V SWARAJYALAXMI Vs. AUTHORISED OFFICER LAND REFORMS MEDAK

JUDGEMENT

(1.) This appeal is preferred against the judgment of the learned single Judge of the High Court of Andhra Pradesh dated 2-7-1996 in Civil Revision Petition No. 4627 of 1997. The appellants are purchasers of land in a Court auction sale. The land in question originally belonged to M/s. Yadavendra Plantations. Yadavendra Plantations were owners of 300 acres of land at Kandi village in Medak District of Andhra Pradesh. In 1968, M/s. Yadavendra Plantations mortgaged the said 300 acres of land in favour of State Bank of India and obtained a loan of Rs. 5 lakhs for setting up a hybrid seed farm. The Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 (hereinafter referred to as "the Ceiling Act") came into force on 1-1-1973. The owners of the land, namely M/s. Yadavendra Plantations filed three declarations under Section 8(1) of the Ceiling Act before the Land Reforms Tribunal. The Tribunal held that out of the 300 acres owned by them, 150 acres of land was surplus land liable to be surrendered to the Government. State Bank of India, which was not made a party in the proceedings before the Land Reforms Tribunal, filed three appeals before the Land Reforms Appellate Tribunal challenging the orders of the Land Reforms Tribunal. The matter was remanded to the Land Reforms Tribunal which again confirmed its earlier order holding that half of the extent admeasuring 300 acres was excess land under the Ceiling Act.

(2.) State Bank of India, meanwhile, filed a suit registered as O.S. No. 27 of 1973 for realisation of the mortgage money. After the said suit was decreed on 29-8-1975 and a final decree was passed on 5-8-1976, State Bank of India filed three Execution Petitions bearing No. 1 of 1977, No. 46 of 1977 and No. 5 of 1980 before the Subordinate Judge, Sangareddy. A sum of Rs. 10 lakhs was due to the State Bank of India under the mortgage executed by the original mortgagor. State Bank of India, in the meantime, also filed three appeals before the Land Reforms Appellate Tribunal against the revised order passed by the Land Reforms Tribunal. In those appeals, the Bank contended that they be permitted to proceed with the recovery of mortgage money, even against the land which was found to be surplus at the hands of the three declarants who were the mortgagor. The Land Reforms Appellate Tribunal was under the impression that under Section 23 of the Ceiling Act, the land mortgaged to the Bank was exempted from the provisions of the Ceiling Laws and permitted the Bank to proceed with the recovery of the money due to them against the land which was found to be surplus at the hands of the declarants. It is relevant to note here that pursuant to the order passed by the Land Reforms Tribunal, the surplus land was taken over by the State on 25-2-1976 under Section 11 of the Ceiling Act. On the strength of the order passed by the Land Reforms Appellate Tribunal the State Bank of India sought to bring the surplus land under Court auction sale. As there were no bidders, steps were taken to sell this land by private negotiations and the surrendered land was thus sold by private negotiations on 22-7-1981.

(3.) Before the sale was confirmed, the appellants herein deposited the sale proceeds on 22-7-1981. However, before confirmation of the sale and issue of the sale certificate, the State Govt. filed E.A. No. 68 of 1981 for setting aside the private sale which was effected pursuant to the permission granted earlier in E.A. No. 51 of 1981 dated 21-7-1981. In an affidavit filed in those proceedings, the Joint Collector stated that the land had already been surrendered by the declarants and it vested in the State free from all encumbrances and that the land was not liable to be sold in Court auction sale. It was also contended that in the sale held pursuant to the order in E.A. No. 51 of 1981, the State was not given notice and as the land was in the possession of the State, the same was not liable to be sold. The Executing Court passed an elaborate order on 7-8-1981 and set aside the order in E.A. No. 51 of 1981 dated 21-7-1981. In that order, the Executing Court held that the Bank did not acquire the land in the course of recovery of the amount due to them and, therefore, the land was not exempted under Section 23(f) of the Ceiling Act and that the Bank had held only the right to security in respect of that land. It was held that the Section 23(f) of the Ceiling Act was not applicable and the Court also noticed that under Section 11 of the Ceiling Act, the Bank could have proceeded only against the compensation amount, if any, payable to the land owners. The Court, in paragraph 11 of the order dated 7-8-1981 made the following directions :