Himachal Pradesh High Court
Reserved On: 12.03.2025 vs State Of H.P. And Another on 8 April, 2025
2025:HHC:9583 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CMPMO No. 436 of 2024 Reserved on: 12.03.2025 Decided on: 08.04.2025
------------------------------------------------------------------------------------- M/s Hemkunt Iron & Steel Pvt. Ltd.
......Petitioner Versus State of H.P. and another .......Respondents
------------------------------------------------------------------------------------- Coram The Hon'ble Mr. Justice Satyen Vaidya, Judge Whether approved for reporting?1 Yes For the Petitioner : Mr. Shrawan Dogra, Senior Advocate, with Mr. Manik Sethi, Advocate.
For the Respondent : Mr. Anup Rattan, Advocate General, with Mr. Hemand Kumar Verma, Deputy Advocate General and Mr. Shalav Thakur, Asstt. Advocate General.
------------------------------------------------------------------------------------ Satyen Vaidya, Judge Aggrieved against the order/communication dated 18.07.2024 (Annexure P-5) issued by respondent No.2, petitioner has invoked the jurisdiction of this Court under Article 227 of the Constitution of India for following relief:
"A. A direction be issued under the Supervisory jurisdiction to annul the order-cum-communication dated 18.07.2024 (Annexure P-5) passed by respondent No.2 as being patently perverse based on illegal consideration and to direct the respondents to decide the application of the petitioner for the grant of the Section 1 Whether reporters of print and electronic media may be allowed to see the order?
2 2025:HHC:9583 118 Permission strictly in terms of law within stipulated time without considering the objections as mentioned in the order-cum-communication dated 18.07.2024 (Annexure P-5)."
2. The case as set-up by the petitioner is that it had purchased a piece of land measuring 9-07 Bighas after obtaining permission dated 6.5.1981 from the State Government under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 (for short, "The Act") for establishment of an industrial unit. The petitioner started its industrial production on 10.03.1984. The unit of the petitioner was registered with the Department of Industries on 01.02.2014. On 24.04.2023, the petitioner has entered into an agreement to sell with M/s M.T. Autocraft Private Limited whereby the land purchased by the petitioner has been agreed to be further sold to M/s M.T. Autocraft Pvt. Ltd.
3. As the petitioner is obligated to seek prior permission of the State Government to sell the land as per the provisions of the Act, petitioner initiated the process for the same and finally the Deputy Commissioner, Solan recommended the case of the petitioner to the State Government on 20.02.2024 in terms of Rule 38A (2) (a) of the 3 2025:HHC:9583 H.P. Tenancy and Land Reforms Rules, 1975 (for short, "The Rules").
4. The State Government is the competent authority to take final decision on the application of the petitioner. When the decision making was delayed by the competent authority, the petitioner approached this Court by way of CMPMO No.375 of 2024. The said petition was disposed of by a co-ordinate Bench of this Court vide order dated 28.06.2024 in following terms:
"11. Accordingly, I deem it appropriate to dispose of this petition by directing the competent authority to decide the application submitted by the petitioner after taking into consideration the recommendations made by the Deputy Commissioner, Solan on or before 12th July, 2024."
5. Thereafter, the impugned order/communication was issued whereby the application of the petitioner has been rejected.
6. I have heard learned counsel for the parties and have also gone through the records of the case carefully.
7. The grounds for rejection of the application of the petitioner have been mentioned in the order/ communication dated 18.07.2024 as under:
4 2025:HHC:9583 "(a) M/s Hemkunt Iron & Steel Pvt. Ltd. purchased land to set up an industry after taking permission under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 in the years 1981. The land should have been put to use within two years, however, the certificate issued by the Deputy Director Industries, dated 02.12.2023 mentions that the industry "started production in 1984 as acknowledged by this office on 01.02.2014".
Therefore, it appears that production was actually delayed beyond the permissible limited. This is in violation of the act and the very purpose of permission under Section 118 seems to have violated.
(b) Further it is cleared from the record that the construction of the shed was taken up in the year 2005 which was on 105 square meter area out of total 7037.08 Sq. meters, total plot area. This also points out that the constructed area was only a small shed on more than 09-07 bigha land. This also shows that seller has actually violated the provisions of the act and has deliberately not produced entire record to show the exact position of the site. This can be verified from the valuation report submitted with the case. Therefore, this is a case of violation of Section 118 of the Act and the Industry named M/s Hemkunt Iron & Steel Pvt. Ltd. is trying to sell this land in violation of the Act. Thus, the case is rejected."
8. The aforesaid order/communication has been addressed by the Additional Chief Secretary (Revenue), Government of Himachal Pradesh to the Deputy 5 2025:HHC:9583 Commissioner, Solan with copies to the petitioner and M/s Autocraft Pvt. Ltd. with direction as under:
"You are, therefore, requested to enquire the case under Section 118 of H.P. Tenancy and Land Reforms Act, 1972 and if violation is found suitable action should be taken as per law."
9. Learned Advocate General, at the time of hearing of the matter, raised an objection as to maintainability of the petition under Article 227 of the Constitution of India on the ground that such jurisdiction is available with this Court only with respect to the order or decision or conduct of judicial or quasi-judicial authority which may be termed as Court or Tribunal. According to learned Advocate General, the order assailed in the present petition is neither judicial nor quasi- judicial order, rather the State Government while exercising the powers under the Act and the Rules has performed purely an administrative function.
10. On the other hand, Sh. Shrawan Dogra, learned Senior Advocate representing the petitioner has opposed the contention raised by learned Advocate General. He submitted that the function performed by the State Government in exercise of powers under Section 118 (2) (h) read with Rule 38-A(2) of the Rules, is quasi-judicial in nature as it affects 6 2025:HHC:9583 the substantive rights of a party. Mr. Dogra would submit that the power vested in the State Government, under the Act and the Rules, is to take decision either to accept or reject the application after considering the material submitted to it by the District Collector. Keeping in view the inherent mechanism provided under the Act and the Rules, the decision either to accept or reject the application has to be backed by the reasons based on objective considerations and not on the ipse-dixit of the authority. In this manner, it is tried to be suggested that the Act and Rules require the authority to act judicially while deciding the application for permission to transfer the land otherwise barred by the provisions of Section 118 of the Act. Learned Senior Counsel also pointed out that the power of review available with the State Government on the application of the applicant, whose application has been rejected, clearly points out the existence of mandate to decide the matter judicially.
11. In order to assess the rival contentions of the parties, it will be useful to notice the relevant provisions of the Act and Rules as under:
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(a) Sub Section 1 of Section 118 of the Act prohibits the transfer of land in favour of a person who is not Agriculturist;
(b) Clause (h) of Sub Section 2 of Section 118 reads as under:
"Nothing in sub section (1) shall be deemed to prohibit the transfer of land by any person in favour of a non-agriculturist with the permission of the State Government for the purpose that may be prescribed;
(c) The second proviso to clause (h) of Sub Section 2 of Section 118 reads as under:
"Provided further that a non-agriculturist who purchases land under clause (dd) or in whose case permission to purchase land is granted under clause (h) of this sub section shall put the said land to such use for which the permission has been granted within a period of two years or a further such period not exceeding one year, as may be allowed by the State Government for reasons to be recorded in writing, to be counted from the day on which the sale deed of land is registered and if he fails to do so or diverts, without the permission of the State Government, the said use for any other purpose or transfer by way of sale, gift or otherwise, the land so purchased by him, in the prescribed manner, vest in the State Government free from all encumbrances"
12. Rule 38-A of the Rules reads as under:
38-A Purpose for which land is transferrable under section 118(2)(h) (1) Where a non-agriculturist intends to acquire land in his name by way of sale, gift, will, exchange, lease or mortgage with possession, he shall apply for permission under clause (h) of sub-section (2) of 8 2025:HHC:9583 section 118 of the Act, in Form LR-XIV duly supported with the documents specified, to the Collector in whose jurisdiction the land is situated.
(2) (a) On receipt of the application, complete in all respects under sub-rule (1), the Collector shall, after calling for the information from the revenue staff in form LRXV and holding such enquiry as he may deem fit, verify the title of the land in question and if he is of the opinion that the application should be accepted, he shall recommend application within a period of 30 days from the date of its receipt by him to the State Government for its consideration: Provided that if there is any objection or shortcoming in the application Form LRXIV, the Collector shall convey all such objection(s) or shortcoming(s) at one time only to avoid un- necessary delay: Provided further that in case of transfer of land to Industrial/Tourism units or Hydro electric projects, the documents shown in items II, VI and VII of Part II of Form LRXIV and spot inspection report of the revenue officers/officials in Form LRXV shall not be required"
(b) On receipt of the recommendations made by the Collector under clause (a) of this sub-rule, the State Government shall consider the application and allow or [reject the application within 30 days:] Provided that in case of Industrial/Tourism units or Hydro electric projects, the permission so granted shall be subject to the fulfilment of other statutory requirements if any;] 9 2025:HHC:9583
(c) The applicant shall be informed of every order passed by the State Government under clause (b) of this sub-rule; and
(d) Any applicant, whose application has been rejected, may, within 60 days of the date of order of rejection, apply to the State Government to review the order and the Government may, after making such further inquiry as it may think fit, pass such order as it considers necessary:
Provided that the State Government may entertain the review application after the expiry of the said period of 60 days, if it is satisfied that the applicant was prevented by sufficient cause from filing the review application in time.
(3) The permission under sub-rule 2 may be granted for any of the following purposes and subject to the following scales:-
Purpose Area Conditions Eligibility of Other on transfer transferee(s) conditions
(e) For Such area as Shall not That the As per industrial/ may be become person is proforma religious/ certified by landless/ qualified to for tourism/ the houseless undertake Essentialit apartment Department such activity y / hydel concerned to be Certificate project/BT certified by and /IT project concerned Check list department separately as per notified criteria laid down by the department 10 2025:HHC:9583
13. By referring to the binding precedents from Province of Bombay vs Kusaldas S Advani [1950 SCC 551 :
(1950) SCR 621], Radheshyam Khare Vs State of Madhya Pradesh 1958 SCC Online SC 43, Harinagar Sugar Mills Ltd. vs. Shyam Sunder Jhunjhunwala & others reported in AIR 1961 SC 1669 and Associated Cement Companies Ltd. Vs P.N. Sharma and others AIR 1965 SC 1595 it can be said that the following broad parameters are required to declare an authority to have been vested with quasi-judicial functions:
(a) A statutory authority has power to do any act which will prejudicially affect the subject.
(b) The adjudication is on contest for an issue between the two or more parties.
(c) Even if there are no two or more parties, the contest is between the authority proposing to do the act and the subject opposing it.
(d) The authority should be vested under the statute expressly or impliedly, a duty to act judicially.
14. Further it has been held that if the Government embarks upon curial functions and proceeds to exercise judicial powers and decide disputes, in such circumstances, it is legitimate to refer the authority who deals with the matter as a "Tribunal".
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15. Thus, it becomes clear that the basic test to qualify as "Tribunal" is that it should be a body vested with judicial powers of the State. It has also been categorically held that the word Tribunal mentioned in Article 227 of the Constitution has the same meaning as in Article 136.
16. Coming to the facts of the case, it is not in dispute that petitioner was non agriculturist and was granted permission by the State Government to purchase land for industrial purpose in the year 1981. Now in 2024 the petitioner intends to transfer by way of sale the same land in favour of another entity which also is not the agriculturist. The petitioner is under prohibition to do it in terms of second proviso to section 118(2)(h) of the Act, without permission from the State Government.
17. Petitioner followed the procedure provided in Rule 38-A supra and the Collector recommended its case to the State Government.
18. In the instant case the State Government has rejected the case of petitioner. The decision of the State Government would definitely prejudice the rights of subject i.e. the petitioner herein as the petitioner's investments (tangible and intangible) are at stake. The mere fact that there 12 2025:HHC:9583 is no adjudication between two or more rival contestants shall also not be an impediment in light of what has been held in Kusaldas S Advani (supra).
19. Thus, the question is as to whether the State Government while taking decision in exercise of jurisdiction under section 118(2)(h) of the Act and Rule 38-A of the Rules discharges purely an administrative function or the Act and Rules require the State Government to act judicially?
20. The Constitutional Bench of Hon'ble Supreme Court in Board of High School and Intermediate Education U.P. Allahabad Vs Ghanshyan Dass Gupta and others AIR 1962 SC 1110 by making reference to principles laid down in Kusaldas S Advani supra observed as under:
"8. These principles have been acted upon by this Court in later cases : see Nagendra Nath Bora v. Commissioner of Hills Division Appeals, Assam [(1958) SCR 1240] , Radheshyam Khare v. State of Madhya Pradesh [(1959) SCR 1440] , Gullapalli Nageswara Rao v. Andhra Pradesh State Road Transport Corporation [1959 Supp (1) SCR 319] , and Shivji Nathubha v. Union of India [(1960) 2 SCR 775] . Now it may be mentioned that the statute is not likely to provide in so many words that the authority passing the order is required to act judicially; that can only be inferred from the express provisions of the statute in the first instance in each case and no one circumstance alone will be determinative of the question whether the authority set up by the statute has the duty to act judicially or not. The inference whether the authority acting under a statute where it is silent has the duty to act judicially will depend on the express provisions of the statute read along with the nature of the right affected, the manner of the disposal provided, the objective criterion 13 2025:HHC:9583 if any to be adopted, the effect of the decision on the person affected and other indicia afforded by the statute. A duty to act judicially may arise in widely different circumstances which it will be impossible and indeed inadvisable to attempt to define exhaustively: (vide observations of Parker, J., in R. v. Manchester Legal Aid Committee [1952 2 QB 418]."
21. The State Government as per Rule 38-A (2)(b) is under mandate to consider the application as the term used is "shall consider" and thereafter has the power to either allow or reject the application. The term "consider" needs to looked in the perspective it has been used. Rule 38-A (3) provides for purpose and scale with respect to permissible acquisitions. The particulars departments are required to fulfil preparatory requirements by issuance of essentiality certificate etc. On receipt of the application, complete in all respect under sub- rule 1, the Collector has been vested with power to examine the same and if he is of the opinion that the application should be accepted, he shall recommend the same to the state Government for consideration.
22. It will also be necessary to notice certain clarifications issued by the State Government on the subject as under:
No.Rev. B.A.(3)-5/2000-I Government of Himachal Pradesh Department of Revenue 14 2025:HHC:9583 From:
The Principal Secretary (Revenue) to the Government of Himachal Pradesh.
To All the Deputy Commissioners in Himachal Pradesh.
Dated: Shimla-2, the 22nd September, 2011.
Subject:- Regarding permission to get the land transferred by non-agriculturists under Section 118 of the H.P. Tenancy and Land Reforms Act, 1972.
Madam/Sir, In continuation of this Department notification of even number dated 29th July, 2011, I am directed to say that it has been experienced that under the provisions of Section 118 of the H.P. Tenancy and Land Reforms Act, 1972 following types of application are generally made by non-agriculturists:-
7. Application to purchase land for purposes specified in Rules.
8. Permission to sell land/structure by the non- agriculturists acquired with permission u/s 118.
9. Permission by non-agriculturists to purchase land/structure from non-agriculturists selling as in 2 above.
10. Permission to change purpose for which land was purchased with prior permission of the State Government.
11. Permission for extension of period to utilize land purchased with permission of the State Government.
12. Permission for extension of period for registration of sale deed.
While processing the cases under aforesaid situations following guidelines may be adhered to:-
1. Application to purchase land for purposes specified in Rules.
These application may be processed in accordance with the Rule 38-A of the H.P. Tenancy and Land Reforms Rules, 1975 as amended in year, 2011 and further instructions issued vide letter No. Rev.B.A.(3)- 5/2000-I, dated 5th September, 2011.
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2.Permission to sell land/structure by non- agriculturists.
(i) In case of application received within a period of 2 years or 3 years (if extension has been granted), the application should have attached a copy of permission letter vide which permission to purchase was granted and copy of extension letter, if an extension was required and was granted.
(ii) In case of application received after a period of 2 years or 3 years (if extension has been granted) the application should have attached a Utilization Certificate issued by the concerned department where Essentiality Certificate was required for the initial permission under Rule 38-A and in other cases by the local body concerned or by concerned Naib/Tehsildar/ Tehsildar/SDM/ADM/ ADC/DC.
3. Permission to purchase land/structure from non-
agriculturist.
In case the proposed purchaser is a non-
agriculturist, he has to apply for permission to purchase as per provisions of Rules on form LR-XIV provided that in cases, where the land is proposed to be utilized for the same purpose for which earlier permission was granted, the recommendations of the department concerned will be sufficient in place of an essentiality certificate. However, in case the purpose for which acquisition is being made in different from that for which permission was originally granted then Essentiality Certificate from the concerned Department will be required if the Rules specify an EC for the changed purpose.
4. Permission to change land use of land purchased with prior permission of the State Government.
(i) In case of an application made within a period of 2 years or 3 years (if extension has been granted), it should have attached:-
(a) Copy of permission letter vide which permission to purchase was received,
(b) Copy of extension letter, if relevant, and
(c) Essentiality certificate from the relevant department wherever the new purpose requires such an essentiality certificate under the Rules.
16 2025:HHC:9583 In case of other purposes, no other document is required.
(ii) In case of an application made after a period of 2 years or 3 years (if extension has been granted) it should have attached:
(i) Utilization Certificate issued by the concerned department where the original purpose required an Essentiality Certificate and in case of other purposes by local body concerned or by the concerned NT/Tehsildar/SDM/ADM/ADC/DC.
ii) Essentiality Certificate in case the Rules specify this requirement for the changed purpose. In other cases, no other documents are required.
5. Permission for extension of period for registration of sale deed.
The application should have attached a copy of permission letter granted by the Government.
6. Permission for extension of period to utilize land purchased with permission of the State Government.
The application should have attached a copy of land transfer deed.
You are, therefore, requested to kindly follow procedure outlined above and ensure that only the documents listed in each situation outlined above are sought for processing the matter for permission of the State Government.
Yours faithfully, Sd/-
Deputy Secretary (Revenue) to the Government of Himachal Pradesh.
No.Rev.B.A.(3)-5/2000-II-Loose Government of Himachal Pradesh Department of Revenue From The Principal Secretary (Revenue) to the Government of Himachal Pradesh.
To
1. All the Principal Secretaries, to the Govt. of H.P.
2. All the Head of Departments in Himachal Pradesh.
3. All the Deputy Commissioners in Himachal Pradesh.
Dated:Shimla-2, the 28th May, 2012.
17 2025:HHC:9583 Subject:- Regarding permission to get the land transferred by non-agriculturists under Section 118 of the H.P. Tenancy and Land Reforms Act.
Madam/Sir, In continuation of this Department letter No. Rev.B.A.(3)-5/2000-I, dated 22nd September, 2011 (copy enclosed) on the subject cited above, I am directed to say the essentiality certificates of the department concerned are being obtained under the provisions of Rule 38-A of the H.P. Tenancy and Land Reforms Rules, 1975 for the purpose of acquisition of land by non-agriculturists in the State of H.P. for different purposes. Such Essentiality Certificate is obtained basically to know the exact requirement of area, suitability of land and eligibility of non-agriculturist, to undertake the proposed activity.
There are instances where land has already been put to a particular use either by a non-agriculturist after obtaining approval under section 118 or by an agriculturist after securing such approvals as may have been required and the said property is to be further sold to a non-agriculturist. Existing instructions would appear to make it necessary for the relevant department to issue an Essentiality Certificate in the form given with Rule 38A. It is clarified that in such cases the requirement of essentiality certificate will be met if the Department concerned issues a NOC together with a recommendation that the transferee is eligible to carry out the relevant activity.
Yours faithfully, Sd/-
Deputy Secretary (Revenue) to the Government of Himachal Pradesh.
No.Rev.B.F.(10)-7/2008-II Government of Himachal Pradesh Department of Revenue From The Principal Secretary (Revenue) to the Government of Himachal Pradesh.
To All the Deputy Commissioners in Himachal Pradesh.
Dated:Shimla-2, the 15th March, 2012.
Subject:- Instructions regarding utilization or change of land use of land purchased with prior permission 18 2025:HHC:9583 of the State Government under the provisions of Section 118 of the H.P. Tenancy and Land Reforms Act, 1972.
Sir, I am directed to say that transfer of land to non- agriculturist is barred under section 118 of the H.P. Tenancy and Land Reforms Act, 1972 except with the permission of the State Government which is provided for under clause (h) of sub-section under section 118 of the H.P. Tenancy and Land Reforms Act, 1972 except with the permission of the State Government which is provided for under clause (h) of sub-section (2) of the said section. Further, land purchased with prior permission of the State Government, has to be "used for the purpose for which the permission has been granted within two years" which is extendable by a period "not exceeding one year" (to be counted from the date of registration of the deed).
After having acquired the land, the non- agriculturist normally uses the land for the purpose for which the permission has been granted. However, in certain cases the non-agriculturist seeks permission to sell the land or change the purpose for which land is to be used. While the procedure for such applications has been given vide letter No. Rev.B.A.(3)-5/2000-I, dated 22nd September, 2011, there has been some lack of clarity on the cases which will be entertained. In order to clarify matters the following decision has been taken:-
1. Permission shall ordinarily be granted-
(i) Where the non-agriculturist seeks permission to sell the land or change the purpose for which it is to be used within the period prescribed for its use.
(ii) Where the land has been used for the purpose for which it had been purchased.
(iii) Where the land is put even to partial use e.g. structures etc. have been raised partially or fully but it has not been fully used for the purpose for which it was allowed to be purchased.
2. Where the land was not used at all within the prescribed period in case this situation has arisen despite bonafide efforts of the person to whom permission has been granted, the time period that has elapsed in obtaining statutory approvals that are essential for putting the land to use for the stated purpose, shall be excluded for calculating the time period stipulated. For this purpose, the concerned department responsible for issuing the essentiality certificate shall ascertain the factual position and pass a 19 2025:HHC:9583 speaking order and thereafter forward the proposal to this Department through, the Deputy Commissioner concerned. In cases of residential purpose or shop the Deputy Commissioner, concerned shall ascertain such position and forward the cases to Government with his clear cut recommendations.
Yours faithfully, Sd/-
Principal Secretary (Revenue) to the Government of Himachal Pradesh.
Endst. No. As above. Dated: Shimla-2, the 15th March, 2012. Copy forwarded for information and further necessary action to:-
1. All the Principal Secretaries to the Government of H.P.
2. All the Head of Departments, in H.P. Sd/-
Deputy Secretary (Revenue) to the Government of Himachal Pradesh.
23. Thus the departments required to make preparatory assessments have been provided with criteria and parameters according to which they have to submit their reports to the Collector. Once the Collector is in receipt of such reports he has to take decision as to whether the application deserves approval or otherwise. The decision of the Collector has to be based on objective considerations derivable from the material before him. If the collector is satisfied that the application should be accepted, he recommends the same to the State Government for its consideration.
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24. In such circumstances it will be farcical to assume that the power vested by the Act and the Rules in State Government to take decision after consideration would mean only a bare formality. There has to be application of mind as to objective considerations, if any, taken into view firstly by the preparatory authority(ies) and thereafter by the Collector. For such an exercise a critical evaluation of the material placed before State Government would be necessary. The decision of the State Government to accept or reject the application has to be supported by reasons and such reasons have to be decipherable as per material considered by the State Government. Thus, it cannot be said that the Act or Rules do not impliedly require the State Government to act judicially while exercising powers under Section 118(2)(h) read with Rule 38-A of the Rules. The request made by a person for diverting the use of land by sale, gift, mortgage etc. cannot be brushed aside on mere ipse dixit of the authority.
25. Further, Rule 38A (2) provides a right to the party against whom the decision is taken by the State Government to file a review petition and in such event, the State Government is empowered to pass such order as it considers necessary after making such further inquiry as it may think 21 2025:HHC:9583 fit. The expression "further inquiry means, that even while exercising the original jurisdiction to accept or refuse the prayer for transfer of land, some inquiry is required to be made.
26. In Purtabpore Co. Ltd. v. Cane Commr. of Bihar, (1969) 1 SCC 308, Hon'ble Supreme Court observed as under:
14. This takes us to the question whether the proceeding which resulted in making the impugned orders is a quasi-
judicial proceeding or an administrative proceeding. There was some controversy before us whether a proceeding under clause 6(1) of the "order" is a quasi-judicial proceeding. It is not necessary for us to decide that question as in this case we are only concerned with the proceeding which resulted in making the impugned orders. In that proceeding the only question before the authorities was whether all or some of the villages reserved for the appellant should be taken out from the reserved area and reserved for the 5th respondent. The plea of the 5th respondent was that all those villages should be reserved for it, whereas the appellant insisted that the reservation made in its favour should not be disturbed. Whether there was a lis between the appellant and the 5th respondent at an earlier stage or not, we are of the opinion, as soon as the 5th respondent moved the Government for altering or modifying the reservation made in favour of the appellant, a lis commenced. The dispute that arose between the appellant and the 5th respondent had to be decided on the basis of the objective criteria, prescribed by clause 6 of the "order" i.e. (1) the crushing capacity of the appellant mill; (2) the availability of the sugarcane in the reserved area and (3) the need for the production of sugar.
27. Thus by analogy, the inference would be that once the party against whom the State Government has passed order in exercise of powers under Section 118(2)(h) read with Rule 38-A of the Rules, avails the remedy of Review a lis 22 2025:HHC:9583 comes into being and the State Government is required to decide the same judicially by acting as a quasi-judicial authority and for that matter as a Tribunal having trappings of the Court. Viewed from this angle also it is hard to comprehend that if the State Government would, at such stage of hearing Review, would be a Tribunal, why it should not partake the same role and responsibility while exercising the original jurisdiction to decide on the recommendation made by the Collector.
28. Further, the impugned order reveals a clear prejudice to the petitioner herein as not only his application has been rejected but the State Government has referred the matter to Deputy Commissioner, Solan to hold inquiry and to take action, if violation is found. Such a direction is in fact a mandate to the Deputy Commissioner as the State Government has clearly held in the impugned order as under:
"Therefore, this is a case of violation of section 118 of the Act and the Industry named M/s Hemkunt Iron & Steel Pvt. Ltd. is trying to sell this land in violation of the act. Thus, the case is rejected."
29. Thus, I am of the considered view that the Act and Rules require the State Government to act quasi-judicially 23 2025:HHC:9583 while exercising jurisdiction under Section 118(2)(h) read with Rule 38-A of the Rules and hence for such purpose the State Government shall be the Tribunal and its decision shall be amenable to the supervisory jurisdiction of this Court under Article 226 of the Constitution of India.
30. Noticeably, the State Government has passed the order impugned herein after the directions were issued by a co-ordinate bench of this Court on 28.6.2024 in CMPMO No.375 of 2024. The said petition had also been filed under Article 227 of the Constitution of India. In the said petition no objection, as to maintainability, was raised by the State and finally in compliance to the orders of this Court, the State acted and passed the impugned order.
31. Having held the existence of jurisdiction to decide the instant matter, now I proceed to examine the merits of contentions, raised on behalf of petitioner, as to the legality or otherwise of the impugned order.
32. The impugned order reflects two reasons for rejecting the prayer of the petitioner. First is that the petitioner had not put the land to use within two years and second is that a shed on an area of 105 square meter was 24 2025:HHC:9583 constructed, whereas the total area of 7037.08 was sq. meters.
33. In S.R. Venkataraman v. Union of India, (1979) 2 SCC 491, Hon'ble Supreme Court has held as under:
"6. It is however not necessary to examine the question of malice in law in this case, for it is trite law that if a discretionary power has been exercised for an unauthorised purpose, it is generally immaterial whether its repository was acting in good faith or in bad faith. As was stated by Lord Goddard. C.J. in Pilling v. Abergele Urban District Council [(1950) 1 KB 636 : (1950) 1 All ER 76] where a duty to determine a question is conferred on an authority which state their reasons for the decision, and the reasons which they state show that they have taken into account matters which they ought not to have taken into account, or that they have failed to take matters into account which they ought to have taken into account, the court to which an appeal lies can and ought to adjudicate on the matter.
7. The principle which is applicable in such cases has thus been stated by Lord Esher, M.R. in Queen on the Prosecution of Richard Westbrook v. The Vestry of St. Pancras [(1890) 24 Q BD 371, 375 : 62 LT 440] :
"If people who have to exercise a public duty by exercising their discretion take into account matters which the Courts consider not to be proper for the guidance of their discretion, then in the eye of the law they have not exercised their discretion."
This view has been followed in Sadler v. Sheffield Corporation [(1924) 1 Ch 483] .
8. We are in agreement with this view. It is equally true that there will be an error of fact when a public body is prompted by a mistaken belief in the existence of a non-existing fact or circumstance. This is so clearly unreasonable that what is done under such a mistaken belief might almost be said to 25 2025:HHC:9583 have been done in bad faith; and in actual experience, and as things go these may well be said to run into one another.
34. In Shalini Shyam Shetty v. Rajendra Shankar Patil, (2010) 8 SCC 329, Hon'ble Supreme Court has held as under:
"43 [Ed.: Para 43 corrected vide Official Corrigendum No. F.3/Ed.B.J./84/2010 dated 26-8-2010.] In a rather recent decision of the Supreme Court in Surya Dev Rai v. Ram Chander Rai [(2003) 6 SCC 675], a two-Judge Bench of this Court discussed the principles of interference by the High Court under Article 227. Of course in Surya Dev Rai [(2003) 6 SCC 675] this Court held that a writ of certiorari is maintainable against the order of a civil court, subordinate to the High Court (SCC p. 688, para 19 of the Report). The correctness of that ratio was doubted by another Division Bench of this Court in Radhey Shyam v. Chhabi Nath [(2009) 5 SCC 616] and a request to the Hon'ble Chief Justice for a reference to a larger Bench is pending. But insofar as the formulation of the principles on the scope of interference by the High Court under Article 227 is concerned, there is no divergence of views."
44. In para 38 sub-para (4) at SCC p. 695 of the Report, the following principles have been laid down in Surya Dev Rai [(2003) 6 SCC 675] and they are set out:
"38.(4) Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate courts within the bounds of their jurisdiction. When a subordinate court has assumed a jurisdiction which it does not have or has failed to exercise a jurisdiction which it does have or the jurisdiction though available is being exercised by the court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction."
45. Sub-paras (5), (7) and (8) of para 38 are also on the same lines and extracted below: (Surya Dev Rai case [(2003) 6 SCC 675] , SCC pp. 695-96) 26 2025:HHC:9583 "38.(5) Be it a writ of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere errors of fact or of law unless the following requirements are satisfied: (i) the error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law, and (ii) a grave injustice or gross failure of justice has occasioned thereby. (6)*** (7) The power to issue a writ of certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the abovesaid two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate court and the error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred thereagainst and entertaining a petition invoking certiorari or supervisory jurisdiction of the High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis.
(8) The High Court in exercise of certiorari or supervisory jurisdiction will not convert itself into a court of appeal and indulge in reappreciation or evaluation of evidence or correct errors in drawing inferences or correct errors of mere formal or technical character."
35. Keeping in view the above exposition of law, the impugned order cannot withstand judicial scrutiny. As regards the first reason, it clearly is against the provision of 27 2025:HHC:9583 Act. In the year 1981 when the permission was granted to the petitioner to purchase the land there was no embargo that the land had to be put to use within stipulated time. The amendment to this effect was brought in the Act w.e.f. 25.03.1988. The amended provision cannot be applied retrospectively more particularly when the amending act did not specifically make such provision to be retrospective in operation. Even otherwise also it has been observed in the impugned order that the petitioner had started production in the year 1984. As regards the second reason, the same also is not in conformity with the provision of the Act and the Rules. The permission was granted to petitioner to purchase the land for establishing an industry. There is no material on record to suggest that the permission was subject to any condition to occupy the entire land with construction. In addition, even the clarification issued by the State Government on 15.3.2012, as reproduced above, itself provided as under:
1. Permission shall ordinarily be granted-
(i) Where the non-agriculturist seeks permission to sell the land or change the purpose for which it is to be used within the period prescribed for its use.
(ii) Where the land has been used for the purpose for which it had been purchased.
28 2025:HHC:9583
(iii) Where the land is put even to partial use e.g. structures etc. have been raised partially or fully but it has not been fully used for the purpose for which it was allowed to be purchased.
36. That being so, the reasons assigned by the State Government for rejecting the prayer of petitioner can easily be termed to be perverse and thus, requires interference by this Court.
37. In light of above discussion, the petition is allowed. The impugned order/communication dated 18.07.2024, Annexure P-5, issued by respondent No.2, is quashed and set aside with direction to the State Government to take a decision afresh strictly in terms of what has been held above. The State Government shall complete the exercise within a period of 30 days from the date of production of this order before the competent authority.
38. The petition stands disposed of in the above terms, so also the pending application(s), if any.
(Satyen Vaidya)
8th April, 2025 Judge
(GR)