REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NO. 28034/2011 (Arising out of CC 9038/2010) State of Haryana ...Petitioner Versus <NAME> & Ors. ...Respondents J U D G M E N T

<NAME>, J.

1. People are often astonished to learn that a trespasser may take the title of a building or land from the true owner in certain conditions and such theft is even authorized by law.

2. The theory of adverse possession is also perceived by the general public as a dishonest way to obtain title to property. Property right advocates argue that mistakes by landowners or negligence on their part should never transfer their property rights to a wrongdoer, who never paid valuable consideration for such an interest.

3. The government itself may acquire land by adverse possession. Fairness dictates and commands that if the government can acquire title to private land through adverse possession, it should be able to lose title under the same circumstances.

4. We have heard the learned counsel for the State of Haryana. We do not deem it appropriate to financially burden the respondents by issuing notice in this Special Leave Petition. A very vital question which arises for consideration in this petition is whether the State, which is in charge of protection of life, liberty and property of the people can be permitted to grab the land and property of its own citizens under the banner of the plea of adverse possession?

5. Brief facts, relevant to dispose of this Special Leave Petition are recapitulated as under:

6. The State of Haryana had filed a Civil Suit through <NAME>, Gurgaon, seeking a relief of declaration to the effect that it has acquired the rights of ownership by way of adverse possession over land measuring 8 biswas comprising khewat no. 34, khata no.

56, khasra no. 3673/452 situated in the revenue estate of Hidayatpur Chhavni, Haryana.

7. The other prayer in the suit was that the sale deed dated 26th March, 1990, mutation no. 3690 dated 22nd November, 1990 as well as judgment and decree dated 19th May, 1992, passed in Civil Suit No. 368 dated 9 th March, 1991 are liable to be set aside. As a consequential relief, it was also prayed that the defendants be perpetually restrained from interfering with the peaceful possession of the plaintiff (petitioner herein) over the suit land. For the sake of convenience we are referring the petitioner as the plaintiff and the respondents as defendants.

8. In the written statement, the defendants raised a number of preliminary objections pertaining to estoppel, cause of action and mis-joinder of necessary parties. It was specifically denied that the plaintiff ever remained in possession of the suit property for the last 55 years. It was submitted that the disputed property was still lying vacant.

However, the plaintiff recently occupied it by using force and thereafter have also raised a boundary wall of police line. It was denied in the written statement that the plaintiff acquired right of ownership by way of adverse possession qua property in question. The defendants prayed for dismissal of suit and by way of a counter claim also prayed for a decree for possession qua suit property be passed.

9. <ORG> framed the following Issues in the suit.

1. Whether plaintiffs have become owner of disputed property by way of adverse possession? OPP

2. Whether sale deed 26.3.1990 and mutation no.

3690 dated 22.11.90 are null and void as alleged?

OPP

3. Whether judgment and decree dated 19.05.92 passed in civil suit no. 368 dated 9.3.91 is liable to be set aside alleged? OPP

4. Whether the suit of the plaintiff is not maintainable in the present form? OPP

5. Whether the plaintiff has no locus-standi to file the present suit? <ORG>

6. Whether the plaintiff has no cause of action to file the present suit? OPP

7. Whether the suit of the plaintiff is bad for mis-

joinder of necessary parties? OPP

8. Whether defendants no. 1 to 4 are rightful owners of disputed property on the basis of impugned sale deed dated 23.6.1990 registered on 3.7.1990? <ORG>

9. Whether defendants are entitled for possession of disputed property? OPP

10. Relief.

10. Issue No. 1 which relates to adverse possession and issue No. 4 pertaining to maintainability were decided together. According to <ORG>, the plaintiff has failed to prove the possession over the disputed property because the plaintiff could not produce any documentary evidence to prove this. On the contrary, revenue records placed on the file shows that the defendants are the owners in possession of disputed property. <ORG> observed that possession of <ORG>, as claimed in the plaint for a continuous period of 55 years, stood falsified by the documents issued by the officials of the <ORG>.

11. <ORG> also observed that despite claiming adverse possession, there was no pleading qua denial of title of the defendants by the plaintiff, so much so that the specific day when the alleged possession of <ORG> allegedly became adverse against the defendants has not been mentioned in order to establish the starting point of limitation could be ascertained.

12. <ORG> relied on the judgment of this Court in <CITATION> . Bibi Sakina AIR 1964 SC 1254 wherein this Court has laid down that the adverse possession must be adequate in continuity, in publicity and extent and a plea is required at the least to show when possession becomes adverse. The Court also held that long possession is not necessarily adverse possession.

13. <ORG> also relied on a decision of <ORG> and Haryana in the case of <CITATION> ., AIR 2006 P and H 195, wherein it was stated that no declaration can be sought by a plaintiff with regard to the ownership on the basis of adverse possession.

14. <ORG> came to specific conclusion that despite the fact that the possession of the plaintiff over the disputed land is admitted on behalf of defendants, Issue No. 1 stand decided against the plaintiff. It was held that the suit of the plaintiff claiming ownership by way of adverse possession is not maintainable. Consequently, Issue No. 1 was decided against the plaintiff and Trial No. 4 was decided in favour of the defendants.

15. <ORG> decided Issue Nos. 2, 3, 5 and 6 together and came to the definite conclusion that the plaintiff failed to prove its possession over the property in question. It was also held that the plaintiff had no locus standi to challenge the validity of the impugned sale deed, mutation as well as the judgment and decree because the plaintiff was neither the owner nor in possession of the property in dispute. Consequently, the plaintiff had no right to say that the impugned sale deed dated 26th March, 1990 was a sham transaction and the suit of mutation dated 22nd November, 1990 and, thereafter, the judgment and decree dated 19th May, 1992 passed in Civil Suit No. 386 dated 9th March, 1991 are liable to be set aside.

16. <ORG> came to the conclusion that the plaintiff having no right or title in the suit property has neither locus standi nor cause of action to file the present suit. Issue Nos. 2 and 3 were decided against the plaintiff, whereas, Issue Nos. 5 and 6 were decided in favour of the defendants.

17. Regarding Issue Nos. 8 and 9, <ORG> observed that once it is held that defendant Nos. 1 to 4 are owners of the disputed property, which is presently in possession of the plaintiff without any right, they (defendants) are entitled to its possession. Hence, Issue Nos. 8 and 9 were also decided in favour of the defendants.

18. Issue No. 7 was not pressed and decided against the defendants.

19. Regarding Issue No. 10 (relief) <ORG> observed as under:

"As a sequel to the findings of this court on the issues mentioned above, the suit of the plaintiff stands dismissed, however, counter claim filed by defendants is decreed with costs to the effect that they are entitled to possession of land measuring 8 biswas comprising of khewat no. 34 khata no. 56 khasa no. 3673/452 situated in revenue estate of Hidayatpur Chhavni village now the part of known as Patel Nagar, Gurgaon. Decree sheet be drawn accordingly. File be consigned to the record room after due compliance."

20. The plaintiff, aggrieved by the judgment of <ORG> filed an appeal (Civil Appeal No. 33) before the learned Additional District Judge, <NAME>. Learned Additional District Judge while deciding the appeal, relied on the judgment of <ORG> delivered in the case of <ORG> and Another v.

<NAME> 1991 PLJ 425, wherein it was observed that it does not behove the <ORG> to take the plea of adverse possession against the citizens.

21. Learned Additional District Judge also relied on other judgments of <ORG> in the cases of <NAME> (supra) and <NAME> v.

<NAME> Ors. (2007) 146 PLR 498 wherein it was held that a person in adverse possession of immovable property cannot file a suit for declaration claiming ownership and such a suit was not maintainable.

22. Before parting with the judgment the learned Additional District Judge observed regarding conduct of the plaintiff that the present suit was filed by State of Haryana by the then Superintendent of Police, Gurgaon on 11th May, 1996. It was also observed by the learned Additional District Judge that the Police department is for the protection of the people and property of the citizens and the police department had unnecessarily dragged the defendants in unnecessary litigation. The appeal was dismissed with exemplary cost of Rs.25,000/-.

23. Unfortunately, despite serious strictures passed by the Court, the State of Haryana did not learn a lesson and preferred a Second Appeal (RSA No. 3909 of 2008) before <ORG>, Chandigarh against the judgments and decrees of the two courts below.

24. <ORG>, relying on the earlier judgments, observed that the welfare State which was responsible for the protection of life and property of its citizens, was in the present case, itself trying to grab the land/property of the defendants under the garb of plea of adverse possession and hence the action of the plaintiff is deplorable and disgraceful.

25. Unfortunately, the State of Haryana, is still not satisfied with the three strong judgments by three different forums given against the State and is still quite anxious and keen to grab the property of the defendants in a clandestine manner on the plea of adverse possession.

26. In a democracy, governed by rule of law, the task of protecting life and property of the citizens is entrusted to the police department of the government. In the instant case, the suit has been filed through <ORG>, Gurgaon, seeking right of ownership by adverse possession.

27. The revenue records of the <ORG> revealed that the disputed property stood in the name of the defendants. It is unfortunate that the Superintendent of Police, a senior official of <ORG>, made repeated attempts to grab the property of the true owner by filing repeated appeals before different forums claiming right of ownership by way of adverse possession.

28. The citizens may lose faith in the entire police administration of the country that those responsible for the safety and security of their life and property are on a spree of grabing the properties from the true owners in a clandestine manner.

29. A very informative and erudite Article was published in <ORG> Spring 2007 with the title `Making Sense Out of Nonsense: A Response to Adverse Possession by Governmental Entities'. The Article was written by <NAME>. Historical background of adverse possession was discussed in that article.

Historical background

30. The concept of adverse possession was born in England around 1275 and was initially created to allow a person to claim right of "seisin" from his ancestry.

Many felt that the original law that relied on "seisin"

was difficult to establish, and around 1623 a statue of limitations was put into place that allowed for a person in possession of property for twenty years or more to acquire title to that property. This early English doctrine was designed to prevent legal disputes over property rights that were time consuming and costly.

The doctrine was also created to prevent the waste of land by forcing owners to monitor their property or suffer the consequence of losing title.

31. The concept of adverse possession was subsequently adopted in the United States. The doctrine was especially important in early American periods to cure the growing number of title disputes.

The American version mirrored the English law, which is illustrated by most States adopting a twenty-year statue of limitations for adverse possession claims. As America has developed to the present date, property rights have become increasingly more important and land has become limited. As a result, the time period to acquire land by adverse possession has been reduced in some States to as little as five years, while in others, it has remained as long as forty years. The United States has also changed the traditional doctrine by preventing the use of adverse possession against property held by a governmental entity.

32. During the colonial period, prior to the enactment of the Bill of Rights, property was frequently taken by states from private land owners without compensation.

Initially, undeveloped tracts of land were the most common type of property acquired by the government, as they were sought for the installation of public road.

Under the colonial system it was thought that benefits from the road would, in a newly opened country, always exceed the value of unimproved land.

33. The doctrine of adverse possession arose in an era where lands were vast particularly in the United States of America and documentation sparse in order to give quietus to the title of the possessor and prevent fanciful claims from erupting. The concept of adverse possession exits to cure potential or actual defects in real estate titles by putting a statute of limitation on possible litigation over ownership and possession. A landowner could be secure in title to his land; otherwise, long-lost heirs of any former owner, possessor or lien holder of centuries past could come forward with a legal claim on the property. Since independence of our country we have witnessed registered documents of title and more proper, if not perfect, entries of title in the government records. The situation having changed, the statute calls for a change.

34. <CITATION>  (one of us <NAME>, J.), this Court had an occasion to examine the English and American law on "adverse possession". The relevant paras of that judgment (Paras 24 and 26 to 29) are reproduced as under:

"24. In a relatively recent case in P.T.

<CITATION> , this Court again had an occasion to deal with the concept of adverse possession in detail. The Court also examined the legal position in various countries particularly in English and American systems. We deem it appropriate to reproduce relevant passages in extenso. The Court dealing with adverse possession in paras 5 and 6 observed as under: (SCC pp. 66-67) "5. Adverse possession in one sense is based on the theory or presumption that the owner has abandoned the property to the adverse possessor on the acquiescence of the owner to the hostile acts and claims of the person in possession. It follows that sound qualities of a typical adverse possession lie in it being open, continuous and hostile. (See Downing v. <NAME> 100 So 2d 57 (Fla 1958), <ORG> v. City of Little Rock 227, Ark 1085 : 303 SW 2d 569 (1957); <NAME> v. <NAME> 207 NY 240 : 100 NE 742 (1913); City of Rock Springs v.

Sturm 39 Wyo 494 : 273 P 908 : 97 ALR 1 (1929).)

6. Efficacy of adverse possession law in most jurisdictions depends on strong limitation statutes by operation of which right to access the court expires through efflux of time. As against rights of the paper-owner, in the context of adverse possession, there evolves a set of competing rights in favour of the adverse possessor who has, for a long period of time, cared for the land, developed it, as against the owner of the property who has ignored the property. Modern statutes of limitation operate, as a rule, not only to cut off one's right to bring an action for the recovery of property that has been in the adverse possession of another for a specified time, but also to vest the possessor with title. The intention of such statutes is not to punish one who neglects to assert rights, but to protect those who have maintained the possession of property for the time specified by the statute under claim of right or colour of title. (See American Jurisprudence, Vol. 3, 2d, p. 81. It is important to keep in mind while studying the American notion of adverse possession, especially in the backdrop of limitation statutes, that the intention to dispossess cannot be given a complete go-by. Simple application of limitation shall not be enough by itself for the success of an adverse possession claim."

35. A person pleading adverse possession has no equities in his favour since he is trying to defeat the rights of the true owner. It is for him to clearly plead and establish all facts necessary to establish adverse possession. Though we got this law of adverse possession from the British, it is important to note that these days English Courts are taking a very negative view towards the law of adverse possession.

The English law was amended and changed substantially to reflect these changes, particularly in light of the view that property is a human right adopted by <ORG>. This Court in <NAME> (supra) observed that to understand the true nature of adverse possession, Fairweather v. <ORG> [1962] 2 WLR 1020 : [1962] 2 All ER 288 can be considered where House of Lords referring to Taylor v. Twinberrow [1930] 2 K.B. 16 termed adverse possession as a negative and consequential right effected only because somebody else's positive right to access the court is barred by operation of law. As against the rights of the paper-owner, in the context of adverse possession, there evolves a set of competing rights in favour of the adverse possessor who has, for a long period of time, cared for the land, developed it, as against the owner of the property who has ignored the property.

36. The right to property is now considered to be not only constitutional or statutory right but also a human right.

Human rights have already been considered in realm of individual rights such as right to health, right to livelihood, right to shelter and employment etc. But now human rights are gaining a multi faceted dimension. Right to property is also considered very much a part of the new dimension.

Therefore, even claim of adverse possession has to be read in that context.

37. The changing attitude of the English Courts is quite visible from the judgment of <ORG> v.

<NAME> (2005) 3 WLR 554. The <ORG> here tried to read the human rights position in the context of adverse possession.

But what is commendable is that the dimension of human rights have widened so much that now property dispute issues are also being raised within the contours of human rights. With the expanding jurisprudence of <ORG>, the <ORG> has taken an unkind view to the concept of adverse possession.

38. Paragraphs from 26 to 29 of Hemaji Waghaji Jat (supra) are set out as under:-

26. With the expanding jurisprudence of <ORG>, the Court has taken an unkind view to the concept of adverse possession in the recent judgment of <ORG> v. United Kingdom (2005) 49 ERG 90 which concerned the loss of ownership of land by virtue of adverse possession. In the said case, "the applicant company was the registered owner of a plot of 23 hectares of agricultural land. The owners of a property adjacent to the land, Mr and Mrs <NAME> (the <NAME>s) occupied the land under a grazing agreement. After a brief exchange of documents in December 1983 a chartered surveyor acting for the applicants wrote to the <NAME>s noting that the grazing agreement was about to expire and requiring them to vacate the land." The <NAME>s continued to use the whole of the disputed land for farming without the permission of the applicants from September 1998 till 1999. In 1997, Mr <NAME> moved <ORG> against the applicant on the ground that he had obtained title by adverse possession. The <NAME>s challenged the applicant company's claims under the Limitation Act , 1980 (the 1980 Act) which provides that a person cannot bring an action to recover any land after the expiration of 12 years of adverse possession by another.

27. The judgment was pronounced in JA <NAME> (Oxford) Ltd. v. <NAME> (2000) 3 WLR 242 : 2000 Ch 676. The Court held in favour of the <NAME>s but went on to observe the irony in law of adverse possession. The court observed that the law which provides to oust an owner on the basis of inaction of 12 years is "illogical and disproportionate". The effect of such law would "seem draconian to the owner"

and "a windfall for the squatter". The court expressed its astonishment on the prevalent law that ousting an owner for not taking action within limitation is illogical. The applicant company aggrieved by the said judgment filed an appeal and <ORG> reversed the <ORG> decision. The <NAME> then appealed to <ORG>, which, allowed their appeal and restored the order of the <ORG>.

28. <ORG> in <ORG> v. <NAME> (2003) 1 AC 419 : (2002) 3 WLR 221 : (2002) 3 All ER 865 (HL), observed that the <NAME>s had possession of the land in the ordinary sense of the word, and, therefore, the applicant company had been dispossessed of it within the meaning of the Limitation Act of 1980.

29. We deem it proper to reproduce the relevant portion of the judgment in P.T.

<CITATION> : (SCC p. 79, paras 51-52) "51. Thereafter the applicants moved <ORG> (<ORG>) alleging that the United Kingdom law on adverse possession, by which they lost land to a neighbour, operated in violation of Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (`the Convention').

52. It was contended by the applicants that they had been deprived of their land by the operation of the domestic law on adverse possession which is in contravention with Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms (`the Convention'), which reads as under:

`Every natural or legal person is entitled to the peaceful enjoyment of his possession. No one shall be deprived of his possession except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.' "

This <ORG> in <NAME> case also mentioned that <ORG> importantly laid down three-pronged test to judge the interference of the Government with the right of "peaceful enjoyment of property":

(SCC p. 79, para 53) "53. ... [In] <NAME> v. Italy [GC] No. 33202 of 1996 '' 108-14 ECHR 2000-I, it was held that the `interference' should comply with the principle of lawfulness and pursue a legitimate aim (public interest) by means reasonably proportionate to the aim sought to be realised."

The Court observed:(Revamma case 79-80, paras 54-56) "54. ... `The question nevertheless remains whether, even having regard to the lack of care and inadvertence on the part of the applicants and their advisers, the deprivation of their title to the registered land and the transfer of beneficial ownership to those in unauthorized possession struck a fair balance with any legitimate public interest served. In these circumstances, the Court concludes that the application of the provisions of the 1925 and 1980 Acts to deprive the applicant companies of their title to the registered land imposed on them an individual and excessive burden and upset the fair balance between the demands of the public interest on the one hand and the applicants' right to the peaceful enjoyment of their possessions on the other.

There has therefore been a violation of Article 1 of Protocol 1.'

55. The question of the application of Article 41 was referred for the <ORG> of the <ORG>. This case sets the field of adverse possession and its interface with the right to peaceful enjoyment in all its complexity.

56. Therefore it will have to be kept in mind the courts around the world are taking an unkind view towards statutes of limitation overriding property rights."

39. In <NAME> case, this Court ultimately observed as under:

"32. Before parting with this case, we deem it appropriate to observe that the law of adverse possession which ousts an owner on the basis of inaction within limitation is irrational, illogical and wholly disproportionate. The law as it exists is extremely harsh for the true owner and a windfall for a dishonest person who had illegally taken possession of the property of the true owner. The law ought not to benefit a person who in a clandestine manner takes possession of the property of the owner in contravention of law. This in substance would mean that the law gives seal of approval to the illegal action or activities of a rank trespasser or who had wrongfully taken possession of the property of the true owner.

33. We fail to comprehend why the law should place premium on dishonesty by legitimising possession of a rank trespasser and compelling the owner to lose his possession only because of his inaction in taking back the possession within limitation."

Fifth Amendment of the U.S. Constitution - a principle of a civilized society

40. Another important development in the protection of property rights was the Fifth Amendment. <NAME> was the drafter and key supporter for the Fifth Amendment. The Fifth Amendment states: "nor shall private property be taken for public use, without just compensation". The main issue is to pay just compensation for acquiring the property. There are primarily two situations when a landowner may obtain compensation for land officially transferred to or depreciated by the government. First, an owner may be entitled to compensation when a governmental entity intentionally acquires private property through a formal condemnation proceeding and without the owner's consent. The State's power to take property is considered inherent through its eminent domain powers as a sovereign. Through the condemnation proceedings, the government obtains the necessary interest in the land, and the Fifth Amendment requires that the property owner be compensated for this loss.

41. The second situation requiring compensation under Fifth Amendment occurs when the government has not officially acquired private property through a formal condemnation proceeding, but "nonetheless takes property by physically invading or appropriating it". Under this scenario, the property owner, at the point in which a "taking" has occurred, has the option of filing a claim against the government actor to recover just compensation for the loss. When the landowner sues the government seeking compensation for a taking, it is considered an inverse condemnation proceeding, because the landowner and not the government is bringing the cause of action.

42. We inherited this law of adverse possession from the British. The <ORG> may consider abolishing the law of adverse possession or at least amending and making substantial changes in law in the larger public interest.

The Government instrumentalities - including the police -

in the instant case have attempted to possess land adversely. This, in our opinion, a testament to the absurdity of the law and a black mark upon the justice system's legitimacy. The Government should protect the property of a citizen - not steal it. And yet, as the law currently stands, they may do just that. If this law is to be retained, according to the wisdom of the <ORG>, then at least the law must require those who adversely possess land to compensate title owners according to the prevalent market rate of the land or property in question. This alternative would provide some semblance of justice to those who have done nothing other than sitting on their rights for the statutory period, while allowing the adverse possessor to remain on property.

While it may be indefensible to require all adverse possessors - some of whom may be poor - to pay market rates for the land they possess, perhaps some lesser amount would be realistic in most of the cases. The <ORG> may either fix a set range of rates or to leave it to the judiciary with the option of choosing from within a set range of rates so as to tailor the compensation to the equities of a given case.

43. The <ORG> must seriously consider at least to abolish "bad faith" adverse possession, i.e., adverse possession achieved through intentional trespassing.

Actually believing it to be their own could receive title through adverse possession sends a wrong signal to the society at large. Such a change would ensure that only those who had established attachments to the land through honest means would be entitled to legal relief.

44. In case, the <ORG> decides to retain the law of adverse possession, the <ORG> might simply require adverse possession claimants to possess the property in question for a period of 30 to 50 years, rather than a mere

12. Such an extension would help to ensure that successful claimants have lived on the land for generations, and are therefore less likely to be individually culpable for the trespass (although their forebears might). A longer statutory period would also decrease the frequency of adverse possession suits and ensure that only those claimants most intimately connected with the land acquire it, while only the most passive and unprotective owners lose title.

45. Reverting to the facts of this case, if the <ORG> department of the <ORG> with all its might is bent upon taking possession of any land or building in a clandestine manner, then, perhaps no one would be able to effectively prevent them.

46. It is our bounden duty and obligation to ascertain the intention of the <ORG> while interpreting the law. Law and Justice, more often than not, happily coincide only rarely we find serious conflict. The archaic law of adverse possession is one such. A serious re-look is absolutely imperative in the larger interest of the people.

47. Adverse possession allows a trespasser - a person guilty of a tort, or even a crime, in the eyes of law - to gain legal title to land which he has illegally possessed for 12 years. How 12 years of illegality can suddenly be converted to legal title is, logically and morally speaking, baffling.

This outmoded law essentially asks the judiciary to place its stamp of approval upon conduct that the ordinary Indian citizen would find reprehensible.

48. The doctrine of adverse possession has troubled a great many legal minds. We are clearly of the opinion that time has come for change.

49. If the protectors of law become the grabbers of the property (land and building), then, people will be left with no protection and there would be a total anarchy in the entire country.

50. It is indeed a very disturbing and dangerous trend. In our considered view, it must be arrested without further loss of time in the larger public interest. <ORG>, <ORG>, and much less <ORG> should be permitted to perfect the title of the land or building by invoking the provisions of adverse possession and grab the property of its own citizens in the manner that has been done in this case.

51. In our considered view, there is an urgent need for a fresh look of the entire law on adverse possession. We recommend <ORG> to immediately consider and seriously deliberate either abolition of the law of adverse possession and in the alternate to make suitable amendments in the law of adverse possession. A copy of this judgment be sent to the Secretary, <ORG>, <ORG>, <ORG> for taking appropriate steps in accordance with law.

52. This Special Leave Petition is dismissed with costs of Rs.50,000/- (Rupees Fifty Thousand only) to be paid by the State of Haryana for filing a totally frivolous petition and unnecessarily wasting the time of the <ORG> and demonstrating its evil design of grabbing the properties of lawful owners in a clandestine manner. The costs be deposited within four weeks from the date of pronouncement of this judgment. In this petition, we did not issue notice to the defendants, therefore, we direct that the costs be deposited with <ORG> for utilizing the same to enable the poor litigants to contest their cases.

53. This Special Leave Petition being devoid of any merit is accordingly dismissed.

..................................J.

(<NAME> .................................J.

(<NAME>) New Delhi:

September 30, 2011


JUDGMENT <NAME>, J.

1. These two tax revision cases give rise to a common question of law for our consideration and hence they are disposed of by a common order.

2. The State of Andhra Pradesh is the revision-petitioner in both the cases. The respondents are dealers in iron and hardware goods. While assessing the dealers to sales tax, the Commercial Tax Officer exempted the sales of (i) galvanised plain or corrugated sheets and (ii) B. P. sheets, in both the cases and of wire-nails in the first case on the ground that those commodities fell within the ambit of entry No. 2 in the Third Schedule to the Andhra Pradesh General Sales Tax Act (hereinafter called "the Act"), namely, "iron and steel" and those sales were not the first sales, but second sales.

3. In the exercise of his revisional powers Under Section 20(2) of the Act, the Deputy Commissioner of Sales Tax, suo motu, revised the assessments by withdrawing the exemption that was granted by the Commercial Tax Officer as, in his opinion, the view taken by the Commercial Tax Officer that the corrugated and B.P. sheets and wire-nails fell under the entry "iron and steel", was erroneous in law.

4. On appeals filed by the dealers, <ORG> held that galvanised plain or corrugated sheets and B.P. sheets fell within "iron and steel", entry No. 2 in the Third Schedule to the Act and as the sales effected by the dealers were not the first sales, those sales were exempted from payment of sales tax. The <ORG>, however, upheld the view of the Deputy Commissioner of Sales Tax that the commodity of wire-nails did not fall within the entry "iron and steel". In other words, <ORG> disagreed with the Deputy Commissioner's view in respect of the sales of the first two commodities and exempted the sales of those commodities from tax, but, with regard to the sales of wire-nails, <ORG> upheld the view of the Deputy Commissioner of Sales Tax that they were exigible to sales tax.

5. Aggrieved by the orders of <ORG>, the State of Andhra Pradesh has filed these tax revision cases, raising four questions of law for our consideration. These four questions can be reframed into one question and that question is:

Whether the commodities of galvanised plain or corrugated sheets and B.P. sheets fall within the ambit of 'iron and steel', i. e., entry No. 2 in the Third Schedule to the Andhra Pradesh General Sales Tax Act ?

6. Commodities mentioned in the Third Schedule to the Act are declared goods in respect of which a single point tax only is leviable Entry No. 2 in that schedule is "iron and steel". The sales of iron and steel are made taxable at the point of first sale at 0.3 paise in a rupee. The said entry defines "iron and steel" thus :

Iron and steel, that is to say,

(a) pig iron and iron scrap ;

(b) iron plates sold in the same form in which they are directly produced by the rolling mills;

(c) steel scraps, steel ingots, steel billets, steel bars and rods ;

(d)(i) steel plates,

(ii) steel sheets,

(iii) steel bars and tin bars,

(iv) rolled steel Sections and

(v) tool alloy steel, sold in the same form in which they are directly produced by the rolling mills.

7. The learned Advocate appearing for the <ORG> contended that the real test that has to be applied for determining whether galvanised plain or corrugated sheets or B.P. sheets fall within "iron and steel" within the meaning of entry No. 2 in the Third Schedule to the Act is the test of possibility of substitution of the one for the other, so far as the consumers are concerned. If there is no such possibility, it would be a different commodity, but if there is such a possibility, it would be the same commodity. For that purpose, the entries in the schedule to the Act must be construed or understood not in a technical sense but in a sense as understood in common parlance by persons who are conversant with the subject-matter with which the statute is dealing.

8. Corrugated and B.P. sheets in the commercial field are understood by business people, in ordinary parlance, as commodities different from iron and steel. The use for which the corrugated sheets and B.P. sheets are put by the consumers is something different from the use to which iron and steel are put. The trade names under which corrugated sheets and B.P. sheets and the iron and steel are sold, are different from one another. Hence it was urged by the learned counsel appearing for the <ORG> that <ORG> erred in holding that the galvanised plain and corrugated sheets and B.P. sheets fall within the entry "iron and steel". In support of this argument, the learned counsel relied upon the decisions in <CITATION>  23 S.T.C. 288, <CITATION> .  12 S.T.C. 286 (S.C.) and the <CITATION> .) Ltd.  20 S.T.C. 409.

9. The learned counsel <NAME>, appearing for the dealers, on the other hand, submitted that iron and steel are not sold as such, but are sold in acceptable forms and shapes and merely because iron and steel are put to some process for bringing them into acceptable forms and shapes for their sales, i. e., into galvanised or B. P. sheets, they do not cease to be iron and steel. In support of his argument, the learned counsel relied upon the following decisions :

(i) <CITATION>  19 S.T.C. 24 (S.C) in which <ORG> held that patasa, hard a and alchidana fall within the definition of "sugar";

(ii) <CITATION> A.I.R. 1966 S.C. 1546, in which <ORG> held that bars, flats and plates fall within the definition of "iron and steel";

(iii) <CITATION>  26 S.T.C. 416 in which <ORG> held that though mild steel rounds, flats and angles manufactured from "iron and steel" scraps maybe commercially different from iron and steel scraps, still they do not cease to be "iron and steel"; and

(iv) <CITATION>  11 S.T.C. 827 (S.C.) in which <ORG> held that hydrogenated groundnut oil called "vanaspati" is "groundnut oil" within the meaning of Rule 18(2) of the Madras General Sales Tax Rules.

10. In order to decide the question referred to us, we must know the exact nature of the commodities known as galvanised plain or corrugated sheets and B.P. sheets.

11. Corrugated sheets are iron sheets with parallel ridges and furrows so that the cross-section is a continuous waved line. "Flat sheet metal", according to <ORG>, 1958 Edition, Volume 8, at page 21, "tends to buckle and get out of shape with every change in temperature. The corrugations, made in one direction, give it greatly increased stiffness and adapt it to numerous purposes for which it would otherwise be less suitable. The sheet metal is corrugated by passing between ridged rollers.... It comes out in the commercial form,and is frequently subjected to a process of coating with zinc to protect from oxidation and is then known as galvanised corrugated iron. It is used widely for roofing and walling barns, sheds, warehouses and other buildings...."

12. Encyclopaedia Britannica, Fourteenth Edition, Volume 6, at page 471, points out that corrugating process enables much lighter gauges of sheets to be used because it makes them very rigid and portable.

13. Corrugated iron sheets are thus nothing but iron sheets-sheets of iron-corrugated, that is, wrinkled for the purpose of making them more rigid and giving them increased stiffness so that they become more suitable for roofing and walling than they would otherwise be as flat iron sheets. They are merely iron sheets with their shapes altered to make them more adaptable and useful for being used as iron sheets for roofing and walling.

14. On a difference of opinion expressed by two learned Judges, the learned Chief Justice of <ORG> in <CITATION>  23 S.T.C. 288 agreed with the view expressed by one of the differing Judges, Mr. <NAME>, that galvanised plain or corrugated sheets fall within the entry "iron and steel" under the Bombay Sales Tax Act. The definition of "iron and steel" given by the Bombay Sales Tax Act is exactly identical with its definition given in the Andhra Pradesh General Sales Tax Act.

15. The test, of substitution of the one for the other, applied by <NAME>, J., was not accepted by the learned Chief Justice. The learned Chief Justice observed that:

...It is no doubt true that iron sheets when corrugated cease to be raw materials for manufacture or fabrication of goods and they can be used only as corrugated iron sheets for roofing and walling but on that account they do not cease to be iron sheets having the essential character of iron. It may be that by reason of alteration of shape, iron sheets may cease to be usable for any purpose other than roofing or walling but they still remain iron sheets and do not lose the essential character of iron which they possessed as flat iron sheets before corrugation. The process of corrugation is one of Alteration of shape and it does not make iron sheets a different or product of iron....

16. The question as to when a commodity would lose its essential character of the raw material and becomes a different or a product of the raw material, is one of degree and where precisely to draw the dividing line is a pretty difficult task. However, the test of substitution or the user of the one for the other is not the sole criterion for holding the view that the galvanised corrugated or plain sheets are a commodity different from "iron and steel" as defined in entry No. 2 in the Third Schedule of the Andhra Pradesh General Sales Tax Act.

17. Entry No. 2 in the Third Schedule to the Andhra Pradesh General Sales Tax Act begins with the words "iron and steel, that is to say...." Those words are of considerable importance. They are explanatory of what iron and steel is. All s enumerated under that head, either in their crude form or in their manufactured stage or in any of the forms listed under the sub-headings (a), (b), (c) and (d), are treated as various forms of iron and steel.

18. The scope and meaning of the words "that is to say" following "land" in entry No. 21 of List II of the Seventh Schedule to the Government of India Act, 1935, has been expressed by <ORG> in <CITATION> A.I.R. 1917 P.C. 72 as introducing the most general concept "rights in or over land".

19. By a parity of reasoning, the words "that is to say" occurring immediately after "iron and steel" in entry No. 2 show that the <ORG> intended to adopt the most general concept of iron and steel and wanted all forms of iron and steel to be brought within that entry.

20. <CITATION> .  12 S.T.C. 286 (S.C.) the dealer claimed exemption from payment of sales tax on betel leaves, contending that betel leaves fell under the entry "vegetables" which was an exempted item. <ORG> rejected the contention holding that :

this word must be construed not in any technical sense nor from the botanical point of view but as understood in common parlance. It has not been defined in the Act and being a word of every day use it must be construed in its popular sense meaning 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'

21. A Division Bench of this Court in the <CITATION> .) Ltd.  20 S.T.C. 409 held that:

'manganese' does not include 'manganese ore' in the popular sense of the term, though from the scientist's point of view manganese ore may contain manganese

22. The learned Judges observed that:

in interpreting items in statutes like the Sales Tax Act ,resort should be had not to the scientific or technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their ordinary sense.

23. <CITATION>  11 S.T.C. 827 (S.C.), <ORG> had to consider whether the hydrogenated groundnut oil (commonly called "vanaspati") was "groundnut oil" within the meaning of the Rule 18(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939.

24. Before <ORG>, the decision of which was the subject-matter of the appeal before <ORG>, the dealer had claimed deduction of the purchase price of the groundnuts from the proceeds of the sale of all oils by the company-raw, refined and hydrogenated. Both the <ORG> as well as the learned Judges of <ORG> upheld the dealer's contention in regard to the sale of refined oil, but rejected it in so far as it related to the sale of hydrogenated oil.

25. The <ORG> as well as <ORG> held that the hydrogenated oil ceased to be groundnut oil by reason of the chemical changes which took place and which resulted in the acquisition of new properties including the loss of its fluidity. In other words, <ORG> held that hydrogenated oil was not groundnut oil but a product of groundnut manufactured out of groundnut oil and, therefore, was not entitled to the benefit of deduction under Rule 18(2). Before <ORG>, the question that was raised for their decision was, whether, if beyond the process of refinement of the oil, the oil was hardened again by the use of chemical processes, it was rendered any-the-less groundnut oil ? In regard to that question, the Advocate-General, late <NAME>, laid stress on two facts: (i) while normally oil was a viscous liquid, the hydrogenated oil was semi-solid and that this change in its physical state was itself indicative of a substantial modification of the identity of the substance; and (ii) in the course of hydrogenation the oil absorbed two atoms of hydrogen and there was an inter-molecular change in the content of the substance. <NAME>, J., speaking for <ORG>, rejected the first submission and in regard to the second submission, stated that it was not decisive of the matter.

26. The learned Judge observed that:

To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnuts and, secondly, the commodity must be 'oil' The addition of the hydrogen atoms was effected in order tosaturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality and utility. But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood The change here is both additive and inter-molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used

27. In the end, the learned Judge held that the hydrogenated oil will continue to be groundnut oil notwithstanding the processing which was merely for the purpose of rendering the oil more stable thus improving its keeping qualities for those who desire to consume groundnut oil.

28. <CITATION>  19 S.T.C. 24 (S.C.), the question that arose for the decision of <ORG> was whether patasa, harda and alchidana could be regarded as "sugar", which was defined as meaning "any form of sugar containing more than 90 per cent of sucrose".

29. A small portion of hydrogen sulphide is passed through the sugar solution for bleaching purposes, after which patasas are prepared by splashing the solution on a piece of wood which converts the sugar into amorphous sugar; the hard as are prepared by pouring the solution into moulds which is then allowed to cool and the alchidanas are prepared by rapidly passing the solution of appropriate thickness through a sieve so as to convert it into granulated lumps of sugar.

30. It was contended on behalf of the <ORG> that patasa, harda and alchidana bore a distinct and different name from sugar and were not commercially purchased or sold as sugar and, therefore, they were commodities different from "sugar". This argument was rejected. It was held that they fell within the definition of "sugar".

31. In <NAME> v. <NAME> [1954] 5 S.T.C. 365, a question arose before <ORG>, whether chira and muri could be said to be covered by the words "all cereals and pulses including all forms of rice".

32. Chira is parched beaten rice. It involves the process of boiling paddy, its dehydration, frying and flattening. Muri involves the process of soaking, boiling and dehydration of paddy and the removal of husks. As a result of these processes, the rice became edible and could be taken as food without any more cooking.

33. Although the , when so transformed, bore a different name and could not be commonly recognised as "rice", <NAME>, C.J., observed that it seemed to him that those commodities could be regarded more as forms of rice than products thereof and were, therefore, exempt from the payment of tax under the Assam Sales Tax Act, 1947.

34. <CITATION>  19 S.T.C. 469 (S.C.) in considering whether charcoal was included in the word "coal" specified in entry 1 of Part III of Schedule II to the Madhya Pradesh General Sales Tax Act, 1958, <ORG> observed that :

while construing the word 'coal' in entry 1 of Part III of Schedule II to the Act, the test that would be applicable is, what is the meaning which persons dealing with coal and consumers purchasing it as fuel would give to that word. A sales tax statute, being one levying a tax on goods, must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term as 'coal' according to the meaning ascribed to it in common parlance. Viewed from that angle, both the merchant dealing in coal and a consumer wanting to purchase it would regard coal not in its geological sense but in the sense as ordinarily understood and would include 'charcoal' in the term 'coal'....

35. <ORG> also observed that:

...While interpreting items in statutes like the Sales Tax Act s,resort should be had not to the scientific or technical meaning of such terms but to their popular meaning or the meaning attached to them by those dealing in them, that is to say, to their commercial sense....

36. <CITATION> A.I.R. 1966 S.C. 1546 Subba Rao, J. (as he then was), speaking for <ORG>, observed that:

...So long as iron and steel continued to be raw materials, they enjoyed the exemption. Scrap iron purchased was merely re-rolled into bars, flats and plates. They were processed for convenience of sale. The raw materials were only re-rolled to give them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold 'iron and steel' in the shape of bars, flats and plates and the customer purchased 'iron and steel' in that shape....

37. <ORG> held that bars, flats and plates sold by the assessee were "iron and steel" which were exempted under the notification.

38. <CITATION>  26 S.T.C. 416, a Division Bench of <ORG> held that:

...Even though mild steel rounds, flats and angles manufactured from iron and steel scraps may be commercially different from iron and steel scraps, they do not cease to be 'iron and steel' and tax can be levied only at a single point in the series of sales from the stage of raw material till it is sold in the same form in which it has been produced by the rolling mills, that is, till the manufactured s have been converted into any other form of fabricated material....

39. From the aforesaid discussion it emerges that a taxing statute like the Sales Tax Act must, in the absence of a technical term or a term of science or art, be presumed to have used an ordinary term according to the meaning ascribed to it in common parlance. In interpreting items contained in those entries, resort should be had not to the scientific, geological or botanical sense, but to their popular meaning, or the meaning that is attributed to them by those who are dealing in those commodities and the meaning in which their consumers or buyers understand them.

40. The test of possibility of substitution of the one for the other, so far as the consumers or purchasers are concerned, cannot be said to be a decisive or the only test for determining whether the sold was the same or different from the s specified in the entry in the schedule to the Sales Tax Act .

41. If the raw material is subjected to a processing by the application of chemical methods, either for the removal of impurities or for improving its quality or utility, the resulting does not lose its essential character as the raw material.

42. Neither mere absorption of other matter, nor any inter-molecular changes effected in processing the raw material, necessarily affect the identity of the as ordinarily understood by the dealers or consumers.Mere change of physical form or shape of the raw material by the application of some process or the other, so as to prevent it from oxidation or to increase its utility, the resulting from that process, although called by a different trade name in the commercial world, does not lose its essential character of the raw material. The different uses to which the raw material and the resulting from it by reason of some process or the other, are put to, would not be decisive of the fact that the resulting is different from the raw material that was processed.

43. It is in this background of decided cases and by applying the tests laid down by those cases, that we will now have to decide whether or not galvanised plain of corrugated sheets and B.P. sheets are different from "iron and steel" specified in entry No. 2 in the Third Schedule to the Andhra Pradesh General Sales Tax Act.

44. Galvanisation is nothing but coating the iron sheet with zinc by an electrical process, or some other processes, to prevent it from oxidation. The galvanisation improves the utility of the raw material of iron. Corrugation is merely wrinkling of the sheets in one direction for the purpose of making the sheets more rigid and for giving increased stiffness so as to be more suitable for roofing and walling. Corrugation results merely in the alteration of the shape of the raw material, "iron and steel". Both corrugation and galvanisation improve the utility of the raw material. By the process of galvanisation and corrugation, the iron and steel do not lose their essential character as "iron and steel" when the resulting s are sold as galvanised plain or corrugated sheets. The purposes for which the iron is used may be different from the purposes for which the galvanised plain or corrugated sheets are used, but for that mere reason it is difficult to hold that the essential character of iron has been lost. Nor is the fact that the raw material and the s resulting on processing that are sold under different and distinct names in the commercial market, would be decisive of the fact that the galvanised plain or corrugated sheets are different from iron, the raw material which still exists in them. B.P. sheets are mere sheets of steel and hence a fortiori they are forms of "iron and steel".

44. Hence we agree with the <ORG> that galvanised plain or corrugated sheets and B.P. sheets fall within entry No. 2 in the Third Schedule to the Andhra Pradesh General Sales Tax Act. Since the sales of those s are not the first sales effected by the dealers but are the second sales, the dealers are not liable to pay the sales tax thereon.

45. The references are accordingly answered. The <ORG> shall pay the costs of these references to the dealers. The tax revision cases are dismissed.