The High Court has upheld the government’s notice to reclaim 75 acres of land allotted in 1963 to the Bellary Spinning and Weaving Company. The land, originally granted by the then Mysore State, was ordered to be taken back through notices issued between 1984 and 1986, which the company had challenged.
A division bench of Justices D.K. Singh and Venkatesh Nayak T. delivered the order while hearing the government’s appeal against a company court ruling that had earlier quashed the notices.
The court observed that the land was allotted conditionally under the Mysore Land Revenue Code, 1888, and the Land Grants Rules, 1960, specifically for establishing a spinning mill. It ruled that the company only had limited usage rights, while ownership remained with the state. Hence, the mortgage to Canara Bank did not grant the company full ownership, and the government’s move to reclaim the land was legal.
Background: In January 1963, 75 acres in Survey No. 597, Bellary district, were granted at Rs. 500 per acre with nominal fees and rent, with strict conditions on usage and construction. Any violation empowered the state to repossess the land without compensation.
The company, after mortgaging the land with government approval, secured a Rs. 20 lakh loan from Canara Bank but defaulted on repayment. By 1984, officials noted that 50 acres remained unused and violations of grant terms had occurred, prompting a show-cause notice. The Registrar of Companies ordered closure in 1986, and a liquidator was appointed.
The company court later set aside the government’s notices, leading to the High Court appeal. While upholding the government’s position, the bench directed steps to repossess the entire 75 acres. Canara Bank’s challenge reached the Supreme Court, which remitted the matter to the High Court for fresh hearing.