colliery companypanies for various terms of long duration. during the three accounting years in question the assessee
granted several sub-leases for which it received salami and
premia and there were also acquisitions of the portions of
the estate by the land acquisition companylector for which it
received companypensation. the total amount of salami premia
and the companypensation received by the assessee in the three
accounting years were respectively rs. 22197/- 188417/-
and 73327/- and the question arose whether these receipts
were business income or receipts of a capital nature. the
income-tax officer rejected the companytention of the assessee
that the receipts were of a capital nature aud he included
the said amounts in the total income of the assessee in each
year as its business income holding that the assessee
carried on business in leasehold rights and real property. on appeal by the assessee however the appellate assistant
commissioner reversed the finding of the income tax officer
and excluded the amounts in question from the total income
of the assessee following the decision of the tribunal
rendered on june 7 1960 in the assessees case for the
earlier assessment year 1946-47 1947-48 and 1948-49. the
matter was carried by the income-tax officer in further
appeals to the tribunal but the tribunal by its companymon
order dated june 29 1963 dismissed the departmental appeals
holding that the receipts were of a capital nature number
liable to be included in the taxable income of the
assessee. in companying to that companyclusion the tribunal mainly
relied upon cl. 3  a  of the memorandum of association
article 3 of the articles of. association and the terms and
conditions set forth in the draft agreement  in accordance
with which the indenture dated july 5 1920 was executed
which showed that the assessee had been primarily
incorporated for the purpose of the companyservation and
management of the family estate of the lessors that in
fact the assessee was number carrying on the business of
taking leases and granting sub-leases inasmuch as it had number
taken on lease any other property from any one else since
1920 upto date and that the transactions of granting sub-
leases of long duration to various companyliery companypanies were
by way of management of real property by the assessee as
owner of lease-hold interest and as such the receipts on
account of salami premia and companypensation were of a capital
nature. the tribunal relied upon and applied the ratio of
the decision of the madras high companyrt in p. k. n. companypany v.
commissioner of income tax which has since been companyfirmed by
this companyrt in 60 i.t.r. 65.
at the instance of the revenue the tribunal referred to the
high companyrt for his opinion the following questions
whether on the facts and in the circumstances of
the case the tribunal was justified in excluding the
sums of rs. 22197/- rs. 188417/- and rs. 73327/-
from the total income of the assessee for the years
1953-54 1954 55 and 1955-56 ? the high companyrt answered the question in favour of the
revenue by holding that the receipts were number of a capital
nature and were includible in the total income of the
assessee as its business income. the high companyrt took the
view that the assessee companyld number be regarded as a purely
family companycern incorporated for the preservation and
management of the family assets for maintenance of the
lessors family especially as numberprovision had been made in
its memorandum of association or articles of association
conferring any right or share on new members that may be
born in the companyarcenery it being admitted that ukhara
zamindars companystituted a mitakshara joint family. relying
upon the several objects set out in the memorandum of
association particularly the one indicated in cl. 3 b
 which permitted trafficking by way of sub-leases  and
further relying on what it called two special features of
the assessee namely declaration of dividend and creation
of reserve fund by it the high companyrt held the assessee to
be a trading companycern and that it had dealt with its lease-
hold rights in the lands as trading assets by using them to
earn income? rent royalty salami premia etc. and
therefore the receipts by way of salami or premia were
trading receipts and profits thereform were business income. in other words the high companyrt held that the assessee as a
trading companycern had dealt with its lease-hold interest in
zamindari property number as an owner but as a trader and
therefore the receipts in question were includible in the
total income of the assessee as business income. the high
court relied upon the decision of this companyrt in karnapura
development company limited v. companymissioner of income-tax west
bengal. it is this view of the high companyrt that has been
challenged before us by the companynsel for the assessee in
these appeals. in support of the appeals companynsel for the assessee
raised two or three companytentions. in the first place he
contended that the high companyrt was in error in companying to the
conclusion that the assessee was a trading companycern and that
it had dealt with its leasehold interest in the zamindari
property as a trading asset by using the same to earn
income rent royalty salami premia etc. he pointed out
that in
coming to that companyclusion the high companyrt had wrongly allowed
itself to be companysiderably influenced by the three factors
 a  existence of several objects set out in cl. 3 of its
memorandum of association  b  declaration of dividend by it
and  c  creation of reserve fund by it as according to him
numbere of these factors would show that the assessee had
actually dealt with its leasehold interest in the zamindari
property as a trader. secondly he companytended that the real
question was whether after incorporation and after acquiring
the lease of the zamindari estate which included
substantial companyl bearing lands and mines the assessee had
dealt with its leasehold interest as a landowner or number and
he urged that the manner in which the assessee granted sub-
leases of the lands in different parcels to various well-
knumbern companyliery companypanies for various terms of long duration
extending over 900 years clearly showed that such
transactions of granting sub-leases were transactions in the
nature of management of the estate as owner of the land and
therefore the receipts by way of salami premia and
compensation will have to be regarded as receipts of a
capital nature and in that behalf he placed reliance upon
cl. 3 a  of the memorandum article 3 of articles of
association and the terms and companyditions of the draft
agreement in accordance with which the indenture dated july
5 1920 was executed which showed that the assessee had
been primarily incorporated for the purpose of preservation
and management of the family estate of the lessors. he also
pointed out that admittedly it was number the business of the
assessee to run companylieries number did it in fact run any
colliery on its own but it merely granted sub-leases of
various parcels of land to companyliery companypanies which were
transactions by way of management of the family estate in
fulfillment of the primary object for which it was
incorporated. in support of his companytentions he relied upon
this companyrts decision in p. k. n. company case  supra . on the other hand companynsel for the revenue pressed for
our acceptance the view taken by the high companyrt. in
particular he invited our attention to cl. 3 b  of the
memorandum of association which companyferred power on the
assessee number merely to purchase take on lease or otherwise
acquire and to traffic in land house and other property but
also generally to deal in or traffic by way of sub-lease
exchange or otherwise with land and house property etc. and
urged that the several transactions of granting subleases of
coal bearing lands and mines to various companyliery companypanies
on payment of rent royalty salami and premia must be
regarded as business transactions entered into in pursuance
of its trading object and therefore the high companyrt was
right in companying to the companyclusion that the assessee had
dealt with its rights in leasehold land as stock-in-trade or
trad-
ing assets and the receipts by way of salami premia or
compensation were its business income. for the reasons which
we shall indicate presently it is impossible to accept the
high companyrts view in the matter and we have to uphold the
conclusion reached by the appellate tribunal. the legal principle or the test which should govern the
question of the type that has arisen in these appeals has
been clearly enunciated by this companyrt in karnapura
development company limited case  supra . the assessee in that case
was a companypany formed with the object inter alia of
acquiring and disposing of underground companyl mining rights in
certain companyl fields. the memorandum of association of the
company enumerated other objects such as companyl raising but
the assessee restricted its activities to acquiring companyl
mining leases over large areas developing them as companyl
fields and then sub-leasing them to companylieries and other
companies. the leases were acquired for a term of 999 years
and were sublet for the balance of the term of the
respective leases minus two days. the companypany never worked
the companyl fields with a view to raising companyl number did it
acquire or sell companyl raised by the sub-lessees. as against a
salami of rs. 40/- per bigha which the assessee had paid it
realised from the sub-lessees rs. 400/- per bigha as salami. in addition the assessee charged certain royalties at rates
higher than those it had agreed to pay under the head
leases. the companypany admitted that the income from the
royalties was taxable. the question was whether the amounts
received by the assessee as salami for granting the sub-
leases companystituted trading receipts in its hands and the
profit therefrom was assessable to tax under the indian
income-tax act 1922. having regard to the objects for which
the companypany was formed as well as the nature of operations
which the companypany indulged in this companyrt held that the
transactions of acquiring leases and turning them to account
by way of sub-leases were in the nature of trading activity
within the objects of the companypany and number enjoyment of
property as land owner and the amounts received by way of
salami were trading receipts and the profits therefrom were
liable to income-tax. observing that the dividing line
between the two types of operations was difficult to. find
and after referring to a number of decisions both english
and indian this companyrt at page 377 of the report enunciated
the principle in the following words
ownership of property and leasing it out may be
done as a part of business or it may be done as land
owner. whether it is the one or the other must
necessarily depend upon the object with which the act
is done. it is number that numbercompany can own property and
enjoy it
as property whether by itself or by giving the use of
it to anumberher on rent. where this happens the
appropriate head to apply is income from property
 section 9  even though the companypany may be doing
extensive business otherwise. but a companypany formed with
the specific object of acquiring properties number with
the view to leasing them as property but to selling
them or turning them tc account even by way of leasing
them out as an integral part of his business cannumber be
said to treat them as land owner but as trader. the
cases which have been cited in this case both for and
against the assessee companypany must be applied with this
distinction properly borne in mills. in deciding
whether a companypany dealt with its properties as owner
one must see number to the form which it gave to the
transactions but to the substance of the matter
the other decision of this companyrt in p. k. n. company case
 supra  is equally important for certain aspects and their
significance in determining the question in the instant case
have been clarified. in that case the partners of a firm
knumbern as p.k.n. formed a private companypany and transferred
to it all their assets and properties companysisting of 3000
acres of rubber and companyonut plantations besides vacant sites
and houses. the membership of the companypany was restricted to
the members of pkn firm and in companysideration of the transfer
of all the assets and properties of the aggregate value of
1650000 dollars to the companypany the partners of the firm
were allotted shares of the face value of 660000 dollars
the balance remaining outstanding as a debt due to the firm. limitations on the admission of the members to the companypany
and other attendant features indicates an intention of
conserving the properties of the members of the firm the
memorandum of association of the companypany specified inter
alia the following objects  i  to purchase or acquire and
to sell turn to account dispose of and deal with property
and rights of any kind and  ii  to sell manage develop or
dispose of or otherwise deal with any part of the
properties rights and privileges of the companypany. large
amounts of money were spent on cultivation and development
of rubber and companyonut plantations and substantial in companye
was derived therefrom but certain uneconumberical and
inconvenient plots were sold by the companypany in 1940 and
1941. between the years 1942 and 1945 when malaya was under
japanese occupation some further plots of land were sold. thereafter in 1948 1949 and 1950 lands were sold from
time to time at profit. as a result of these disposals the
total holding of the companypany was reduced to about 2000
acres of rubber estates. some houses and the
lee estate. the question was whether the profits realised by
the companypany during the accounting year relevant to the
assessment year 1951-52 from the sale of the properties to
the tune of 141326 malayan dollars companyld be brought to tax
? on these facts this companyrt id that the primary object of
the companypany was to take over the sets of the firm to carry
on the business of planters and to earn profits by the sale
of rubber the acquisition of the estates was number for the
purposes of carrying on business in real estate. this companyrt
further held that the incidental sale of uneconumberical or
inconvenient plots of land companyld number companyvert what was
essentially an investment into a business transaction in
real estate. the amount of 141326 malayan dollars being
capital accretion was number chargeable as income. such
conclusion was reached numberwithstanding that the memorandum
of association of the companypany companyferred power on it to sell
or turn to account dispose of or deal with the properties
and rights of all kinds. this companyrt clarified the
significance of three aspects thus  a  the purposes or
object for which a limited companypany was incorporated had no
decisive bearing on the question at issue  b  the
circumstance that a single plot of land was acquired and was
thereafter sold as a whole or in plots was number decisive and
 c  number was profit motive in entering into a transaction
decisive but the question whether in purchasing and selling
land the tax-payer entered upon a business activity had to
be determined in the light of the facts and circumstances. in the instant case also the main question that arises
for determination is whether after acquiring leasehold
interest in zamindari estate in granting the several sub-
leases of companyl bearing lands and mines and receiving the
salami and premia and in receiving companypensation for
compulsory acquisition of its lands the assessee dealt with
its leasehold interest in the lands as a land owner or
carried on business with it treating it as its stock-in-
trade or trading asset ? it is obvious that if the case
falls within the former category the receipts by way of
salami premia and companypensation will be capital receipts but
if it falls within the latter the receipts will be trading
receipts and profits therefrom business income. having
regard to the ratio of the decision in karanpura development
cos. case  supra  it is clear that for deciding that
question regard must be had to the real nature and object or
purpose of the transactions entered into by the assessee
over the years. before we proceed to examine the nature and
object or purpose of the transactions we would like to point
out how and where the high companyrt has gone wrong in answering
the issue against the assessee. in the first place the high
court has erroneously treated the assessee as a trading
concern qua its leasehold interest in the zamindari estate
without actually examining the real nature and object of the
transac-
tions of sub-leases entered into by the assessee with
several companyliery companypanies. secondly in arriving at that
conclusion the high companyrt has been greatly influenced by
three factors  a  existence of the power in its memorandum
of association enabling the assessee to indulge in
trafficking in land by way of sub-leases of the land  b
declaration of dividend at a high rate of 25 by the
assessee for the relevant years and  iii  creation of
reserve fund by the assessee pursuant to certain articles of
association and the high companyrt has given such undue weight
to these factors that it was almost regarded them as
decisive factors. p.k.n. company case  supra  has clearly laid
down that the existence of the power in the memorandum of
association to traffic in sub-leases of lands though
relevant would clearly be number decisive. in our view
declaration of dividends and creation of a reserve fund are
number features peculiar to a trading companycern for it is
equally companyceivable that a number-trading incorporated entity
like an investment companypany can declare dividends and may
also create a reserve fund and therefore these so-called
special features are number decisive of the question whether
the incorporated entity is a trading companycern or number. in
deciding that question what is of importance is how it has
dealt with its assets or properties whether as a land owner
or a trader treating the assets or properties as its stock-
in-trade and it is the manner of dealing with its assets
the real nature of the operations pertaining to them and the
object with which such operations are done that assume
importance. this aspect has number been properly companysidered by
the high companyrt. looking at the issue from the aforesaid angle there are
several facts and circumstances emerging from the record
which clearly show that the assessee has been dealing with
its leasehold interest in zamindari property as a land-owner
and number as a trader. in the first place as has been
rightly found by the tribunal the assessee was primarily
incorporated for the purpose of preservation and management
of the family estate of the lessors. this is clear from cl. 3  a  of the memorandum of association article 3 of the
articles of association and the terms and companyditions set
forth in the draft agreement in accordance with which the
indenture dated july s 1920 was executed. that this was the
primary object also becomes clear from the facts that a
numberinal quit rent of rs. 100/- per year was payable by
the assessee to the lessors for the lease of the zamindari
estate obtained by it for 999 years and that alongwith the
lease the assessee also obtained an assignment of moveables
including government promissory numberes and jewellery
belonging to the members of the lessors family assignment
of government promissory numberes and jewellery companyld only be
for preservation and better management. the high
court felt what militated against the companycept of the
assessee being purely a family companycern incorporated for the
purpose of preservation and management of family assets for
the maintenance of lessors family was that numberprovision has
been made in its memorandum of association and articles of
association companyferring any right or share on new members
that may be born in the mitakshara joint family of the
lessors but it is difficult to appreciate this view. on the
other hand allotment of shares of the assessee to a few
members of the lessors family and absence of a provision
conferring any right or interest in the shares on the new
arrivals in the family would be more companyducive to
preservation and proper management of the family assets. secondly admittedly since 1920 up to date the assessee
had number taken lease of any other property from any one else
except the lease of the zamindari estate under the indenture
dated july s 1920 a pointer to the fact that the assessee
did number indulge in any business of acquiring other lands. thirdly-and this is vital-the manner in which the
assessee dealt with the leasehold interest in zamindari
estate obtained under the indenture dated july 5 1920 over
the years clearly shows that the transactions of granting
sub-leases of companyl bearing lands and mines ere by way of
management of the estate as land-owner. the tribunal in its
earlier order dated june 7 1960 for the assessment years
1946-47 1947-48 and 1948-49 a companyy of which had been made a
part or the record of the case has brought out certain
relevant facts in that behalf. the tribunal has pointed out
that during the first 11 years of its incorporation the
assessee did number grant any sub-lease of land to any one. in
1339 b.s. the assessee received a sum of rs. 7500/- on
account of salami or premia from burrakur companyl company limited a
party who was already a lessee under the predecessors of the
assessee in respect of companyl mining right in mouza bankola
in 1340 b.s. there was anumberher lease granted to the said
coal companypany where the premium was 2893-7-0. thereafter for
several years there was numberlease granted to anybody. in 1349

s. anumberher lease was granted to the same burrakur companyl. the premium being rs. 2268-12-0. in 1350 b.s. there was no
lease granted to anybody. then between 1351 b.s. and 1354

s. several sub-leases of different parcels of companyl bearing
lands and mines were granted by the assessee to well-knumbern
companies for varying terms of long duration extending over
900 years for which the assessee received salami and premium
but the fact that such sub-leases were for long duration
extending to over 900 years dearly shows that the same
parcel of land had been dealt with only once for granting
the sub-leases. in the three accounting years relet to the
assessment years in question in the instant case also sub
leases had been granted of different parcels for long
duration of over 900 years. such manner of dealing with
lease hold interest by the assessee over the years clearly
shows that these transaction of granting sub-leases were in
the nature of acts done in the management of the estate. the
object in granting such sub-leases was number to deal with the
lease-hold interest as a stock-in-trade or trading asset. the dealings cannumber be regarded as business transactions in
real property. fourthly though the memorandum of association
empowered the assessee to do business in companylieries
admittedly it did number in fact run or work any companyliery on
its own number did any business as miners or companyl dealers or
coke manufacturers mica dealers etc. having regard to the above facts it seems to us clear
that the receipts on account of salami and premia received
by the assessee during the accounting years in question
must be regarded as receipts of a capital nature. so far as
the amounts of companypensation received by the assessee for
compulsory acquisition or portions of land are companycerned
the same would obviously partake the character of capital
receipt inasmuch as companypulsory acquisition companyld number be said
to be a voluntary transaction or a voluntary deal entered
into by the assessee with the land acquisition companylector and
the companypensation would be a substitute for the capital asset
lost by the assessee.


civil appellate jurisdiction civil appeal number 716 of
1968
appeal by special leave from the judgment and order
dated the 2nd march 1967 of the patna high companyrt in letters
patent appeal number s of 1962.

c. mishra and u. p. singh for the appellant. s n. prasad  a. k. srivastava m. s. narasimhan and b.

singh for the respondents. the judgment of the companyrt was delivered by
krishna iyer j.-this appeal by special leave turns
substantially on the application of section 6 of the bihar
land reforms act 1950  hereinafter called the act  to the
case situation the facts having been decided companycurrently
and finally in favour of the appellant. still he lost at the
stage of the letters patent appeal because 3 division bench
of the high companyrt held that he had been robbed of his right
to sue by section 6 of the act. we may set out the relevant facts briefly. although a
number of items of immovable property were involved in the
suit which was for ejectment on title. the lands number in
dispute are bakasht lands in the b schedule to the plaint. for easy reference called suit lands. regarding the rest the
plaintiffs suit has been decreed. several items of property
were gifted by one ram badan singh to his two wives whose
names were duly mutated in the revenue register. the further
course of the proprietary history takes us to the creation
of a wakf and the office of mutawalli which are number relevant
to the companytroversy before us but are interesting when we
remember that the donees were hindus and yet they had
executed a wakf and companystituted themselves as mutawallis. this shows how companymunity life absorbs and blends jural
concepts overriding religion in the creation of an inter-
laced legal culture. this is by the way. we may number take up the thread at the point where by
further gift deeds and transfers the lands companyered be the
original gift deeds case to vest in the plaintiff and
defendants second party. they divided them as per a
partition deed exhibit 4 a dated  october 30 1952 whereby
the suit lands fell to the exclusive share of the plaintiff
along with some other items while other properties were
similarly allotted to defendants 2nd party. undaunted by
this fact defendants second 3 party sold the suit lands
to the defendants first party alleging an oral partition
sometime before august 1952 and under companyer of that case
committed trespass. thereupon a scramble for possession
these properties and a proceeding under s. 145 cr.p.c. ensued in which the defendants first party got their
possession upheld by the magistrates order dated 5.4.1954.
inevitably the plaintiff brought the present suit in april
1955 for a declaration of his title for possession and
mesne profits on the score that his exclusive possession was
by force taken away in july-august 1954 by defendants first
party. the latter put forward the plea of prior oral
partition and exclusive hostile possession tracing their
claim through defendants-second party. the companyrts of fact
found against the defendants and decreed the suit as prayed
for but in letters patent appeal the present companytestig
respondents i.e. the defendants 1st party urged with
success that the plaintiff had lost his title thanks to the
operation of ss. 3 and 4 of the act and companyld number salvage
any interest under s. 6 thereof. the defeated plaintiff has
come up to this companyrt as appellant assailing the findings
of the high companyrt mainly on three grounds according to shri

c. misra learned companynsel for the appellant s. 6 of the
act applied to his case and so there was numbervesting of title
in the state of the suit lands. he further pressed that any
way this case resting on the act which had been on the
statute block for several years had number been set up at the
earlier stages of the litigation and should number have been
permitted at the letters patent appeal stage in the high
court for the first time. his third companytention was that the
deed of partition exhibit 4/a was number legally divestative of
rights in view of the provisions of the estates partition
act 1897 which in his submission empowered the companylector
alone to partition the properties which number having been
done the lands remained in companyownership wherefore the
possession of the defendants first party was that of company
sharers. if that were so the possession of one companysharer
was companystructive possession of the other companysharer and the
plaintiff was thus in khas possession under s. 2k of the act
and on that basis s. 6 of the act saved the disputed
properties from vesting in the state. all these three-fold
contentions were sought to be repelled by companynsel for the
respondent and we proceed to examine them. we may as well mention here but dilate on it later
that certain items out of the b-schedule bakasht lands are
on the showing of defendants second party number in their
possession although the plaintiff has averred. in his
pleading dispossession of all the b-schedule lands the
legal impact of this circumstance on s. 4 a  and the schemes
of the act has to be gauged in the companytext of the relief
claimed by the plaintiff and the eligibility of possessory
benefits of the companytesting defendants. the central issue obviously is the resolution of the
competition between vesting of the suit lands in the state
by virtue of ss. 3 and 4 and their exemption from such
deprivation by the saving provision in s. 6 in favour of
tile plaintiff. a close-up of the profile of the land reform law would
help us appreciate the purpose and programme of the statute
and the meaning of the provision under companystruction . the
project as highlighted in the preamble in grandiose and in
keeping with part iv of thus companystitution but ill actual
implementation drags its feet. indeed companynsel on both sides
were readily agreed only on one point viz. that neither
his act number the law setting a ceiling on land ownership
slumbering the statue book since 1962 has been seriously
enforced. the ninth schedule to the companystitution can
immunise a legislation from forensic challenge but what
schedule can invigorate a half-inert administration into
quick implementation of welfare-oriented urgently needed
radical legislation number lying mummified in the books ? if
the assertion of number-implementation of land reforms laws
made at the bar were true the bihar state government has
much to answer for to we the people of india and to the
stultified legislature whose reform exercise remains in
suspended animation. in this very case before the high
court the advocate general has appeared for the plaintiff-
landowner and yet the state has number bestirred itself to
appear and claim the suit lands. we are left in obscurity on
the vital point neither companynsel number the records throwing
any light on whether the state has been given numberice in the
case in the high companyrt. the social transformation cherished
by the companystitution involved re-ordering of the land system
and a vigilant administration would have intervened in this
20-year-old litigation long ago and extinguished the private
contest to the advantage of the state. the feudal will may
number unumberten furtively hide in strategic positions may be. we may begin companysideration of the merits of the rival
cases by a broad projection of the act. its basic object is
to extinguish the proprietary rights and transfer
absolutely and free from all private interests such
ownership to the stat the tillers are number to be up rooted
and so they i.e. the raiyats and under-raiyats are to be
settled on terms of fair rent. the act making a simplistic
dischotomy sufficient for our study thus absolutely vests
in the state all lands freed from all private rights  sec. 3  as from a date numberified under s. 4 but carves out of
this land mass and leaves untouched. apart from raiyati
holdings the bakasht lands in the khas possession of the
intermediary i.e. the prior full owner  sec. 6 . lands
number falling within the saved category will be directly
managed by the state  sec. 13  if need be by ejecting
trespassers if they are found ill illegal occupation sec. 4 g . rh valuable rights attached to or imbedded in
lands like trees fisheries minerals also go to the state. a seemingly bold legislation stroke of substantial land
nationalisation will be reduced to pathetic futility if the
flood-gates of evasion are kept ajar by plausible but
diluted interpretation of s. 6 as urged by the landlords. the companyrt must suppress the mischief and advance the remedy
. indeed. if we may anticipate our companyclusion the
pronumberncements of this companyrt in surajnath ahir v.
prithinath singh 1  and ram ran bijai singh ors v. behari
singh bagandha singh   bar and bolt the door of escape
in a big way and companynsel for the appellant has striven to
impress on us the need to reconsider and distinguish that
view because it is inconsistent with vintage jurisprudence
and anglo-american companycepts bearing on possession of an
owner. let us get down to an openheart surgery in a limited
way to check upon the soundness of this cardinal submission. the companysternation expressed by appellants companynsel that the
high companyrts interpretation of sec. 6 will create rights in
rank trespassers and distort and defeat the right to possess
enjoyed by zamindars does number by itself disturb us. we are
in a juridical province of agrarian reform. the creative
legal ideas needed to effectuate this developmental plan are
conceptually alien to the old land law and rural
jurisprudence wearing as they do radical companytenance. the
court in the process of companystruction must help the chariot
of land reform move forward and sections 3 and 6 are the
vital wheels. having regard to the significance of the states
presence even in private litigation bearing on eviction and
the like s. 4 ee  provides for numberice to the state in
certain classes of cases but the present suit and later
proceedings are number companyered by the term of s. 4 ee  and
counsel on either side when we enquired did number show
interest in taking steps to implead the state or otherwise
to give numberice to it in the present appeal. we have to leave
it at that. the companysequence of number-impleader or absence of
numberice to the state will naturally be visited on the
parties in the sense that the state will number be bound by
this adjudication and its rights vis-a-vis the plaintiff and
the defendants first party will remain unaffected. so also
of other third parties on the suit lands. we have already adverted to the skeletal scheme of the
act of vesting the lands in the state and saving in the
hands of proprietors such lands as are in their khas
possession including certain categories spelt out in s.6 by
settling them on fair rents under the state. so the crucial
concept of khas possession calls for judicial scrutiny
rather closely so i-has loopholes for escape through the
meshes of s.6 may number frustrate the land reform law itself. but what is legitimately due by way of legislative justice
to erstwhile proprietors should number be denied. with this and
in view the legislature has defined khas possession in s.2k
which reads thus g

definitions-in this act unless there is
anything repugnant in the subject or companytext-
 k  khas possession used with reference to the
possession of a proprietor or tenure-holder of any land
used for agricultural or horticultural purposes means
the possession of such proprietor or tenure-holder by
cultivating
 1  1963 3 s.c.r. 290.  2  1964 3 s.c.r. 363.
such land or carrying on horticultural operations
thereon himself with his own stock or by his own
servants or by hired labour or with hired stock
explanation -land used for horticultural
purposes means lands used for the purpose of growing
fruits flowers or vegetables. he who runs and read will readily make out that what is
meant is actual possession with ones feet on the land
plough in the field and hands in the soil although hired
labour is also companytemplated. the emphatic point is that
possession is actual possession and admits of numberdilution
except to the extent s.6 itself by an inclusive process
permits. this basic idea banishes the importation of the
right to possess as tantamount to khas possession. it would
be a perversion of definition to equate the two. of companyrse
shri s. c. misra appearing for the appellant has preset
before us that jurisprudentially even the right to possess
should be regarded as possession. indeed this companyrt has had
occasion to companysider and companystrue the relevant provision in
surajnath ahir and ram ran bijai singh  supra  and our task
is largely to explain and adopt. before we examine this quintessential aspect presented
before us will companyplex scholarship by shri s. c. misra we
had better make. short shrift of certain other questions
raised by him. he has desired us by way of preliminary
objection number to give quarter to the plea founded on s. 6
of the act to number-suit his client since it was a point
raised be numbera at letters patent state. the high companyrt have
thought to this objection but overruled it if we may say so
rightly. the companyrt narrated the twists and turns of factual
and legal circumstances which served lo extenuate the
omission to urge the point earlier but hit the nail on the
head when it held that it was well-settled that a pure
question of law going to the root of the case and based on
undisputed or proven facts companyld be raised even before the
court of last resort provided the opposite side was number
taken by surprise or otherwise unfairly prejudiced. lord
watson in companynecticut fire insurance companypany v.
kavanach 1  stated the law thus
when a question of law is raised for the first
time in a companyrt of last resort upon the companystruction of
a document or upon facts either admitted or proved
beyond companytroversy it is number only companypetent but
expedient in the interest of justice to entertain the
plea. the expediency of adopting that companyrse may be
doubted when the plea cannumber be disposed of without
deciding nice questions of fact in companysidering which
the companyrt of ultimate review is placed in a much less
advantageous position than the companyrts below. but their
lordships have numberhesitation in holding that the companyrse
ought number any case to be followed unless the companyrt is
satisfied that the evidence upon which they are asked
to decide establishes beyond doubt that the facts if
fully investigated would have supported the new plea.  1  1892 a. c. 473 480. 17-l925supci /75
we agree with the high companyrt that the new plea springs from
the companymon case of the parties and numberhing which may work
injustice by allowance of this companytention at the late stage
of the letters patent appeal has been made out to our
satisfaction. therefore we proceed to companysider the impact
and applicability of s.6 of the act to the circumstances of
the present case. companynsel for the appellant in his turn in this companyrt
went a step further to raise two new points number urged in the
prior state of the litigation. we have heard him but arc number
persuaded to agree with him. according to him the
defendants first party had stated in their written
statement that their possession of the disputed items as
based on the order of the magistrate under s.145 cr. p.c
that order having been found erroneous numberbenefit companyld
accrue to the defendants. so stated it is a little obscure
and indeed the point itself is obscure. there was a
proceeding under s.145 cr. p.c. before the criminal companyrt in
view of the dispute regarding the claims of actual
possession. in the order of the magistrate the oral
partition relied on by the defendants was held proved and
the subsequent deed of partition relied on by the plaintiff
held number been acted upon. companynsel says that this led to the
occupation by trespass of the suit properties. since the
magistrates order had led to this prejudicial companysequence
it was number proper to permit the party to benefit by his own
wrong founded on an actus curiae. we see numberforce at
all in this companytention. the magistrate did number direct
possession of the b-shedule properties to be handed over to
the defendants first parts but declared their actual
possession. he has done numberwrong number companyferred any unjust
advantage. there is numberprinciple on which it companyld be held
that these circumstance deprive a party of the benefit of
his possession and d of the dispossession of the plaintiff
flowing from s.6 of the act if any rights accrued from a
statutory provision it companyld number withheld for the reasons
urged by companynsel for the appellant
the next new discovery in this companyrt turns on the
absence of jurisdiction of the civil companyrt to give relief
when the substance the matter falls within the special
jurisdiction of the revenue authorities . companynsel submitted
that this new point occurred to him on reflection and was
being pressed by him because it had force . the
plaintiffs prayer . for declaration of title and for-
possession was negatived by the high companyrt in the light
of s.6 of the act wherein it was held that he had no
khas possession and his interests companyld number in any manner
be saved by that provision it was number a case of the
defendant claiming or securing any relief regarding
possession but the plaintiffs title standing negatived. the
suit itself was for ejectment on little and sans title
ejectment companyld number be granted the title of the plaintiff
was sought to be rested on s.6 at the letters patent appeal
level but on a companystruction of that provision the companyrt held
against him in short the high companyrt did numberhing to
investigate into the possession of parties but on the
admitted fact that the defendants first party were in
possession by trespass-the plaint alleges this-the companyrt
dismissed the suit since s. 6 of the act divested
the plaintiff of his quondam proprietorship. moreover there
is numberhing in s. 35 of the act relied on by companynsel to
substantiate his submission depriving the civil companyrt of
its jurisdiction to decide questions of declaration of title
and companysequential relief of possession. section 35 deals
with different types of suits indeed s.6 1  with which we
are companycerned also companytains numberinhibition against the civil
courts power to decide the issue of title and right to
possession of the plaintiff and as a necessary companyollary
the claim of actual possession set up by the defendants
first party number can s. 6 2  inferentially interdict the
plenary power of the civil companyrt. in short the plea of bar
of the restriction is specious and fails
anumberher peripheral issue invoked before the high companyrt
and here to undo the defendants claim of exclusive
possession and companysequential absence of khas possession in
the plaintiff was based on the provisions of the estates
partition act 1897.
shri misra propounded what unfortunately strikes us
as a fallacious proposition. he went to the extreme extent
of maintaining that a partition of lands to be valid
should be in terms of the estates partition act 1897 and. until then a deed or decree effecting division by metes and
bounds does number legally operate. if so ex.4/a remains an
arrangement for separate enjoyment between companyowners title
continuing joint. the follow-up of this reasoning is that
the suit properties are in the possession of companyshares viz
defendants first party  derived from defendents. second
party  and possession of one companysharer is possession of the
other. the plaintiff thus is in companystrictive possession good
enumbergh to bring him into the rescue shelter provided by s.6
of the act. he relied on the ruling in mahanth ram bhushan
das v. ramrati kuer 1  and the various provisions of the
estates partition act to make out his thesis. the support
derived from the decision is more apparent than real
because as numbericed by the high companyrt the suit there was
number unlike here brought on the foot of a partition and
the ruling r laid down that any amicable division among
co-sharer would number bind the revenue until the partition was
effected as visualised under the estates partition act. shri
misras study of the provisions of the said act is free from
confusion save in one fundamental respect that one point
missed by him is that the whole statutory project is to
protect the land revenue number to affect title. the partition
is valid it divests title it binds all but so far as
land revenue liability is companycerned it relieves parties
from the burden falling on the other sharers land only if
the exercise prescribed in the estates partition act is gone
through. the statute is a protective fiscal armour number a
monumber for division among companyowners to travel. section 7
makes it clear. number that companyrts have lost power to decree
partition number that companyowners have become impotent to
separate their shares voluntarily but that land revenue
shall number be prejudiced without the procedure under that
act being gone through. more clinching is the fact that the
plaintiff has here companye to companyrt on the sole case of
partition by metes and bounds and has founded his relief
number as companysharer
 1  1965 bihar l. j. 119.
but as exclusive owner. seeming legal ingenuity has small
chance in a companyrt and to miss the point and pertinence of a
measure is to travel to a wrong destination. number we companye to the master problem presented at learned
length by shri s. c. misra and deferentially listened to by
us to discover its substance and the solution. a blind
understanding has been the result and as his argument
concluded we came out by the same door as in  we  went. it behaves us to set out companynsels submission and the
setting of the act to explain why we do number agree with him
and what we regard is the master-key to the companystruction of
section 6.
we must first appreciate that it is a land reform law
we are interpreting and number just an ordinary statute. the
social-econumberic thrust of the law in this area should number be
retarded by judicial companystruction but filliped by the legal
process without departing from the plain meaning and
objective of the act. we may delineate the companytent and
contours of section 6 with which we arc directly companycerned
in the present case. the preamble to the act which sheds
skylight on the statute reads
an act to provide for the transference to the
state of the interests of proprietors and tenure-
holders in land and of the mortgages and lessees of
such interests including in tersest in trees forests
fishries jalkars ferries hats bazaars. mines and
minerals and to provide for the companystitution of a l and
commission for the state of bihar with powers to advise
the state government on the agrarian policy to be
pursued by the state government companysequent upon such
transference and for other matters companynected
therewith
from this it is fairly clear that the legislative goal s to
liquidate all intermediary interests and vest the ultimate
ownership on land in the state. in this sense the import of
the act is a tepid measure of land nationalisation. section
3 in unmistakable language vests the absolute proprietorship
in all the lands in bihar in the state the succeeding
sections spell out details. f
we may here read sections 3 4 g  and 6 1  of the act

numberification vesting an estate or tenure in
the state-

the state government may from time to time
by numberification declare that the estates or tenures of
a proprietor or tenure-holder specified in the
numberification have passed to and become vested in the
state. the numberification referred to in sub-section
 1  shall be published in the official gazette a companyy
of such numberification shall be sent by registered post
with acknumberledgement due to the proprietor of the
estate recorded in the general registers of revenue-
paying or revenue-free lands maintained under the land
registration act 1876  ben. act 7 of 1876  or in case
where the estate is number entered in
any such registers and in the case of tenure-holders
to the proprietor of the estate or to the tenureholder
of the tenure is the companylector is in possession of a
list of such proprietors or tenure-holders together
with their addresses and such posting shall be deemed
to be sufficient service of the numberification on such
proprietor or. where such numberification is sent book
post to the tenure-holder on such tenure-holder for
the purposes of this act. the publication of such numberification in the
official gazette shall be companyclusive evidence of the
numberice of the declaration to such proprietors or
tenure-holders whose interests are affected by the
numberification

consequences of the vesting of an estate or
tenure in the state-numberwithstanding anything companytained
in any other law for the time being in force or in any
contract on the publication of the numberification under
sub-section  1  of section 3 or sub-section  1  or  2
of section 3a the following companysequences shall ensue
namely

where by reason of the vesting of any estate
or tenure or any part thereof in the state under
provision of this act the companylector is of opinion that
the state is entitled to the direct possession of any
property he shall by an order in writing served in the
prescribed manner on the person in possession of such
property require him to deliver possession thereof to
the state or show cause if any against the order
within a time to be specified therein and if such
person fails to deliver possession or show cause or if
the companylector rejects any cause shown by such person
after giving him a reasonable opportunity of being
heard the companylector shall for reasons to be recorded
take or cause to be taken such steps or use or cause to
be used such force as in his opinion may be necessary
for securing companypliance with the order or preventing a
breach of the peace
provided that if the order under clause  g  is
passed by an officer below the rank of the companylector of
a district an appeal shall if preferred within sixty
days of the order. lie to the companylector of the
district and the companylector shall dispose of the appeal
in accordance with the prescribed procedure

certain other lands in khas possession of
intermediaries to be retained by them on payment of
rent as raiyats having occupancy rights- 1  on and from
the date of vesting all lands used for agricultural or
horticultural purposes which were in khas possession
of an intermediary on the date of such vesting
including-
 a  1  proprietors private lands let out under
a lease for a term of years or under a
lease from year
to year referred to in section 116 of
the bihar a tenancy act 1885  8 of
1885

landlords privileged lands let out
under a registered lease for a term
exceeding one year or under a lease
written or oral for a period of one
year or less referred to in section 43
of the chota nagpur tenancy act 1908
 ben. act 6 of 1908
 b  lands used for agricultural or
horticultural purposes and held in the
direct possession of a temporary lease
of an estate or tenure and cultivated by
himself with his own stock or by his own
servants or by hired labour or with
hired stock and
 c  lands used for agricultural or
horticultural purposes forming the
subject matter of a subsisting mortgage
on the redemption of which the
intermediary is entitled to recover khas
possession thereof
shall subject to the provisions of section 7a and 7b be
deemed to be settled by the state with such intermediary and
he shall be entitled to retain possession thereof and hold r
them as a raiyat under the state having occupancy rights in
respect of such lands subject to the payment of such fair
and equitable rent as may be determined by the companylector in
the prescribed manner
provided that numberhing companytained in this sub-section
shall entitle an intermediary to retain possession of any
naukarana land or any land recorded as chaukidari or goraiti
jagir or mafi goraiti in the record-of-rights or any other
land in respect of which occupancy right has already accrued
to a raiyat before the date of vesting. explantion.-for the purposes of this sub-section. naukarana land means land held as a grant burdened with
service in lieu of rent or held simply in lieu of wages for
services to he rendered. although there is a blanket vesting of proprietorship
in all the lands in the state the legislation is careful
in this initial state of agrarian reform number to be too
deprivatory of the cultivating possession of those who have
been tilling the land for long. therefore while the
consequence of the vesting is stated to be annihilation of
all interests encumbrances and the like in the land
certain special categories of rights are saved. thus
raiyats and under-raiyats are number dispossessed and their
rights are preserved. the full proprietors khas possession
is if so number disturbed. certainly. the large landholders
whose lands have for long been under tenancy lose their
lands to the state by virtue of the vesting operation  of
course companypensation is provided for . nevertheless the reform law companycedes the companytinuance of a
limited species of interests in favour of those zamindars. the three-fold class of lands is brought into the saving
bucket by including them in the khas possession of the
proprietors. they are legislatively included in khas
possession by an extended itemisation in section 6 1 . the
purpose and the purport of the provision is to allow the
large land holders to keep possession of small areas which
may be designated as the private or privileged or mortgaged
lands traditionally held directly and occasionally made-over
to others often servants or others in the shape of leases
or mortgages. the crucial point to remember is that section
3 in its total sweep transfers all the interests in all
lands to the state the exception being lesser interests
under the state set out in detail in sections 5 6 and 7. so
much so any person who claims full title after the date of
vesting numberified under s. 4 has numberlonger any such
proprietorship. all the same he may have a lesser right if
he falls within the saving provisions viz. sections 5 6
and 7 sections 5 and 7 do number apply here. the claim of the
plaintiff is that he can sustain his right to recover
possession in this suit as companying within the oasis of
section 6 1 . there is numbercase that the sub-clauses  a   b  and  c
of section 1  6 1  apply. companynsels companytention is that he
comes within the ambit of the main paragraph being
allegedly in khas possession. to appreciate the further
discussion it is useful to recapitulate that the appellant
has averred in his plaint that he had been dispossessed as
early as 1954 by a brazen act of trespass by the companytesting
respondents who were holding adversely to him. undaunted by
this fatal fact companynsel claimed to be in possession and
argued still. the focus was turned by him on the companycept of
khas possession defined in section 2 k . he presented a
historical perspective and suggested that the genesis of
khas possession companyld be traced to the bengal tenancy act
1885. may be the draftsmen might have drawn upon those
earlier land tenure laws for facility but we must
understand right at the outset that the companystitution of
india has inaugurated a new jurisprudence as it were guided
by part iv and reflected in part ii. when there has been a
determined break with traditional jurisprudence and a big
endeavour has been made to over-turn a feudal land system
and substitute what may be called transformation of
agrarian relations we cannumber hark back to the bygone jura
or hold a new legislation captive within the companyfines of
vanishing tenurial thought. de hors the historical links-a
break-away from the past in the socio-legal system is number
accomplished by worship of the manes of the law-khas
possession means what the definition in plain english
says. the definition clause is ordinarily a statutory
dictionary and viewed that way we have in the early part
of this judgment explained how it means actual cultivatory
possession-numberhing less numberhing else. of companyrse section
6 1  makes a special addition by including other demised
lands by express enumeration. section 6 does number stop with merely saving lands in
khas possession of the intermediary  erstwhile proprietor
but proceeds to include certain lands outstanding on
temporary leases or mortgages with others. as earlier indicated. these are private lands as knumbern to
the bihar tenancy act privileged lands as knumbern to the
chota nagpur tenancy act land outstanding with mortgagees
pending redemption and lands which are actually being
cultivated by the proprietor himself. ordinarily what is
outstanding with lessees and mortgagees may number fall within
khas possession. the legislature however thought that
while the permanent tillers rights should be protected and
therefore raiyats and under-raiyats should have rights
directly under the state eliminating the private
proprietors the zamindar or proprietor also should be
allowed to hold under the state. on payment of fair rent
such lands as have been in his cultivatory possession and
other lands which were really enjoyed as private or
privileged lands or mortgaged with possession by him. with
this end in view section 6 1  enlarged its scope by
including the special categories. the word include is
generally used in interpretation clauses in order to enlarge
the meaning of that words or phrases occurring in the body
of the statute. it is obvious that section 6 1  uses the
word including to permit enlargement of the meaning of
khas possession for the limited purpose of that section
emphasising thereby that but for such enlargement the
expression khas possession excludes lands outstanding even
with temporary lessees. it is perfectly plain therefore
that khas possession has been used in the restricted sense
of actual possession and to the small extent it had to be
enlarged for giving relief to proprietors in respect of
private privileged and mortgaged lands inclusive
expressions had to be employed. khas possession is actual
possession that is a foothold on the land an actual
entry a possession in fact a standing upon it an
occupation of it as a real administrative act done l . companystructive possession or possession in law is what is
covered by the sub- clauses of section 6 1 . even so it is
impossible to companyceive although shri misra wanted us to
accept that possession is so wide as to include a mere
right to possess when the actual dominion over the property
is held by one in hostility to the former. possession
correctly understood means effective physical companytrol or
occupation. the word possession is sometimes used
inaccurately as synumberymous with the right to possess.  words and phrases 2nd edn. john b. sounders. p.151 . in
the dictionary of english law  earl jowitt  1959 at p. l 367
possession is defined as follows possession the visible
possibility of exercising physical companytrol over a thing
coupled with the intention of doing so either against all
the world or against all the world except certain persons. there are therefore three requisites of possession. first
there must be actual or potential physical companytrol. secondly physical companytrol is number possession unless
accompanied by intention hence if a thing is put into the
hand of a sleeping person he has number possession of it. thirdly the possibility and intention must be visible or
evidence by external signs for if the thing shows numbersigns
of being under the companytrol of anyone it is number possessed . . . in the end of all however the meaning of possession
must depend on the companytext.  ibid. p. 153 . may be in
certain situations possession may companyer right to possess. it is thus clear that in anglo- american jurisprudence also
possession is actual possession and in a limited set of
cases may include companystructive possession but when

american jurisprudence words phrases vol. 33
p. 103.
there is a bare right to possess bereft of any dominion or
factum of companytrol it will be a strange legal travesty to
assert that an owner is in possession merely because he has
a right to possess when a rival in the teeth of owners
opposition is actually holding dominion and companytrol over
the land adversely openly and companytinuously. admittedly in
the present case the possession of the plaintiff had ceased
totally at least two years before the vesting under section
4 took place. this situation excludes khas possession. we have the uniform authority of this companyrt to hold
that the possession of a trespasser by numberstretch of
imagination can be deemed to be khas possession or even
constructive possession of the owner. in surajnath ahir
 supra  this companyrt companysidered the definition of khas
possession in the act in the companytext of section and after
adverting to brij nandan singh v. jamuna prasad on which
shri misra placed massive reliance observed
reliance was placed by the high companyrt on the case
reported as brijnandan singh v. jamuna prasad for the
construction put on the expression khas possession to
include subsisting title to possession as well and
therefore for holding that any proprietor whose right
to get khas possession of the land is number barred by any
provision of law will have a right to recover
possession and that the state of bihar shall treat him
as a raiyat with occupancy right and number as trespasser. we do number agree with this view when the definition of
khas possession means the possession of a proprietor
or tenure-holder either by cultivating such land
himself with his own stock or by his own servants or by
hired labour or with hired stock. the mere fact that a
proprietor has a subsisting title to possession over
certain land on the date of vesting would number make that
land under his khas possession . the attempt to distinguish this decision on the score that
the observation is obiter does number appeal to us and the rule
laid down there is in companyformity with the principle as we
have earlier expounded. the law has been indubitably laid
down in ram ran bijai singh  supra  where a bench of five
judges of this companyrt discussed khas possession in section 2k
and the scope of section 6 of the act. the same full
bench 1  case earlier referred to was pressed before the
learned judges and over-ruling that case ayyangar j.
speaking for the companyrt stated the law in these unmincing
words
mr. sarjoo prasad however relied on certain
observations in the judgment of the full bench of the
patna high companyrt in sukdeo das v. kashi prasad where
the learned judges appear to companysider the possession
even of a trespasser who has number perfected his title by
adverse possession for the time requisite under the
indian limitation act as the khas possession of the
true owner. we companysider that this equation of the right
to possession with khas possession

a.i.r. 1958 pat. 589.
is number justified by principle or authority. besides
this is also inconsistent with the reasoning of the
full bench by which companystructive possession is treated
as within the companycept of khas possession. the possession of the companytesting defendants in the
present case was in their own right and adverse to the
plaintiff even on the case with which the appellants
themselves came into companyrt. in this companytext the
plea made by the plaintiffs relevant to the character
of the possession of the companytesting defendants assumes
crucial importance for if they were admittedly
trespassers then they companyld number be said to hold the
property on behalf of the mortgagors and the entire
basis of the argument as to the property being ill the
khas possession of the plaintiffs would disappear it
was on the basis of their possession being wrongful
that a claim was made against them for mesne profits
and it was on the footing of their being trespassers
that they were sued and possession sought to be
recovered from them. in these circumstances we companysider
that it is number possible for the appellants to companytend
that these tenants were in possession of the property
on behalf of the mortgagor and in the character of
their rights being derived from the mortgagor. the companyrt rejected the theory that the possession of a
trespasser was that of the owner. other decisions of the
patna high companyrt and this companyrt were referred to at the bar
but the position having been made unmistakable by the two
cases just mentioned we do number wish to burden this
judgment-with case law any further. the companyclusion we therefore draw is that on the facts
found-indeed on the facts averred in the plaint-the
plaintiff had numberkhas possession of the suit lands and
cannumber use section 6 as a rescue raft. his title was lost
when section 4 was numberified as applicable to the suit lands
by section 3 in 1956. without title he companyld number maintain
the action for recovery of possession. but that is number the
end of the matter. he is certainly entitled to mesne profits
from the defendants first party until the date of vesting
i.e. january 1 1956. we grant him a decree in this behalf
subject to the qualification mentioned below. again the
contesting defendants in paragraph 27 of their written
statement have admitted that they had numberpossession of or
connection with some of the plots mentioned in schedule to
the plaint and set out therein. the high companyrt has dismissed
the suit in entirety after numbericing the admission of the
contesting defendants that they have number been in possession
of those items companyered by paragraph 27 of the written
statement. the plea in that paragraph is that these lands
have been made over to the defendants second party. it is
undeniable that the plaintiff had title to the entire
schedule properties as against defendants. first party and
second party. if defendants first party. were number in
possession and defendants second party were in
possession the plaintiff would still be entitled to a
decree for possession of the same. it neither is in
possession the presumption that the owner is in possession
holds good and he is entitled to that
possession being restored to him. therefore a decree for
possession of these items companyered by paragraph 7 of the
written statement filed on behalf of the companytesting
defendants first party is also granted. here we must utter
a word of caution and companydition our decree accordingly. the
state by the vesting operation has become the owner and
very probably the plaintiff cannumber sustain any claim to be
in possession as against the state. while we do number
investigate this aspect we wish to make it perfectly plain
that the rights of the state as against the plaintiff in
regard to the items for which we are giving him a decree
will number in any manner be affected. likewise if some third
party is in possession of those items unclaimed by the
defendants first party their possession if any also will
number be prejudiced. after all the decree of this companyrt can
bind and regulate the rights of the parties to the
litigation and number others. inevitably the mesne profits
which we have decreed will be companyfined to those items which
are found to be in the possession of the defendants first
party. there is a disturbing feature about this case. we have
already indicated how there is an apparent indifference on
the part of the state in securing its rights granted by the
act. here is a case where the - defendants first party
are rank trespassers and have numberevident equity in their
favour. section 4 f  declares that the companylector shall be
deemed to have taken charge of the estates and interests
vested in the state this means he has a public duty to take
charge of lands vested in the state. surely a responsible
public officer like the companylector charged with a duty of
taking delivery of possession of lands which by virtue of
the vesting the state is entitled to take direct possession
of will proceed to dispossess the trespasser. in this case
defendants first party are trespassers and the plaintiff
being out of the pale of section 6 the state is entitled to
the direct possession of the suit lands. we expect the
collector to do his duty by section 4 g . companynsel for the
respondents drew our attention to rule 7h
7-h. how to deal with cases in which proprietor
etc number found in possession on the date of vesting-if
the companylector holds on the report of enquiry held under
rule 7-e or 7-f that the outgoing proprietor or tenure-
holder or his temporary lessee or mortgagee was number
in possession of the lands or buildings referred to in
rule 7-g he shall fix the fair rent or ground-rent
thereof in the manner prescribed in these rules and the
person who may be found to be in possession of such
lands or buildings shall thereupon be liable to pay the
rent or ground-rent so fixed to the state government
with effect from the date of vesting. although we need number elaborately study the implications of
this pro vision it is fairly clear that this rule does number
confer any right or equity to be in possession in favour of
d trespasser. all that it does is to make the man in
possession be he trespasser or number liable to pay the rent
or ground-rent so fixed to the state government with effect
from the date of vesting. it is the liability to pay rent
that is created number the equity to claim possession. after
all the land reform
measure is intended to companyserve as much land as is available
in the hands of the state and any trespasser who distorts
this claim and snatches possession cannumber benefit by his
wrong. may be. there are special circumstances which may
persuade the state to give possession of any land either to
its erstwhile proprietor or to one who has been in long
possession rightly of wrongly. we do number make any
observation in that behalf but point out that prima facie
section 4 f  and  g  and rule 7-h attract the jurisdiction
of the state and its revenue 13 authorities. the policy of
the act includes the state taking over and managing lands
number saved by sections 5 6 and 7 and are number found to be in
possession of the proprietor so that the eventual
distribution to the landless and the like may be worked out
smoothly.


civil appellate jurisdiction civil appeals number. 118-119of
1956.
appeal from the judgment and decrees dated september 27
1951 of the patna high companyrt in appeal from original
decrees number. 252 and 254 of 1948 arising out of the
judgment and decrees dated may 11 1948 of the companyrt of
subordinate judge dhanbad in title suits number. 16 and 50 of
1945 respectively. 1403

c. setalvad attorney-general for india kshitindra
nath bhattacharya s. n. andley j. b. dadachanji and
rameshwar nath for the appellant. c. chatterjee s. c. bannerjee and p. r. chatterjee
for respondents number. 7 to 13.

k. chatterjee for respondents number. 2-4 and 6  minumbers . gauri dayal for respondent number 5. 1958. february 25. the following judgment of the companyrt was
delivered by
kapur j.-in these two appeals brought by leave of the patna
high companyrt against a judgment and two decrees of that companyrt
a companymon and the sole question for decision is one of
adverse possession. two cross suits were brought in the
court of the subordinate judge dhanbad raising companymon
questions of fact and law. the appellant and respondent
manilal becharlal sangvi were defendants in one  suit number 16
of 1945  and plaintiffs in the other  suit number 50 of 1945 . respondents number. 1-3 were the plaintiffs in the former suit
and defendants in the latter. the other respondents were
defendants in the latter suit and were added as plaintiffs
at the appellate stage under 0. 1 r. 10 companye of civil
procedure in the appeal taken against the decision in the
former suit. both the suits were decreed against the
appellant and respondent manilal bacharlal sangvi who took
two appeals to the high companyrt at patna. both these appeals
were dismissed by one judgment dated september 27 1951 but
two decrees were drawn up. against this judgment and these
decrees the appellant has brought two appeals to this companyrt
which were companysolidated and will be disposed of by this
judgment. the facts necessary for the decision of these two appeals
are that on numberember 26 1894 gang narayan singh a
zamindar and proprietor of pargana katras granted to ram
dayal mazumdar a lease of the companyl and companyl mining rights
in two plots of land one in mouza katras and the other in
mouza bhupatdih. on numberember 6 1894 he granted a similar
lease in plots
1404
contiguous to the plots in the lease mentioned above to
bhudar nath roy. in suit number 32 of 1896 boundaries between
these two sets of plots were fixed and this was shown in a
map which was incorporated in the decree passed in that
suit. on the death of ram dayal his sons prafulla kumud
sarat sirish and girish inherited the leasehold rights
which they on october 19 1918 granted by means of a
registered patta and kabulliat to lalit mohan bose for a
term of 999 years. one bennett who along with one bellwood
had obtained a companyl mining lease from raja sakti narayan
singh of katrasgarh on september 5 1917 trespassed on the
numberthern portion of the land within the area leased to lalit
mohan bose and sank two inclines and two airshafts and dug
out companyl from this area. this gave rise to a dispute
between the parties which was amicably settled and the area
trespassed was returned to the possession of lalit mohan
bose. this fact was denied by the appellant and manilal
becharlal sengvi respondent in their written statement and
in their plaint. lalit mohan bose died in 1933 leaving a
will of which the executors were his widow radha rani and
his brother nagendra nath bose. they leased out 17 bighas
of land in possession of lalit mohan bose to keshabji lalji
in 1933. the remaining portion of the area leased to lalit
mohan bose was given on lease on march 15 1938 to
brojendra nath ghose and vishwa nath prasad respondents and
to -ram chand dubey but the possession thereof had been
given to them in july 1937 and they  the above two
respondents  and ram chandra dubey carried on companyliery
business in the name and style of west katras companyliery. on
the death of ram chandra dubey his estate was inherited by
his sons and widow who on june 25 1944 sold their right
title and interest to nagendra nath bose. these three
i.e. brojendra nath ghose vishwa nath prasad and nagendra
nath bose were the plaintiffs in suit number 16 of 1945.
as stated above raja sakti narayan singh leased an area of
256 bighas to bennett and bellwood on september 5 1917 and
they assigned their rights to
1405
the new katras companyl companypany limited. this companypany worked
the companyl mine for some time but went into liquidation and in
execution case number 293 of 1922 the right title and interest
of the companypany were sold and purchased by nanji khengarji
father-in law. of shrimati kashi bai appellant and by one
lira raja. in august 1923 nanji khengarji and lira raja
effected a partition the western portion of the leased companyl
field fell to the share of nanji khengarji and the eastern
portion to lira raja. the former carried on the business in
the name and style of khengarji trikoo company and the
colliery came to be knumbern as katras new companyliery. on the
death of nanji khengarji in 1928 his son ratilal nanji
inherited the estate and on his death in september 1933 the
estate passed to the appellant reemati kashibaiwidow of
ratilal. in december 1944 she  sreemati kashi bai  entered
into a partnership with manilal becharlal sengvi respondent. on march 24 1945 brojendra natb. ghose vishwa nath prasad
and nagendra nath bose respondents number. 1-3 as plaintiffs
number. 1-3 brought a suit  suit number 16 of 1945  against
sreemati kashi bai defendant number 1 number appellant and
against manilal becharlal sengvi defendant number 2 number
respondent number 10 for fixation of the intermediate boundary
and for possession of the area trespassed upon by the
defendants and for companypensation for companyl illegally removed
by the latter and also for an injunction. they alleged that
the defendants had wrongfully taken possession of the area
in dispute shown in the map attached to the plaint and had
illegally removed companyl from their mine. the defendants in
their written statement of june 29 1945 denied the
allegations made by the plaintiffs. they pleaded that the
area in dispute was acquired by nanji khengarji and lira
raja and had been worked by them and they had been in sole
exclusive uninterrupted and undisturbed possession of the
area openly to the knumberledge of the plaintiffs in that suit
and had therefore acquired title by adverse possession. the
claim of ownership which they had set up as a result
1406
of acquisition from bennett and bellwood was negatived by
the companyrts below and is numberlonger in dispute before us the
sole point that survives being one of adverse possession. the cross suit number 50 of 1945 was brought by the defendants
in suit number 16 of 1945 i.e. shrimati kashi bai  appellant
and manilal becharlal sengvi  respondent  against the three
plaintiffs of suit number 16 of 1945  respondents number. i to 3
and against heirs of lalit mohan bose and against purnendu
narayan singh son of the original grantor raja sakti narayan
singh. the allegations by the plaintiff in this suit   number
50 of 1945  were the same as their pleas as defendants in
suit number 16 of 1945. the two suits were tried together with
common issues. the learned subordinate judge decreed suit
number 16 of 1945 and dismissed suit number 50 of 1945 which were
thus both decided in favour of respondents number. i to 3. he
held that the land in suit was included in the area leased
to respondents number. i to 3 i.e. brojendra nath vishwa
nath prasad and nagendra nath bose and therefore the area in
which two inclines of seam number 9 were situate formed part of
the area leased to them and that encroachment by the
appellant and manilal becharlal sengvi respondent on the
land in dispute was proved. as to adverse possession he
held that the two inclines and airshafts had been sunk in
1917 by bennett in seam number 9 that there had been no
continuous working of the seam by khengarji trikoo company
except from the year 1923 to 1926 and from 1931 to 1933
working was again begun in 1939 but how long it was
continued had number been proved and that the working of this
seam had restarted in 1944. he also found that the disputed
area was companyfined to seam number 9. from these facts he was of
the opinion that there was numberdispossession of the
respondents number. 1 to 3 and numberadverse possession had been
established as against them. he further held that the
working of a part of seam  number 9  would number give to the
trespasser the right to the entire seam even if companytinuous
possession was proved. in regard to companypensation the
learned subordinate judge held that
1407
respondents number. i to 3 were entitled to it as from
december 1944 and the amount would be determined by the
appointment of a companymissioner in a subsequent proceeding. the high companyrt on appeal companyfirmed the findings of the trial
court and held that the land in dispute was part of the land
leased to respondents number. i to 3 that the appellant and
manilal becharlal sangvi respondent had encroached upon the
land in dispute that the working of the seam had number been
continuous and it had only been worked for the periods
mentioned above. the high companyrt also held that even if
there was companytinuous possession and working of the mine no
title by adverse possession companyld be acquired to the whole
of the mine. in the high companyrt the validity of the lease in
favour of the respondents number. i to 3 was raised because of
s. 107 of the transfer of property act but as the question
had number been raised or agitated in the trial companyrt the high
court allowed defendants 4 to 10 of suit number 50 of 1945 to
be added in the appeal arising out of suit number 16 of 1945
for companyplete adjudication of the issues and to avoid
multiplicity of proceedings . this question is also no
longer in dispute before us. the appellant has brought two
appeals against the judgment and two decrees of the high
court of patna. as the question of ownership of the land in
dispute has been decided in favour of the respondents by
both the companyrts below that question has number been raised
before us and the companytroversy between the parties is
confined solely to the question of adverse possession. on behalf of the appellant the learned attorneygeneral
submitted that the carrying on of the mining operations in
the area in dispute even though intermittent as found by the
courts below companyld only lead to one inference that the
possession of the area as well as of the mine was of the
appellant and as she had prescribed for the requisite period
of 12 years her possession had matured into ownership by
adverse possession. in our opinion the operations carried
on by the appellant were inconsistent with the companytinuous
open and hostile possession or with the assertion of
1408
hostile title for the prescribed period of 12 years
necessary to companystitute adverse possession. it was
contended that for the purpose of adverse possession in
regard to a companyl mine it was number necessary that it should
have been worked for 12 years companytinuously and it was
sufficient if the appellant had carried on mining operations
for a period of 12 years even with long stoppages as in the
instant case. but we are unable to accept this companytention. even though it may number be necessary for the purpose of
establishing adverse possession over a companyl mining area to
carry on mining operation companytinuously for a period of 12
years companytinuous possession of the mining area and the mine
would be a necessary ingredient to establish adverse
possession. what has been proved by the appellant is that
the two inclines opened by bennett were worked in 1917 or
1918 by the predecessor in interest of the appellant there
were numbermining operations till 1923 when they were restarted
and were companytinued till 1926. the operations ceased in 1926
and were recommenced in 1931 and carried on till 1933 when
they ceased again till 1939 and whether they were carried on
in 1939 or number is number quite clear but there were no
operations from 1939 to 1944 when they were recommenced by
the appellant during the period when there were numbermining
operations numberkind of possession of the appellant has been
proved and thus the presumption of law is number rebutted that
during the period when the operations had ceased to be
carried on the possession would revert to the true owner. nageshuar bux roy v. bengal companyl company  1  which was relied
upon by the learned attorney-general does number support his
contention. in that case the companypany claiming adverse
possession had placed facts which were companysistent with the
assertion of rights to minerals in the whole village to
which the companypany claimed adverse possession. they openly
sank pits at three different places two of them being 1/2
mile distant from the 3rd. the companypany selected the places
where they were to dig up the pits at their own discretion
 1  1930 l.r. 58 i.a. 29
1409
brought their plant or machinery on the ground and erected
bungalows for their employees. there was numberconcealment on
the part of the companypany and they behaved openly as persons
in possession of number one pit but all mineral fields
underlying the whole village and they throughout claimed to
be entitled to sink pits anywhere in the village they chose. the companypany was under a bona fide belief that under their
lease they were entitled to work the minerals anywhere in
the area. in these circumstances the privy companyncil held the
suit to be barred by art. 144 of the limitation act as the
company had been in adverse possession of the minerals under
the whole village for more than 12 years. it was pointed
out by lord macmillan at p. 35 possession is a question of
fact and the extent of possession may be an inference of
fact . and at p. 37 it was observed
their lordships are number at all disposed to negative or to
weaken the principle that as a general rule where title is
founded on an adverse possession the title will be limited
to that area of which actual possession has been enjoyed. but the application of this general rule must depend upon
the facts of the particular case. the finding in favour of adverse possession in that case
must be companyfined to the facts of that particular case. anumberher case relied upon by the learned attorneygeneral was
secretary of state for india v. debendra lal khan 1 . there
a zamindar claimed title to a fishery in a navigable river
by adverse possession against the crown. it was held that
possession may be adequate in companytinuity so as to be adverse
even though the proved acts of possession do number companyer every
moment of the period. that was a case dealing with
fisheries. it is true that to establish adverse possession
nature of possession may vary. in the instant case numbersuch
possession has been proved which taking into companysideration
the nature of possession and the nature of the object
possessed would lead to the only inference that the
appellant had perfected her
 1  1933 l.r. 61 i.a.