Strict limits on post-vesting settlement under estate abolition law prevent transfer of non-agricultural land to former intermediaries.

Under the Orissa Estates Abolition Act, 1951, vesting under Section 5 transfers the entire estate to the State free from encumbrances, leaving the intermediary with only those rights expressly saved by the Act. Section 7 is a strict exception and applies only to land used for agricultural or horticultural purposes and in the intermediary's khas possession on the date of vesting. Non-agricultural anabadi land not shown to be in cultivating possession does not meet that requirement and cannot be validly settled in favour of the ex-intermediary. A settlement made outside this limited statutory exception is contrary to the scheme of the Act.

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Issues: Whether land described as anabadi and non-agricultural, having vested in the State on notification under the Orissa Estates Abolition Act, 1951, could validly be settled in favour of the ex-intermediary under Section 7 of the Act.

Analysis: On vesting under Section 5, the entire estate and the lands comprised therein stood transferred to the State free from encumbrances, and the intermediary ceased to have any surviving interest except to the extent expressly saved by the Act. Section 7 is an exception and therefore must be strictly construed. The benefit of Section 7(1)(a) is confined to lands used for agricultural or horticultural purposes and in khas possession of the intermediary on the date of vesting. A non-agricultural anabadi land not shown to be in cultivating possession could not satisfy that statutory requirement. The settlement order was therefore contrary to the statutory scheme, and the subsequent death of some applicants also undermined the validity of the settlement made in their favour.

Conclusion: The settlement in favour of the ex-intermediary was invalid, and the State's challenge succeeded.

Ratio Decidendi: After vesting under Section 5 of the Orissa Estates Abolition Act, 1951, only those lands that strictly fall within the limited exception in Section 7 can be retained by the intermediary, and non-agricultural land not in khas possession cannot be validly settled under that provision.

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