Gujarat High Court
Nagrik Sahakari Bank Limited vs State Of Gujarat on 12 February, 2026
NEUTRAL CITATION
C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026
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Reserved On : 04/02/2026
Pronounced On : 12/02/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 19795 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
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Approved for Reporting Yes No
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NAGRIK SAHAKARI BANK LIMITED
Versus
STATE OF GUJARAT & ORS.
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Appearance:
MR MEHUL SHARAD SHAH(773) for the Petitioner(s) No. 1
MR JAY TRIVEDI, AGP for the Respondent(s) No. 1,2
MR HS MUNSHAW(495) for the Respondent(s) No. 3
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CORAM:HONOURABLE MR. JUSTICE DIVYESH A. JOSHI
CAV JUDGMENT
1. By way of preferring present petition, the petitioner have prayed for the following main relief/s:
"(A) to issue a writ of certiorari or any other appropriate writ, order or direction, quashing and setting aside the order dated 31.08.2016 (posted on 12.09.2016) passed by respondent No.1 herein in Revision Application No.39/2014 and also the order dated 02.06.2014 passed by the Page 1 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined District Collector, Amreli in Remand Case No.9/2013.
(B) to issue a writ of certiorari or any other appropriate writ, order or direction, quashing and setting aside condition No.3 imposed vide order dated 21.10.1985 by the District Development Officer, Amreli and thereby be pleased to declare that the land allotted to the petitioner Bank was an old tenure land."
2. The facts of the case of the petitioner can be summarized in nutshell as under:
2.1. The Nagar Panchayat, Babra was holding certain parcels of Gamtal land prior to 1955 and intended to sell some portion of such Gamtal land to the petitioner bank. The Nagar Panchayat, Babra, therefore, sought permission from District Development Officer, Amreli to sell the said Gamtal land to the petitioner. The District Development Officer, Amreli granted the permission with certain terms and conditions. Thereafter, the petitioner purchased the said portion of Gamtal land by executing a registered sale deed. The petitioner had paid 25% more price than the market price of such land. Thereafter, the petitioner started construction work of building including 14 shops after approval of plans by the Nagar Panchayat, Babra. Thereafter, the petitioner had given the said shops on rent. The petitioner is carrying on banking activities in the said premises since 1985. Thereafter, in the year Page 2 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined 2011, the RBI informed the petitioner Bank to dispose of non-banking assets as it is in violation of Section 9 of the Banking Regulations Act. Therefore, petitioner Bank had passed a resolution and intended to sell those 14 shops. The petitioner sought prior permission from the District Development Officer, Amreli to sell out the shops. However, during the interregnum period, since the Nagar Panchayat, Babra had turned into Nagarpalika, the DDO forwarded the said proposal to the District Collector, Amreli along with his remarks. The District Development Officer concerned informed the Collector that there is breach of condition of original permission and therefore appropriate action is required to be initiated by the District Collector. Thereafter, the District Collector had initiated the proceedings for breach of condition and issued show cause notice to the petitioner. The petitioner appeared before the Collector and filed written submissions. After considering the materials available on record, the Collector passed the impugned order under Section 211 of the Gujarat Land Revenue Code, vesting the entire property of the petitioner bank in the Government.
Being aggrieved by and dissatisfied with the said order, petitioner bank preferred revision before the Special Secretary, Revenue Department. The said revision also came to be rejected. Hence, present petition is filed by the petitioner.
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3. Heard learned advocate Mr. Mehul Sharad Shah for the petitioner and learned AGP Mr. Jay Trivedi for the respondent Nos. 1 and 2.
4. Learned advocate Mr. Shah for the petitioner has drawn the attention of this Court to the facts of the present case and submitted that Nagar Panchayat, Babra acquired some parcels of Gamtal land before 10.10.1955 and intended to sell some portion of said Gamtal land to the petitioner - Bank. Thereafter, the Nagar Panchayat, Babra sought permission from the District Development Officer, Amreli under Section 98(1) of the Gujarat Panchayat Act to sell the said Gamtal land to the petitioner, which was granted by the District Development Officer, Amreli vide order dated 21.10.1985 by imposing certain conditions. He submits that those conditions would be applicable to Nagar Panchayat, Babra and not to the present petitioner as those conditions were not imposed at the time of execution of sale deed by the Nagar Panchayat, Babra. He further submits that the petitioner purchased the said land from Nagar Panchayat, Babra by executing a registered sale deed and paying 25% more price than the market price of the said property. Thereafter, the petitioner Bank had carried out construction work of building after approval of plans by the concerned Nagar Panchayat. He submits that along with the building of bank, petitioner had also constructed shops, which were Page 4 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined given on rent. Learned advocate Mr. Shah submits that the said shops were constructed after approval of plans by the concerned Nagar Panchayat and Nagar Panchayat was well aware about the fact of renting out the said shops, despite that, they have not raised any objections at that relevant point of time. He further submits that the petitioner Bank had purchased the subject land by executing a registered sale deed and they are the absolute owner and occupier of the subject property and therefore imposition of conditions by the District Development Officer, Amreli is not legal and proper.
5. Learned advocate Mr. Shah further submits that it is well settled that Gamtal land would not fall under restricted 'New Tenure' and it shall be free from the restrictions under Sections 73A and 73AA of the Bombay Land Revenue Code, despite that, the District Development Officer, Amreli has, at the time of granting permission, imposed condition No.3, whereby, the subject land is considered to be of 'New and Impartible Tenure'. He submits that new and impartible tenure is applied to the agricultural lands only and not to the Gamtal land and once the property is permitted to be used for non-agricultural purpose, the said property would automatically fall under the category of old tenure land and therefore question of breach of condition would not come into play. He further submits that petitioner had Page 5 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined purchased the said property by executing a registered sale deed by paying 25% more price than the market price and petitioner is the absolute owner of the said property. Thus, condition No.3 imposed by the District Development Officer, Amreli is nullity since inception and not in consonance with the provisions of the revenue laws and therefore the said condition is required to be set aside.
6. Learned advocate Mr. Shah further submits that petitioner is the owner and occupier of the subject property since 1985 and carrying on banking activities in the said property. He submits that in the year 2011, i.e. after 26 years from the date of purchasing and renting out the property in question, the Reserve Bank of India informed the petitioner Bank to dispose of non-banking assets as it is in violation of Section 9 of the Banking Regulations Act. The petitioner, therefore, sought permission from the District Development Officer, Amreli, to sell the shops constructed by the petitioner, as per condition No.3 of the permission letter. He submits that during the interregnum period, the Babra Nagar Panchayat has turned into Municipality and therefore the District Development Officer, Amreli sent the matter to the District Collector, Amreli along with his opinion that there is breach of condition No.3 of the permission letter, and therefore, appropriate proceedings are required to be initiated by the Page 6 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined Collector.
7. Learned advocate Mr. Shah has read the original order dated 21.10.1985 passed by the District Development Officer, Amreli, whereby, permission to sell the said property in favour of the petitioner has been granted, and submitted that the subject Gamtal land was acquired by the Nagar Panchayat, Babra before 10.10.1955 and therefore as per the Government Resolution dated 03.06.1980 of the Revenue Department, when such property is sold, transferred and/or disposed of under Section 98(1) of the Gujarat Panchayat Act, in that event, the said transaction of sale and/or transfer shall be subject to the provisions of the Transfer of Properties Act, 1882 and the provisions of Government Grants Act, 1895 would not be applicable for such transactions. He submits that Babra Nagar Panchayat has acquired the said property before 1955 and therefore, as per the aforesaid resolution, the sale of the said property in favour of the petitioner is subject to the provisions of Transfer of Properties Act and hence the Collector has no power to pass the impugned order. He further submits that petitioner has purchased the subject property from Babra Nagar Panchayat by executing a registered sale deed and there is no mention of said condition in the sale deed. He, therefore, submits that condition No.3 of the original permission letter itself is nullity Page 7 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined since inception and therefore said condition is required to be set aside.
8. Learned advocate Mr. Shah has further submitted that the shops have been rented out by the petitioner since 1985 after approval of plans by the concerned Nagar Panchayat and the impugned order came to be passed by the Collector on 02.06.2014 i.e. almost after 29 years. He submits that the Hon'ble Apex Court as well as this Court have, in numerous case laws, held that the initiation of action by the statutory authorities beyond a reasonable time would not justify their act and render the exercise arbitrary. He further submits that it is well settled that even if the transaction is void and if it is allowed to remain effective for considerable long period, in that event, the authority will be precluded from initiating the proceedings to annul it. He further submits that where no time limit is prescribed for exercise of powers under a statute, it should be exercised within a reasonable time and ordinarily revisional powers are required to be exercised within a period of three years. In support of his submissions, learned advocate Mr. Shah has relied upon the decision of Hon'ble Apex Court in the case of Santoshkumar Shivgonda Patil v. Balasaheb Tukaram Shevale, reported in (2009) 9 SCC 352, decisions of Division Bench of this Court in the case of Chandulal Gordhandas Ranodriya v. State of Page 8 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined Gujarat, reported in 2013 (2) GLR 1788, in the case of State of Gujarat v. Hussainbhai Satarbhai Meman, reported in 2024(0) AIJEL-HC 249387 and the decision of Coordinate Bench of this Court in the case of Amitbhai Kantilal Jayswal v. State of Gujarat, reported in 2020(2) GLR 981. He, therefore, submits that the law laid down by the Hon'ble Apex Court in the case of State of Gujarat vs. Patel Raghav Natha reported in (1969) 2 SCC 187, would squarely applicable in the facts of the present case.
9. Learned advocate Mr. Shah has read condition No.3 of the permission letter and submitted that neither the petitioner has mortgaged the shops nor has sold the shops without obtaining permission from the District Development Officer and therefore the petitioner has not committed any breach of the conditions, despite that, the Collector has passed the impugned order whereby the entire property of the petitioner has been ordered to be vested in the Government. The said act and action on the part of the Collector is not legal and valid one and Collector is not empowered to vest the entire property of the petitioner in the Government. He further submits that the imposition of the conditions on the part of the District Development Officer, Amreli itself is nullity, however, for the sake of arguments and without admitting it, even if it is to be believed that the District Development Officer is Page 9 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined empowered to impose such conditions, and if breach of any condition is committed by the petitioner, in that event also, the Collector is not empowered to vest the property of the absolute ownership of the petitioner in the Government. The Collector can impose penalty upon the petitioner for breach of any condition but Collector is not empowered to pass the impugned order vesting the property of the petitioner in the Government.
10. Learned advocate Mr. Shah has further submitted that on account of instructions from the RBI and the impugned order passed by the Collector, which is confirmed by the SSRD, the petitioner is neither in a position to rent out nor in a position to sell out the shops and thereby huge loss is occurred to the petitioner bank. Moreover, petitioner has also to intimate to the RBI every year about pendency of the present proceedings. He further submits that the learned SSRD has also not considered the aforesaid submissions raised by the petitioner and therefore the impugned orders passed by revenue authorities are required to be quashed and set aside and condition No.3 of the original permission letter is also required to be set aside.
11. On the other hand, present petition is objected by learned AGP Mr. Jay Trivedi for the respondent - authorities and submitted that the District Page 10 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined Development Officer concerned has granted permission to Nagar Panchayat, Babra to sell the property in question to the petitioner for the purpose of carrying on banking activities by imposing certain conditions. However, along with the building of bank, petitioner had also constructed shops and those shops were given on rent to the concerned tenants and thereby bank had committed breach of conditions of the original permission letter. He submits that thus the petitioner had used the property in question for other purpose than the purpose for which the permission is granted in favour of the petitioner and before entering into that transaction, petitioner bank had not obtained any permission from the competent authority. He further submits that once the bank had entered into monetary transaction and allowed third party to carry out their business in the said premises, which was allowed to be used by the petitioner bank for banking activities only, and thereby created third party right, the said act and action on the part of the petitioner itself would fall under the category of breach of condition.
12. Learned AGP has read the prayer clause of the petition and submitted that the petitioner has challenged the imposition of condition No.3 in this petition after almost 31 years and no explanation for such delayed challenge has been offered in the memo of the petition. He further submits that learned Page 11 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined advocate for the petitioner has heavily put reliance upon number of decisions and emphatically submitted that if any time limit is not fixed in the statute for initiation of proceedings for breach of conditions, in that event, the said powers are required to be exercised within reasonable period. He submits that those decisions would also applicable in the case of the petitioner also. Learned AGP Mr. Trivedi further submits that now at this belated stage, it is not open for the petitioner to challenge the said condition. He, therefore, submits that prayer clause 8(B) may not be granted by this Court at this belated stage. He submits that if at this juncture the said prayer is to be allowed outrightly, in that event, the effect of the order passed by the concerned authority would become nullity.
12.1. In rebuttal, learned advocate Mr. Shah submits that there is no delay in challenging the said condition No.3 as the petitioner has no occasion to challenge the said condition till the Collector has passed the impugned order. He submits that immediately after the Collector has passed the impugned order, the petitioner has raised the said contention before the learned SSRD at the time of preferring revision and therefore it cannot be said that there is delay in challenging the said condition.
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13. Learned AGP Mr. Trivedi has drawn the attention of this Court to the affidavit filed by the answering respondent and documents annexed with the said affidavit and submitted that if the Hon'ble Court would make cursory glance upon the record pertaining to the property in question, in that event, it would have been found out that in the property card, the City Survey Department, Babra had put the property of the petitioner under 'K-1' category. The petitioner has not challenged the said remarks made by the City Survey Department of Babra. Therefore, at this belated stage, it is not open for the petitioner to challenge the conditions, especially condition No.3, imposed by the District Development Officer while granting permission to the Nagar Panchayat, Babra for selling the property to the petitioner. He, therefore, submits that when the petitioner had used the property for other purpose than the same was granted to the petitioner, Collector has rightly passed the impugned order vesting the entire property of the petitioner bank in the Government and SSRD has also not committed any error while upholding the said order and therefore this petition is not required to be entertained by this Court.
14. Having heard learned advocates appearing for the parties and having considered the materials placed on record, it is found out that Nagar Panchayat, Babra had acquired certain parcels of Gamtal land prior to Page 13 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined 1955 and intended to sell some portion of such Gamtal land to the petitioner for banking activities. The Nagar Panchayat, Babra, therefore, sought permission from District Development Officer, Amreli to sell the said Gamtal land to the petitioner. The said permission had been granted by the DDO, Amreli with certain conditions. Thereafter, the petitioner purchased the said portion of Gamtal land from Nagar Panchayat, Babra by executing a registered sale deed and paying 25% more price than the market price of such land. Thereafter, after approval of plans by the Nagar Panchayat, Babra, petitioner started construction work of building and along with the building of the bank, petitioner had also constructed 14 shops. It is pertinent to note that the plan of entire building including 14 shops had been approved by Nagar Panchayat, Babra in the year 1985. Thereafter the petitioner had rented out the said shops to the concerned tenants. Thus, since 1985, the said shops have been given on rent by the petitioner. The petitioner is also carrying on banking activities in the said premises. Thereafter, in the year 2011, the RBI informed the petitioner Bank to dispose of non-banking assets as it is in violation of Section 9 of the Banking Regulations Act. Therefore, petitioner Bank had passed a resolution and intended to sell those 14 shops. As per the condition of permission letter, the petitioner sought prior permission from the District Development Officer, Amreli to sell out Page 14 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined the shops. However, during the interregnum period, since the Nagar Panchayat, Babra had turned into Nagarpalika, the DDO forwarded the said proposal to the District Collector, Amreli with his remarks. The DDO informed the Collector that there is breach of condition of original permission and therefore appropriate action is required to be initiated by the District Collector. Thereafter, the District Collector had initiated the proceedings for breach of condition and issued show cause notice to the petitioner. The petitioner appeared before the Collector and filed written submissions. Thereafter, the Collector passed the impugned order under Section 211 of the Gujarat Land Revenue Code, vesting the entire property of the petitioner bank in the Government. Being aggrieved by and dissatisfied with the said order, petitioner bank preferred revision before the Special Secretary, Revenue Department. The said revision also came to be rejected. Hence, present petition is filed by the petitioner.
15. Perusal of the order of the Collector reveals that the Collector had passed the impugned order mainly on the aspect of breach of condition No.3 of the original permission. The condition No.3 of the original permission letter issued by the DDO in the year 1985 stipulates that the land in question shall be of new and impartible tenure and it shall not be sold and/or mortgaged without prior permission of the Page 15 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined authority concerned. However, if the second limb of the condition is to be seen, in that event, it would have been found out that, 'without prior permission, the said property shall not be sold and/or mortgaged'. The petitioner has not mortgaged the said property to any party and before selling it, petitioner had sought prior permission from the DDO concerned. Thus, in the opinion of this Court, the said condition has not at all been breached by the petitioner. It is found out from the record that petitioner bank had purchased the Gamtal land, which was acquired by the concerned Nagar Panchayat from the Government before 1955, by executing a registered sale deed and paying 25% more price than the market price, whereupon, petitioner had constructed building of the bank including 14 shops. Thus, petitioner is the absolute owner and occupier of the said property. It is also pertinent to note that before construction of the shops, Nagar Panchayat, Babra had also approved the plan and as per the case or the petitioner, the fact of renting out of shops by the petitioner bank was well within the knowledge of the concerned Nagar Panchayat since inception i.e. since 1985, despite that, they have not raised any objection and not initiated any proceedings for breach of condition. Now, so far as the use of premises for other purpose is concerned, for the sake of repetition, it is required to be noted that the petitioner had constructed the shops after approval Page 16 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined of plans by the concerned Nagar Panchayat and therefore it cannot be said that the fact of renting out of the shops was not at all within the knowledge of the concerned authority. Despite that, the authority concerned has not initiated any proceedings at that relevant point of time and almost after 28 years, the Collector had exercised the revisional powers under Section 211 of the Gujarat Land Revenue Code, whereby, the property of the petitioner has been vested in the Government. The said act and action on the part of the Collector has been upheld by the SSRD.
16. It is pertinent to note that as per GR dated 03.06.1980 of the Revenue Department, when the lands of the concerned Panchayat, which were acquired by the said Panchayat before 10.10.1955 from the Government, are sold, transferred and/or disposed of under Section 98(1) of the Gujarat Panchayat Act, in that event, the said transactions shall be subject to the provisions of the Transfer of Properties Act, 1882 and the provisions of Government Grants Act would not be applicable to those transactions. In that view of the matter, this Court is of the considered view that the authority concerned would be justified in imposing those conditions in case if the permission is granted for the land, the sale/transfer of which is subject to the provisions of Government Grants Act.
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17. The Hon'ble Apex Court as well as this Court have, in numerous case laws, held that initiation of action by the statutory authorities beyond a reasonable time would not justify their act and render the exercise arbitrary. Moreover, even if the transaction is void and if it is allowed to remain effective for considerable long period, in that event, the authority will be precluded from initiating the proceedings to annul it. Moreover, when no time limit is prescribed for exercise of revisional powers in the statute itself, it should be exercised within a reasonable time and as per the celebrated decision of Hon'ble Apex Court in the case of Patel Raghav Natha (supra), exercise of revisional powers beyond one year is considered to be too late. However, in the instant case, the Collector had exercised the revisional powers almost after 28 years. Thus, in view of the aforesaid overall factual aspects of the present case, in the opinion of this Court, the Collector is not empowered to vest the properties of the petitioner Bank in the Government and therefore the impugned orders passed by the Collector and confirmed by the SSRD are required to be quashed and set aside.
18. In view of the aforesaid discussion, the orders impugned passed by the concerned revenue authorities are hereby quashed and set aside. The Collector, Amreli is directed to decide the application of the Page 18 of 19 Uploaded by LAVKUMAR J JANI(HC00210) on Thu Feb 12 2026 Downloaded on : Fri Mar 13 21:40:59 IST 2026 NEUTRAL CITATION C/SCA/19795/2016 CAV JUDGMENT DATED: 12/02/2026 undefined petitioner for selling out the shops in question, as expeditiously as possible, and preferably within a period of four weeks from the date of receipt of copy of this order, after affording an opportunity of hearing to the petitioner and keeping in mind the aforesaid observations made by this Court. The petition is allowed in aforesaid terms.
Direct service permitted.
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