LexSTEEL AUTHORITY OF INDIA LTD. versus STATE OF M.P. AND ORS.
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A STEEL AUTHORITY OF INDIA LTD. v. STATE OF M.P. AND ORS. APRIL 5, 1999 B [M. JAGANNADHA RAO AND S.N. PHUKAN, JJ.] Land Laws: Madhya Pradesh Land Revenue Code, 1959 : Section 58-Exemption C from payment of land revenue by special grant or contract-Acquisition of land by Central Government from State Government for establishing steel plant-Agreement entered into between the Governments for payment of capitalised value of land revenue at 25 times-Transfer of land to appellant- Company-Assessment-order demanding land revenue from Company- D Validity of-Held, once land revenue was capitalised and paid, no further amount could be realised-Right t.o exemption accrued to the Central Government not to pay land revenue also available to appellant-Company as successor-in-interest-Demand of land revenue quashed Constitution of India, 1950 : Article 299-Contract executed by virtue E of statutory power-Applicability of F Words & Phrases: ''Capitalise' '-Meaning of The Central Government wrote to the Chief Secretaries of States informing about a proposal to establish Russian Technical Assistance Steel Plants. For the said steel plant, the Central Government needed land free of cost and•wanted to know whether the State Government would be prepared G to extend the facilities. In pursuance to the offer, the respondent-State Government showed its willingness. Subsequently, the Respondent-State Government brought to the notice of the Central Government the rules framed by the Secretary of State in 1925. The salient features of the said rules were that in respect of land belonging to private persons, the Central Government would pay the cost of acquisition, to the owners of the land and H capitalised value at 25 times the amount of land revenue assessed on such 408 STEEL AUTHORITY OF INDIA v. ST ATE 409 land to the State Government. The Central Government by two deeds of A · assignment transferred the land etc. to a company wholly owned by it. The appellant was the successor of the said company. The Deputy Collector passed an assessment order demanding land revenue dues for the period 1962 to 1987 from the appellant-company the appellant company Jmsuccessfully challenged the said order before the Commissioner, Board B of Revenue and High Court. Hence the present appeal. The appellant contended that there was an implied contract that Central Government should make one time payment of land revenue for 25 years. In addition, the 1925 Rules also provide tha~ if land is transferred by the State to Centr,al Government and if such a payment is made, the Central Government C need not pay any further land revenue to the State. Thus both on the ground of contract and Rules, the Central Government gets exemption under sub- clause (1) of section 58 of the Madhya Pradest. Land Revenue Code, 1959. Allowing the appeal, this Court HELD : 1.1. There is no liability on the appellant-Company to pay any land revenue as it has been capitalised and paid at 25 times by the Central Government (418-A-B; F-G] 1.2. The object of the Rules framed by the Secretary of State in 1925 D is clear that land revenue was to be capitalised and collected once for all and E that no land revenue could be further recovered thereafter. Moreover from the conduct of the parties it is very clear that both the Governments agreed with the terms mentioned in the letter of the State Government dated 25th September, 1958 and, therefore, there was also a contract between the parties regarding exemption from payment ofland revenue, if25 times of the land revenue was paid once for all. Section 58 of the Madhya Pradesh Land F Revenue Code, 1959 provides that land revenue is payable in respect of all land unless it is exempted from such liability by special grant or contract with the State Government. Thus, in view of the agreement between the two Governments and in view of the provisions of section 58 of the Code, no land revenue is payable for the land in question as it has been capitalised at 25 G times of the land revenue prevailing at that time. [416-G; 417-C; G-H] Blacks law Dictionary, Fifth Edition Oxford English Dictionary, Vol. 11-C, referred to. 2. Article 299 of the Constitution applies only to contracts to be H 410 SUPREME COURT REPORTS (1999] 2 S.C.R. .A executed in exercise of "executive power" and not those executed by virtue of statutory power like section 58 of the Code. Thus, the contention that th
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