The Himachal Pradesh High Court (Shimla Bench) has held that the expression “shall put the land to such use for which the permission has been granted” in the second proviso to Section 118(2) of the H.P. Tenancy and Land Reforms Act, 1972 cannot be interpreted myopically or as requiring completion of the entire project within two years or the extended period. What the statute requires is that the permission holder must demonstrate cogent and meaningful steps towards utilizing the land for the permitted purpose. If such steps are shown, and there is no diversion of land for any other use, the land cannot automatically vest in the State merely because the project was not fully completed within the prescribed time.
The Court also affirmed that the vesting clause is attracted only where there is failure attributable to conscious default, negligence or refusal. Where delay or non-compliance is caused by statutory hindrances, procedural requirements, bureaucratic delay, or other reasons beyond the grantee’s control, Section 118 cannot be enforced in a mechanical manner to deprive the purchaser of the land.
A Single Judge Bench of Justice Jyotsna Rewal Dua examined the second proviso to Section 118(2) of the Himachal Pradesh Tenancy and Land Reforms Act, 1972, which requires a non-agriculturist to “put the land to such use” for which permission was granted within two years, extendable by one more year, failing which the land may vest in the State. The Bench noted that the controversy turned on the meaning of the words “shall put the land to such use,” and accepted the interpretation adopted by the Divisional Commissioner and the Financial Commissioner that these words do not mean the entire project must become fully operational within the statutory period. Rather, they mean that the purchaser must move in the direction of utilizing the land for the permitted purpose in a manner that shows readiness and willingness to establish the project.
The Bench reiterated that vesting under Section 118 is not automatic. Referring to the case of Ravinder Chauhan v. State of H.P. [AIR 1999 HP 43], it held that failure must be on account of conscious default, negligence or refusal on the part of the grantee. If non-compliance occurred for reasons beyond the grantee’s control, or because performance was incapable or impossible due to operation of other laws or statutory requirements, the vesting clause cannot be mechanically invoked. The Bench also noted the State Government’s own instructions dated Feb 15, 2016, which required exclusion of the period during which the purchaser was prevented from putting the land to use because of statutory hindrances or action of the Government itself.
The Bench further noticed that the case records and photographs showed that the land had been put to use for the permitted purpose after obtaining necessary NOCs, and that the District Collector had not conducted a proper inquiry before directing vesting. It also underlined the stringent nature of Section 118 proceedings, since they can lead to confiscation of land and structures without compensation, and therefore require utmost care, proper opportunity, and careful appreciation of evidence before any adverse order is passed.
Briefly, the respondent company had obtained permission under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 to purchase 06-11 bighas of land at Nalagarh/Baddi, District Solan, for setting up an industrial unit within two years. As the unit was not set up within that period, the respondent sought extension, and the State Government granted a further one year on June 08, 2009. When the industry was still not set up within the extended period, the respondent sought another extension, which was rejected, and proceedings under Section 118 were initiated on Sep 22, 2011.
The respondent’s case was that it had in fact put the land to use by carrying out development and levelling work, constructing a retaining wall and industrial shed, and digging a borewell. The Collector, Solan, however, ordered vesting of the land in the State on April 30, 2016. That order was set aside by the Divisional Commissioner and the Financial Commissioner remanded the matter to the Collector for fresh consideration. The State then challenged those orders before the High Court.
The respondent had obtained multiple statutory approvals connected with the industrial unit, including electricity and water NOC, single window clearance, pollution control consents, fire NOC, power release certificate, GST enrolment, and later renewals of operational permissions. The respondent relied on these approvals to show that it had taken steps in furtherance of the permitted industrial use of the land.
