PETITIONER: <ORG> Vs. RESPONDENT: STATE OF GUJARAT & ORS. DATE OF JUDGMENT: 18/03/1998 BENCH: <NAME>, D.P. WADHWA ACT: HEADNOTE: JUDGMENT:

WITH CIVIL APPEAL NOS 1673-76 OF 1998 (Arising out of SLP (C) Nos. 11900, 11957, 12986 and 14637/97 J U D G M E N T D.P. Wadhwa, J.

Leave granted.

All these five appeals arise out of a common judgmen dated February 27, 1997 of a Division Bench of <ORG> in three Special Civil Applications (SCA) Nos. 1568/87, 5149/89 and 5171/91 whereby <ORG> set aside the acquisition of land for <ORG> <ORG> (`L&T Ltd,' for short) under the provisions of the Land Acquisition Act , 1894 (for short, `the Act') comprised in SCAs 1568/87 and 5149/89 and dismissed the challenge of <ORG>. in SCA 5171/91 for withdrawal from acquisition by <ORG> under Section 48 of the Act. In all these matters, different notifications under Section 4 of the Act were issued as it appeared to <ORG> that lands specified in these notifications which were under challenge in these matters were likely to be needed for the purpose of a housing colony of <ORG> "which was engaged in <ORG> which was for a public purpose". All the lands are situated in village Mandalla, Taluk Choryasi, District Surat. In SCA 1568/1987 acquisition was set aside on the ground that there was no compliance with the provisions of Rules 3 and 4 of the Land Acquisition (Companies) Rules, 1963 (`Rules' for short). In SCA 5149/89 acquisition was set aside not only on the ground of non-compliance with the Rules 3 and 4 of the Rules but also that petitioners therein were not served with notice under Section 9 of the Act before passing of the award. In SCA 5171 <ORG> held that the decision of <ORG> for withdrawal from acquisition under Section 48 of the Act was neither illegal nor ultra vires though the same would be enforceable only on the issuing of notification under Section 48 of the Act. In this case, <ORG> also held that actual physical possession of the land had not been delivered to the acquiring body <ORG> Against the order passed in SCA 1568/87 both <ORG> and <ORG> have filed special leave petition Nos. 11957/97 and 12986/97 respectively. Against the order in SCA 5149/89 again both <ORG> and <ORG> have filed special leave petitions respectively bearing Nos. 11900/97 and 14637/97. Against the order in SCA 5171/91 it is only <ORG> who is aggrieved and has filed special leave petitions No. 11778/97. In this State Government is supporting its action for withdrawal from acquisition.

Under the Act , land can be acquired for a company as well. "Company" means a company as defined in Section 3 of the Companies Act, 1956. Petitioner is such a company. Under Section 4 of the Act whenever it appears to the appropriate <ORG> that land in any locality is needed or is likely to be needed for any public purpose or for a company, a notification to that effect shall be published and a public notice also to be given in the said locality. under Section 5-A any person interested in any land notified under Section 4 can object to the acquisition of the land or of any land in the locality, as the case may be. Procedure is prescribed as to how objections are to be heard by the Collector and his naking the report to the <ORG>. Under Section 6 when the appropriate <ORG> is satisfied after considering the report, if any, made under Section 5-A that any land is needed for a public purpose, or for a company, a declaration shall be made to the effect. Part VII of the ACT deals with acquisition of land for companies. Under Section 39 falling in Part VII, the provisions of Section 6 to 16 and Sections 18 to 37 shall not be put in force in order to acquire land for any Company unless with the previous consent of the appropriate <ORG> and not unless the Company shall have executed the agreement as prescribed. Under Section 40 an enquiry is to be made before the appropriate <ORG> consents to acquisition of land for the Company. This Section, in relevant part, is as under:

"40 Previous enquiry - (1) Such consent shall not be given unless the appropriate Government be satisfied, either on the report of the Collector under Section 5-A , sub-section (2), or by an enquiry held as hereinafter provided -

(a) that the purpose of the acquisition to obtain land for the erection of dwelling houses for workmen employed by the Company or for the provision of amenities directly connected therewith, or (aa)........

(b).........

Such enquiry shall be held by such officer and at such time and place as the appropriate Government shall appoint. Under Section 41 if the appropriate Government is satisfied after considering the report of the Collector under Section 5-A and on the report under Section 40 that the proposed acquisition is for the purpose mentioned in Section 40 it shall require the <ORG> to enter into an agreement providing for the following matters, namely:-

"(1) the payment to the appropriate Government of the cost of the acquisition;

(2) the transfer, on such payment, of the land to the <ORG>; (3) the terms on which the land shall be held by the <ORG>; (4) where the acquisition for the purpose of erecting dwelling houses or the provision of amenities connected therewith, the time within which, the conditions on which and the manner in which the dwelling houses or amenities shall be erected or provided;"

Under Section 42 every such agreement shall be published in <ORG> and shall thereupon have the same effect as if it had formed part of the Act. Under Section 55 of the Act powers have been conferred on the appropriate <ORG> and on the Central <ORG> to make rules. This Section, in relevant part, is as under:

"55. Power to make rules.- (1) The appropriate Government shall have power to make rules consistent with this Act for the guidance of officers in all matters connected with its enforcement, and may from time to time alter and add to the rules so made;

Provided that the power to make rules for carrying out the purposes of Part VII of this Act shall be exercisable by <ORG> and such rules may be made for the guidance of <ORG>s and the officers of <ORG> and of <ORG>:

Provided further.............

In exercise of the powers so conferred under Section 55 of the Act, <ORG> has framed Rules called "the Land Acquisition (Companies) Rules, 1963.

Arguments have proceeded on the basis that Rules 3 and 4 of the aforesaid Rules are mandatory. <ORG> has held that Rules 3 and 4 have been violated. We may set out Rules 3 and 4 which are as under:

"3. Land Acquisition Committee. - (1) For the purpose of advising the appropriate Government in relation to acquisition of land under Part VII of the Act the appropriate Government shall, by notification in the Official Gazette, constitute a Committee to the called <ORG>. (2) The Committee shall consist of

(i) the Secretaries to the Government of the Departments of Revenue, Agriculture and Industries or such other officers of each of the said Departments as the appropriate government may appoint;

(ii) such other members as the appropriate <ORG> may appoint, for such term as that <ORG> may, by order, specify. (3) The appropriate <ORG> shell appoint one of the members of the <ORG> to be its Chairman. (4) The <ORG> shall regulate its own procedure.

(5) It shall be duty of the <ORG> to advise the appropriate Government on all matters relating to or arising out of acquisition of land under part VII of the Act, on which it is consulted and to tender its advice within one month from the date on which it is consulted: Provided that the appropriate Government may on a request being made in this behalf by the committee and for sufficient reasons extend the said period to a further period not exceeding two months.

(4) Appropriate government to be satisfied with regard to certain matters before initiating acquisition proceedings,-(1) Whenever a company makes an application to the appropriate <ORG> for acquisition of any land, that <ORG> for acquisition of any land, that <ORG> shall direct the Collector to submit a report to it on the following matters, namely-

(i) that the company has made its best endeavour to find out lands in the locality suitable for the purpose of acquisition.;

(ii) that the company has made all reasonable efforts to get such lands by negotiations with the persons interested therein on payment of reasonable price and such efforts have failed;

(iii) that the land proposed to be acquired is suitable for the purpose;

(iv) that the area of land proposed to be acquired is not excessive;

(v) that the company is in a position to utilise the land expeditiously; and

(vi) where the land proposed to be acquired is good agricultural land, that no alternative suitable site can be found so as to avoid acquisition of that land. (2) The Collector shall, after giving the company a reasonable opportunity to make any representation in this behalf, hold an inquiry into the matters referred to in sub-rule (1) and while holding such enquiry he shall

(i) in any case where the land proposed to be acquired is agricultural land consult the Senior Agricultural Officer of the district whether or not such land is good agricultural land;

(ii) determine, having regard to the provisions of Section 23 and 24 of the Act, the approximate amount of compensation likely to be payable in respect of the land, which, in the opinion of the collector, should be acquired for the company; and

(iii) ascertain whether the company offered a reasonable price (not being less than the compensation so determined), to the persons interested in the land proposed to be acquired.

Explanation.- For the purpose of this rule "good agricultural land" means any land which, considering the level of agricultural production and the crop pattern of the area in which it is situated, is f average or above average productivity and includes a garden or grove land. (3) As soon as may be after holding the enquiry under sub-rule (2) the collector shall submit the report to the appropriate government and a copy of the same shall be forwarded by the <ORG> to the committee. (4) No declaration shall be made by the appropriate <ORG> under Section 6 of the Act unless -

(i) the appropriate Government has consulted the committee and has considered the report submitted under this rule and the report, it any, submitted under Section 5A of the Act; and

(ii) the agreement under Section 41 of the Act has been executed by the company." We may also reproduced Section 9 which reads as under: "9. Notice to persons interested.

(1) the Collector shall then cause public notice to be given at convenient places on or near the land to be taken, stating that the government intends to take possession of the land, and that claims to compensation for all interests in such land may be made to him.

(2) Such notice shall state the particulars of the land so needed, and shall require all persons interested in the land to appear personally or by agent before the collector at a time and place therein mentioned (such time not being earlier than fifteen days after the date of publication of the notice), and to state the nature of the respective interests in the land and the amount and particulars of their claims to compensation for such interests, and their objections (if any) to the measurements made under Section

8. The Collector may if any case requires such statement to be made in writing and signed by the party or his agent.

(3) The Collector shall also serve notice to the same effect on the occupier (if any) of such land and on all such persons known or believed to be interested therein, or to be entitled to act for persons so interested, as reside or have agents authorized to receive service on their behalf, within the revenue district in which the land is situate.

(4) In case any person so interested reside elsewhere, and has no such agent, the notice shall be sent to him by post in a letter addressed to his last known residence, address or place of business and registered under Sections 28 and 29 of the Indian Post Office Act, 1898."

In first special leave petition No 12986/97, land situated in Survey No 40, Village Mandalla, Taluk Choryasi in district Surat was subject matter of acquisition. M/s <ORG>, respondent No. 1 challenged the action of <ORG> in acquiring the land by issuing notification and declaration under Sections 4 and 6 of the Act on the ground that it acted "without any authority of law and in purported exercise of the powers conferred upon it by committing fraud on the statute and by the colourable exercise of the said power and also without application of mind". First respondent, therefore, sought quashing of the notification under Section 4 and declaration under Section 6 of the Act. In whole body of the petition before <ORG> it was never stated that provisions of rule 3 had been contravened. It was submitted that provisions of Sections 4 to 37 of the Act could not be put into operation to acquire land for a company unless with the previous consent of <ORG> nor before the company had executed an agreement as mentioned in Section 41 of the Act. It was then submitted that in this case neither the consent of <ORG> was obtained nor the company seemed to have executed agreement as provided in Section 37 read with section 41 of the Act before issuance of the notification under Section 4 and declaration under Section 6 of the Act. Rule 4 was quoted and with reference to it was contended that statutory requirements contained in the said rule had not been fulfilled before issuance of the impugned notification and declaration and also that <ORG> made no efforts to purchase land by negotiation nor the competent authority had help any enquiry as contemplated by Rule 4. It was also alleged that under Section 42 the agreement entered into, if any, between <ORG> and <ORG> was required to be published in the official gazette and that no such agreement to the knowledge of the petitioner was published in any gazette. In the counter affidavits filed in <ORG> both <ORG> and <ORG> denied the allegations so made by the petitioner, the first respondent herein.

In the absence of any allegation that Rule 3 had not been complied and there being no particulars in respect of non-compliance of Rule 4 also, it is difficult to see as to how <ORG> could have reached the finding that statutory requirements contained in these Rules were not fulfilled before issuance of notification under Section 4 and declaration under Section 6 of the Act. <ORG> did not give any reason as to how it reached the conclusion that Rules 3 and 4 had not been complied in the face of the record of the case. Rather, it returned a finding which is unsustainable that it was "not possible on the basis of the material on record to hold that there was compliance with the rules 3 and 4". In the affidavit filed by Mr. <NAME>, Under Secretary, <ORG>, <ORG> it was stated that as per the requirement of Rule 3 a Committee had been constituted by <ORG> which consisted of (1) Secretary, <ORG> (Land Acquisition), (2) Joint Commissioner of Industries, (3) Deputy Secretary, <ORG> (4) past M.L.A., (5) Member and (6) President of Zila <ORG>. In this affidavit it was also stated that the Assistant Collector, Surat prepared a detailed report which he submitted to the Collector and placed before the aforesaid Committee. Deputy Secretary, who was Ex-Officio Member Secretary of the Committee addressed a letter to all the members in this connection and along with that letter he circulated a note in connection with the acquisition of the land in question. President of the District <ORG> and a Member of the Committee also submitted a separate report to the Deputy Secretary, <ORG>. The Committee thereafter met and discussed the matter and recommended acquisition of land for <ORG> to the Government. In this view of the matter it is difficult to understand as to how <ORG> said that there was no compliance with Rule 3 by <ORG> when as a matter of fact, as noted above, there was no mention of non-compliance with Rule 3 in whole body of the writ petition. <ORG>, in our opinion, failed to take note of the affidavit of Mr. <NAME>, Senior Manager, <ORG> and that of Mr. <NAME>, Manager of the <ORG> giving details and placing on record documents to show compliance with the requirements of Rule 4. We do not think it is necessary for us to set out in any detail as to how requirements of Rule 4 have been complied when in presence of the relevant record it was difficult for the respondent to contend otherwise. It was conceded that there was no specific averment relating to rule 3. Even otherwise, we find that stipulations contained in Rule 3 were fully observed. As regards non-compliance of Rule 4 it was submitted that there was no independent report of the collector. That is also not correct. It is not necessary for the Collector personally to examine all the details himself. He can certainly call for the report from the Assistant Collector as the circumstances of a case may demand and act on the same. As a matter of fact only two contentions had been raised by the petitioners before <ORG> and that were that the land belonging to a cooperative housing society which itself was a public purpose could not be subject to acquisition and that Rule 4 had not been complied. There were, however, no particulars stated in the petition as to how it could be so said. It is not enough to allege that a particular rule or any provision has not been complied. It is a requirement of good pleading to give details, i.e., particulars as to why it is alleged that there is non-compliance with a statutory requirement. Ordinarily, no notice can be taken on such an allegation which is devoid any particular. No issue can be raised on a plea foundation of which is lacking. Even where Rule Nisi is issued, it is not always for the department to justify its action when the <ORG> finds that a plea has been advanced without any substance, though ordinarily department may have to place its full cards before the <ORG>. In the present case, however, we find that the <ORG> has more than justified its stand that there has been compliance not only with rule 4 but with Rule 3 as well, though there was no challenge to rule 3 and the averments regarding non- compliance with Rule 4 were sketchy and without any particulars whatsoever, <ORG> was, therefore, not right in quashing the acquisition proceedings in SCA 1568/87.

In Special leave petition No. 11900/97 (arising out of SCA 5149/89), it was submitted by Mr. <NAME>, learned counsel for the appellant <ORG> that the writ petition should have been dismissed by <ORG> on the ground of laches. In this case notification under Section 4 was issued on January 23, 1986, declaration under Section 6 on February 10, 1987, notices under Section 9 issued on January 27, 1989 and possession of the land taken over on July 5, 1989 and the writ petition was filed on July 19, 1989. Mr. <NAME> said in view of the law laid down by this court notification under Section 4 has to be challenged within a reasonable time and for any petitioner to contend that it was challenged immediately after possession of the land was taken over was not a relevant circumstance to be taken into consideration. He criticised the judgment of <ORG> holding that no notices under Section 9 of the Act had been served upon the petitioners. He referred to averments made in the writ petition itself wherein petitioners themselves admitted that two separate notices under Section 9 were served upon them as different portions of Survey No. 41/2 which were on the two sides of the canal were acquired. These petitioners further stated that as soon as the notices were served on them they made an application to the Deputy Collector and special Land Acquisition Officer concerned stating that the land was being acquired contrary to law and that the decision of the Government was illegal. It was also stated in the writ petition that various other points were also made in the representation to the Deputy Collector and Special Land Acquisition Officer. In view of specific admission by the petitioners themselves it is difficult to appreciate how <ORG> could say that no notices under Section 9 of the Act has been issued to the petitioners. Mr. <NAME> further pointed out that there was no occasion for <ORG> also to hold that there was non- compliance of Rules 3 and 4 when it was not the case of the petitioners anywhere.

Nevertheless <ORG> and <ORG> filed affidavits showing absolute compliance with Rules 3 and 4. The fact that there was certainly no allegation of non- compliance with Rules 3 and 4 in the writ petition has been admitted by learned counsel for the respondents 1 to 4.

<ORG> held that actual physical possession of the land subject matter of the acquisition proceeding was not handed over to the appellant while it was the contention of the appellant as well as the State Government that possession of the land was handed over to <ORG> on July 5, 1989. At the time the possession was taken over a <NAME> was prepared duly witnessed by two farmers of the Village Magdalla and singed by the Circle Officer evidencing handing over of possession and also by <NAME> an officer of the <ORG> for taking over possession. The possession receipt of the same date duly signed by the Circle Officer and the officer of the <ORG> was given. <ORG> thus took possession of the land in presence of the panchas. <NAME> recites that both the witnesses (<NAME>) had been intimated in advance by <NAME>, <NAME> and that possession of the concerned land that day taken over in their presence by the Circle Officer and that the land was an open spot and there was no construction or crops grown therein. Possession of the land was taken over along with the trees standing thereon. As noted above, possession was thereafter delivered to the representative of the <ORG> at that time itself. In <ORG> it was contended that no actual physical possession of the land had been taken. The petitioners filed affidavits of the <NAME> who had signed the <NAME>. In these affidavits they stated that they were called to the office of the <ORG> and that their signatures were obtained on blank papers and that they had not gone to the sita and that neither the landlord was present not the actual possession was delivered to the acquiring body. Ready with these affidavits <ORG> noticed from the recitation in the <NAME> that it was nowhere mentioned that the panchas had gone to the site from the office of the panchayat. It was not disputed that in the revenue records it was <ORG> who was shown in possession of the land. Affidavits of the <NAME> filed in <ORG> which contained statements contrary to what was recorded in the <NAME> and against the revenue entries are quite meaningless and in our opinion <ORG> unnecessarily put undue reliance on the same. <ORG> could not convert itself into a revenue court and hold that in spite of the <NAME> and the revenue records actual physical possession of the acquired land had not been handed over to the acquiring body. <ORG>, in our opinion, has not correctly analysed the two judgments of this Court in <CITATION>  4 SCC 212 and <CITATION> .  1 SCC 700 to come to the conclusion that actual physical possession of the land was not taken over by the State.

<CITATION> , [(1975) Supp. SCR 250 = 1 SCC 700], a three Judge Bench of this <ORG> was considering the question of taking possession of the acquired land under the Act. <NAME>, <NAME> (as he then was) delivered judgment for himself and <NAME> <NAME> He said he agreed with the conclusion reached by <NAME>, <NAME> (who was the third Judge) as also with the reasoning on which the conclusion was based. He, however, said that a separate judgment was being written as he felt that it was not necessary to consider the question of delivery of "symbolical" and "actual" possession as provided in Rules 35, 26, 95 and 96 of order XXI of the Code of Civil Procedure as that was not necessary for the disposal of the appeal before the <ORG>. <NAME>, <NAME> said as under:

"There can be no question of taking `symbolical' possession in the sense understood by judicial decisions under the code of civil Procedure. Nor would possession merely on paper be enough. What the Act contemplates as a necessary condition of vesting of the land in the <ORG> is the taking of actual possession of the land. How such possession may be taken would depend on the nature of the land. Such possession would have to be taken as the nature of the land admits of. There can be no hard and fast rule laying down what act would be sufficient to constitute taking of possession of land. ?We should not, therefore, be taken as laying down an absolute and inviolable rule tat merely going on the spot and making a declaration by beat of drum or otherwise would be sufficient to constitute taking of possession of land in every case. But here, in out opinion, since the land was lying fallow and there was no crop on it at the material time, the act of he Tehsildar in going on the spot and inspecting the land for the purpose of determining what part was waste and arable and should, therefore, be taken possession of and determining its extent, was sufficient to constitute taking of possession. It appears that the appellant was not present when this was done by the Tehsildar, but the presence of the owner or the occupant of the land is not necessary to effectuate the taking of possession. It is also not strictly necessary as a matter of legal requirement that notice should be given to the owner or the occupant of the land that possession would be taken at a particular time, though it may be desirable where possible, to give such notice before possession is taken by the authorities, as that would eliminate the possibility of any fraudulent or collusive transaction of taking of mere paper possession, without the occupant or the owner ever coming to know of it."

In Tamil Nadu Housing board vs. <NAME> (Dead) by LRs.

[(1996) 8 SCC 259] the issue whether the land in question was taken possession of in proceedings under the Act. It is not necessary for us to refer to the facts of that case. We find the following statement of law relevant to the controversy in the present case:

"It is settled law by series of judgments of this Court that one of the accepted modes of taking possession of the acquired land is recording of a memorandum of Panchanama by the <ORG> in the presence of witnesses winged by him/them and that would constitute taking possession of the land as it would be impossible to take physical possession of the acquired land. It is common knowledge that in some cases the owner/interested person may not cooperate in taking possession of the land."

<CITATION> . [], this Court again considered the same very question of taking possession of land and said as under:

"It is seen that the entire gamut of the acquisition proceedings stood completed by 17.4.1976 by which date possession of the land had been taken. No doubt, <NAME> has contended that the appellant still retained their possession. It is now well-settled legal position that it is difficult to take physical possession of the land under compulsory acquisition.

The normal mode of taking possession is drafting the <ORG> in the presence of <NAME> and taking possession and giving delivery to the beneficiaries is accepted mode of taking possession of the land. Subsequent thereto, the retention of possession would tantamount only to illegal or unlawful possession."

It is strange that State Government itself have gone back on the <ORG> prepared on July 5, 1987. It has brought on record an affidavit sworn in August 1996 of Mr. <NAME>, Deputy Secretary, <ORG> of <ORG> wherein it is mentioned that the only requirement of Section 48 of the Act it that the Government can withdraw from acquisition when possession of the land has not been taken. He deposes that <ORG> had duly verified the fact and that it was an admitted fact that the Government had not taken possession of the land bearing Survey Nos. 39 and 41/2. He said the Government got verified the fact regarding possession of land in Survey No. 41/2 and that it had deputed an Under secretary, <ORG> who after verifying the position at the site along with the Deputy Collector, Surat and <NAME>, Surat, had drawn up a <ORG> dated July 4, 1991 regarding actual physical possession of the land and as a matter of fact he noticed that whatever land <ORG> had acquired in Magdalla and possession taken had been fenced while land of Survey No.41/2 has no fancing and that the same was in possession of the original owners. Mr. <NAME> therefore, justified the stand of <ORG> in withdrawing from the acquisition. <ORG> mentioned in the affidavit of Mr. <NAME> admits there is no construction and it is an open land. It is certainly diabolical to contend on the basis of <ORG> prepared on July 4, 1991 to say that possession of the land was not handed over to <ORG> on July 5, 1989. In view of the pendency of the proceeding in <ORG> at that time and in the face of the interim order when <ORG> was seized of the matter it is difficult to appreciate how it was proper for <ORG> to depute its officers to find out as to who were in possession of the land in question and then to justify its action under Section 48 of the Act. There is on record a letter dated April 12, 1990 addressed by the Assistant Collector, <NAME> to the Government advocate giving his comments on the affidavit of the petitioner (Respondent No.1) in SCA 5149/89. He sent his comments as under:

"On 05-07-1989 Circle Officer, <NAME> has because of no occupant remaining present took possession in presence of <NAME> and delivered to representative of <ORG> company. By a Notice No. JMN/Vashi-1346/89 of 30th June, 1989 issued by <NAME>, <NAME> <NAME> informed in the matter of taking over of possession on 5th July, 1989 at noon 1200 hrs. A copy of the said notice is enclosed herewith. Circle officer <NAME> has taken possession making 09out a Panchanama i;n presence of residents of village Magdalla. When possession was taken the land in question was open at site. There was no construction or crop in it. Reference to that is made in Panchanama. Thus the statement made by Petitioner that there was a standing crop in it is false and in copy of 7/12 of 1989-90 in village From No. 7/12 he name of <ORG> Company has been recorded as occupant. Accordingly the statement of the petitioner that possession has not been given is false. On 04- 03-1990 <ORG> has certified that the land in question is under cultivation. But on record of village From 7/12 the name <ORG> Company is going on hence the certificate of 4th March 1990 of <ORG> is false. This land is under Revenue Survey No. and <ORG> that is <ORG> has no authority to give certificate concerned record of Revenue Survey No. Thus the certificate of <ORG> is false. Panchakayas of Circle Officer dated 5th July 1989 is enclosed."

The Assistant Collector also stated in his comments that all the acquisition formalities were completed and hence section 48 of the Act would not apply. Assistant Collector is the person on the spot to verify to the facts when possession was delivered. After the aforesaid clear and unambiguous stand of the State Government it would appear there was rethinking in the State Government and a case was sought to be made out to justify that since no possession was taken over, action under Section 48 of the Act would acquire validity.

That apart the question of having taken possession of land would be more relevant in the case where the <ORG> is withdrawing from acquisition proceedings under Section 48 of the Act. Finding of <ORG> that possession of the land subject matter of SCA 5149/89 had not been handed over by the <ORG> Government to <ORG> is not correct. Other findings of <ORG> that notices under Section 9 of the Act had not been served upon the petitioners and that there was no compliance with Rules 3 and 4 of the Rules are also not correct. As noted above <ORG> Government is also aggrieved by the order allowing SCA 5149/89 whereby <ORG> quashed the notification under Section 4 and declaration under Section 6 of the Act. In this SCA 5149/89 <ORG> Government supported the stand of the <ORG> and also in this appeal. It has also stated that the possession of the land subject matter of the writ petition was taken over and delivered to <ORG> on July 5, 1989.

Mr. <NAME> also submitted that it was not the requirement of law to issue notices to interested parties under Section 9 of the Act and he referred to a few decisions of this <ORG>. In view of the fact, however, that there was no complaint of notices under Section 9 not having been served on the respondents, this question does not arise for consideration in this case.

This Court has repeatedly held that writ petition challenging the notifications issued under Section 4 and 6 of the Act is liable to be dismissed on the ground of delay and laches if challenge is not made within a reasonable time. This Court has said that the petitioner cannot sit on the fence and allow the <ORG> to complete the acquisition proceedings on the basis that notification under Section 4 and the declaration under Section 6 were valid and then to attack the notifications on the grounds which were available to him at the time when these were published as otherwise it would be putting premium on dilatory tactics. Writ petition (SCA 5149/89) is thus barred by laches as well.

Special leave petition No 11778/97 arises out SCA No. 5171/91 which was filed by the <ORG> in <ORG>. In the writ petition <ORG> had prayed for quashing of the action of <ORG> in withdrawing land under survey Nos. 39, 41/2 and 44/2 of village Magdalla from acquisition under Section 48(1) of the Act of which acquisition was for the purpose of housing colony for <ORG> and sought a direction to <ORG> and <ORG>, respondents 1 and 2 herein, to complete the acquisition proceedings after notifications under Section 4 and under Section 6 which had been issued. There are as many as 13 respondents in this appeal, respondents 3 to 13 being the persons whose land <ORG> has withdrawn from acquisition under Section 48 of the Act. Appellant admits that in respect of lands comprising in survey Nos. 39 and 44.2 possession had not been taken. However, its contention is that possession of land comprised in Survey No. 41/2 was taken and on that account also any action under section 48(1) of the Act would be bad in law. The fact that possession of land in the writ petition and Survey No. 41/2 was in fact taken has strenuously denied by not only the private respondents but also by <ORG>. It is admitted that though there is an order of <ORG> withdrawing from acquisition on notification has yet been issued in the official gazette and on that ground also appellant submits there could not be any valid withdrawal from acquisition and any action of the respondents in pursuance to that very decision of <ORG> to withdraw from acquisition would be illegal.

In respect of certain portions of land comprised in Survey No. 41/2, subject matter of SCA 5149/89 (SLP 11900/97), we have already held that <ORG> was put in possession. Any action under Section 48 of the Act to that extent of land is bad in law.

In support of his submission Mr. <NAME> said that apart from the fact that there was no notification issued under Section 48 of the Act making withdrawal from acquisition the reasons for withdrawal from acquisition are justiciable and the beneficiaries for whom the land is acquired are to be heard. it is the beneficiary and in the present case <ORG> which is the affected party. When there is withdrawal from acquisition of the land, owners are well protected under sub-section (2) and (3) of Section 48 of the Act. Mr. <NAME> submitted that there cannot be any unilateral withdrawal and there has to be bona fide exercise of poser in case <ORG> decides to withdraw fro acquisition before possession is taken over.

<ORG> Government in <ORG> issued a `Yadi' (memo) on April 11, 1991 withdrawing from the acquisition of land under Survey No. 39 and 41/2 of the village Magdalla. This decision of <ORG> was communicated to <ORG> on April 29, 1991/May 3, 1991. Yet another `Yadi' (memo) was issued by <ORG> on May 3, 1991 withdrawing from acquisition of the land under Survey No. 44/2 in village Magdalla under Section 48 (1) of the Act. <ORG> was informed of this decision on June 3, 1991. <ORG> held that Section 48 created an absolute right as a dominion eminent in favour of the <ORG> which proposes to acquire the land to take unilateral decision to withdraw from the acquisition and there was no restriction on its powers to withdraw from acquisition except in a case where in pursuance to the acquisition proceeding, owner of the land was dispossessed. <ORG> said that this restriction on the <ORG> to withdraw from acquisition, when possession had not been taken, could not be there and that it was unable to hold that appellant ought to have been heard by the <ORG> before passing the order of withdrawing from the acquisition.

All the formalities as per requirements of Rules 3 and 4 had been complied with and so also the provisions of Section 40 , 41 and 42 of the Act. After the notifications had been issued under Section 4 and 6 of the Act, notices under section 9 were issued on April 1, 1987, present writ petition (SCA 5171/91) was filed by <ORG> on July 15, 1991 when its protest against withdrawal from acquisition of the land to <ORG> failed. What led <ORG> to withdraw from the acquisition is reflected from its affidavit in reply filed in the writ petition of the appellant. it is as under:

"I say that various land owners who are respondent in this petition has made application to the government. I say that the said decision is bona fide can be seen from the applications were given by the land owners much prior to the date of the Election, i.e. as back as in March, 1991 and the lane owners had pointed out various facts including the fact that there are various lands have been acquired in past and since they are poor agriculturists left with no other land, their land should be released from acquisition. They had pointed out hardship to them. All these applications were processed legally. For example in the case of <NAME>, application was made on 12-03-1991 pointing out that his lands in village in Magdalla have been acquired for one purpose or the other with the result that he was left with no land. His lands were acquired for <ORG> housing <ORG>, <ORG> etc. Similar applications were also given by other lands owners mentioning the reason why their lands should be denotified from acquisition. The government has thereafter got verified the facts and ordered release of the land. I say that the government has not released from acquisition all the lands which were acquired for petitioner, but only part of the lands in which the government found bona fide case for withdrawal from acquisition the Government has done so. Not only that but after the land were released from the acquisition the petitioner <ORG> has filed objections and representations against the same. Immediate on getting the petition from <ORG> petitioner herein on 21--6-

1991 the Prant Officer <NAME> has written at the instructions of the <ORG> to the land owners not to proceed further on the basis that the land have been denotified. This the been done because objections filed by <ORG> were under consideration. Thereafter having verified all the facts, <ORG> was convinced that there was no reason to the change the said order and therefore <ORG> i.e., Under Secretary, Revenue Department informed the Deputy Collector by his letter dated 15-07-1991 that the instructions which were given in the previous letter, stay order given is withdrawn."

Mr. <NAME> strongly objected to the observations made by the High court that it would be open to the appellant to lay its claim and sue <ORG> for damages if any suffered by it on account of the action of <ORG> in withdrawing from the acquisition. He said it was not for <ORG> to advise the beneficiary to go to the civil court for damages when challenge before it was to the very legality of the action of <ORG> withdrawing from acquisition. Mr. <NAME> said it was also wrong for <ORG> to observe that the land which was proposed to be withdrawn from acquisition was in reality not needed by the appellant and on that account withdrawal from acquisition would not have seriously prejudiced the appellant in the implementation of its housing scheme for its employees and that "nothing of that sort has been taken place in this case". Mr. <NAME> said has per the report of <ORG> all the lands which were subject matter of acquisition in all the three writ petitions measured 29 acres which satisfied only 45% need for housing of the employees of <ORG> he said the observations of <ORG> were entirely against the record. Mr. <NAME> appears to be right in his submissions . <ORG> has not properly considered the need of the appellant. it was only after all the enquiries as required under the Act and the Rules has been made that action to acquire land for housing scheme of the employees of the appellant was taken. It was submitted that the lands were needed by the appellant and were situated in the middle of the other lands being acquired for the housing colony for the appellant. Appellant said that there was no ground for <ORG> to withdraw from acquisition when proceeding for acquisition had been initiated as for back as in the year 1986. Appellant had established a large industry at Hazira and its needs for a housing colony for its staff and workers were imperative. Appellant said that it was not able to provide suitable accommodation to its employees to make appropriate arrangement for their transport to the factory and that most of the staff had scattered residential accommodations in the city of Surat. They all came from different surrounding villages and even from Surat. Their regularity of attendance and efficiency was affected on account of the long distances they had to travel to reach the factory of the appellant. These difficulties became aggravated during the rainy season and in extreme climate. Appellant had also difficulties in finding accommodation in Surat for its employees and had to pay large amounts towards rent. The appellant said that the lands proposed to be withdrawn from acquisition were such that the planning of the appellant housing colony would go haywire. It was also submitted that the land proposed to be withdrawn from acquisition did constitute a compact block at one end of the lands acquired for the appellant housing colony. Various other pleas were also raised which did not find favour with <ORG> and rather not adverted to. The appellant alleged that apart from legal submissions that appellant had been denied opportunity of being heard before decision was taken by the State government withdrawing from acquisition, the action of the state Government was politically motivated inasmuch as the decision was taken at the time of General Elections to the <ORG>. This allegation has however been denied by <ORG>. It has justified its action otherwise as stated above and asserted that it was not the requirement of law nor necessary to hear the appellant before taking decision to withdraw from acquisition under Section 48(1) of the Act. A great deal of agruments were addressed if it was the requirement of law that a notification withdrawing from acquisition had to be issued and before that the beneficiary for whom the acquisition proceedings were initiated to be heard.

<CITATION> . [] a submission was made that <ORG> for whom the notification was issued for acquiring the land for public purpose did not need the plots of land. This Court observed that "so long as there is no notification published under Section 48(1) of the Act withdrawing from the acquisition, the Court cannot take notice of any subsequent disinclination on the part of the beneficiary". In U.P. Jal Nigam, Lucknow through its <CITATION> . [] land stood vested in the state under Section 17(2) of the Act free from all encumbrances. The Court said that it was settled law that once possession is taken by operation of Section 17(2) , the land vested in the State free from all encumbrances unless the notification under Section 48(1) was published in the Gazette withdrawing from the acquisition. The Court further said, "there is no other provision under the Act to have the acquired land divested, unless, as stated earlier, notification under Section 48(1) was published and the possession is surrendered pursuant thereto". <CITATION> . [] this Court affirmed the Full Bench decision of <ORG> in <CITATION> . [AIR 1996 Delhi 206]. It was submitted before the Court, which was the alternative argument, that the withdrawal of certain land included in the notification under Section 4 could be effected only by denotifying the release and that since there was no such notification denotifying the release, it could not be regarded as a release within the meaning of Section 48 of the Act. The argument was that Section 48 could be applied only when the release was published in the official Gazette in the same manner as the notification under Section 4 and declaration under Section 6 of the Act are published in view of the provisions contained in Section 21 of the General Clauses Act and since no such notification was published in the official Gazette, mere information given with regard to the withdrawal from acquisition would be of no consequence. This Court referred to its earlier decisions in <CITATION> . [] and also in U.P. Jal Nigam, Lucknow through its <CITATION> . [] and said "in this view of the matter even if we assume that there was an order for release of certain land from acquisition the same could not be given effect to in the absence of a notification denotifying the acquisition of land". <CITATION> 1987 (4) SC 218 = ] the <ORG> wanted to withdraw from acquisition of land by exercising its power under Section 48 but the owner of the land insisted that the government should be directed to go ahead with the acquisition, take over the land and pay him the compensation. <ORG> Struck down the order made under Section 48 and directed and <ORG> to acquire the lands of the respondent-owner. This Court held that <ORG> committed error in doing so. In the context whether the view taken by <ORG> that a decision of withdrawal from acquisition must be backed by reasons and could not be arbitrary or whimsical, this Court said as under:

"We may observe that having regard to the scheme of the Act as discussed above, it is difficult to see why <ORG> should at all be compelled to give any cogent reasons for a decision not to go ahead with its proposal to acquire a piece of land. It is well settled in the field of specific performance of contracts that no person will be compelled to acquire a piece of land as any breach of a contract to purchase it can always be compensated for the damages. That is also the principle of Section 48(2) .

This Court even examined the question if the withdrawal was bona fide and held that to be so. We are, however, not concerned with that issue in the present case.

<CITATION> 1997 (9) S.C. 659] the argument by the appellant was that when acquisition was under Part VII, when land is acquired for a company and when all the formalities have been completed including execution of the agreement for payment of cost of the acquisition and Section 6 notification has also been issued, it was not open to the Government to withdraw from such acquisition without the consent of the company for which the land had been acquired. It was submitted that the power to withdraw from acquisition was not absolute and was fettered by implicit restrictions and was thus justiciable. In that case the government had issued notification under Section 4 of the Act notifying its intention to acquire the land for a public purpose namely "playground of students of <ORG> (Public School), Mathura". Thereafter, inquiries under Section 5-A and under Rule 4 of the Land Acquisition (Company) Rules, 1963 were made and the Government also entered into an agreement with the appellant as required by Section 40(1) of the Act. It then issued a declaration under Section 6 mentioning the fact that the report made under Rule 4 was considered by the Government and that <ORG> constituted under Rule 3 of the said Rules was consulted and the agreement entered between the appellant and the Governor was duly published recording satisfaction of the Governor that land mentioned in the agreement needed for construction of a playground. The acquisition of land was challenged by the owner of the land by filling writ petition in <ORG> and an interim order was passed directing the parties to maintain status quo as regards possession. During the pendency of the said writ petition the government denotified the land from acquisition in exercise of its power under Section 48 of the Act. Challenge to this by the appellant in <ORG> failed. Contention of the <ORG> before this Court was that the <ORG> was under no obligation to give any reason for withdrawing from the acquisition and when it was shown that the power was exercised boa fide it was not open to the Court to invalidate such an action even if the reason given by the <ORG> was found to be erroneous. it was submitted on behalf of the <ORG> that Section 48 contained no words of limitation as regards the exercise of power and the only limitation put upon the power of the <ORG> Government was that it could exercise that power till possession of the land sought to be acquired was taken and not thereafter. Strong reliance was placed by the <ORG> upon the decision of this Court in special <CITATION> 1987 (4) SC 218]. This Court, however, distinguished the judgment in <NAME> and <NAME>'s case as in that case the challenge to the withdrawal order under Section 48 was by the owner himself and as provided in sub- section (2) of Section 48 if as a result of withdrawal from acquisition any damage be suffered by any party he could be paid damages for the loss caused to him. The decision in the case of <NAME> and <NAME>'s case was, therefore distinguished as in the case before <ORG> the challenge was by the beneficiary. This Court observed that the decision in <NAME> and <NAME> case was no authority laying down the proposition that in all cases where power was exercised under Section 48 of the Act it was open to the <ORG> Government to act unilaterally and that it could withdraw from acquisition without giving any reason or for any reason whatsoever. The Court observed as under:

"In an acquisition under Part VII of the Act, Position of the company or the body for which the land acquired is quite different from that of the owner of the land. As a result of withdrawal from the acquisition whereas the owner of the land is ordinarily not likely to suffer any prejudice or irreparable loss, the company for whose benefit the land was to be acquired, may suffer substantial loss."

The Court examined the reasons given by the <ORG> withdrawing from acquisition and held that the decision of the <ORG> to withdraw from acquisition was based upon misconception of the correct legal position and that such a decision had to be regarded as arbitrary and not bona fide. Then the Court said as under:

"Particularly, in a case where as a result of a decision taken by the <ORG> other party is likely to be prejudicially affected, the <ORG> has to exercise its power bona fide and not arbitrarily. Even though Section 48 of the Act confers upon the State wide discretion it does not permit it act in an arbitrary manner.

Though the <ORG> cannot be compelled to acquire land compulsorily for a company its decision to withdraw from acquisition can be challenged on the ground that power has been exercised mala fide or in an arbitrary manner. Therefore, we cannot accept the submission of the learned counsel for the <ORG> that the discretion of the <ORG> Government in this behalf is absolute and not justiciable at all."

It was submitted by mr. <NAME> that Section 48 of the Act did not contemplate issue of any notification and withdrawal from the acquisition could be by order simpliciter. He said that Section 4 and 6 talked of notification being issued under those provisions but there was no such mandate in Section 48 . It was thus contended that when statute did not require to issue any notification for withdrawal from the acquisition, reference to Section 21 of the General Clauses Act was not correct. Section 21 of the General Clauses Act is as under:

"21. Power to issue, to include power to add to, amend, vary or rescind, notifications, orders, rules or bye-laws.- Where by any Central Act , or Regulation, a power to issue notification orders, rules, or bye-laws is conferred, then that power includes a power exercisable in the like manner and subject to the like sanction, and conditions, if any, to add to, amend, vary or rescind any notifications, orders, rules or bye-laws so issued."

Mr. <NAME> said that Section 21 expressly referred to the powers being given to issue notifications etc. under an Act or Regulations and under this that poser included power to withdraw or rescind any notification in the similar fashion. It was therefore submitted that when Section 48 did not empower <ORG> to issue any notification and it could not be read into that provision that withdrawal had to be issued by a notification. His argument, therefore, appeared to be that on correct interpretation of Section 21 of the General Clauses Act before reaching the stage of Section 48 , <ORG> could withdraw notifications under Sections 4 and 6 of the Act by issuing notification withdrawing or rescinding earlier notifications and that would be the end to the acquisition proceedings. We do not think that Mr. <NAME> is quite right in his submissions. When Sections 4 and 6 notifications are issued, much has been done towards the acquisition process and that process cannot be reversed merely be rescinding those notification. Rather it is Section 48 under which, after withdrawal from acquisition is made, compensation due for any damage suffered by the owner during the course of acquisition proceedings is determine and given to him. it is, therefore, implicit that withdrawal from acquisition has to be notified.

Principles of law are, therefore, well settled. A notification in <ORG> is required to be issued if <ORG> decides to withdraw from the acquisition under Section 48 of the Act of any land of which possession has not been taken. An owner need not be given any notice of the intention of <ORG> to withdraw from the acquisition and <ORG> is at liberty to do so. Rights of the owner are well protected by sub-section (2) of Section 48 of the Act and if he suffered any damage in consequence of the acquisition proceedings, he is to be compensated and sub-section (3) of Section 48 provides as to how such compensation is to be determined. There is, therefore, no difficulty when it is the owner whose land is withdrawn from acquisition is concerned. However, in the case a company, opportunity has to be given to it top show cause against any order which <ORG> proposes to make withdrawing from the acquisition. Reasons for this are not far to seek. After notification under Section 4 is issued, when it appears to <ORG> that the land in any locality is needed for a company, any person interested in such land which has been notified can file objections under Section 5-A(1) of the Act. Such objections are to be made to the collector in writing and who after giving the objector an opportunity of being heard and after hearing of such objections and after making such further enquiry, if any, as the Collector thinks necessary, is to make a report to <ORG> for its decision. Then the decision of <ORG> on the objections is final. Before the applicability of other provisions in the process of acquisition, in the case of company, previous consent of <ORG> is required under Section 39 of the Act nor unless the company shall have executed the agreement as provided in Section 41 of the Act. Before giving such consent, Section 40 contemplates a previous enquiry. then compliance with Rules 3 and 4 of the Land Acquisition (Company) Rules, 1963 is mandatarily required. After the stage of Section 40 and 41 is reached, the agreement so entered into by the company with <ORG> is to be published in <ORG>, This is Section 42 of the Act which provides that the agreement on its publication would have the same effect as if it had formed part of the Act. After having done all this, <ORG> cannot unilaterally and without notice to the company withdraw from acquisition. Opportunity has to be given to the company to show cause against the proposed action of <ORG> top withdraw from acquisition. A declaration under Section 6 of the Act is made by notification only after formalities under part VII of the Act which contains Section 39 to 42 have been complied and report of the Collector under Section 5-A(2) of the Act is before <ORG> who consents to acquire the land on its satisfaction that it is needed for the company. A valuable right, thus, accrues to the company to oppose the proposed decision of the State government withdrawing from acquisition. The <ORG> may have sound reasons to withdraw from acquisition but those must be made known to the company which may have equally sound reasons or perhaps more which might persuade <ORG> to reverse its decision withdrawing from acquisition. In this view of the matter it has to be held that <ORG>Memo) dated 11.4.91 and <ORG>Memo) dated 3.5.91 were issued without notice to the appellant (<ORG>) and are, thus, not legal.

Accordingly all these appeals are allowed with costs; impugned judgment of <ORG> is set aside. SCA 1568/87 and SCA 5149/89 filed in <ORG> are dismissed and SCA 5171/91 is allowed. <NAME> (Memo) dated 11.4.91 and <NAME> (Memo) dated 3.5.91 containing orders of <ORG> withdrawing from acquisition of the land are quashed. A direction is issued to the respondents 1 and 2 to complete the acquisition proceeding in pursuance to the notification under Section 4 and declaration under Section 6 of the Land Acquisition Act.


<NAME>, Senior Vice-President

1. By the impugned order, the Collector of <ORG>, Cochin ordered the appellants to pay customs duty amounting to Rs. 5,53,971.81 and imposed a penalty of Rs. 50,000/- on them. It is against this order, that the present appeal has been filed.

2. The facts of the case, briefly stated, are that <ORG>, Cochin (hereinafter referred to as the appellants) were issued an Advance Licence No. P/L/0342075, dated 14-6-1983 for import inter alia of 32 Metric Tonnes of white cardboard, other than ivory board, subject to the condition that the appellants shall export frozen shrimps etc. packed in packing material made inter alia of white cardboard for an F.O.B. value of Rs. 1,00,00,000/-. A Duty Exemption Entitlement Certificate (<ORG>) Book No. 005166, dated 24-6-1983 was also issued to the appellants listing the materials (of c.i.f. value of Rs. 3,74,000/-) allowed to be imported duty free, one of them being 32 M.Ts. of white cardboard, other than ivory board. In part 'E' of the <ORG> Book, the resultant export products were shown as frozen shrimps etc. packed in packing materials made inter alia of white cardboard, for an F.O.B. value of Rs. 1,00,00,000/-. The appellants imported at Madras Port, among other things, 31.97054 M.Ts. of white cardboard and cleared it free of customs duty under Notification No. 117/78-Cus., dated 9-6-1978. The appellants filed at Cochin Port shipping bills commencing with one on 21-4-1983 for export of frozen shrimps in purported discharge of their export obligation in respect of the packing materials. It appears that <ORG> had information that the appellants had not utilised the imported white cardboard for the purpose for which it was allowed to be imported but that they had exported only locally made packing materials. Search and investigation followed. In a statement recorded from him, <NAME>, Managing Partner of the appellant-firm, deposed that the firm was under the impression that as per Appendix 19 of the Import Policy, export could be effected in discharge of the obligation of export from the date of application for Advance Licence and that such discharge should be declared on shipping bills and suitable endorsements made in the <ORG> book against such exports. Accordingly, the firm commenced exports from 21-4-1983 and got the necessary endorsements made. After the import of packing materials including white cardboard, the firm made only four shipments in discharge of their export obligation which involved a quantity of 3.9336 M.Ts. of white cardboard. With the last shipping bill dated 13-4-1984, the export obligation was fully completed and the <ORG> book was got endorsed for a total quantity of 30.8484 M.Ts. of white cardboard against the stipulated figure of 29.1 M.Ts. <NAME> further stated that the export obligation having thus been fully discharged, the duly discharged <ORG> book was submitted to the <ORG>. Chief Controller of Imports and Exports, Ernakulam who also discharged the undertaking executed by the firm. He further deposed that the material imported at Madras was brought to Cochin and converted into inner cartons by two other firms. The firm had not claimed any drawback of duty in respect of the entire exports in discharge of their export obligation.

2.1 By a show cause notice dated 30-6-1986, the Assistant Collector of <ORG>, <ORG>, Cochin <ORG> House, alleged that -

(a) the appellants had purchased locally made corrugated master cartons and Duplex cartons and used them for packing frozen shrimps and falsely claimed discharge of export obligation and that the imported material was not utilised for the purpose for which it was imported. No evidence was available that the imported white cardboard had been converted into cartons as specified in the Advance Licence and the <ORG> book. It was, therefore, alleged that the appellants had contravened Clauses (d) and (e) of the Customs Notification No. 117/78, dated 9-6-1978.

(b) It was further alleged that the appellants had deliberately mis-declared the description of the packing materials in the shipping bills with a view to get the export obligation fulfilled and thereby to evade customs duty on the imported white cardboard amounting to Rs. 5,53,971.81 and that they had misdeclared in the shipping bills that the inner cartons were made out of white cardboard. On this basis, it was alleged that the appellants had violated the provisions of Clauses (d) and (e) of the aforesaid notification.

(c) Since the goods covered by the 38 shipping bills in question did not correspond in material particulars with regard to the packing materials, with the entry made under Section 50 of the <ORG> Act, the goods were alleged to be liable to confiscation under Section 113(i) of the <ORG> Act. However, since the goods had already been exported, the appellants who had contravened Section 113(i) of the <ORG> Act, read with Section 50 ibid, with deliberate intent to evade <ORG> duty on the imported white cardboard had thereby rendered themselves liable to a penalty under Section 114 ibid.

2.2 The appellants denied all the charges and requested that the proceedings be dropped. After holding adjudication proceedings, the Collector of <ORG>, Cochin, passed an order dated 6-4-1987 holding that the appellants had failed to comply with the conditions specified in Notification No. 117/78 and ordering them to pay customs duty of Rs. 5,53,971.51 and imposing a penalty of Rs. 50,000/- on them. It is this order which is now challenged in the present appeal.

3.1 In his order, the Collector inter alia recorded a finding that in shipments which were made prior to the date of importation of the packing material on 19-1-1984, the appellants had not claimed drawback of duty. Similarly, subsequent to the importation of the packing material also, the appellants did not claim drawback till they completed the export obligation on 13-4-1984. In all, there were 38 shipments. They had, however, claimed drawback on cartons made out of the non-duty paid imported materials (apparently the Collector seems to be referring to later shipments, i.e., later than 13-4-1984 and till 19-4-1985). The Collector held that it was wrong on the part of the appellants to claim duty drawback when no duty had actually been paid on the imported material. As regards the appellant's contention that <ORG> had no jurisdiction to issue a show cause notice in this matter, the Collector found that since the packing material had been imported duty free in accordance with Notification No. 117/78, and there had been violation of the conditions laid down in that notification and the exports had been effected through Cochin, <ORG> had jurisdiction.

3.2 The evidence produced by the appellants to show that the imported cardboard had been converted into cartons was rejected by the Collector stating that there was nothing to prove that the said cartons were made only out of the imported material.

4. We have heard <NAME>, Advocate, for the appellants and <NAME>, Jt. CDR, for the respondent.

5.1 At this stage, we may, with advantage, notice some of the relevant provisions. By Customs Notification No. 5/76, dated 31-1-1976, <ORG> had exempted goods imported against an Advance Licence, being materials required to be imported for the purpose of manufacturing goods for execution of an export order, from duty of customs subject to the conditions laid down therein. One condition was that the materials should be covered by a <ORG>. Another was that the exempt materials should be used in the manufacture of such resultant products and in such factories as were specified in the <ORG>. They should not be sold or otherwise transferred to any other person or utilised in any other manner without the previous permission of the competent authority.

5.2 Notification No. 117/78, dated 9-6-1978 exempted the goods specified in the schedule to the notification, imported against an Advance Licence, being materials required to be imported for the purpose of manufacture of goods, or replenishment of the materials used in the manufacture of goods or both for executing one or more export orders, from customs duty. There were several conditions laid down including the one about <ORG>. One of the conditions was that the exempt materials shall not be sold or otherwise transferred to any other person, or utilised or permitted to be utilised or disposed of in any other manner without the previous permission of the competent authority. However, this condition was not applicable to exempt materials which are imported for replenishment of the materials used in the manufacture of goods.

5.3 Thus two important differences are noticeable in the 1978 scheme as compared to the earlier scheme. One is that the imported materials were allowed to be imported duty free not only for the manufacture of specified goods for export but also for replenishment of the materials used in the manufacture of such goods. Secondly, the prohibition on the disposal of the goods by sale or otherwise without the permission of the competent authority was not made applicable to the materials imported for replenishment purposes.

6. At the outset, the learned Counsel for the appellants made certain submissions challenging the validity of the show cause notice issued to the appellants and the jurisdiction of the Collector of <ORG>, Cochin to adjudicate upon the proceedings initiated thereunder. With respect to the show cause notice, the submission was that it was issued by the Assistant Collector on 30-6-1986, i.e., after the amendment to Section 28 of the <ORG> Act by Section 3 of the <ORG> (Amendment) Act, 1985 on 27-12-1985. The effect of this amendment was two fold. First, the show cause notice for payment of duties not levied, short-levied or erroneously refunded, in a case involving collusion or any wilful misstatement or suppression of facts by the importer or exporter or his agent or employee, enabling the <ORG> to invoke an extended period of five years instead of the usual period of six months, was to be issued by the Collector. Second, the order of adjudication must in such a case be passed by the Collector. In the present instance, the show cause notice was issued by the Assistant Collector though cause was required to be shown to the Collector. Further, neither the notice nor, for that matter, the order passed by the Collector did allege any suppression of facts, or mis-statement or collusion on the part of the appellants. Therefore, urged <NAME>, the show cause notice was barred by time, the import having been effected on 19-1-1984 and the last shipment having been effected on 13-4-1984.

7. The second preliminary submission of <NAME> was that the import having been effected at Madras Port, the Collector of <ORG>, Cochin had no jurisdiction to demand duty on the goods.

8. On the first point, the learned Jt. CDR's submission was that the <ORG> notification in question did not impose any time-limit within which the imported goods ought to be used. The demand for duty was not under Section 28 of the <ORG> Act, nor did the show cause notice invoke Section 28 .

9. On the issue of the Cochin Collector's jurisdiction, <NAME> stated that he could not cite any authority in support of the Collector's jurisdiction to demand duty in respect of goods imported at Madras. He, however, sought to draw an analogy to Central Excise Rule 196 which inter alia enjoins on the applicant-user of goods (procured free of duty from under Rule 192) to pay duty on such quantity of goods as are not accounted for to the satisfaction of the proper officer, <NAME> cited in this context the <ORG>'s decision in the case of <CITATION> , 1985 (22) E.L.T. 297 wherein it was held that the question of demanding duty on goods obtained under Rule 192 could not arise till the goods were taken into use in a manner otherwise than as provided or in the event of unsatisfactory accountal of the goods. It was further held that a demand for differential duty on the occurrence of such eventualities would not be the same thing as a demand for duty on account of non-levy or short-levy. <NAME> also cited the <ORG>'s decision in the case of <CITATION> - 1984 (17) E.L.T. 205 = 1984 ECR 1160 (CEGAT).

10. Since the two preliminary submissions of <NAME> are fundamental to the validity of the impugned order, we propose to deal with them first. Taking first the question of the Cochin Collector's jurisdiction to demand duty in the present case, we have to note that the import of the goods took place at Madras. Their clearance duty free in terms of <ORG> notification was granted at Madras. In terms of the said notification, a claim was required to be made to the Collector of <ORG>, Madras for exemption from duty. A bond/legal undertaking for complying with the conditions specified in the notification was to be executed before such authority as may be approved by the Central Government. A declaration was to be filed by the appellants before the Assistant Collector binding themselves to pay on demand an amount equal to the duty leviable, but for the exemption, on the imported materials in respect of which the conditions laid down in the notification had not been compiled with (this declaration was filed before the Assistant Collector of <ORG>, Madras). There is, therefore, no manner of doubt that the Assistant Collector of <ORG> or the Collector of <ORG>, Madras was the proper authority who was to return a finding of non-compliance with the conditions laid down in the notification and to demand customs duty in respect of the quantity of goods in respect of which the conditions were not complied with. It is, of course, true that the use or utilisation of the imported materials in the present case was not in the Madras Collector's jurisdiction. If the Cochin Collector had reason to believe that the conditions laid down in the notification had been violated necessitating proceedings against the appellants which could have led to demand of duty, penalty, etc., the proper course would have been for him to report the matter to the Collector of <ORG>, Madras to enable the latter to proceed against the appellants in accordance with law. The Cochin Collector, however, seems to have assumed jurisdiction to deal with the matter himself. The analogy with Central Excise Rule 196 as sought to be drawn by <NAME> is inapplicable. The rule itself provides for demand of duly by the proper officer having jurisdiction over the applicant-user who may have got his requirement of materials cleared duty-free or at concessional duty in terms of Rule 192 from a manufacturer situated in another officer's jurisdiction. Such is not the case here. The two decisions cited in this context are of no help to the <ORG>. <NAME> has sought to justify the demand on the plea that what was demanded by the Cochin Collector was not really duty but only an amount equal to the duty leviable. This contention is, on the face of it, untenable. For one thing, what the notification makes the importer liable to pay on demand is an amount equal to the duty leviable but for the exemption. No doubt the duty has to be quantified in an amount but, for that reason, it does not cease to be duty. For another, the Collector himself has no such illusion. He has quite clearly and categorically asked the appellants to pay the customs duty demanded in the show cause notice. If indeed the amount in question was not duty it could not have been demanded in terms of an adjudication order under the <ORG> Act but only in enforcement of the bond or legal undertaking executed by the appellants, if necessary through appropriate proceedings in <ORG>. <NAME>'s contention has, therefore, to be, and is, rejected

11. The <ORG> has not produced any notification or other legal provision (none has been placed before us) under which the Cochin Collector was conferred jurisdiction to demand duty in respect of goods imported at Madras and cleared by the Madras customs either generally or in this particular case. <ORG> has issued notifications under Section 4 of the <ORG> Act appointing Collectors of <ORG> and lower officers for different jurisdictions. In terms of these notifications, the respective jurisdiction of the Collectors have been clearly spelt out (see, for example, Notification No. 36-Cus., dated 1-2-1963, as amended). Notification No. 37, dated 1-2-1963, as amended, appoints the Collector of <ORG> and <ORG>, Cochin, as the Collector of <ORG> in his jurisdiction. Evidently, it does not extend to Madras Port for which the Collector is the Collector of <ORG>, Madras, vide Notification No. 36, dated 1-2-1963. There are, of course, a few officers appointed as Collectors with all-India jurisdiction such as the Director of Revenue Intelligence but the Collector of <ORG>, Cochin is not one among them. In these circumstances, we hold that the Collector of <ORG>, Cochin had no jurisdiction to demand duty in the present case and, consequently, we set aside the demand.

12. Thus, we are now left with only the penalty imposed by the Collector on the appellants. The order does not in terms spell out the provision of the <ORG> Act under which the penalty has been imposed. However, the show cause notice called upon the appellants to explain why, in the circumstances stated in the notice, a penalty should not be imposed on them under Section 114 of the <ORG> Act, 1962. We have, therefore, to proceed on the basis that penalty has in fact been imposed under Section 114 , though it is not clearly stated so. The Cochin Collector, in any event, could not have imposed any penalty for alleged violation of the <ORG> notification in question since, as we have already held, the demand for duty could not have been made by him and it follows that any adjudication leading to imposition of penalty in connection with any alleged violation of the notification could not also have been made by the Cochin Collector. Now, Section 114 provides that any person who, in relation to any goods, does or omits to do any act, which act or omission would render such goods liable to confiscation under Section 113 or abets the doing or omission of such an act, shall be liable to the penalties prescribed therein. Separate penalties are prescribed in the case of different types of goods. The first type is goods in respect of which any prohibition is in force under the <ORG> Act or any other law for the time being in force. It has not been shown before us that in respect of the exported goods, there was any such prohibition. This provision has no application to the present case. The Second type is dutiable goods other than prohibited goods. "Dutiable goods" in this context evidently means goods liable to export duty. The <ORG>'s case is not that the exported goods were dutiable or that they were exported without payment of duty. This provision again has no application. The third and the last type is goods that are exported under claim for drawback. In the present case, we are not concerned with goods which were exported under claim for drawback. In fact, the admitted position is that exports of the goods covered by the 38 shipping bills, including the four relating to goods shipped after the import of materials at Madras, were effected without claiming any drawback thereon. If this is so, then, the provision in Section 114 enabling the Collector to levy penalty in the case of goods exported under claim for drawback is also not applicable to the present case. What appears to have happened (though we do not wish to pronounce any verdict on this) is that the appellants seem to have claimed duty drawback on cartons made out of non-duty paid imported materials in certain shipments which, however, are not the subject matter of the present dispute because the Collector, in his order, has not demanded repayment of the drawback amount which he should have done if the present dispute was in relation to such shipments. Perhaps, there are separate proceedings in this regard. Be that as it may, it is obvious that in the case before us, the penalty has not been imposed on the ground that the appellants had exported goods under claim for drawback though they had been made out of non-duty paid imported materials.

13. In the above view of the matter, the penalty levied by the Collector is also not sustainable and is set aside.

14. In the view we have taken, there is no need to go into the other submissions made before us.

15. The result is that the impugned order is set aside and the appeal is allowed.


JUDGMENT <NAME>, C.J.

1. These four revision petitions are by the Deputy Commissioner of Agricultural Income Tax and Sales Tax, and raise common legal issues. They together seek to vary the orders by <ORG>, that have sustained the dealers' objections to being assessed to sales tax. The facts in these petitions are that for the assessment year 1953-54, the dealers had been held under the Madras General Sales Tax Act, IX of 1939, liable to pay sales tax on rubber sold at Fort Cochin, that then formed, part of the Madras State, and the appeals by the dealers were rejected. <ORG> has upheld the objection against the tax on the ground of the commodity being agricultural produce and sales by the plantation owners being excluded from the definition of turnover under the Act.

2. In T.R.C. 8/58 the respondent is Messrs <ORG>, Ayalur, which was then within the Travancore-Cochin State, and the turnover determined by the assessing authority for the purposes of the tax is Rs. 69,122-7-4. In this petition the tax disputed is on the entire turnover. In T.R.C. 9/58 the respondent is Messrs <ORG>, Kuzhithurai, now at Nagercoil, which also was then part of the Travancore-Cochin State and the turnover amounts to Rs. 3,26,921, on which the disputed tax amounts to Rs. 5,108-2-3. In T.R.C. 11/58 the respondent is Messrs <ORG>, Trivandrum, whose estate was outside the Madras State and the turnover on which the tax had been levied, comes to Rs. 2,80,682-7-4, the tax amount being Rs. 4,385-10-8. In T.R.C. 12/58 the respondent is Messrs Kamadhenu Estate, Kuzhithurai, and the turnover, on which this dealer has been assessed, is Rs. 29,121-1-11, the tax levied being Rs. 455-0-3. The aforesaid turnovers are prices of rubber sold by the dealers at Fort Cochin during 1953-54, which the Deputy Commercial Tax Officer discovered in the first petition, from the accounts of <ORG>, and in the other three from the accounts of <ORG>

3. The objection to the assessments rests on Section 2(i) of the Madras General Sales Tax Act, whereby the sales by persons of their agricultural or horticultural produce are excluded from the definition of the word "turnover" and it was urged that rubber being the agricultural produce of the several respondents, they cannot be charged to sales tax under Section 3 (1) (a) of the Act. The aforesaid two provisions in detail are :-

Section 2. (i) 'turnover' means the aggregate amount for which goods are either bought by or sold by a dealer, whether for cash or for deferred payment or other valuable consideration provided that the proceeds of the sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, shall be excluded from his turnover;

Section 3. (1) Subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year ; and (b) the tax shall be calculated at the rate of three pies for every rupee on such turnover :-

4. <ORG> has held that as rubber was agricultural produce and the sales had been by the estates that had grown the commodity from which the rubber had been got, the price obtained from such sales at Fort Cochin would not constitute the dealers' "turnover" and therefore would not attract the liability under Section 3(1). Before us, the correctness of the aforesaid conclusion is challenged on the ground that the Act having been passed by <ORG>, and, having regard to the territorial limits of the enacting authority, the word "land" in Section 2(i) would mean land within the Madras State, so that produces from rubber estates beyond the boundaries of the enacting State would not be of the land that <ORG> intended to save from the sales tax. The next reason urged against the <ORG>'s order is that rubber, having been got by the produce from land being put to manufacturing process, cannot be agricultural produce and would thus not be covered by the exception under Section 2(i).

5. The learned Advocate-General has in support of the first ground relied on In re Hindu Women's Rights to Properly Act, A.I.R. 1941 F.G. 72 at p. 75. There, the provisions of the Hindu Women's Rights to Property Act were challenged on the ground of its extending to agricultural properties as well, of being a Central Act , to be beyond the competence of the <ORG> and, being therefore, void. Rejecting the argument <NAME>, <NAME>, observes as follows :-

No doubt if the, Act does affect agricultural land in the Governors' Provinces, it was beyond the competence of the <ORG> to enact it; and whether or not it does so must depend upon the meaning which is to be given to the word 'property' in the Act. If that word necessarily and inevitably comprises all forms of property, including agricultural land, then clearly the Act went beyond the powers of the <ORG> ; but when a <ORG> with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate, and to no other. The question is thus one of construction, and unless the Act is to be regarded as wholly meaningless and ineffective, the court is bound to construe the word 'property' as referring only to those forms of property with respect to which the <ORG> which enacted the Act was competent to legislate; that is to say, property other than agricultural land. On this view of the matter, the so-called question of severability, on which a number of <ORG> decisions, as well as decisions of <ORG>, were cited in the course of the argument, does not arise.

6. The learned Advocate-General has further relied on the following observation of <NAME>, J., in <CITATION> A.I.R. 1959 S.C. 1002 at p. 1010.:

It is now well settled that there is a general presumption that the <ORG> does not intend to exceed its jurisdiction, and it is a sound principle of construction that the Act of a sovereign <ORG> should, if possible, receive such an interpretation as will make it operative and not inoperative.

7. Support was also sought from <NAME> v. Attorney-General for New South Wales [1891] A.C. 455 where Section 54 of the Criminal Law Amendment Act of New South Wales, Australia was construed as applying to only those acts that were actually committed within the territorial jurisdiction of the <ORG>, with the result there being no jurisdiction in the aforesaid Colony to try the appellant for bigamy alleged to have been committed in the United States of America. The legal proposition, therefore, is well settled that the presumption is in favour of the enactments being within the constitutional limits of the enacting authority.

8. But the revision petitioners' learned Advocate overlooks that the presumption is about the enactment being within all constitutional limitations on <ORG> and such limitations would cover Article 304(a) as well. There under, <ORG>s may, by law, impose on goods imported from other States or the <ORG> territories, any tax, to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced. It is therefore clear that <ORG>, in passing <CITATION> of the Act, cannot be presumed to have enacted something that would be violative of Article 304(a) ; and yet that would exactly be the position we are asked to place on the word "land" in <CITATION> ; for, the produces from rubber estates within the Madras State would not be charged to sales tax if sold at Fort Cochin ; but the produces from the rubber estates within Travancore-Cochin area would be liable, because they would not be produces of land that had been intended to be excluded. Indeed the same owner would get the benefit under the provision if the produce be from plantations within the Madras State, but would be liable should his goods from estates in the adjoining Travancore-Cochin State come to be sold at Fort Cochin. When confronted with such a position and the presumption of the constitutionality precluding the <ORG> having such an intention, the petitioners' Advocate was compelled to argue that the restriction under Article 304(a) is against levying tax at the point of import, and not when the imported goods are being sold in the market. We are afraid that such an interpretation is not justified; and, there are overwhelming decisions declining to place such a restricted interpretation on Article 304(a).

9. The petitioners in <CITATION> A.I.R. 1956 M.B. 214 at p. 218 were carrying on the business of sale and purchase of pugrees, which were mainly manufactured in Uttar Pradesh and Rajasthan ; and the complaint was that the State of Madhya Bharat, having exempted similar goods under a notification, pugrees manufactured by similar process in other States cannot be subjected to a tax, as that would offend Article 304. <NAME>, J., upholding the objection, observes as follows:-

The wording of Article 304 of the Constitution indicates that the taxing power of the <ORG> is only valid so far as it does not work discrimination as against similar goods coming from other <ORG>s. The moment it begins to work discrimination, the taxing power is rendered invalid to the extent of discrimination.

Learned Advocate-General contended that the law imposing sales tax is valid. What is invalid is the discriminatory nature of exemption granted. The result will be that the exemption will cease to operate and the similar goods made at the aforesaid places in Madhya Bharat will be subjected to tax. The tax on pugrees imported from Uttar Pradesh or Rajasthan will not be free from taxation.

I am unable to agree with this contention. The Constitution permits taxation upon goods imported from States other than taxing States within certain defined limits as laid down in Article 304 of the Constitution. The moment the limits are crossed by whatever means, whether by the provision of the State law passed by the <ORG>, or under any power vesting in an authority by reason of power delegated to it the taxing power is gone. And when the taxing power to the extent of discrimination is gone, the tax becomes invalid and cannot be recovered.

10. <ORG> in <CITATION>  11 S.T.C. 173. has held that the words "manufactured or produced" in Article 304(a) do exhaust all categories of goods that can be found in a <ORG> other than the goods imported and should be understood as contra-distinguished from goods imported from outside the <ORG>. It was further held that having regard to the object of Articles 301 and 304, no discriminatory power of taxation is vested in a <ORG>, either at the point of import or at a later time ; and it would not, therefore, be open to any <ORG> to levy a tax on goods having its origin in a different <ORG> at any stage of its existence in the former <ORG> so as to discriminate it from goods of a similar kind manufactured or produced therein. The imposition of tax on sales of imported "bura sugar" was in <CITATION>  11 S.T.C. 337. held discriminatory and unconstitutional. Again in <CITATION> .  11 S.T.C. 511 at p. 517 the imposition of sales tax on the petitioner in respect of sales of tobacco imported into Madhya Pradesh was held illegal, being in violation of Article 304(a) of the Constitution, and that the petitioner was entitled to refund of the amount paid by him as tax. The learned Chief Justice observes as follows :-

We are not prepared to adopt the construction suggested by the learned Advocate-General, namely, that Article 304 does not deal with the imposition of taxes on purchase or sale of goods and that it refers to tax on imported goods in the act of import. Such a construction is not warranted at all by the language of Article 304(a). That article, as it is worded, gives to <ORG> the power to impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and similar goods of local origin. Its object is to maintain freedom of inter-State trade and to ensure that no special tax on the act of import or on the imported goods as such is levied. The discrimination spoken of in that article is not discrimination as between the import of goods from outside the State and import of goods of local origin. It is difficult to conceive of import into a State of goods manufactured in that State itself.... We do not read those observations as holding that a discriminatory sales tax on goods imported from other States is outside the purview of Article 304(a) of the Constitution. That would have been an impossible finding on the clear language of Article 304(a) of the Constitution.

11. <CITATION> A.I.R. 1957 Assam 1 it has been held that taxing goods, that the dealer has obtained for sale from outside the State of Assam, when otherwise they would not have been liable to tax for sale of similar goods, is discriminatory and not permissible under the Constitution, nor under Section 297 , Government of India Act, 1935. It follows that the first ground taken against the order of <ORG> and for sustaining the tax levied on the sales of rubber at Fort Cochin from the rubber estates situated in the then Travancore-Cochin area, is not sufficient. The words "produce of the land" in the definition of "turnover" in <CITATION> of the Act, because of the constitutional provision not to discriminate, cannot therefore be construed as referring only to lands situated within the Madras State, but, having regard to the proposition that the <ORG> must be presumed to observe the constitutional limits, must be interpreted as covering lands situated beyond the boundaries of the Madras State as well. In any case, the levy of tax on the sales of rubber produced from lands situated outside Madras State would be discriminatory and void, as rubber sold from the estates within the Madras State would not be liable to tax on the ground of being agricultural produce ; and this brings us to the next ground urged for reversing the decision of the lower Tribunal.

12. The <ORG> has held rubber to be a produce for two reasons. One is that though the aforesaid term has not been defined by the Madras General Sales Tax Act, yet the Madras Plantations Agricultural Income-tax Act, 1955, in defining what is agricultural income included that from rubber as well by second Explanation to Section 2 (2) (ii) which reads as follows :-

Agricultural income derived from such plantation by the cultivation of coffee, rubber, cinchona or cardamom means that portion of the income derived from the cultivation, manufacture and sale of coffee, rubber, cinchona, or cardamom, as the case may be, as may be defined to be agricultural income for the purposes of the enactments relating to Indian income-tax.

13. It is clear that what is treated by the same <ORG> as a source of agricultural income cannot be treated for purposes of another Act not to be agricultural produce. That apart, one of us in Deputy Commissioner of A.I.T. & S.T. v. Raman I.L.R. 1960 Ker. 624 had held that whether a particular process alters the character of the agricultural or horticultural produce to that, of manufactured article, is a question of fact, but as a general guiding principle of law it can be safely laid down that if an agriculturist puts the produce gathered from his lands to certain minimum processes ordinarily employed by an agriculturist to make it really marketable or more marketable or to make it fit to be taken to market, it cannot be said the produce ceases to be an agricultural or horticultural produce. Applying the aforesaid test to the cases before us it is clear that latex is hardened by the application of sulphuric acid, shaped in the form of sheets and dried with the help of smoke. This is done for purposes of preserving the latex, and making it fit for marketing. It follows that rubber is still produce from land and not liable to the sales tax. We are fortified in this view by the observation in <CITATION>  9 S.T.C. 769 at p. 772 where the decision of a learned single Judge, holding rubber to be agricultural produce, was not reversed, and indeed conceded by the Government Pleader. The relevant passage in the case reads as follows:-

The learned Judge after considering the several authorities on the subject, held that tea and rubber would be agricultural produce.... The learned Government Pleader conceded that rubber would be an agricultural produce.

14. It follows that rubber is an agricultural produce and this ground for reversing the order sustaining the dealer's objection also fails. Accordingly all the four revision petitions are dismissed, but without costs.