Land Acquisition Dispute: Supreme Court Upholds Vesting of Sugar Mill Land to Government

The case of Gaurav Aseem Avtej vs. U.P. State Sugar Corporation Ltd. & Ors. involves a dispute over land ownership and the vesting of property under the Uttar Pradesh Sugar Undertakings (Acquisition) Act, 1971. The Supreme Court examined whether the land leased to a sugar mill had vested in the government under the 1971 Act or whether the original owners retained their rights.

The appellant challenged the High Court’s ruling, which held that the land in dispute had vested in the State Government free from all encumbrances. The Supreme Court upheld the High Court’s decision, affirming that the land had been acquired by the government under the provisions of the 1971 Act.

Background of the Case

The original plaintiffs, Vinod Chandra Gupta and his mother, Prakashwati, had leased their land to M/s Shiv Prasad Banarasi Das Sugar Mills, Bijnor for vehicle parking. The lease was renewed in 1976 for five years. After the lease expired in 1980, the plaintiffs issued a notice terminating it and sought eviction of the sugar corporation. However, the corporation refused to vacate the land, claiming it had vested in the State Government under the 1971 Act.

The plaintiffs filed a civil suit seeking eviction and recovery of rent arrears. While the Trial Court and First Appellate Court ruled in their favor, the High Court reversed the decision, holding that the land had vested in the State under the acquisition law.

Arguments by the Parties

Petitioner’s Arguments (Gaurav Aseem Avtej)

The appellant contended that:

• The 1971 Act only vested the leasehold rights, not ownership, and the plaintiffs remained the rightful owners.
• The land was declared non-agricultural under the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950, allowing them to lease it legally.
• The Trial Court and First Appellate Court correctly ruled that the plaintiffs had the right to reclaim the land.

Respondents’ Arguments (U.P. State Sugar Corporation Ltd.)

The respondents argued that:

• The 1971 Act clearly stated that all land used for sugar factories vested in the State Government.
• The plaintiffs had lost their rights to the land when the government took over the sugar mill.
• The High Court correctly interpreted the scope of the acquisition law, and there was no merit in the appeal.

Supreme Court’s Analysis

The Supreme Court examined the relevant provisions of the 1971 Act, particularly Section 3, which provided for the vesting of all assets held or occupied for the purposes of the sugar factory. The Court ruled:

• The word “held” in the Act covered both ownership and leasehold interests.
• The land had been lawfully occupied by the sugar mill for factory-related purposes, bringing it within the scope of the acquisition.
• The plaintiffs could not claim ownership once the land vested in the State Government.

Key Observations by the Court

The Supreme Court stated:

“All lands held or occupied lawfully and which were used for the purposes of the factory stood vested in the Government on the appointed day. The word ‘held’ in Section 2(h)(vi) cannot be interpreted as limited only to a holding as an owner of the property. Legal possession is sufficient for the lands to vest in the Government by forming part of the scheduled undertaking.”

Final Judgment

The Supreme Court dismissed the appeal, affirming the High Court’s ruling. It ruled:

“In view of the above, we are of the opinion that the land in dispute stood vested in the State Government on the appointed day i.e. 03.07.1971.”

Conclusion

This case sets an important precedent regarding land acquisition under the 1971 Act. It clarifies that land occupied for factory operations, whether owned or leased, vests in the government upon acquisition. The ruling underscores the broad scope of government acquisition laws in industrial land disputes.

Petitioner Name: Gaurav Aseem Avtej.
Respondent Name: U.P. State Sugar Corporation Ltd. & Ors..
Judgment By: Justice S.A. Bobde, Justice L. Nageswara Rao.
Place Of Incident: Uttar Pradesh.
Judgment Date: 20-04-2018.

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