Venkataramiah, J. - (1.) Labh Singh, respondent No. 1 herein, was the owner of certain agricultural lands in three villages situated in the district of Kapurthala, namely, village Karahal Nauabad, village Isherwa and village Brindpur measuring in all 32-8 standard acres. Of them an extent of 7-4 standard acres of land situated in village Brindpur had been mortgaged with possession by him in favour of one Lachman Singh of village Khera Dona before the Pepsu Tenancy and Agricultural Lands Act, 1955 (Pepsu Act 13 of 1955) (hereinafter referred to as 'the Act') came into force. The mortgage was subsisting when Chapter IV-A was inserted by the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956 (Pepsu Act No. 15 of 1956) into the Act. Chapter IV-A of the Act which provided for the imposition of ceiling on land and acquisition and disposal of surplus area consisted of sections 32-A to, 32-NN. Section 32-A of the Act read as follows:"32-A. Ceiling on land.- (1) Notwithstanding anything to the contrary in any law, custom, usage or agreement, no person shall he entitled to own or hold as landowner or tenant land under his personal cultivation within the State which exceeds in the aggregate the permissible limit. (2) For the purposes of computing the permissible limit under sub-section (1), the provisions of clauses (d) and (e) of sub-section (2) of section 3 shall not apply."
(2.) The permissible limit for the purposes of the Act was fixed at 30 standard acres of land by section 3 thereof Section 32-B of the Act provided that any person who on the commencement of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956 owned or held as landowner or tenant land under his personal cultivation, which in the aggregate exceeded the permissible limit should within a period of one month from the commencement of the Pepsu Tenancy and Agricultural Lands (Amendment) Ordinance, 1958 furnish to the Collector a return giving the particulars of all his lands in the prescribed form and manner and stating therein his selection of the parcel or parcels of land not exceeding in the aggregate the permissible limit which he desired to retain and the lands in respect of which he claimed exemption from the ceiling under the provisions of Chapter IV-A of the Act. It was further provided that such person should state in the return any transfer or other disposition of land made by him after 21st August, 1956 and where a person had furnished a return before the commencement of the Pepsu Tenancy and Agricultural Lands (Amendment) Ordinance, 1958 he should within the aforesaid period intimate to the Collector any such transfer or other disposition of land made by him. Clause (f) of section 2 of the Act defined the expression 'landowner'. The explanation added to the said clause provided that in respect of land mortgaged with possession the mortgagee should be deemed to be the landowner. In view of the above definition the extent of 7-4 standard acres of land which was under mortgage with possession at the commencement of the Act was not to be included in the holding of Labh Singh for purposes of determining the surplus land in his hand but the mortgagee had to be treated as the landowner in respect of that land. Consequently, the remaining extent of land in the possession of Labh Singh being less than 30 standard acres he was treated as a small landowner not liable to surrender any land as surplus land under the provisions of the Act. But on April 1, 1959, Labh Singh got back the possession of 7-4 standard acres of land by redeeming the mortgage. On redemption the total extent of land in his possession became 32-8 standard acres which was in excess of 30 standard acres which had been prescribed by the Act as the permissible limit. Labh Singh did not file any return informing the authority concerned that his holding had exceeded the permissible limit. But on coming to know that Labh Singh had in his possession land in excess of the permissible limit, proceedings were' started by the Revenue authorities to declare the surplus land in his hands and to take possession of the surplus area. The Collector by his order dated April 25, 1967 declared that 2-8 standard acres of land in the hands of Labh Singh was surplus area which he had to surrender. The Collector, however, did not impose any penalty on Labh Singh for not submitting his return in time on the ground that he being an illiterate person was not aware of the stringent provisions of the Act. Labh Singh was directed to produce a list of Khasara Nos. to be surrendered as surplus land within a fortnight therefrom. Aggrieved by the order of the Collector, Labh Singh preferred an appeal before the Commissioner of Jullandur Division. That appeal was unsuccessful. A:revision petition filed before the Financial Commissioner, Punjab, against that order also failed. Labh Singh thereafter filed a writ petition before the High Court of Punjab and Haryana questioning the correctness of the order passed by the Financial Commissioner, Punjab, contending that the land which was under mortgage at the commencement of the Act and which was redeemed subsequently could not be taken into consideration for determining surplus area in the hands of the landowner. The learned single Judge who heard the writ petition did not agree with the contention urged on behalf of Labh Singh and dismissed it. In the Letters Patent Appeal filed before the Division Bench of the High Court by Labh Singh against the judgment of the learned single Judge it was held that the acquisition made by Labh Singh of 7-4 standard acres of land on redemption amounted to a transfer within the meaning of that expression in section 32-L of the Act and that being so by virtue of sub-section (2) of that section the transfer by which Labh Singh had acquired interest in that land must be deemed to be null and void and therefore non-existent. It was further held that the transfer being non-existent there was no acquisition in the eye of law. Consequently, the transfer had to be ignored and not to be taken into consideration. The Division Bench of the High Court which decided the appeal observed that the "so-called acquisition is hit by section 32-L of the Pepsu Act and is therefore non-existent in the eye of law being null and void, and does not have the effect of making Labh Singh the owner of an area exceeding the permissible limit." In that view of the matter the appeal was allowed and the orders passed by the Revenue authorities culminating in the order of the Financial Commissioner and the order of the learned single Judge were set aside. The High Court declined to consider the effect of section 32-M of the Act on the case. This appeal by special leave is filed by the State of Punjab against the judgment of the Division Bench of the High Court in the Letters Patent Appeal.
(3.) In order to appreciate the contentions of the parties it is necessary to refer at this stage to sections 32-L and 32-M of the Act as they stood then. They read as follows: "32-L. Ceiling on future acquisition of land.- (1) Notwithstanding anything to the contrary in any law, custom, usage, contract or agreement, from and after the commencement of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956, no person whether as landowner or tenant, shall acquire or possess by transfer. exchange, lease, agreement or settlement any land which with or without the land already owned or held by him, shall in the aggregate exceed the permissible limit. (2) Any transfer, exchange, lease, agreement or settlement made in contravention of the provisions of sub-section (1), shall be null and void. 32-M. Ceiling on future acquisition by inheritance. - (1) If, after the commencement, of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956, any person, whether as landowner or tenant, acquires by inheritance or by bequest or gift from a person to whom he is an heir any land which with or without the lands already owned or. held by him, exceeds in the aggregate the permissible limit, then he shall within the period prescribed furnish to the Collector a return in the manner specified in section 32-B giving the particulars of all lands and selecting the land he desires to retain and if the land of such person is situated in more than one Patwar circle, he shall also furnish a declaration required by sub-section (1) of section 32-BB. (1-A) If such person fails to furnish the declaration, the provisions of sub-sections (2) and (3) of section 32-BB shall apply. (2) If he fails to furnish the return and select his land within the, prescribed period, then the Collector may obtain the information and select the land for him in the manner specified in section 32-C. (3) The Collector shall then submit a statement to the State Government in the manner specified in section 32-D and issue a notification in the Official Gazette as required by that section. (4) The excess land shall then vest in the State Government in accordance with the provisions of section 32-E and compensation therefor, shall be payable in accordance with the provisions of this Chapter.";