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CASE NO.:

Appeal (civil) 3694-3748 of 1996

PETITIONER:

STATE OF ANDHRA PRADESH & ORS.

Vs.

RESPONDENT:

NALLAMILLI RAMI REDDI & ORS.

DATE OF JUDGMENT: 29/08/2001

BENCH:

S. Rajendra Babu & Brijesh Kumar

JUDGMENT:

[WITH W.P. (C) NOS. 1429/1987 and 120/1988]

J U D G M E N T

RAJENDRA BABU, J. :

CIVIL APPEAL NOS. 3694-3748 OF 1996

In a batch of writ petitions filed in the High Court of Andhra

Pradesh the constitutional validity of Section 82 of the Andhra Pradesh

Charitable & Hindu Religious Institutions & Endowments Act, 1987

[hereinafter referred to as the Act] was challenged. The learned Single

Judge who heard these matters held that sub-section (1) of Section 82 of

the Act is arbitrary and ultra vires of Articles 14 and 21 of the

Constitution to the extent of lessees who are marginal or small farmers,

are not excluded from its effect while sub-section (2) was declared to be

unconstitutional in its entirety. The matter was carried in appeal to the

Division Bench. The Division Bench concluded that Section 82(1) of the

Act is violative of equal protection clause of the Constitution inasmuch

as the provisions of Section 82 singles out the tenants of the lands held

by religious institutions or endowments resulting in putting an end to

their tenancy rights; that the said classification was not only

unreasonable but also it had no nexus to the object sought to be

achieved (i) as to payment of rent or augmentation of the revenue of the

religious institutions inasmuch as the rents stood frozen by reason of the

Tenancy Acts in force in the State of Andhra Pradesh; (ii) that sale of

lands is not a feasible proposition; (iii) that there is no exclusion of

application of the tenancy Acts and the lands held by religious

institutions or endowments in treating the tenants in question differently

suffers from the vice of discrimination by putting an end to their leases.

For the aforesaid reasons, sub-section (1) of Section 82 was declared

void as violative of Article 14 of the Constitution. While the question as

to the enforceability of Section 82(2) of the Act is concerned, the Division

Bench observed that sub-section (2) puts an end to tenancy rights of the

landless poor persons too though in name sub-section (2) purports to

save them from the cancellation. The learned Judges of the Division

Bench proceeded to illustrate that if the land is held by two persons A

and B who do not own any land of their own and A is a tenant of a land

of an extent of Ac.2-50 cents. wet., B is also a tenant of a land of an

extent of Ac.2.60 cents. wet. While A is a landless poor person and is

saved from cancellation, B would not be such a landless person. To

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avoid discrimination between these persons, the Legislature ought to

have provided that in the case of B his lease would not stand terminated

to the extent of Ac.2-50 cents wet and that he would be entitled to

purchase to the extent of Ac.2-50 cents in accordance with sub-section

(2) and not providing for such a situation amounts to discrimination

between two similarly placed persons. The learned Judges thereafter

proceeded to hold what we have adverted to earlier that the object of

augmentation of revenue of the institutions and endowments is not

realistic. However, the learned Judges did not go into the question as to

the meaning of marginal or small farmers and did not find it necessary

to examine the contention of the State that the learned Single Judge had,

in fact, legislated to the extent of introducing the concept of marginal or

small farmers into Section 82 inasmuch they have held the entire sub-

section (1) to be void. The Division Bench also noticed that though there

is no appeal by writ petitioners inasmuch as the constitutionality of the

enactment was involved and when the learned Single Judge had struck

down certain provisions, their reasons were sufficient to sustain the

same. The Division Bench also did not consider it necessary to express

any opinion as to whether it is competent for the Legislature to put an

end to the tenancy rights and whether such cancellation is violative of

Article 19(1)(g) of the Constitution or not. On that basis, after making a

declaration of law in the manner stated above, the Division Bench

dismissed the appeals filed by the State. Hence these appeals by special

leave.

The Division Bench of the High Court found that the classification

is unreasonable inasmuch as all tenants except those who are defined to

be landless poor tenants are covered by Section 82 and such

classification has been made which has no nexus to the object to be

achieved, namely, augmentation of income to the institutions in question

and better management of the properties. One of the reasons given by

the Division Bench of the High Court to reach this conclusion is that the

tenancy Acts, namely, the Andhra Pradesh (Andhra Area) Tenancy Act,

1956 [hereinafter referred to as the Andhra Act] and Andhra Pradesh

(Telangana Area) Tenancy and Agricultural Land Act, 1950 [hereinafter

referred to as the Telangana Act] are still in force. These enactments

have not been excluded in the application to lands held by tenants of the

agricultural lands of the institutions in question. Therefore, the view of

the High Court is that the rents are frozen and eviction of the tenants are

not possible and unless the operation of the Tenancy Acts are excluded

insofar as the lands held by the institutions in question are concerned,

the objectives cannot be fulfilled. It would only result in displacing one

tenant by another tenant and would not achieve the objectives of the Act.

Thus there is no nexus in making the classification.

Smt. K.Amreshwari, learned Senior Advocate appearing for the

appellants, strongly contended that this approach of the High Court is

plainly unsustainable in view of the fact that the law on the matter is

very clear that charitable or religious institution or endowment fall into a

separate category and form a class by themselves. She submitted that

such tenants coming under them also form separate class and they can

be treated differently from others; secondly, she submitted that in

striking down the provisions of Section 82 of the Act, the High Court has

unnecessarily relied upon far too much on the tenancy laws in force in

the State to fetter the legislature in cancelling the existing agricultural

leases and lands belonging to charitable or religious institution or

endowment. The High Court, she complained, has speculated on the

outcome of the impugned legislation and proceeded to hold that there is

no reasonable connection with the object of the enactment in the

absence of any material other than the laws in force in the State which

would not indicate as to the type of tenants who are holders of leases

under consideration, the rent payable by them, what rent the lands

would fetch after the lands are resumed by the charitable or religious

institution or endowment, possibility of sale or self cultivation. The

judgment of the High Court is based on conjectures and surmises

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unsustainable in law and they are not strong reasons to invalidate a law.

Shri L.Nageswara Rao, learned Senior Advocate appearing for the

respondents, however, urged that the view taken by the High Court gives

recognition to the ground realities by reference to the appropriate

legislations in force in the State such as tenancy laws and we should not

ignore the same and interfere with the order of the High Court. He

submitted that all tenants covered by the tenancy laws in the State of

Andhra Pradesh fall into one category and to distinguish them on the

basis that the lands are held by religious institutions will lead to hostile

discrimination particularly when the object of classification is not

fulfilled. He pointed out that there are about 40,000 tenants holding

about 3,20,000 acres of land and the measure adopted in enacting

Section 82 of the Act is drastic resulting in deprivation of their leases

without practical benefit to the institutions as noticed by the High Court.

Hence, he very forcefully urged that we should not interfere with the

order of the High Court. He submitted that we should take note of every

circumstance available such as matters of common knowledge, history,

antecedent legislation, social conditions, impact of other law on the

impugned law in judging whether the same would be violative of Article

14 of the Constitution.

The legislation in question is preceded by a report made by a

Commission headed by Justice C.Kondaiah, former Chief Justice of the

Andhra Pradesh High Court. It was noticed in para 1.18.1 of the said

report as under:

It is stated that all concerned who are interested in the charitable

or religious institutions have stated that the temple authorities are

facing innumerable difficulties in the management of the landed

properties of the institutions, the income is very meagre, not

worth-mentioning, and in some cases it is nil, although the

institution owns large extent of lands. Reasons thereof is the

provisions of the Tenancy Act, attitude of the persons in

possession and enjoyment for several years, the lands belonging to

these institutions are mostly in the hands of the rich and

powerful sections against whom the concerned authorities are

experiencing difficulties to dispossess them from the lands. The

trustees or archakas are in enjoyment of the lands kept Benami in

the names of their relations, etc. The authorities also are in the

collusion with them. The rents paid by the tenants are nominal

fixed decades back. The Estimates Committee also expressed the

same opinion.

It is thereafter the Act in question was brought in force and in the

Statement of Objects and Reasons, inter alia, it was stated as follows:

A provision is also made to terminate the lease held by persons

other than landless poor persons and to enable landless persons

to purchase the lands already held by them on lease.

Section 82 has the effect of cancelling all leases of agricultural

lands belonging to the institutions subsisting on the date of

commencement of the Act notwithstanding any other law in force.

However, such cancellation will not affect leases held by landless poor

persons. Landless poor person is identified by the Act as a person

whose total land held by him, either as owner or as cultivating tenant or

as both, does not exceed two and a half acre of wet land or five acres of

dry land. In respect of leases held by landless poor persons for not less

than six years continuously such persons are given the right to purchase

such land on payment of 75% of prevailing market value being payable in

four equal instalments as may be prescribed. If, however, such landless

poor persons fail to purchase the land as aforesaid or is unwilling to

purchase the land, the lease shall be deemed to have been terminated.

Rules have to be made providing for the authority competent to sanction

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the lease or licence in respect of properties belonging to charitable and

religious institutions/endowments and also provide for other terms and

conditions. This provision has no effect upon leases or licences of

immovable properties other than agricultural lands.

What Article 14 of the Constitution prohibits is class legislation

and not classification for purpose of legislation. If the legislature

reasonably classifies persons for legislative purposes so as to bring them

under a well-defined class, it is not open to challenge on the ground of

denial of equal treatment that the law does not apply to other persons.

The test of permissible classification is two fold : (i) that the classification

must be founded on intelligible differentia which distinguishes persons

grouped together from others who are left out of the group, and (ii) that

differentia must have a rational connection to the object sought to be

achieved. Article 14 does not insist upon classification, which is

scientifically perfect or logically complete. A classification would be

justified unless it is patently arbitrary. If there is equality and uniformity

in each group, the law will not become discriminatory, though due to

some fortuitous circumstance arising out of peculiar situation some

included in a class get an advantage over others so long as they are not

singled out for special treatment. In substance, the differentia required

is that it must be real and substantial, bearing some just and reasonable

relation to the object of the legislation.

We may notice the effect of the two Tenancy Acts in force in the

State of Andhra Pradesh. Under Section 18(2) of the Andhra Act

provisions of Sections 3 to 7 are made inapplicable to leases of lands

belonging to or given or endowed for the purpose of any charitable or

religious institution or endowment falling within Section 74(1) of the

A.P.Act 17 of 1966. Section 18(2) of the Andhra Act further provides that

rent payable by the tenants in respect of such property will be the rent in

force at the commencement of the Andhra Tenancy (Amendment) Act,

1974 and where reasonable rent has been fixed under Section 74(1)(e) of

the A.P.Act 17 of 1966, such reasonable rent. Sections 3 to 7 of Andhra

Act provide for maximum rent payable by tenants, prescribe the form of

agreement of tenancy, provide for determination of rent, and also for

deposit of rent during the pendency of proceedings for fixation of fair

rent. All other provisions including Sections 8 to 16 of the Andhra Act do

apply to leases in question.

Insofar as the Telangana Act is concerned, it exempted from its

operation inams held by charitable or religious institution or endowment

as well as service inam lands. Inams were abolished in the Telangana

area of the State in 1955 and that process was completed in 1973. By

Amendment Act of 1985, all such inams have also been brought within

the purview of the Act and abolished and that resultant position is that

none of the charitable or religious institution or endowment in the

Telangana area are exempt from the operation of Hyderabad Act 21 of

1950.

The Division Bench in reaching the conclusion that Section 82 is

unconstitutional held that the two tenancy Acts in force in the State of

Andhra Pradesh are still applicable to the institutions covered by the Act

and, therefore, the object of the enactment of Section 82 will not be

fulfilled. The Division Bench also noticed that there is no overriding

effect given to the Act. In effecting the agrarian reforms, the major

programme of the Government has been to protect the tenants by

securing them a permanent tenure of the land and freezing the rent or

conferring a right upon them to purchase the land at certain sum which

is far below the market rate and the right of the landlord to evict them

would be severely restricted and that too by initiating proceedings before

special Tribunals. Under the Telangana Act, the rent does not exceed

five times of the land revenue and in case of wet lands irrigated by wells

it is only three times the land revenue, while in case of dry lands it is

four times the land revenue. Though a maximum rent had been

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prescribed under the Andhra Pradesh Act, the same will not be

applicable in view of Section 18(2) of the Act to which we have already

adverted to. The Andhra Pradesh Tenancy Act had granted perpetuity in

so far as leases were concerned. The Division Bench was impressed by

the fact that Section 82 is the first attempt to undo the right of tenants

in respect of agricultural lands held by institutions or endowments

governed by the Act. The learned Judges stated that protecting the right

of tenants is equally important just as protecting the interest of the

institutions or the endowments. Cancellation of the tenancy, by itself,

will not achieve the ends. First, the High Court considered whether

augmentation of income is possible in view of the rents having been

frozen which was obtained on the date of the commencement of the

Andhra Pradesh Tenancy Act, 1974. They felt that it is not possible to

augment the income of the institutions at all. Except referring to the

enactments arising under the tenancy Acts, there is no material before

the High Court to support the view as to what are the rents payable at

present and what would be the rent that becomes payable after the

leases are put to an end in terms of Section 82 of the Act and fresh

tenancies commence if the lands are leased to others as provided under

the provisions of the Act. When the material is not clear before the court,

the court cannot hazard a guess as to the manner in which the

enactment would operate. How the tenancy Acts will have effect upon

the new tenancies would be a matter to be worked out appropriately.

Therefore, at the stage of enacting Section 82 or examining its

constitutional validity, the High Court could not have proceeded to hold

that unless the operation of the tenancy Acts are excluded the objectives

of enactment cannot be achieved. It is possible under the new Rules to

be framed that the Government may proceed to grant leases or licences

only to small or marginal holders of lands as may be found by them

suitable to cultivate the land thereby freeing the lands from the grip of

rich and powerful persons. Therefore, at this stage, again to state that

the purpose of the enactment of freeing the lands from the grip of rich

and powerful persons cannot be achieved is not correct. The learned

Judges have felt that it is possible for the old tenants themselves to get

back the possession of the lands in question. But, that is as good a

guess as against other possibilities, which we have suggested. Therefore,

that will not be a permissible ground to strike down the law. Wherever

possible, some of these lands which are not within the manageable limits

of the concerned religious institutions may be sold in the manner

prescribed in Section 80 of the Act or may be leased out by them, as the

case may be, like a prudent owner or manager of the property. The High

Court proceeded to consider further that cultivation of these lands by

these institutions would not be feasible. We fail to understand as to

how it can be stated so. It is certainly possible if the institutions hold

large holdings of land to have a department in the institutions to get the

lands cultivated and to expect that the very same incidence and

consequences will follow as were applicable earlier prior to coming into

force of Section 82 of the Act does not, therefore, appeal to us. Whether

a tenancy Act should be applicable to a religious institution or should be

kept out of it is not a matter for the court to decide. How far a tenancy

Act is applicable to a religious institution and to what extent it should be

limited is a matter for the legislature to decide. But such a policy should

not be irrational. We do not think on that basis, we can interfere with

the validity of the Act.

It is plain that religious institutions fall into a separate class and

lands held by them have a special character in respect of which

tenancies had been created and these tenancies are sought to be put to

an end to for resumption of lands for better management thereof. It is

clear that the tenants under the religious institutions form a special

class by themselves and such classification is made, so far as tenants are

concerned, to achieve the object of protecting the interests of the

religious institutions. Therefore, we do not think, any of the principles

which result in hostile discrimination would be applicable to the present

case.

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So far as the validity of Section 82(1) in classifying the landless

poor persons is concerned, the High Court felt that the provisions

themselves are inconsistent and that the illustration given by them, to

which reference has already been made earlier, will show how

discrimination will result. It is settled law that it is open to the

legislature to state as to who should be exempt from the application of

the law and, in the present case, there is definition of landless poor

person whose total extent of land held by him either as owner or as

cultivating tenant or as both does not exceed two and half acres of wet

land or five acres of dry land having been identified as landless poor

person and he is enabled to purchase the land at 75% of the prevailing

market value by paying in four equal instalments as may be provided

under the Rules. Therefore, that aspect of saving the small land holders

cannot be objected to nor can the meaning of landless poor person be

enlarged, as has been sought to be done by the learned Single Judge. If,

however, the said landless poor persons are not willing to purchase the

land or fail to purchase such land, the lease would lapse. This latter

provision cannot be held to be inconsistent with the earlier provisions as

has been held by the High Court because that is a consequence flowing

from the fact that such landless poor person is either not anxious to

purchase the land or fails to do so. The validity of an enactment cannot

be judged by fortuitous circumstance arising out of peculiar

circumstances. Therefore, that reasoning of the Division Bench is also

faulty.

None of the learned counsel appearing in the case supported the

view taken by the learned Single Judge. Therefore, we do not propose to

examine the same.

We may sum up the upshot of our discussion:

1. That charitable or religious institution or endowment fall into a

separate category and form a class by themselves. If that is so,

tenants coming under them also form separate class. Therefore, they

can be treated differently from others;

2. In operation of the Act it is possible that it may result in hardship to

some of the tenants but that by itself will not be a consideration to

condemn the Act;

3. The manner in which the charitable or religious institution or

endowment would deal with the properties that are resumed after the

provisions of Section 82 of the Act come into force by cancelling the

existing leases is in the region of speculation.

4. Fresh tenancy can be entered into and there is no material before the

court as to what was the rent paid by tenants at the time when the

Act came into force in terms of Section 18(2) of the Act or as provided

under the Andhra Act or under the Telangana Act. In the absence of

a such material, it would be hazardous for the court to reach any

conclusion one way or the other to state that the tenants would be

frozen and, therefore, there is no likelihood of charitable or religious

institution or endowment getting higher rents. If there is no material

one way or the other, the presumption that the Act is good should

prevail.

5. It is a matter of policy with the legislature as to whether all provisions

of the tenancy Acts should be exempt in its application to the

charitable or religious institution or endowment in their entirety.

6. The identification of landless poor persons and protection given to

them is justified as enunciated earlier.

7. It will be very difficult to predict at this stage that the result of Section

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82 of the Act would be so hazardous as not to achieve the object for

which it was enacted. It would not only result in displacing the old

tenants by new tenants, it may also achieve other social objectives in

another manner. If appropriate provisions are made under the Rules

and if the leases are given to small holders of land, another social

objective could be achieved.

8. In what manner charitable or religious institution or endowment

would deal with matters of this nature is a mere guess work at this

stage. On some hypothetical approach the High Court could not have

declared a law to be invalid.

In the light of the discussion made above, we hold that the tenants

of the institutions in question fall into a separate class which is

identifiable. If that is so, what is to be next considered is whether the

cancellation of the lease in their favour would achieve the objectives of

the Act. We have demonstrated that there is no material before the court

to show that such cancellation would not carry out the purposes of the

Act, whether the legislature should have gone ahead to exclude the

applicability of the Tenancy Acts in their application to the charitable or

religious institution or endowment is another matter.

Thus, the order under appeal shall stand set aside and the writ

petitions filed by the parties shall stand dismissed. However, it is made

clear that the undertaking given to the Court that while the writ

proceedings were pending no steps would be taken for evicting the

tenants holding the lands at present until appropriate Rules are framed

shall be binding on the appellants and will hold good even now.

Subject to these observations, the appeals stand allowed.

However, in the circumstances of the case, there shall be no order as to

costs.

W.P. (C ) NOS. 1429/1987 AND 120/2988

Certain additional contentions have been raised on behalf of the

petitioners in the other two writ petitions to the effect that Section 80

would not be applicable to agricultural lands while Section 82 refers only

to agricultural lands and whether the lands in question could be sold by

the charitable or religious institution or endowment themselves would be

doubtful. The learned counsel also contended that cancellation of leases

of all tenancies is arbitrary inasmuch as the protection given under the

Andhra Act and the Telangana Act being different, the tenants could not

have been classed into one category. He next contended that tenancies

are inheritable and in such a situation without paying compensation

could not have deprived the rights to the same. He also submitted that

Section 38-E of the Telangana Act provides for conferment of ownership

rights to tenants in question and this aspect has not been considered by

the High Court. He further contended that the livelihood of the tenants

being deprived, the provision is violative of Article 21 of the Constitution.

He also drew our attention to Article 31A of the Constitution to contend

that the tenants in question are entitled to compensation.

We need not delve deep into the operation of Section 80 of the Act

and whether it is applicable to the lands in question or not and as to the

manner the lands would be dealt with by the charitable or religious

institution or endowment on resumption thereof after cancellation of the

leases. It is possible to read that Section 80 of the Act is an independent

provision though falling under Chapter X with the heading Alienation of

any Immovable Property and Resumption of Inam Lands and contention

advanced on behalf of the Petitioners is that there is a discernable

difference between the applicability of the Act which is for agricultural

lands and other properties and Section 80 of the Act which is applicable

to only other properties. Prima facie, Section 80 of the Act does not

appear put such a restriction. The tenants covered either by the Andhra

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Act or the Telangana Act may fall into two different categories but insofar

as their holdings with reference to the institutions are concerned, they

fall into the same category. Therefore, the aspect that they had different

kinds of rights arising under different enactments and make them

distinct class in the present circumstance will not be of much relevance.

Therefore, this contention also does not hold water. The question of

tenancy being inheritable or not would arise if the leases are maintained

but if the leases are themselves cancelled, such a question will not arise

at all. Conferment of ownership under Section 38E of the Telangana Act

has no relevance to the present case at all inasmuch as if the proper

procedure has been adopted and the proceedings have reached the

logical end, the tenant would become the owner of the land. Therefore,

Section 82 would not be attracted to such a situation but if the

proceedings have not been terminated and a tenancy continues to be in

force, Section 82 of the Act would be attracted to such a case. This

contention based on Section 38-E of the Telangana Act is untenable.

The arguments relating to livelihood also have no legs to stand.

The object of the Act is to resume lands in the hands of existing tenants

for better management. After resumption some tenants may be

dependent on the land leased to them by the charitable or religious

institution or endowment but it cannot be said that was the only land

held by them and that was the only avocation carried on by them, the

objectives of the cancellation of the land is not to deprive anyone of his

livelihood but, on the other hand, it is the better management of the

properties belonging to the charitable or religious institution or

endowment. The incident that the same may result in hardship to some

of the tenants will not be a ground to say that it deprives them of their

livelihood.

The next argument of the learned counsel based on Article 31A of

the Constitution, in our view, is entirely unfounded. Article 31A provides

for granting certain enactments immunity from attack under Articles 14

and 19 of the Constitution. That is not relevant in the present context at

all inasmuch as no such exercise has been undertaken by the State.

Therefore, we find no merit in any one of the contentions raised on

behalf of the petitioners. The writ petitions, therefore, stand dismissed.

No costs.

...J.

[ S. RAJENDRA BABU ]

...J.

[BRIJESH KUMAR]

AUGUST 29, 2001.