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3. According to the petitioner, an extent of 1503 acres and 11 guntas of Government land was granted to it for sugarcane cultivation for a period of 30 years. In addition to this, the Company purchased 2282 acres and 8 guntas of land belonging to private parties. It is stated in para-6 of the Writ Petition that out of this total extent of 3785 acres 19 guntas of land, nearly 1415 acres turned out to be kharab land and in spite of the best efforts of the petitioner, those lands were found to be uncultivable. Originally the Company filed a declaration under Section 66 of the Act, but It got it cancelled and filed a fresh declaration under the provisions of Section 79B of the Act. Section 79B prohibits holding of agricultural lands by certain persons, on and from 1-3-1974, except as otherwise provided in the Act. A 'Company' comes within the purview of the prohibition of Section 79B, unless any exception is found in the other provisions of the Act. Further, every such person falling within Section 79B has to furnish to the Tahsildar a declaration containing the particulars of the lands held by such a person. On receipt of the declaration and after holding an enquiry as prescribed, the Tahsildar has to send a statement containing the prescribed particulars etc., to the Special Deputy Commissioner who is to declare by notification that such lands held by the person shall vest in the State Government free from all encumbrances.

(c) the sale of any land or interest therein referred to in Clause (b) in enforcement of the said security."

Here, we are concerned with Section 81 read with Section 79B. Section 79B prohibits holding of agricultural land by certain persons. If Section 81 is attracted, then the prohibition imposed by Section 79B to hold the land will not be applicable. In other words, the operation of Section 81 read with Section 79B is to say that the prohibition imposed by Section 79B shall not apply in the cases falling under Section 81. Section 81(b)(ii) excludes the provisions of Section 79B "to the mortgage" of any land or interest therein in favour of a Financial Institution. In the case before us, Section 81 is sought to be applied to the lands which are the subject matter of the mortgage executed by the Company in favour of the State Bank of Mysore. The question arises in the context of consideration is, whether the bar under Section 79B will govern the mortgage executed by the Company in favour of the State Bank of Mysore and by virtue of Section 81, the Company can continue to hold any interest in the said lands? Obviously the answer is that mortgage in favour of the State Bank is not prohibited. But, the question still remains, to what extent the rights of the mortgagee Bank are saved and enforceable and whether the bar under Section 79B against the petitioner Company to hold land is removed or inapplicable by virtue of the said mortgage.

20. We have already held that none of the other provisions of the Act apply to a land belonging to the State Government but held on lease by the Company. Therefore, Section 79B also would not govern these lands. Hence question of considering Section 81 to those lands does not arise. The problem, pertains to other lands.

Section 79B is applicable to holdings of lands. Section 79B opens with a qualified statement - "except as otherwise provided in this Act". In other words, if there is a specific provision governing a case, to that extent the prohibition under Section 79B will not be applicable. Therefore, to the extent of the total holding saved under Section 63(8), question of applying Section 79B does not arise. It is only in respect of the balance of the extent of lands, the effect of Section 79B has to be examined. In view of the clear language of Section 79B, read with Section 63(8), petitioner Company is not entitled to hold any agricultural land except to the extent permitted by Section 63(8).

Since the Special Deputy Commissioner is being directed to decide the question afresh under Section 79B, we are of the opinion that the interest of the creditor can be safeguarded by directing the Special Deputy Commissioner to afford an opportunity to the creditor Bank also to have its say before him. It is made clear by us that we have not expressed any final view as to the scope of Section 79B read with Section 81 of the Act in any manner.

23. The learned single Judge has held that the Special Deputy Commissioner has not applied his mind to all the relevant questions and therefore the matter was remitted for a fresh consideration in accordance with law. Under Section 79B(3), the Tahsildar sends a statement containing the prescribed particulars etc., to the Special Deputy Commissioner, who shall by notification declare that such land shall vest in the State Government. A technical reading of this provision, no doubt, does not provide for an enquiry by the Special Deputy Commissioner. This provision drastically affects the right to hold property and therefore a procedure in conformity with the principles of natural justice will have to be read into this provision. If the Tahsildar's report is the final one, it is not understandable as to why the Tahsildar has not been vested with the power to issue the declaration instead of sending the statement to the Special Deputy Commissioner. Therefore, we are of the opinion that the Special Deputy Commissioner should give adequate opportunity to the affected party before deciding to issue the notification under Section 79B(3). We agree with the conclusion of the learned single Judge in this regard and direct the Special Deputy Commissioner to hold an appropriate enquiry, after giving the Company a proper opportunity to put-forth its case, including leading of evidence, if any, and only thereafter the Special Deputy Commissioner shall proceed to issue the notification under Section 79B of the Act. As already observed, the creditor Bank of the Company also shall be heard by the Special Deputy Commissioner on the application and effect of Section 81.