M/s Circar Paper Mills Ltd. v. District Collector, Nellore Distt. & Ors. (with connected matters), 2026

Circar Paper Mills eventually went into liquidation. On 14 February 2001, the Company Court ordered winding up, and the Official Liquidator took possession of approximately 64 acres on 27 March 2001. The Company Court subsequently authorised an auction of the properties. 

J.K. Sugar Mills Ltd. emerged as the successful auction purchaser with a bid of ₹7.80 crore. The Company Court confirmed the sale. However, the State subsequently asserted that 40.65 acres were Government-assigned lands and objected to their sale. 

The Supreme Court noted that the Government had not established its alleged assignment of the lands convincingly. In particular, the State's own material suggested that 20.94 acres had allegedly been assigned to B.J. Rao, even though the record showed that B.J. Rao was not a landless person—the very category of person to whom assigned land was intended to be granted. 

The Court held that the Government had not unequivocally established that the disputed properties were assigned lands. The Court also found that the properties had been held and possessed privately for a very long period and that the State had failed to take appropriate action during that period. 

The Court emphasised that where there is a bona fide dispute regarding title, the Government cannot simply declare the property to be Government property and use a summary procedure to evict the person in possession.

The Supreme Court relied on the principle laid down in Government of Andhra Pradesh v. Thummala Krishna Rao, under which a genuine title dispute cannot ordinarily be resolved through summary eviction proceedings. The Government must establish its title through an appropriate legal proceeding. 

The Court further held that the properties were in the custody of the Official Liquidator pursuant to orders of the Company Court. Therefore, the State should have approached the Company Court if it wished to challenge the proposed auction. 

The auction purchaser, J.K. Sugar Mills, was consequently entitled to possession, subject to the directions of the Court. Amounts deposited with the Government pursuant to the earlier Company Court order were also directed to be restored for use in the liquidation of Circar Paper Mills. 

The Court distinguished between a case where the Government's title is undisputed and one where there is a genuine competing claim of ownership.

Where Government ownership is clear, statutory summary remedies may be available. But where a person has a credible claim supported by title documents, mutation records and long possession, the Government cannot simply make a unilateral determination that the property belongs to it and then evict the occupant.

The private parties traced their predecessor's possession back to 1920. Circar Paper Mills acquired the relevant property in 1980, mutated its name in the revenue records and operated an industrial establishment on the land.

The Court considered this prolonged history important because the Government had not effectively challenged the private title for decades.

The Government's assertion that the land was assigned land was not supported by adequate evidence.

The Court particularly noticed the apparent contradiction in the State's case: part of the property was said to have been assigned to B.J. Rao, even though the statutory scheme contemplated assignment to landless poor persons.

This weakened the foundation for invoking the Assigned Lands Act.

The judgment reinforces the distinction between possession proceedings and adjudication of title.

If the Government's ownership itself is genuinely disputed, determining that question may require a properly constituted civil proceeding rather than a summary administrative mechanism. The Court drew upon Thummala Krishna Rao for this principle. 

Another significant aspect concerns the property of a company in liquidation.

The Official Liquidator had taken possession under orders of the Company Court, and the auction itself was conducted pursuant to Company Court orders. The Supreme Court therefore found that the Government should have approached that court rather than attempting to obstruct the auction through administrative action.

The judgment provides important protection to purchasers who acquire property through court-supervised liquidation auctions.

If Government authorities could subsequently invalidate such auctions merely by asserting an unproven title, the certainty and reliability of judicial auctions would be seriously undermined.

The judgment strengthens the rule that executive authorities cannot convert a disputed question of title into an administrative finding and then use that finding as the basis for summary dispossession.

It therefore has significance beyond assigned-land disputes, particularly in cases involving:

Government land claims;

disputed title;

summary eviction;

revenue records;

long-standing possession;

Company Court auctions; and