STATE OF UTTAR PRADESH AND OTHERS versus UNITED BANK OF INDIA AND OTHERS

Citation: [2015] 14 S.C.R. 118 · Decided: 26-11-2015 · Supreme Court of India · Bench: M.Y. EQBAL · Disposal: Disposed off
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

[2015] 14 S.C.R. 118 
A 
STATE OF UTTAR PRADESH AND OTHERS 
B 
v. 
UNITED BANK OF INDIA AND OTHERS 
(Civil Appeal No. 5254 of 2010 etc.) 
NOVEMBER 26, 2015 
[M. Y. EQBAL AND C. NAGAPPAN, JJ.] 
Government Grants Act, 1895 - ss. 2 and 3 - Transfer 
c of Government land - Property in question leased out by 
State of Uttar Pradesh, in favour of a Company for a period 
of 50 years __: The company mutated as lessee in Nazul 
property register - The lessee-company mortgaged the 
property in question to the appellant-Bank against credit 
D facilities - On company's failure to pay outstanding dues, 
suit by appellant-Bank before Calcutta High Court -
Mortgage decree passed by the High Court on the basis of 
settlement arrived at between the parties - Show cause notice 
to the company by the State authority for termination of its 
E leasehold rights on the property in question - Notice was 
challenged by appellant-Bank by filing writ petition - The Bank 
made application for getting conversion of leasehold land 
into freehold status which was rejected by the competent 
authority - On non-compliance of terms of the mortgage 
F decree, debt recovery proceedings initiated - On the basis 
of settlement between the parties Debts Recovery Tribunal 
(ORT) directed to dispose of the mortgaged property -
Property in question auction-sold pursuant to order of 
ORT -
The prospective auction-purchaser asked the 
G appellant-Bank to get the property converted into freehold -
The Bank issued show cause notice against the auction-
purchaser -
Writ petition filed by auction-purchaser 
challenging the show cause notice~ High Court allowed the 
writ petitions filed.by the Bank and the auction-purchaser -
H 
118 
STATE OF UTT AR PRADESH AND OTHERS v. UNITED 
119 
BANK OF IN DIA AND OTHERS 
On appeal, held: The land in dispute was a Government A 
property (Nazul land) maintained by State authorities in 
accordance with Nazul Rules - The lessee is not authorised 
to transfer or sublet the demised premises without previous 
sanction of the lessor - There is nothing on record to show 
that the lessee in the present case had obtained any written B 
sanction from the lessor before mortgaging its leasehold 
interest in the property and hence the mortgage is bad in 
law- The appeffant,Bank not being lessee of the land, cannot 
get any right over it - Mortgage decree is also bad in law as 
the same was passed without issuing notice to the State of C 
U.P. -The High Court erred in giving direction to convert the 
leasehold as freehold interest in favour of the Bank by 
appiying doctrine of legitimate expectation -The doctrine 
could not have been applied in cases of invalid 
expectation - Nazul Rules - rr. 13 and 16 - Doctrine of D 
Legitimate expectation - Transfer of Property. 
Doctrines/Principles -
Doctrine of legitimate 
expectation - Applicability of - When - Discussed and 
explained. 
E 
Words and Phrases - 'Legitimate expectation' -
Meaning of- Explained. 
Disposing of the appeals, the Court 
Held: 1. The land in dispute being a Government 
property, the appellant-Bank cannot get any right over 
it. Moreover, neither the appellant-Bank is a lessee of the 
land in question nor any lease has ever been sanctioned 
F 
by the Govt of U.P. in its favour. Hence, the appellant is G 
not entitled to get any right or to keep possession of the 
properties in question. [Para 21] [139-F-G] 
2. There is no dispute that the land and building in 
question is Nazul property being the property of H 
120 
SUPREME COURT REPORTS 
[2015] 14S.C.R. 
A Government maintained by the State authorities in 
accordance with the Nazul Rules. Chapter 1 of the Nazul 
Rules lays down the provision for maintenance of Nazul 
register, procedure for entering names of persons in 
possession of Nazul land and building. Rule 13 provides 
B the procedure for sale or lease of Nazul land, whereas 
Rule 16 makes it mandatory for obtaining prior approval 
of the State Government before sale or lease or renewal 
of leases of nazul lands. [Para 26][141-H; 142-A] 
c 
3. Indisputably the lease of Nazul land is governed 
D 
by the Government Grants Act, 1895. Sections 2 and 3 
of the Gov0 rnment Grants Act, 1895 very specifically 
provide that the provisions of the Transfer of Property 
Act do not apply to Government lands. [Para 28][143-E] 
4. The aforesaid legal position was known to the 
lessee-Company and also to the Bank to whom the 
property in question was mortgaged. In reply to the 
applic
Excerpt shown. Read the full judgment & AI analysis in Lexace.