By Dr. Anup P. Shah
Chartered Accountant
INTRODUCTION
A person can
make a Will for any asset that he owns, subject to statutory restrictions, if
any. For instance, in the State of Maharashtra a person cannot make a Will for
any premises of which he is a tenant. A similar question that arises is, ‘Can
a person make a Will in respect of his agricultural land?’ A
Three-Judge Bench of the Supreme Court had an occasion to decide this very
important issue in the case of Vinodchandra Sakarlal Kapadia vs. State of
Gujarat, CA No. 2573/2000, order dated 15th June, 2020.
APPLICABLE LAW
It may be noted that Indian
land laws are a specie in themselves. Even within land laws, laws relating to
agricultural land can be classified as a separate class. Agricultural land in
Maharashtra is governed by several Acts, the prominent amongst them being the
Maharashtra Land Revenue Code, 1966; the Maharashtra Tenancy and Agricultural
Lands Act, 1948; the Maharashtra Agricultural Lands (Ceiling on Holdings) Act,
1961; etc.
The Maharashtra Tenancy and
Agricultural Lands Act, 1948 (‘the Act’), which was earlier known as the Bombay
Tenancy and Agricultural Lands Act, 1948, lays down the situations under which
agricultural land can be transferred to a non-agriculturist. The Act is
applicable to the Bombay area of the State of Maharashtra. The Bombay
Reorganisation Act, 1960 divided the State of Bombay into two parts, namely,
Maharashtra and Gujarat. The Act is in force in most of Maharashtra and the
whole of Gujarat.
PROHIBITIONS UNDER THE ACT
Under section 63 of the Act,
any transfer, i.e., sale, gift, exchange, lease, mortgage, with possession of
agricultural land in favour of any non-agriculturist shall not be valid unless
it is in accordance with the provisions of the Act. The terms sale, gift,
exchange and mortgage are not defined in this Act, and hence the definitions
given under the Transfer of Property Act, 1882 would apply.
This section could be
regarded as one of the most vital provisions of this Act since it regulates
transactions of agricultural land involving non-agriculturists. Even if a
person is an agriculturist of another state, say Punjab, and he wants to buy
agricultural land in Maharashtra, then section 63 would apply. The above
transfers can be done with the prior permission of the Collector subject to
such conditions as he deems fit.
If land is transferred in
violation of section 63, then u/s 84C the transfer becomes invalid on an order
so made by the Mamlatdar. If the parties give an undertaking that they
would restore the land to its original position within three months, then the
transfer does not become invalid. Once an order is so made by the Mamlatdar,
the land vests in the State Government. The amount received by the transferor
for selling the land shall be deemed to be forfeited in favour of the State.
Further, section 43 of the
Act states that any land or any interest therein purchased by a tenant cannot
be transferred by way of sale or assignment without the Collector’s
permission. However, such a permission is not needed if the partition of the
land is among the members of the family who have direct blood relations, or
among the legal heirs of the tenant.
Sections 43 and 63 may be
considered to be the most important provisions of the Act. In this background,
let us consider a case decided by the Supreme Court recently.
FACTS OF THE CASE
The
facts in the case before the Supreme Court were very straight forward. An
agriculturist executed a Will for the agricultural land that he owned in
Gujarat in favour of a non-agriculturist. On the demise of the testator, the
beneficiary applied for transferring the land records in his favour. The
Revenue authorities, however, found that he was not an agriculturist and
accordingly proceedings u/s 84C of the Act were registered and notice was
issued to the appellant.
Ultimately, the Mamlatdar passed
an order that disposal by way of a Will in favour of the appellant was invalid
and contrary to the principles of section 63 of the Act and therefore declared
that the said land vested in the State without any encumbrances. A Single Judge
of the Gujarat High Court in Ghanshyambhai Nabheram vs. State of Gujarat
[1999 (2) GLR 1061] took the view that section 63 of the Act cannot
deprive a non-agriculturist of his inheritance, a legatee under a Will can also
be a non-agriculturist. Accordingly, the matter reached the Division Bench of
the Gujarat High Court which upheld the order of the Mamlatdar and held:
‘….Act has
not authorised parting of agricultural land to a non-agriculturist without the
permission of the authorised officer, therefore, if it is permitted through a
testamentary disposition, it will be defeating the very soul of the
legislation, which cannot be permitted. We wonder when testator statutorily
debarred from transferring the agricultural lands to a non-agriculturist during
his life time, then how can he be permitted to make a declaration of his
intention to transfer agricultural land to a non-agriculturist to be operative
after his death. Such attempt of testator, in our view, is clearly against the
public policy and would defeat the object and purpose of the Tenancy Act…
Obvious purpose of Section 63 is to prevent indiscriminate conversion of
agricultural lands for non-agricultural purpose and that provision strengthens
the presumption that agricultural land is not to be used as per the holders
caprice or sweet-will (sic)’.
The same view was taken by
the High Court in a host of cases.
ISSUE IN QUESTION
The issue reached the Supreme
Court and the question to be considered by it was whether sections 63 and 43 of
the Act debarred an agriculturist from transmitting his agricultural land to a
non-agriculturist through a ‘Will’ and whether the Act restricted the transfer
/ assignment of any land by a tenant through a Will?
DECISION OF THE APEX COURT
The Supreme Court in the case
of Vinod (Supra) observed that a two-member Bench (of the Apex
Court) in Mahadeo (Dead through LR) vs. Shakuntalabai (2017) 13 SCC 756
had dealt with section 57 of the Bombay Tenancy and Agricultural Lands Act,
1958 as applicable to the Vidarbha region of the State of Maharashtra. In that
case, it was held that there was no prohibition insofar as the transfer of land
by way of a Will is concerned. It held that a transfer is normally between two
living persons during their lifetime. A Will takes effect after the demise of the
testator and transfer in that perspective becomes incongruous. However, the
Court in Vinod (Supra) observed that its earlier decision in Mahadeo
(Supra) was rendered per incuriam since other, earlier contrary
decisions of the Supreme Court were not brought to the notice of the Bench and
hence not considered.
It held that a tenancy
governed by a statute which prohibits assignment cannot be willed away to a
total stranger. A transfer inter vivo would normally be for
consideration where the transferor gets value for the land but the legislation
requires previous sanction of the Collector so that the transferee can step
into the shoes of the transferor. Thus, the screening whether a transferee is
eligible or not can be undertaken even before the actual transfer is effected.
The Court observed that as against this, if a Will (which does not have the
element of consideration) is permitted without permission, then the land can be
bequeathed to a total stranger and a non-agriculturist who may not cultivate
the land himself; which in turn may then lead to engagement of somebody as a
tenant on the land. The legislative intent to do away with absentee landlordism
and to protect the cultivating tenants, and to establish direct relationship
between the cultivator and the land, would then be rendered otiose.
Accordingly, the Court held
that the restriction on ‘assignment’ without permission in the Act must include
testamentary disposition as well. By adopting such a construction, the statute
would succeed in attaining the object sought to be achieved.
It also cautioned against the
repercussions of adopting a contrary view. If it was held that a Will would not
be covered by the Act, then a gullible person could be made to execute a Will
in favour of a person who may not fulfil the requirements and may not be
eligible to be a transferee under the Act. This may not only render the natural
heirs of the tenant without any support or sustenance, but may also have a
serious impact on agricultural operations. It held that agriculture was the
main source of livelihood in India and hence the restrictions under the Act
cannot be given the go-by by such a devise.
Another connected question
considered was whether any prohibition in State enactments which were
inconsistent with a Central legislation, such as, the Indian Succession Act,
1925 must be held to be void? The Court held that the power of the State
Legislature to make a law with respect to transfer and alienation of
agricultural land stemmed from Entry 18 in List II of the Constitution of
India. This power carried with it the power to make a law placing restrictions
on transfers and alienations of such lands, including a prohibition thereof. It
invoked the doctrine of pith and substance to decipher the true object of the
Act. Accordingly, the Supreme Court observed that the primary concern of the
Act was to grant protection to persons from disadvantaged categories and confer
the right of purchase upon them, and thereby ensure direct relationship of a
tiller with the land. The provisions of the Act, though not fully consistent
with the principles of the Indian Succession Act, were principally designed to
attain and sub-serve the purpose of protecting the holdings in the hands of
disadvantaged categories. The prohibition against transfers of holdings without
the sanction of the Collector was to be seen in that light as furthering the
cause of legislation. Hence, the Apex Court concluded that in pith and
substance, the legislation was completely within the competence of the State Legislature
and by placing the construction upon the expression ‘assignment’ to include
testamentary disposition, no transgression ensued.
CONCLUSION
Persons owning agricultural
land should be very careful in drafting their Wills. They must take care that
the beneficiary of such land is also an agriculturist or due permission of the
Collector has been obtained in case of a bequest to a non-agriculturist. It is
always better to exercise caution and obtain proper advice rather than leaving
behind a bitter experience for the beneficiaries.
