2026:HHC:13229 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CMP(M) No. 471 of 2026 in LPA No. 214 of 2026 Decided on : 21.04.2026 State of H.P. ...Appellant Versus M/s Vishranti Hotels and Resorts Pvt. Limited …Respondent. Coram Hon’ble Mr. Justice G.S. Sandhawalia, Chief Justice. Hon’ble Mr. Justice Bipin Chander Negi, Judge. Whether approved for reporting?1 For the appellant : Mr. Sidharth Jalta, Deputy Advocate General. For the respondent : G.S. Sandhawalia, Chief Justice (Oral) CMP(M) No. 471 of 2026 Keeping in view the averments made in the application, duly supported by the affidavit of the official, delay of 207 days in filing the appeal is condoned. The application stands disposed of. LPA No. 214 of 2026 The State takes exception to the judgment of the learned Single Judge, whereby the order passed by the District Collector, Solan dated 5th September, 2014 (Annexure A-3), upheld by the 1Whether the reporters of the local papers may be allowed to see the Judgment? Yes -2- learned Divisional Commissioner, Shimla on 18th January, 2019 (Annexure A-4), and further confirmed on 19th April, 2022 by the Financial Commissioner (Annexure A-5), were the subject matter of challenge in Civil Writ Petition No. 90 of 2024 filed by the State. 2. The learned Single Judge chose not to interfere on the ground that the project, for which permission had been granted under Section 118 of the Himachal Pradesh Tenancy and Land Reforms Act, stood completed, and therefore it would not be in the interest of justice to interfere with the order under challenge. Apart from that, the State was advised not to challenge the order, as such, by the same authority which had passed it, as the State had filed the revision petition before the Financial Commissioner through the Collector, Solan, who himself had passed the initial order in favour of the respondent at an earlier point in time. Therefore, the learned Advocate General agreed that he would convey to the concerned officer to issue necessary clarification. 3. Coming to the merits of the case, we are of the considered opinion that the contention that the land had vested in the Government and that the party, as such, had never applied for extension is without any basis, as the orders do not suffer from any illegality warranting interference in writ jurisdiction. 4. It is to be noticed that initial permission was granted on 1st April, 2008 to the respondent for the construction of a hotel under -3- Section 118(2)(h) of the Himachal Pradesh Tenancy and Land Reforms Act, 1972 and the relevant rules. The land was to be utilized within a period of two years, failing which it would vest in the Government free from all encumbrances, and the requisite certificate was to be submitted within the prescribed period. 5. Apparently, a report was prepared on 3rd March, 2013 stating that construction had not been carried out on 3-8 bighas of land of the Khasra numbers in question and that the land was lying vacant, which was treated as a violation of Section 118, leading to the initiation of proceedings before the Collector. 6. The specific defence taken by the respondent before the Collector was that Vinod Malik, Director of the Company, had fallen seriously ill, and medical reports were placed on record showing that he was almost bedridden and suffering from ill health. 7. The Collector, while examining the record, specifically noticed that after the sale deed had been executed pursuant to the permission granted on 28th April, 2008, the respondent had obtained the essentiality certificate from the Commissioner, Tourism and Civil Aviation, Himachal Pradesh, and after completing formalities, had submitted the required documents to the Baddi Barotiwala Nalagarh Development Authority for change of land use and necessary approvals for construction of the hotel at the site on 23.07.2009. -4- However, approvals were not granted, and construction could not commence at that time. 8. Resultantly, the prayer for exclusion of the period during which permission was pending was accepted, also taking into account the fact that the Director had suffered a brain haemorrhage and had been admitted to a hospital at Faridabad, and could not carry out the activities of the project. The relevant portion of the medical document was also considered by the Collector and the statement made therein while coming to the conclusion that there was delay in getting the clearances, and the medical condition of the respondent made it not possible to carry out the work of construction, and it was beyond the control of the respondent. 9. Accordingly, the notice was discharged and proceedings were dropped by placing reliance on the Division Bench judgment of this Court in Ravinder Chauhan and others vs. State of H.P., AIR 1999 H.P. 43, wherein the claim for resumption was repelled on the ground that there is no automatic vesting, and that failure must be due to conscious fault or negligence, and where non-compliance is for reasons beyond the control of the party it would not justify resumption. 10. The said order was then upheld by the Divisional Commissioner, Shimla, who held that the default had occurred due to reasons beyond the control of the respondent and that there was evidence on record of the Director’s medical condition. The order was -5- thereafter further affirmed by the Financial Commissioner, noting that the respondent had already utilized the land for the purpose for which he was allowed to purchase it by the State Government, and that the intention was not to confiscate land which had not been illegally purchased by a non-agriculturist. 11. It is pertinent to notice that in the judgment referred to above, the dispute was inter se the purchasers and related to construction of a residential building for commercial purpose. The challenge was to the dropping of vesting proceedings by the Collector, and it was observed that, for reasons beyond control, the change of land use had become incapable of performance. The provisions of Section 118 were accordingly held not to confer absolute power of resumption, and the order of the Collector dropping the proceedings was upheld, keeping in view the legislative intent and the finding that there was no automatic vesting. The relevant portion reads as under:- 19. In the light of the above provisions of the Statute and the Rules in force, it becomes necessary for us to consider as to whether the plea raised on behalf of the petitioners that the vesting envisaged under the second proviso to clause (i) of sub-section (2) of Section 118 of the Act is automatic and instant on the expiry of the period or it will depend upon on further adjudication by any competent authority before such vesting could be said to have taken place in a particular case. Rule 38-B inserted as noticed above, with detailed provisions in this regard, which were found finally notified on 24-3-1993 was also earlier notified on 14-12-1992 vide notification No. 10-5/75-Rev-B-Vol. III dated 3-11-1992. The sub-sequent rules provide a guideline and assistance of the manner in which a penal provision of the nature engrafted under the second proviso to clause (i) of sub-section (2) of Section 118 of the Act has to be construed. That becomes obvious and necessary even de hors the Rule 38-B and in our view the said rule has been really inserted to make the provision in the Act more reasonable, to protect the main -6- provision in the Act itself from being rendered vulnerable for a challenge under Art. 14 of the Constitution of India. The conditions stipulated for being satisfied in the second proviso to bring into operation the vesting clause or the provisions of the rule itself provide ample basis and guidance as to how the said provision has to be construed. In our view, it is not that on the mere expiry of a period of two years, as may be granted by the State Government or a further period not exceeding one year that the vesting will automatically take place. The legislative intention apparently keeping in view of the drastic and penal nature and far reaching consequences of such vesting clause has been thoughtfully, carefully and meticulously expressed in engrafting a condition stipulating 'if he fails to do so', which in our view will operate as a condition precedent for actual vesting. The failure on the part of the person favoured with a permission under the provision, therefore, is the vital and pivotal fact which brings into operation the vesting clause and consequently it is but necessary and essential that some authority must place on record the failure on the part of the persons, who have been favoured with the permission after an objective consideration of the matter and such finding can be recorded only after complying with the principles of natural justice by giving an opportunity to the persons concerned before condemning them. What Rule 38-B has proposed to do is nothing but giving statutory recognition by means of prescription of a rule to the otherwise essential, vital and necessary procedure as a measure of safeguard to be observed in terms of the principles of natural justice, too, before visiting a citizen with such penal and far reaching consequences involving substantial property rights. In our view when the statute contemplated the failure on the part of the person, who has been granted with permission to purchase, as a condition precedent for bringing into the force of the operation of the vesting clause, the failure should be on account of the conscious default, negligence or refusal on the part of the person concerned and where the non- compliance was for reasons beyond his control or due to the fact that it was incapable or impossible of performance due to the operation of other provisions of law in force and that the authorities, who accorded the permission with such conditions, which are not capable of being complied with and performed and were equally at fault, it is not permissible for the respondents or for that matter anybody from public including the petitioners to insist or assert that despite the obvious and for no fault of the 6th respondent, he should be condemned as having failed to comply with the conditions, that which otherwise he could have complied with, and thereby take over his property by enforcing the vesting clause engrafted in the second proviso. 12. It has also been held that the concept of automatic vestment is subject to reasonableness and the basic principle of rule -7- of law, and the proviso provides that the unconditional consequence follows only “if he fails to do so”, and where the law visits a person with serious consequences, extra care must be taken to ensure that the Legislature did not intend to cover by the express language of the statute which are not meant to be included by stretching the language of the law. 13. In such circumstances, the discretion exercised by the authorities in the peculiar facts and circumstances cannot be said to be faulty in any manner, as the construction of the hotel was beyond the control of the Director on account of his medical condition while he was admitted at Faridabad. 14. Thus, we do not find any plausible reason to take a different view from what has been taken by the learned Single Judge and, while upholding the concurrent findings recorded by the revenue authorities, we find no merit in the present appeal. Accordingly, the same is dismissed. Pending miscellaneous applications, if any, also stand disposed of. (G.S. Sandhawalia) Chief Justice (Bipin Chander Negi) Judge 21st April, 2026 (Tarun)