IN THE COURT OF HIGH COURT OF JAMMU AND KASHMIR             
AT JAMMU   
 OWP No. 292 of 2008  
 K. P. Paper
petitioner
 State of J&K and Ors.
Respondent  

! Mr. Rohit Kapoor, Advocate ^ M/s A.H.Naik, AG Advocate with Mr. A.H.Qazi, AAG.

JUSTICE J. P. SINGH, JUDGE Date : 10/10/2008 : Judgment :

_______________________________________________________ ____ Petitioner has filed this writ petition seeking issuance of a writ of mandamus against the respondents commanding them to grant it Permanent Registration and all those benefits as may be available to Industrial Units under the Industrial Policy of the State of Jammu and Kashmir.

M/s K.P.Paper, initially a sole proprietorship concern, which later came to be constituted as a partnership firm, applied to the respondents seeking permission to set up an Industrial Unit for manufacturing paper as Medium and Large Scale Industry. Its proposal to set up an Industrial Unit was approved by the Apex Project Clearance Committee (APCC for short) constituted in terms of the Industrial Policy of the State, and a Provisional Certificate was issued to it by the Jammu and Kashmir State Industrial Corporation Limited, the Nodal Officer notified as such under 2 the Single Window Clearance System contemplated by the Industrial Policy of the State.

The petitioner had initially taken land on lease hold basis in village Barwal of District Kathua. It, however, with the permission of the respondents-authorities and APCC, shifted its project site from Barwal to village Chak Ramchand in District Kathua. Provisional Registration Certificate for setting up a Medium and Large Scale Industry was, accordingly, granted to it for the changed location. Toll tax exemption on import of building material needed for setting up the Unit too was granted to the petitioner by the Deputy Excise Commissioner, Lakhanpur on the recommendations of Director Industries and Commerce, J&K Government, Exhibition Ground Jammu. Petitioner is stated to have invested approximately Thirty One Crores of rupees in setting up the Unit and has been paying an amount of Rupees Twenty Lacs per month as interest thereon. According to the petitioner, the Unit stands registered with the Sales Tax and other authorities and all requisite formalities to set up and commission the Medium and Large Scale Industrial Unit for manufacture of paper thus stands completed. The Jammu and Kashmir State Pollution Control Board too had granted its consent under Sections 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 and Section 21 of the Air (Prevention and Control of Pollution) Act, 1981 to establish the Unit at village Chak Ramchand Tehsil and District Kathua. The respondents, according to the petitioner had, however, refused Permanent 3 Registration to it thereby stalling the whole process of commissioning the Unit.

Aggrieved by the refusal of the respondents to grant it Permanent Registration for setting up and commissioning its Medium and Large Scale Industry, petitioner has approached this Court invoking its extra ordinary civil writ jurisdiction to issue a command to the respondents to grant it Permanent Registration and all those benefits which may be available to it under the Industrial Policy of the State. Contesting petitioner's case for providing it Permanent Registration and making it available all those benefits which are available to Industrial Unit under the Industrial Policy of the State, the State-respondents have opposed the grant of reliefs to the petitioner on twin grounds, viz.

(1) Being a non-permanent resident of the State, the petitioner was required to approach the State Government to seek allotment of land through State Industrial Development Corporation Limited (SIDCO for short), in case it had intended to set up an Industrial Unit in the State. Having opted to get land from private persons on lease, it cannot be allowed Permanent Registration of its Unit, regardless of the grant of provisional registration to it which, according to the respondents, had been obtained by misrepresentation of facts in indicating the proprietor of the petitioner a resident of village Barwal-Kathua; and (2) Land obtained from private persons on lease by the petitioner, who is a Non State Subject, is invalid transfer of immovable 4 property which disentitles the petitioner to set up his Industrial Unit on such property and seek Permanent Registration therefor. I have heard Mr. Rohit Kapoor, learned counsel for the petitioner and Mr. Altaf Naik, learned Advocate General appearing for the respondents.

Projecting petitioner's case and meeting the defence set up by the respondents to oppose petitioner's writ petition, Mr. Kapoor urged that the laws in force in the State of Jammu and Kashmir do not prohibit lease of immovable property in favour of Non Residents of the State which position in law was well settled in view of the law laid-down by this Court in Estate Officer vs. K. K. Amla, reported as SLJ 1989 J&K, 105. Learned counsel submitted that the respondents had granted Permanent Registration to various similarly situated Units such as Komal Paper Mill Jagatpur, District Kathua, T.K.Paper Mill Saktachak Kathua, besides Jammu Pigment, Makhan Alloy & Bharat Box, which had obtained land on lease from private persons to set up their Industrial Units and the petitioner had been discriminated against for no valid reasons. Disputing petitioner's entitlement to seek Permanent Registration of its Unit by Director Industries and Commerce, Mr. Naik initially argued that Provisional Registration obtained by the petitioner from SIDCO would not provide it any right to seek Permanent Registration because SIDCO had no authority to grant Provisional Registration to its Unit, which power, according to the learned Advocate, vested in Director Industrial and Commerce, Jammu and Kashmir Government, respondent No.2, but on being confronted with Government Order no. 94-Ind of 5 2004 dated 31.03.2004, issued pursuant to Government Order no. 21-Ind of 2004 dated 27.01.2004, in terms of Cabinet Decision No. 19/1 dated 23.01.2004 pertaining to New Industrial Policy, 2004 and Package of incentives for development of industries in the State of Jammu and Kashmir, indicating in its clause 4.13 that the Managing Director SIDCO would be the Nodal Officer for Medium and Large Scale Industrial Units and all applications for registration of Medium and Large Scale Industrial Units shall be submitted to the Managing Director SIDCO at his office at Jammu and Srinagar in the same manner as provided for Small Scale Units, learned Advocate General had nothing to say to support his submission that the Provisional Registration of the petitioner's Unit was unauthorized.

Supporting respondents' second plea that the petitioner, being a Non-permanent resident of the State of Jammu and Kashmir was not entitled to seek Permanent Registration for its Unit, learned Advocate General submitted that the provisions of the Transfer of Property Act, 1977 ( 1920 A.D) specifically prohibit lease of private land(s) to Non- State subjects and in that view of the matter, petitioner being a Non State Subject cannot be permitted to set up its Unit on land obtained by it on lease hold basis in violation of the provisions of the Transfer of Property Act and seek Permanent Registration for setting up an Industrial Unit. According to Mr. Naik "Transfer of property", as defined in Section 5 of the Transfer of Property Act includes in its ambit, Lease of immovable property too, and in view of the prohibition contained in the commands and Irshads mentioned in Section 139 of the Act, lease hold 6 rights obtained by the petitioner, a Non State Subject, in immovable property, for setting up and commissioning its Medium and Large Scale Unit was illegal and impermissible and the land covered by the lease was liable to be escheated to the State.

Referring to the amendment introduced in Section 140 of the Act vide Act No. VII of 2004, learned Advocate General submitted that the Legislature had demonstrated its intention in clear terms that Transfer of property in terms of Section 5 of the Act would include Lease of immovable property also.

I have considered the submissions of learned counsel for the parties.

Petitioner's case seeking Permanent Registration for its Unit by Director Industries and Commerce, has been contested by the respondents on the remaining solitary ground that it is not entitled to seek its Permanent Registration because Lease of land obtained by it for setting up its Unit was illegal and impermissible, in that, being a Non Permanent Resident of the State, it cannot acquire any immovable property on Lease in the State of Jammu and Kashmir in view of the laws in force in the State.

The question that, therefore, falls for consideration, in this petition is, as to whether or not there exists any law in the State of Jammu and Kashmir which prohibits Lease of immovable property in favour of Non- Permanent residents of the State?

To answer the question and deal with the submissions raised at the Bar, regard needs to be had to the provisions of Sections 5, 105, 139 & 140 of the Transfer of Property Act, 1977 (1920 A.D). Provisions of the Transfer of Property Act do not create any specific bar, as such, prohibiting lease of immovable property in favour of Non State Subjects. It is only Section 139 of the Act which saves certain Regulations, Hidayats, Resolutions, Ailan, Rule and valid custom, which regulate transfer of immoveable property or any right therein, in any part of the Jammu and Kashmir State.

The question as to whether the Regulations, Hidayats, Resolutions, Ailans etc., enact any bar for Transfer of property in favour of Non State Subjects, does not appear to be res integra in view of the Full Bench decision of this Court in Lala Devi Dass versus Panna Lal, reported as AIR 1959 J&K, 62 where their lordships had held as follows: "Our attention has been drawn to another Irshad of 29th Magh 1943 and Irshad dated 23rd Magh 1962 by which sales and mortgages of land in favour of residents of British India have been prohibited and it is argued that as it had been the consistent policy of the State not to transfer immovable property in favour of non-State Subjects either by sale or mortgage, therefore, the alienation of the property by will also by implication should be deemed to have been prohibited.

The learned counsel has not been able to show any authority or law for the proposition that disposal by will of immovable property consisting of a house in favour of a non-State Subject is prohibited. He has, however, referred toS.4 of the Land Alienation Act which prohibits the transfer of land in favour of any person who is not a State Subject. The word "transfer" is not specifically defined in the Land Alienation Act but a definition of "permanent alienation" is given in sub-sec. (3) of S.2 of the Act which is as follows:-

"The expression "permanent alienation" includes sale gift, bequest, grant of occupancy rights and exchange other than an exchange made for the purpose of consolidation of holdings".

The expression "land" is defined by Sub-clause (2) of S.2 as land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture.

As bequest is specifically included in "permanent alienation" which is synonymous to the term transfer, so the permanent alienation of land as defined in the Land Alienation Act by bequest is prohibited under the provisions of the Land Alienation Act. But there is no law prohibiting disposal of immovable property other than land as defined in the Land Alienation Act by will in favour of a non-State Subject. The mere fact that transfer by sale or mortgage of immovable property in favour of non-State Subjects is prohibited cannot be considered to be a bar to the disposal of immovable property other than land as defined in the Land Alienation Act by will. There must be a clear and unambiguous provision of law prohibiting the disposal of all kinds of immovable property by will and in the absence of such a provision the Courts will not interpret the latent intention of the legislature which is not embodied in express provisions of law."

In view of the legal position settled by the Full Bench Judgment (supra), it may be concluded that the prohibition on transfer of land which is provided in the Irshads mentioned in Section 139 of the Act is only on the Sale and Mortgage of lands in the State of Jammu and Kashmir.

The next issue which needs to be considered is as to whether Transfer of a right to enjoy property by way of lease would attract the provisions of the Commands/ Irshads prohibiting Transfer of Immovable Property by Sale or Mortgage, And whether Transfer of right to enjoy property, by way of Lease would be Transfer of Property in terms of Section 5 of the Act.

Transfer of Property has been defined in Section 5 of the Act to mean, an act by which a living person conveys property, in present or in future, to one or more persons, whether living or unborn or to himself, or 9 to himself and one or more other such persons; and "to transfer property" is to perform such act.

Living persons, in terms of the definition, include a Company or Association or body of individuals, whether incorporated or not. It has been explained in Section 5 of the Act that nothing contained in it would affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals. Lease of immovable property, as defined in Section 5 of the Act, is a transfer of a RIGHT TO ENJOY such property, made for a certain term, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Perusal of the definitions of 'Transfer of Property' appearing in Section 5 and 'lease' in Section 105 of the Transfer of Property Act unambiguously demonstrates a well defined distinction. Whereas Lease is a transfer, only of a "right to enjoy" the property, which is one of various rights which the owner or authorized occupier thereof possesses therein, the ownership remaining vested in the transferor-lessor, the "transfer of property" on the other hand, is the "transfer of ownership of the property itself" vesting it absolutely and exclusively in the Vendee(s) thereby divesting Owner-Vendor of all his rights in the property.

The above view gets support from the intention of the legislature expressed as such in enacting Section 8 of the Transfer of Property Act 10 which indicates about the effects post transfer of immovable property, which one may not find in case of "transfer of right" alone in the property, as in case of lease of the immovable property. Section 8 of the Act, is reproduced hereunder, for facility of reference:- "Operation of transfer Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property, and in the legal incidents thereof.

Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth;

and, where the property is machinery attached to the earth, the moveable parts thereof;

and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer;

and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect."

In view of the marked distinction in the expression "transfer of property" appearing in Section 5 and "transfer of right to enjoy" the property appearing in Section 105 of the Transfer of Property Act, it may be concluded that lease of immovable property cannot, by any stretch of reasoning, be construed as transfer of property in terms of Section 5 of the Transfer of Property Act which may in turn attract the prohibition on transfer of immovable property to Non State Subjects. Merely because the legislature has by Act No. 7 of 2004 introduced, by way of amendment to Section 140 of the Act, which refers 11 to exemptions of certain instruments from restriction imposed on transfer of immovable property, lease of immovable property in favour of (1) Shri Mata Vaishno Devi University established under the Jammu and Kashmir Shri Mata Vaishno Devi University Act, 1999 and (2) Baba Ghulam Shah Badshah University established under the Jammu and Kashmir Baba Ghulam Shah Badshah University Act, 2002, would not even remotely suggest that lease of immovable property in favour of Non State Subjects had been intended to be prohibited. This is so because introduction of "leases in favour of Shri Mata Vaishno Devi University and Baba Ghulam Shah Badshah University" in Section 140 of the Transfer of Property Act, requires to be viewed in the context of any restriction on transfer of immovable property in favour of a person who is not a Permanent Resident of the State, as contemplated by Irshad dated 29th Maghar 1943 or any Law, Rule, Order, Notification, Regulation, Hidayat, Alian, Circular, Robkar, Yadasht, Irshad, State Council Resolution or any other instrument having the force of law.

As already held in the earlier part of this judgment that none of these commands as mentioned hereinabove had created any bar on lease of immovable property in favour of Non State Subjects and the bar created therein pertained only in respect of Sale and Mortgage of immovable property, so introduction of "leases in favour of Shri Mata Vaishno Devi University and Baba Ghulam Shah Badshah University" in Section 140 of the Transfer of Property Act, would not in any way change the settled position of law that lease of immovable property would not amount to transfer of property itself so as to attract the bar 12 enacted by the above commands for transfer of property in favour of Non State Subjects.

In view of the above discussion, it, therefore, needs to be concluded that the Transfer of Property Act, 1977 (1920 A.D), does not as such enact any bar prohibiting lease of immovable property in favour of Non State Subjects.

Submissions made by learned Advocate General are thus rejected as utterly frivolous.

Learned Advocate General had not referred to any other law in force in the State which prohibited Lease of immovable property in favour of Non State Subjects and rightly so because even the Jammu and Kashmir Alienation of Land Act, 1995 (1938 A.D), does not provide any prohibition for lease of land as defined in the Jammu and Kashmir Alienation of Land Act in favour of Non State Subjects. Prohibition contained in Section 4 of the Jammu and Kashmir Alienation of Land Act on transfer of land in favour of Non State Subjects applies only to permanent alienation of land and not to transfer of right to enjoy the land by way of lease.

I am, therefore, inclined to hold that the laws in force in the State of Jammu and Kashmir do not prohibit lease of immovable property in favour of Non Permanent Residents of the State. Plea of the petitioner that similarly situated Non State Subject Owners of the Units had been allowed Permanent Registration by the respondents, has not been denied by them in their response to the writ petition.

The State and its functionaries are thus found to have grossly erred in refusing Permanent Registration to petitioner's Unit on absurd interpretation of the provisions of the Transfer of Property Act and in raking up an unnecessary issue which stood concluded by a Full Bench Judgment of this Court which had been later followed in Estate Officer versus K.K.Amla, reported as SLJ, 1989 J&K, 105, when there was no legal impediment in the registration of petitioner's Unit and similarly situated Units, like the petitioner had been allowed Permanent Registration.

Petitioner has, therefore, succeeded in establishing its case for issuance of command to the respondents to consider according it Permanent Registration and allow it all those benefits to which it may be entitled to under law and the Industrial Policy of the State. Before concluding, it needs to be observed that a welfare State like ours and its functionaries whose duty it is to serve people and act bonafide, cannot afford to permit contest of litigation on vexatious and frivolous pleas. It is because of such type of defence of the respondents that the petitioner had to suffer in business for its no fault. The respondents are, therefore, liable to be burdened with exemplary costs for refusing registration to petitioner's Unit and contesting their case on misconceived and vexatious grounds whereas in other similar cases they had granted Permanent Registration to the Units which though owned by Non State Subjects had obtained lease hold rights in land from private owners.

A command shall accordingly issue to the respondents to consider petitioner's case for its Permanent Registration and pass appropriate orders thereon in accordance with law within a period of one month. They are further directed to provide the petitioner's Unit all those benefits which may be available to it under the Industrial Policy of the State and the laws in force in the State.

This petition, therefore, succeeds and is allowed with exemplary costs of Thirty Thousand Rupees.

(J. P. Singh) Judge JAMMU:

10.10.2008:

Pawan Chopra