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Issues: (i) Whether the State Government and the Collector acted in accordance with the scheme of Sections 89 and 89A of the Tenancy Act in permitting a direct transfer of agricultural land from the first industrial purchaser to a second purchaser without the statutory enquiry and vesting procedure; (ii) Whether the impugned permission and consequential sale were arbitrary, contrary to law, and liable to be set aside.
Issue (i): Whether the State Government and the Collector acted in accordance with the scheme of Sections 89 and 89A of the Tenancy Act in permitting a direct transfer of agricultural land from the first industrial purchaser to a second purchaser without the statutory enquiry and vesting procedure.
Analysis: Section 89 barred transfer of agricultural land to non-agriculturists except as permitted by law, while Section 89A created a limited exception for bona fide industrial purpose and specifically required the purchaser to commence industrial activity within the stipulated period. On failure, the Collector was required to inquire, hear the purchaser, determine compensation and order vesting of the land in the State Government. The record showed that the first purchaser had already expressed inability and unwillingness to establish the industry, yet the Collector did not conduct the mandatory enquiry or pass a vesting order. Instead, the Government treated the matter as a special case and directed a direct sale to the second purchaser. That course bypassed the statutory mechanism and substituted executive preference for the procedure enacted by the legislature.
Conclusion: The statutory scheme was not followed; the permission and consequential direct transfer were held to be contrary to Sections 89 and 89A and invalid.
Issue (ii): Whether the impugned permission and consequential sale were arbitrary, contrary to law, and liable to be set aside.
Analysis: The decision was taken at ministerial level despite contrary notes from senior departmental officers, and no reasons were recorded in support of overriding the statutory authority. The Collector, who alone was empowered to act under Section 89A(5), was effectively dictated to by the Government. The Court held that when the statute prescribes a particular manner for doing an act, it must be done in that manner alone. The direct inter se sale also deprived the State of the benefit of the lawful statutory process, including possible vesting, compensation determination, and disposal in accordance with the land's use, thereby causing loss to the public exchequer. The reliance on general ownership rights and on administrative control under Section 126 could not override the special statutory regime.
Conclusion: The impugned governmental direction and the Collector's order were arbitrary, bad in law, and liable to be quashed; the direct sale was also held invalid.
Final Conclusion: The appeal succeeded in part, the High Court's dismissal of the PIL was reversed, and the statutory process under the Tenancy Act was enforced while moulding relief to balance legality with the proposed industrial use.
Ratio Decidendi: Where a special statute prescribes a complete decision-making sequence for transfer, resumption, vesting, compensation, and re-disposal of agricultural land, the authority must act strictly within that sequence and cannot validate a bypass by ministerial direction, special-case treatment, or post hoc justification.
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