Compromise Cannot Circumvent Tenancy and Land‑Use Statutes, Supreme Court Holds

A bench of Justices Sudhanshu Dhulia and K. Vinod Chandran heard an appeal by the Communidade of Tivim challenging the Bombay High Court (Goa bench) dismissal of its writ petition against an order of the Administrative Tribunal, Goa which refused permission for the Communidade to file consent terms compromising tenancy proceedings under the Goa, Daman and Diu Agricultural Tenancy Act, 1964.

The Court dismissed the appeal and held that the Administrative Tribunal correctly denied sanction for the proposed compromise because the consent terms attempted to confer de facto ownership and permit non‑agricultural use in breach of the statutory scheme governing tenancy and land use. The Court emphasised that a Communidade’s internal resolution to compromise required Tribunal sanction and could not be used as a vehicle to evade statutory procedures for termination or purchase of tenanted land. The Court, in its reasoning, observed: "A bare reading of the aforementioned provisions is enough to come to the conclusion that the proposed consent terms or the compromise sought to be entered by the appellant with the private respondents falls foul of both the statutes i.e., the Tenancy Act and the Land Use Act, insofar as it creates freehold ownership rights over tenanted land, without resorting to the procedure contemplated for the purchase of such land by the tenant and secondly, for the reason that these terms effectively allow the appellant, as well as the private respondents, to use an agricultural land for non‑agricultural purposes. In other words, the compromise not only circumvents procedural aspects contained in Chapter IIA of the Tenancy Act but also allows the parties to use the suit properties for a purpose which is expressly barred by the Land Use Act. The compromise sought by the parties is nothing but an abuse of the process of law. The so called compromise or agreement is a ploy to defeat the provisions of law and therefore it has been rightly denied the legal sanctity which was sought."

Background

The dispute related to two communidade properties in Tivim, Goa, which were leased in 1978 and in respect of which a predecessor of the private respondents had been entered as tenant following a 1986 decree. In 2016 the private respondents filed tenancy applications; the Trial Court declared them tenants by judgment dated 01.09.2017. During an appeal pending before the Ad‑hoc District Judge, the Communidade resolved at general body meetings (March and October 2021) to settle by bifurcating the land on a 60:40 basis in favour of the private respondents and sought Tribunal permission under Article 154(3) of the Code of Comunidades to file consent terms. The Administrator forwarded the consent terms to the Administrative Tribunal, which by order dated 13.04.2023 refused permission; the High Court dismissed the Communidade’s writ challenging that refusal on 06.08.2024.

The State and the Tribunal had contended that the consent clauses effectively conferred "all rights and interests, which rights shall be akin to full ownership rights" to the private respondents over 60% of the land and allowed both parties unrestricted use, thereby circumventing Section 9 (modes of termination) and the Chapter IIA purchase procedure (Sections 18A–18K) of the Tenancy Act and contravening Section 2 of the Goa Land Use (Regulation) Act, 1991 which bars non‑agricultural use of land vested in a tenant. The Court agreed that the proposed compromise sought to terminate tenancy and create freehold rights without following statutory modes, and that it would permit alienation and non‑agricultural use prohibited by law. The Court therefore found the proposed agreement to be an abuse of process and upheld the Tribunal and High Court orders.

The Court condoned a delay of 146 days in filing the Special Leave Petition and granted leave; however it dismissed the appeal. The Court clarified that it had "expressed no opinion whatsoever on the merits of the dispute" between the parties regarding the claim of tenancy and directed that the pending Tenancy Appeal be decided on its own merits in accordance with law. No interim directions were issued; pending applications stood disposed of.

Case Details: Case No.: 2025 INSC 835 (Diary No. 16901/2025) Case Title: Communidade of Tivim v. State of Goa & Ors. Appearances: For the Petitioner(s): Mr. Huzefa Ahmadi, Advocate For the Respondent(s): Mr. Abhay Anil Anturkar, Advocate