KEDAR NATH YADAV Vs. STATE OF WEST BENGAL & ORS.
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 8438 of 2016, Judgment Date: Aug 31, 2016
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE
JURISDICTION
CIVIL APPEAL NO.8438 OF 2016
(Arising out of SLP (C) No.8463 of 2008)
KEDAR NATH YADAV ………APPELLANT
Vs.
STATE OF WEST BENGAL & ORS. ……RESPONDENTS
WITH
CIVIL APPEAL NO.8440 OF 2016
(Arising out of SLP(C) No. 10731/2008)
CIVIL APPEAL NO.8441 OF 2016
(Arising out of SLP(C) No. 11783/2008)
CIVIL APPEAL NO.8444 OF 2016
(Arising out of SLP(C) No. 11830/2008)
CIVIL APPEAL NO.8446 OF 2016
(Arising out of SLP(C) No. 12360/2008)
CIVIL APPEAL NO.8447 OF 2016
(Arising out of SLP(C) No. 12724/2008)
CIVIL APPEAL NO.8453 OF 2016
Arising out of SLP(C)NO.25580 OF 2016
(Arising out of SLP(C) ….CC No. 13645/2008
And
CIVIL APPEAL NO.8449 OF 2016
(Arising out of SLP(C) No. 22491/2008)
J U D G M E N T
V. GOPALA GOWDA, J.
Delay condoned in SLP (C) CC No. 13645 of 2008.
Leave granted in all the special leave petitions.
The present appeals arise out of the impugned final common judgment and
order dated 18.01.2008 in W.P. No. 23836 (W) of 2006 and connected
petitions, passed by the High Court of Calcutta, wherein the Writ Petitions
filed challenging the proceedings of the acquisition of land to an extent
of about 1000 acres within the mouzas Gopalnagar, Singherberi, Beraberi,
Khaserberi and Bajemelia, P.S. Singur, District Hooghly were dismissed.
The relevant facts which are required for us to appreciate the rival legal
contentions advanced on behalf of the parties are stated in brief as
hereunder:
The State of West Bengal formulated an industrial policy to establish
automobile industries in the State to cater to the needs of the people and
to solve the problem of unemployment in the State. In pursuance of the
same, the respondent, Tata Motors Ltd. (hereinafter referred to as “TML”),
entered into discussions with the State Government of West Bengal regarding
the infrastructural needs of the project. In a letter dated 19.01.2006
addressed to then Principal Secretary of the Commerce and Industries
Department of the Government of West Bengal, TML stated that a team had
visited the State and met representatives of the Government. It also
thanked the Government for the openness with which the discussions were
held and the assurance of its full support on the project, and summarized
its requirements for the same. The relevant portion of the proposal is
extracted hereunder:
“
|Sl.No|Aspect/ |Requirement |Remarks |
|. |Parameter | | |
|1 |Land |1000 acres |75% for Tata Motors land 25% for Vendor |
| |(including | |Park |
| |vendor park) | |Unconditional flexibility for allotment |
| | | |to vendors |
| | | |Land title on out-right sale basis, or |
| | | |long lease of 99 years transfer of title |
| | | |after the lease period, without |
| | | |condition. |
| | | |Land to be stabilised/graded and given, |
| | | |or the cost to be reduced from the land |
| | | |cost. |
|2 |Land for | |Schooling land to be allotted free of |
| |schooling and | |cost or Government to promote |
| |township | |establishment of prominent schools in |
| | | |proximity. |
| | | | |
| | | |Land for township to be given at 50% of |
| | | |rate applied for factory land. |
|3 |Power |100 MVA |Quality of power (50 Hz +/- 3%), |
| |(including | |availability from 2 sources, regulatory |
| |vendor park) | |voltage +/- 5% |
|4 |Water |15000 cu.m |Potable water as per Indian Standards |
| |(including | |(IS-10500) |
| |vendor park) | | |
|5 |6 lane road | |Approach road to be available within 3 |
| |around the | |months from the date of land allotment. |
| |boundary of | | |
| |the plant, and| | |
| |4- lane | | |
| |approach road | | |
| |to the site | | |
| | | | |
| | | | |
|B |Commercial | | |
|1 |Land Cost | |Rs. 2 lakh per acre. Land cost to be paid|
| | | |after 5 years at the rate of 0.1% |
| | | |interest p.a. |
”
The then Principal Secretary to the Government of West Bengal, Commerce &
Industries Department, sent the letter dated 24.01.2006, annexing the
proposal which TML had sent, to the then Principal Secretary Land and Land
Reforms Department, Shri Sukumar Das to communicate his views to the
Commerce and Industries Department. A letter was also sent on the same day
to the then Principal Secretary, Finance Department seeking his view on the
matter. Further, the ‘Record Note of Discussion held between TML and a team
from the Government of West Bengal and West Bengal Industrial Development
Corporation (hereinafter referred to as the “WBIDC”) produced on record,
shows that a team from TML met representatives of the Government of West
Bengal and WBIDC on 08.03.2006 in Kolkata and on 17.03.2006 in Mumbai. The
relevant portion of the record note reads as under:
“TML has shown interest in setting up a “Special Category Project” in West
Bengal for manufacture of its new car for a volume of 2, 50,000 per year on
maturity. The West Bengal Government is also keen to attract a “Special
Category Project” in line with their Industrial Policy Document.”
The record note also states that the project was looking at a direct
investment worth Rs.650 crores in the plant and machinery and the IT
infrastructure by TML, a direct investment by the company in factory
building including utilities such as roads, water line, sewage line, power
lines drainage and effluent treatment plants etc. to the tune of Rs. 176
crores, a direct investment by TML in a township of approximately 2000
dwelling units of an average area of 1000/- sq. ft. per dwelling unit with
complete municipal facilities such as roads, power line, water line,
drainage, parks and other municipal facilities at Rs. 150 crores. The
record note further mentions an indirect investment by vendors in the
vendor park in plant and machinery valued at Rs. 200 crores and a further
indirect investment by vendors in factory building including facilities
such as roads, power line, water line, drainage, sewage and other municipal
facilities amounting to Rs. 90 crores. The employment potential of this
project was assessed at 1,800 employees in direct employment by TML and a
further 4,700 employees through vendors and service providers.
The estimated project requirement of land, is extracted as under:
“Land
TML factory – 400 acres
Vendor park – 200 acres
Township – 100 acres”
At this stage, it is also important to consider the incentive package
offered by the State Government to TML. The relevant portion is extracted
as under:
“ The West Bengal government has offered to TML an incentive package equal
to some of the best being offered in some States.
The two teams have worked out the following package which may vary
downwards or upwards based on the volumes of sales in West Bengal:
The State Government will develop the land admeasuring approx. 600 acres
and lease it to TML for its own factories as well as for sub-leasing to the
vendors for vendor park needed for the project. The entire land will be
leased to TML for 30 years at an annual lease rental of Rs. 10 lakhs. This
lease can be renewed for further blocks of 30 years at a negotiated lease
rental at the option of TML. On each renewal, the lease rental would not
be increased by more than 5 times of the lease rental existing on the date
of renewal.
The State Government would develop the land and construct the factory
building including the facilities such as roads, power line, water line,
drainage, sewage, effluent treatment plant, other utilities e.g. Air
compressors, standby generators and LPG storage yard, etc. and lease it to
the TML at an annual lease rental of Rs. 90 lakhs per annum for 30 years
renewable at the option of TML for further blocks of 30 years. At each
renewal the lease rental will be negotiated. However, the increase in
rental will not be more than 500% at any renewal compared to the rental
existing on the date of renewal.
The State Government will construct an integrated township of approximately
2000 dwelling units of an average area of 1000 sq. ft. per dwelling unit,
including the facilities such as roads, power line, water line, drainage,
sewage, effluent treatment plants, parks, schools, training institutes,
shopping complex, etc. and lease it to TML on lease for 30 years on annual
lease rental of Rs. 25 lakhs. This lease can be renewed in future at the
option of TML for further blocks of 30 years and the increase in lease
rental at each renewal would not be more than 5 times the lease rental
existing on the date of renewal.
The township is estimated to cost Rs. 150 crores.”
The Principal Secretary, Commerce and Industries Department of the
Government of West Bengal sent a letter dated 23.03.2006 to the Deputy
General Manager, Government Affairs and Collaborations of TML with
reference to the letter dated 19.01.2006 and the record notes of the
subsequent discussions between the Government of West Bengal and TML on the
subject signed on 17.03.2006, approving the proposal as under:
“….from TML to set up a plant on 600 acres of land near Kharagpur to
manufacture a new car addressing the lower end of the market, with annual
capacity of 2,50,000 units on maturity……the targeted date of commencement
of commercial production being the year 2008.”
By way of letter dated 29.03.2006, the then Chief Minister of West Bengal
wrote to the then Chairman of TML regarding the project. There was some
discussion regarding the location of the plant, the relevant portion of
which is extracted from the file as under:
“During our discussion today, you had mentioned the allocation close to
Kolkata may be considered. As you are undoubtedly aware, land around
Kolkata is difficult to come by and the cost of such land is also very
high. Also, land has to be suitable for industry. We had to keep these
aspects in view while selecting a location for the TML plant.
We had at first proposed location of this project at Guptamoni, which is
about 25km west of Kharagpur towards Jamshedpur on National Highway 6.
Thereafter, based on the suggestion given by Shri Ravi Kant during his
meeting with Shri Nirupam Sen, we have now selected a site right next to
Kharagpur town, on National Highway 6……The distance to Kharagur from
Kolkata can now be covered in approximately 90 minutes. Haldia Port is at a
distance of 100 kms from this location, while Jamshedpur is about 2 hours
away.
……
We now await a visit from Shri Ravi Kant for his approval of the proposed
location. I can assure you that this is one of the best locations in West
Bengal for locating your plant. I look forward to the final approval from
the Board of Directors of TML so that we can immediately start taking all
the necessary steps.”
(emphasis laid by this Court)
TML subsequently informed the representatives of the State Government of
West Bengal that they would like to be shown the site at Singur again for
their technical team to reconfirm the suitability of the site.
Consequently the said site was again shown to the representatives of TML on
05.05.2006. They confirmed that this is the site which would be ideally
suited for the proposed small car project. The total land area was 1053
acres for the small car project and 200 acres in Telipukur mouza for the
township. The Draft Note for Cabinet Memo mentions the mouzas for which the
WBIDC had proposed for acquisition of land as well.
The Principal Secretary, Commerce and Industries Department drafted the
Cabinet Memo No. 2995/PrS/C&I dated 30.05.2006 titled as under:
“Proposal for acquisition of land measuring 1053 acres for small car
project of Tata Motors at Singur, Hooghly and 200 acres in Telipukur in
Singur P.S. District-Hoogly for Housing and related amenities to be
developed by Tata Housing Development Co. Ltd.”
The Cabinet Memo mentions the investment in the project and the shift in
the proposed site as well. The relevant portion is extracted hereunder:
“….The Tata Motors Co. Ltd. (TML) have decided to set up their Small Car
Project in West Bengal. For this purpose for the last several months, they
have scouted for various sites around Kolkata and have finally chosen a
site in Singur P.S. in the Hooghly district due to its locational
advantage. The site chosen will also cater to the requirement of the
vendors of the Company who will be located in the Vendors’ Park within the
Tata Motors Factory site. The total investment including that by vendors
is expected to be about Rs. 1000 crores. The plant will generate
substantial direct and indirect employment, and will also create a number
of ancillary units, which also generate local employment.
The State Government had initially proposed location of this plant in
Kharagpur. TML have informed that this will be flagship project, providing
very high visibility to West Bengal as an investment destination. They
also need very good connectivity and proximity to airport, as well as
quality urban and physical infrastructure.
Taking all these factors into account, TML, after seeing a number of sites
in Howrah, Hooghly, Paschim Medinipur and Purba Medinipur, finally selected
a site in Singur Block.
West Bengal Industrial Development Corporation Ltd. (WBIDC) now proposes to
acquired 1053 acres of land for the said Small Car Project of Tata Motors
Co. Ltd. in following mouzas under Singur P.S. in Hooghly district:
The Tata Housing Company Ltd. has proposed to set up housing and related
infrastructure at Telipukur under Singur P.S. in Hooghly district
comprising of 200 acres to cater to the Housing and Social infrastructure
requirements of the proposed Small Car Project of the Tata Motors Co. Ltd.
at Singur, which is not far away from the proposed project site. WBIDC,
therefore, proposes to acquire 200 acres of land at Telipukur, Singur P.S.
in Hooghly district for the purpose.
The identification of lands involved in this acquisition proposal has been
made in such a manner that existing settlements/ habitations are avoided.
Where isolated homesteads are involved, suitable rehabilitation in the form
of providing land/house will be taken up.
Detailed land survey and plot identification will be carried out after
Cabinet accords approval to the proposal. Efforts will also be made to
avoid/minimize intensively cropped lands.
This has the approval of the Chief Minister.
Cabinet may kindly approve the proposed acquisition of 1253 (1053+200)
acres of land as proposed at para 3 and 4 above.”
(emphasis laid by this Court)
Pursuant to the approval of the said decision of the Cabinet by the Chief
Minister dated 05.06.2006, the notification under Section 4 (1) of the
Land Acquisition Act, 1894 (hereinafter referred to as the “L.A. Act”) was
published in the Calcutta Gazette Extraordinary dated 21.07.2006, the
relevant portion of which reads as under:
“Whereas, it appears to the Governor that land as mentioned in schedule
below is likely to be needed to be taken by Government/Government
Undertaking/Development Authorities, at the public expense for a public
purpose, viz., employment generation and socio economic development of the
area by setting up TATA Small Car Project in the Mouza Beraberi,
jurisdiction list No. 5, P.S. Singur, District Hooghly; it is hereby
notified that for the above purpose an area of land comprising RS/LR plots
as detailed below and measuring more or less, 72.03 acres, as specified
below within the aforesaid Mouza……”
(emphasis laid by this Court)
A perusal of the said notification makes it clear that it does not
specifically mention that the land in question is being acquired in favour
of WBIDC. It merely states that the land in question might be needed for
Government / Government Undertaking/Development Authorities. Proposal
numbers 3 and 4 of Cabinet Memo, referred to supra, approved by the Chief
Minister make it clear that acquisition of land comprising of 1053 acres is
needed for the Small Car Project of TML and 200 acres of land is needed to
cater to the housing and social infrastructure needs of the project.
Section 4 of the L.A. Act reads as under:
“ (1) Whenever it appears to the appropriate Government the land in any
locality is needed or is likely to be needed for any public purpose or for
a company, a notification to that effect shall be published in the Official
Gazette [and in two daily newspapers circulating in that locality of which
at least one shall be in the regional language], and the Collector shall
cause public notice of the substance of such notification to be given at
convenient places in the said locality the last of the dates of such
publication and the giving of such public notice, being hereinafter
referred to as the date of the publication of the notification.”
The Act, under the provision of Section 5-A further provides that after
the notification, the objections, if any, may be submitted in writing to
the Collector. The Collector, after the receipt of such objections, needs
to give an opportunity of being heard to the person so objecting. The
Collector is then required to conduct an inquiry and submit a report in
that respect to the State Government for its consideration. In the instant
case, five objection petitions were received from the land
owners/cultivators within 30 days after publication of notification under
Section 4 of the L.A. Act. One objector applied for exemption of his land
from acquisition as he intended to set up a petrol pump from it. Another
applied for exemption of the land from acquisition on the ground that they
are running a number of agro-based industries like cold storage, factory
and fisheries covering a large area of land providing employment to a
considerable number of persons. The Land Acquisition Collector submitted
the report dated 31.08.2006 to the State Government. In the report, the
Land Acquisition Collector concluded that WBIDC intends to acquire the land
for generating employment and for socio-economic development of the area by
setting up a factory for the ‘Small Car Project’ of TML at Singur. Being
such a large scale project, it was bound to create immense job
opportunities for the local youth, both directly and indirectly. The Land
Acquisition Collector, thus, concluded that the acquisition of the land in
question was indeed for public purpose. As far as certain other objectors
were concerned, the Land Acquisition Collector observed that the objectors
did not appear before him to justify their objections to the proposed
acquisition of lands, despite the factum of hearing before the Land
Acquisition Collector being widely advertised, including by way of
announcement in two local daily newspapers. The Land Acquisition Collector
concluded that it appears that the objectors are no more interested to
proceed further in the proceedings with their objections. Therefore, he
concluded that those objections may be ignored in the greater interest of
the public and the State and submitted his reports to the State Government
dated 29.08.2006. Pursuant to the report of the Land Acquisition Collector,
the State Government issued notification under Section 6 of the L.A. Act
published in the official gazette dated 30.08.2006, the relevant portion of
which reads as under:
“Whereas the appropriate Government is satisfied, after considering the
report sent by the Collector u/s 5-A (2), the land mentioned in the
schedule given below is needed by the State Government/ Government
Undertaking/ Development Authorities, at the public expense for a public
purpose, viz., employment generation and socio economic development of the
area by setting up of TATA Small Car Project………”
The Land Acquisition Collector subsequently made award of compensation on
25.09.2006. WBIDC then took possession of the land in question, the extent
of which was 997 acres. By its letter dated 20.12.2006, WBIDC asked TML to
take “permissive possession of 950 acres of land pending finalization of
the lease deed and lease terms and conditions.” The formal lease deed was
executed on 15.03.2007. Subsequently, the acquisition proceedings were
challenged before the High Court of Calcutta by way of Writ Petitions. By
common judgment and order dated 18.01.2008, a Division Bench of the
Calcutta High Court, dismissed the Writ Petitions, and upheld the
acquisition of land, holding the same to be in the interest of the public
and for public purpose. The same was challenged by way of Special Leave
Petition before this Court being SLP (Civil) No. 8463 of 2008 and other
connected SLPs as clearly mentioned in the cause title of this judgment.
Even as the above said cases were pending before this Court, the State
Government of West Bengal and TML went ahead with the development of the
land and setting up of the factory for the ‘Small Car Project’. It was,
however, at around that time that the local population started protesting
against the acquisition of the land and setting up of the factory. Numerous
incidents of blockade, protests and violence were reported in the print and
electronic media. By letter dated 10.11.2008 addressed to the Director
General of Police, West Bengal, TML informed that it is suspending
operations as the circumstances were no longer conducive for them to work
in a peaceful manner. TML started removing the equipments, machines and
other materials from the site from 10.11.2008 onwards. The said plant was
then relocated to the State of Gujarat. The new Government of West Bengal
enacted a legislation on 20.06.2011 titled the ‘Singur Land Rehabilitation
and Development Act, 2011’ (hereinafter referred to as the “Singur Act,
2011”) for taking over the land covered by the lease granted in favour of
TML. TML challenged the constitutional validity of the said Act by way of
Writ Petition before a single Judge of the Calcutta High Court. By judgment
and order dated 28.09.2011 the learned single Judge upheld the validity of
the said Act. The correctness of the said decision was challenged by way of
appeals before a Division Bench of the High Court. By its common judgment
and order dated 22.06.2012, the Division Bench allowed the appeals and
struck down Sections 2, 4(3), 5 and 6 of the Singur Act, 2011 as
unconstitutional as they were in direct conflict with the provisions of
the L.A. Act and hence, repugnant to the said Act. It was further held
that the entire Singur Act, 2011 itself is void and unconstitutional as the
same had not received assent from the President of India. Hence, the
present appeals.
By way of order dated 11.05.2016, this Court has de-tagged the appeals
arising out of SLP (C) No. 23843 of 2012, SLP (C) No. 24269 of 2012 and SLP
(C) No. 1881-1911 of 2013, as they deal with the constitutional validity of
the Singur Act, 2011. The scope of the present appeals is only restricted
to deciding the validity of the acquisition of land and the compensation
awarded thereafter in favour of the land losers.
Mr. Colin Gonsalves, the learned senior counsel appearing on behalf of
the appellant in the appeal arising out of SLP (C) No. 12724 of 2008
submits that admittedly, TML approached WBIDC to develop a small car
manufacturing unit within the State of West Bengal. The learned senior
counsel further contends that a perusal of the documents on record, being
the Cabinet Memo as well as the letters exchanged between TML and the West
Bengal State Government would clearly show that the site of the project was
chosen jointly by the State Government and TML as the best possible site
for the project which was to be implemented by establishing the factory in
consultation with each other. The land in question was acquired by WBIDC at
the behest of TML. The learned senior counsel contends that such an
acquisition would be hit by the provisions of Part VII of the L.A. Act, the
heading of which is “Acquisition of land for companies”. It is submitted
that the provisions of the said part were not followed in the instant case,
though the same are mandatory in nature. The learned senior counsel draws
our attention to Section 39 of the L.A. Act which reads as under:
“39.Previous consent of appropriate Government and execution of agreement
necessary:- The provisions of section 6 to 37 (both inclusive) shall not be
put in force in order to acquire land for any Company, unless with the
previous consent of the appropriate Government, nor unless the Company
shall have executed the agreement hereinafter mentioned”
It is contended that the Agreement in terms of Section 39 of the L.A. Act
has not been published in the official gazette.
The learned senior counsel places reliance on the decision of this Court in
the case of Devender Pal Singh v. State of Punjab[1], wherein this Court
has held as under:
“16. When a request is made by any wing of the State or a Government
company for acquisition of land for a public purpose, different procedures
are adopted. Where, however, an application is filed for acquisition of
land at the instance of a "company", the procedures to be adopted therefore
are laid down in Part VII of the Act. Although it may not be decisive but
the conduct of the State as to how it intended to deal with such a
requisition, is a relevant factor. The action of the State provides for an
important condition to consider as to whether the purpose where for a
company requests it for acquisition of land is a public purpose and/or
which could be made at public expenses either as a whole or in part,
evidently provisions laid down in Part II shall be resorted to. On the
other hand, if the State forms an opinion that the acquisition of land at
the instance of the company may not be for public purpose or, therefore the
expenses to be incurred therefore either in whole or in part shall not be
borne by the State, the procedures laid down in Part VII thereof have to be
resorted to. The procedures laid down under Part VII of the Act are
exhaustive. Rules have been framed prescribing the mode and manner in which
the State vis-à-vis the company should proceed. It provides for previous
consent of the Appropriate Government, execution of the agreement, previous
inquiry before a consent is accorded, publication of the agreement,
restriction on transfer, etc. It also provides for statutory injunction
that no land shall be acquired except for the purpose contained in Clause
(a) of Sub-section (1) Section 40 of the Act for a private company which is
not a Government company. For the purpose of Section 44B of the Act, no
distinction is made between a private company and a public limited
company.”
The learned senior counsel contends that the abovementioned case makes it
clear that land can be acquired either for a company, or for a public
purpose, but not for both.
The learned senior counsel further places reliance on the decision of this
Court in the case of Amarnath Ashram v. Governor of U.P. & Ors.[2], wherein
this Court held as under:
“Admittedly, in the present case the entire cost of acquisition is to be
borne by the appellant society and, therefore, it is an acquisition for a
company and not for a public purpose. That is also borne out by the
notification issued Under Section 6 of the Act which states "that the land
mentioned in the schedule below is needed for the construction of play-
ground for students of Amar Nath Vidya Ashram (public school). Mathura in
district Mathura by the Amar Nath Ashram Trust, Mathura". Therefore, simply
because in the notification issued Under Section 4 of the Act it was stated
that the land was needed for a public purpose, namely, for a play- ground
for students of Amar Nath Vidya Ashram (public school), Mathura, it cannot
be said that the acquisition is for a public purpose and not under Chapter
VII for the appellant-society in view of subsequent events and the
declaration made Under Section 6. The learned counsel for the State also
relied upon the decision of this Court in Srinivasa Cooperative House
Building Society Ltd. v. Madam Gurumurthy Sastry, , wherein this Court has
held that though there is "no provision in the Act to say that when a land
is required for a company, it may also be for a public purpose. However,
even the acquisition for a company, unless utilisation of the land so
acquired is integrally connected with public use, resort to the compulsory
acquisition under Chapter VII cannot be had". It was submitted on the basis
of this observation that even in case of an acquisition for a company an
element of public purpose has to be there and if for that reason it was
believed by the Government that it was necessary for it to make substantial
contribution from public revenue so as to avoid the charge of colourable
exercise of powers, the decision of the Government to withdraw from the
acquisition cannot be said to be arbitrary or illegal. The aforesaid
observation was made by this Court in the context of requirement of Section
40 of the Act and they cannot be construed to mean that no land cannot be
acquired by the State Government without making substantial contribution
towards the cost of acquisition. We cannot read something more in the said
observation than what they were intended to convey. The provisions of part
VII and particularly the provisions regarding payment of the entire costs
of the acquisition would otherwise become redundant.”
Further reliance has been placed by him on the case of R.L. Arora[3],
wherein this Court held as under:
“Therefore, though the words "public purpose" in Sections 4 and 6 have the
same meaning, they have to be read in the restricted sense in accordance
with s. 40 when the acquisition is for a company under s. 6. In one case,
the notification under s. 6 will say that the acquisition is for a public
purpose, in the other case the notification will say that it is for a
company. The proviso to s. 6(1) shows that where the acquisition is for a
public purpose, the compensation has to be paid wholly or partly out of
public revenues or some fund controlled or managed by a local authority.
Where however the acquisition is either for a company, the compensation
would be paid wholly by the company. Though therefore this distinction is
there where the acquisition is either for a public purpose or for a
company, there is not a complete dichotomy between acquisitions for the two
purposes and it cannot be maintained that where the acquisition is
primarily for a company it must always be preceded by action under Part VII
and compensation must always be paid wholly by the company. A third class
of cases is possible where the acquisition may be primarily for a company
but it may also be at the same time for a public purpose and the whole or
part of compensation may be paid out of public revenues or some fund
controlled or managed by a local authority. In such a case though the
acquisition may look as if it is primarily for a company it will be covered
by that part of s. 6 which lays down that acquisition may be made for a
public purpose if the whole or part of the compensation is to be paid out
of the public revenues or some fund controlled or managed by a local
authority.”
The learned senior counsel contends that the mere mention of public purpose
in the notifications, does not in fact make the acquisition one for a
public purpose, when the acquisition of lands was made in favour of TML. To
make the acquisition one for public purpose, it must be directly useful to
the public, and the benefit must not be merely incidental in nature. The
learned senior counsel places reliance on the Statement of Objects and
Reasons of the Amendment Act 68 of 1984 to the L.A. Act, which states thus:
“ With the enormous expansion of the State's role in promoting public
welfare and economic development since independence, acquisition of land
for public purposes, industrialisation, building of institutions, etc., has
become far more numerous than ever before. While this is inevitable,
promotion of public purpose has to be balanced with the rights of the
individual whose land is acquired, thereby often depriving him of his means
of livelihood. Again, acquisition of land for private enterprises ought not
to be placed on the same footing as acquisition for the State or for an
enterprise under it. The individual and institutions who are unavoidably to
be deprived of their property rights in land need to be adequately
compensated for the loss keeping in view the sacrifice they have to make
for the larger interest of the community. The pendency of acquisition
proceedings for long periods often causes hardship to the affected parties
and renders unrealistic the scale of compensation offered to them.
2. It is necessary, therefore, to restructure the legislative framework
for acquisition of land so that it is more adequately informed by this
objective of serving the interests of community in harmony with the rights
of the individual. Keeping the above objects in view and considering the
recommendations of the Law Commission, the Land Acquisition Review
Committee as well as the State Governments, institutions and individuals,
proposals for amendment to the Land Acquisition Act, 1894, were formulated
and a Bill for this purpose was introduced in the Lok Sabha on the 30th
April, 1982. The same has not been passed by either House of Parliament.
Since the introduction of the Bill, various other proposals for amendment
of the Act have been received and they have also been considered in
consultation with State Governments and other agencies. It is now proposed
to include all these proposals in a fresh Bill after withdrawing the
pending Bill. The main proposals for amendment are as follows:-
The definition of public purpose as contained in the Act is proposed to
be amended so as to include a longer illustrative list retaining, at the
same time, the inclusive character of the definition.
(ii) Acquisition of land for non- Government companies under the Act will
hence forth be made in pursuance of Part VII of the Act in all cases.”
(emphasis laid by this Court)
Mr. Kalyan Banerjee, the learned senior counsel appearing on behalf of the
some of the appellants, who are cultivators, in the appeal arising out of
SLP (C) No. 11830 of 2008 and SLP (C) No. 11783 of 2008 contends that the
acquisition of lands in the instant case was not for a public purpose, but
for a company, (TML) under the guise of public purpose. The lands were
acquired by WBIDC at the specific instance of TML, as becomes clear from a
perusal of the notifications issued under Sections 4 and 6 of the L.A. Act,
the relevant portions of which have been extracted supra.
The learned senior counsel further draws our attention to Section 6 of the
L.A. Act, which reads as under:
“6. Declaration that land is required for a public purpose. - (1) Subject
to the provision of Part VII of this Act, [appropriate Government] is
satisfied, after considering the report, if any, made under section 5A, sub-
section (2)], that any particular land is needed for a public purpose, or
for a Company, a declaration shall be made to that effect under the
signature of a Secretary to such Government or of some officer duly
authorized to certify its orders [and different declarations may be made
from time to time in respect of different parcels of any land covered by
the same notification under section 4, sub-section (I) irrespective of
whether one report or different reports has or have been made (wherever
required) under section 5A, sub-section (2)];
……………
Provided further that no such declaration shall be made unless the
compensation to be awarded for such property is to be paid by a Company,
wholly or partly out of public revenues or some fund controlled or managed
by a local authority.
Explanation 2. - Where the compensation to be awarded for such property is
to be paid out of the funds of a corporation owned or controlled by the
State, such compensation shall be deemed to be compensation paid out of
public revenues.”
The learned senior counsel contends that as per Section 6 of the L.A. Act,
the deposit of money is the deposit of public revenue is to be examined in
the light of Explanation-2. Explanation-2 to Section 6, which has been
added by way of the Land Acquisition (Amendment) Act 68 of 1984 provides
that no declaration under Section 6 shall be made unless the compensation
to be awarded for the lands in question is paid by a Company, wholly or
partly out of public revenues or some fund controlled or managed by a local
authority. The learned senior counsel further contends that WBIDC cannot be
said to be ‘local authority’. A local authority must have representative
character. This means that it must comprise of elected members and must be
under the control of the Government with the control and management of a
municipal or local fund. This aspect of the matter has been considered by
this Court in a number of cases wherein it was held that a statutory
corporation or a company formed by a State Government or Central Government
cannot be construed as a local authority. The learned senior counsel places
reliance on the Constitution Bench decision of this Court in the case of
Valjibhai Muljibhai Soneji v. State of Bombay & Ors[4], wherein on the
question of whether or not the State Road Transport Corporation was a local
authority for the purpose of the L.A. Act, it was held as under:
“The expression "local authority" is not defined in the Land Acquisition
Act but is defined in s. 3(31) of the General Clauses Act, 1897, as
follows:
"'local authority' shall mean a municipal committee, district board, body
of port commissioners or other authority legally entitled to, or entrusted
by the Government with, the control or management of a municipal or local
fund :"
The definitions given in the General Clauses Act, 1897, govern all Central
Acts and Regulations made after the commencement of the Act. No doubt, this
Act was enacted later in point of time than the Land Acquisition Act; but
this Act was a consolidating and amending Act and a definition given
therein of the expression "local authority" is the same as that contained
in the earlier Acts of 1868 and 1887. The definition given in s. 3(31)
will, therefore, hold good for construing the expression "local authority"
occurring in the Land Acquisition Act. We have already quoted the
definition. It will be clear from the definition that unless it is shown
that the State Transport Corporation is an 'authority' and is legally
entitled to or entrusted by the Government with control or management of a
local fund it cannot be regarded as a local authority. No material has been
placed before us from which it could be deduced that the funds of the
Corporation can be regarded as local funds.”
The learned senior counsel further places reliance on the decision of this
Court in the case of Calcutta State Road Transport Corporation v.
Commissioner of Income Tax, West Bengal[5], wherein it was held as under:
“The expression "local authority" is not defined in the Income Tax Act. Its
definition is, however, contained in the General Clauses Act in Clause (31)
of Section 3. It reads :
'Local authority' shall mean a municipal committee, district board, body of
port commissioners or other authority legally entitled to, or entrusted by
the Government with, the control or management of a municipal or local
fund.
The contention of Sri Ray is that inasmuch as the assessee is entrusted by
the Government with the control or management of a "local fund", it is a
local authority within the meaning of the said definition. Sri Ray placed
strong reliance upon the judgement of this Court in Union of India and Ors.
v. Shri R.C. Jain and Ors. The question in the said decision was whether
the Delhi Development Authority (D.D.A.) constituted under the Delhi
Development Act, 1957 is a "local authority". The question had arisen under
the provisions of the Payment of Bonus Act. Chinnappa Reddy, J., speaking
for the Bench, laid down the following test for determining whether a
particular body is a "local authority" within the meaning of Section 3(31)
of the General Clauses Act: "An authority, in order to be a local
authority, must be of like nature and character as a Municipal Committee,
District Board or Body of Port Commissioners, possessing, therefore, many,
if not all, of the distinctive attributes and characteristics of a
Municipal Committee, District Board or Body of Port Commissioners, but
possessing one essential feature, viz., that it is legally entitled to or
entrusted by the government with, the control and management of a municipal
or local fund." The learned Judge elaborated the said test saying that to
be characterised as a "local authority", the authority must have separate
legal existence as a corporate body, it must not be a mere government
agency but must be legally independent entity, it must function in a
defined area and must ordinarily, wholly or partly, directly or indirectly,
be elected by the inhabitants of the area. It must also enjoy a certain
degree of autonomy either complete or partial, must be entrusted by statute
with such government functions and duties as are usually entrusted to
Municipal Bodies such as those connected with providing amenities to the
inhabitants of the locality like health and education, water and sewerage,
town planning and development, roads, markets, transportation, social
welfare services etc. Finally it was observed-such body must have the power
to raise funds for furtherance of its activities and fulfillment of its
objects by levying taxes, rates, charges or fees.”
(emphasis laid by this Court)
The learned senior counsel further places reliance on the decision of this
Court in the case of S. Sundaram Pillai & Ors. v. R. Pattabiraman & Ors.[6]
to contend that explanation cannot extend the scope of the proviso. It was
held by this Court as under:
“42. In Hiralal Rattanlal etc. v. State of U.P. and Anr. etc. this Court
made the following observations:
Ordinarily, a proviso to a section is intended to take out a part of the
main section for special treatment. It is not expected to enlarge the scope
of the main section. But cases have arisen in which this Court has held
that despite the fact that a provision is called proviso, it is really a
separate provision and the so-called proviso has substantially altered the
main section.
43. We need not multiply authorities after authorities on this point
because the legal position seems to be clearly and manifestly well
established. To sum up, a proviso may serve four different purposes:
1) qualifying or excepting certain provisions from the main enactment;
2) it may entirely change the very concept of the intendment of the
enactment by insisting on certain mandatory conditions to be fulfilled in
order to make the enactment workable;
3) it may be so embedded in the Act itself as to become an integral part of
the enactment and thus acquire the tenor and colour of the substantive
enactment itself; and
4) it may be used merely to act as an optional addenda to the enactment
with the sole object of explaining the real intendment of the statutory
provision.
44. These seem to be by and large the main purport and parameters of a
proviso.”
The learned senior counsel contends that explanation is only relatable to
the main provision and not the proviso. The learned senior counsel thus,
reiterates that even where the acquisition of land is for a corporation,
provisions of Part VII of the L.A. Act must be complied with.
Mr. Prashant Bhushan, the learned counsel appearing on behalf of the
appellant - Association of Democratic Rights in the appeal arising out of
SLP (c) No. CC 13645 of 2008 submits that acquisition for a public purpose
is made under Part II of the L.A. Act, whereas acquisition for a company is
made under Part VII of the L.A. Act. The procedure under Part VII of the
L.A. Act is mandatory and strict compliance of the same is required for the
state to exercise its power of eminent domain to acquire the lands in
favour of a Company. It is submitted that in the instant case, the lands
were acquired for a particular company, TML, at the instance of the said
company and the exact location and site of the land was also identified by
the said company. Even the notifications issued under Sections 4 and 6 of
the L.A. Act clearly state that the land was being acquired for the Tata
Motor’s ‘Small Car Project’.
The learned counsel draws our attention to Rule 4 of the Land Acquisition
(Companies) Rules, 1963 framed under Section 55 of the L.A. Act of which
reads as under:
“Appropriate Government to be satisfied with regard to certain matters
before initiating acquisition proceedings- (1) Whenever a company makes in
application to the appropriate Government for acquisition of any land, that
Government shall direct the Collector to submit a report to it on the
following matters namely :-
that the company has made its best endeavour to find out lands in the
locality suitable for the purpose of acquisition.
(ii) that the company has made all reasonable efforts to get such lands by
negotiation with the person interested therein on payment of reasonable
price and such efforts have failed,
(iii) that the land proposed to be acquired is suitable for the purpose ;
(iv) that the area of land proposed to be acquired is not excessive ;
(v) that the company is in a position to utilize the land expeditiously ;
and
(vi) where the land proposed to be acquired is good agricultural land that
no alternative suitable site can be found so as to avoid acquisition of
that land… ………………”
It is submitted that Rule 4 is mandatory in nature and that unless the
directions enjoined by Rule 4 are complied with, the notification under
Section 6 of the L.A. Act will be invalid. The learned counsel submits that
the aforesaid Rule came up for the consideration before this Court in the
case of Devender Singh (supra), wherein it was held as under:
“44. Another question which arises for our consideration is as to whether
Rule 4 of the Companies Rules is mandatory or directory in nature. The High
Court held it to be directory.
45. Rule 4 of the Rules employs the word "shall" not once place but twice.
Ordinarily, it is imperative in character. No reason has been shown before
us as to why it should be held to be directory provision particularly when
the Land Acquisition Act is an expropriatory legislation.
46. In State of Gujarat and Anr. v. Patel Chaturbhai Narsibhai and Ors.,
this Court held:
15. The contention of the State that the enquiry under Rule 4 is
administrative and that the owner of the land is not entitled to be given
an opportunity to be heard at the enquiry cannot be accepted for these
reasons. The enquiry under Rule 4 shows that the Collector is to submit a
report among other matters that the Company has made all reasonable efforts
to get such lands by negotiation with the persons interested therein on
payment of reasonable price and such efforts have failed. The persons
interested therein are the owners of the land which is proposed to be
acquired. The Company at such an enquiry has to show that the company made
negotiations with the owners of the land. The owners of the land are,
therefore, entitled to be heard at such an enquiry for the purpose of
proving or disproving the reasonable efforts of the company to get such
land by negotiation. The contention on behalf of the State that the owners
of the land will get an opportunity when an enquiry is made under Section
5A of the Act is equally unsound. Section 17 of the Act provides that the
appropriate Government may direct that the provisions of Section 5A shall
not apply, and if it does so direct a declaration may be made under Section
6 at any time after the publication of the notification under Section 4 of
the Act. Therefore, the enquiry under Section 5A may not be held.
47. In General Government Servants Cooperative Housing Society Ltd., Agra
etc. v. Sh. Wahab Uddin and Ors. etc., this Court held:
13. Sub-rule (1) requires the Government to direct the Collector to submit
a report to it on the matters enumerated in Clauses (i) to (vi) of the Sub-
rule (1) which is for the benefit of the Company. The purpose is to avoid
acquisition of land not suitable for a Company. Clause (ii) of Sub-rule (1)
requires that the Company has to make all reasonable efforts to get such
lands by negotiation with the person interested therein on payment of
reasonable prices and that such efforts have failed. The purpose of Clause
(ii) seems to be to avoid unnecessary land acquisition proceedings and
payment of exorbitant prices. The purpose of Clauses (iii), (iv) and (v) is
obvious. The purpose of Clause (vi) is to avoid acquisition of good
agricultural land, when other alternative land is available for the
purpose. Sub-rule 2 of Rule 4 requires the Collector to give reasonable
opportunity to the Company so that the Collector may hold an inquiry into
the matters referred in Sub-rule (1). The Collector has to comply with
Clauses (i), (ii) and (iii) of Sub-rule 2 during the course of the inquiry
under Sub- rule (1). The Collector under Sub-rule 3 then has to send a copy
of his report of the inquiry to the appropriate Government and a copy of
the report has to be forwarded by the Government to the Land Acquisition
Committee constituted under Rule 3 for the purpose of advising the
Government in relation to acquisition of land under Part VII of the Act,
the duty of the Committee being to advise the Government on all matters
relating to or arising out of acquisition of land under Part VII of the Act
(Sub-rule (5) of Rule 3). No declaration shall be made by the appropriate
Government under Section 6 of the Act unless the Committee has been
consulted by the Government and has considered the report submitted by the
Collector under Section 5A of the Act. In addition, under Clause (ii) of
Sub-rule (4) of Rule 4, the Company has to execute an agreement under
Section 41 of the Act. The above consideration shows that Rule 4 is
mandatory; its compliance is no idle formality, unless the directions
enjoined by Rule 4 are complied with, the notification under Section 6 will
be invalid. A consideration of Rule 4 also shows that its compliance
precedes the notification under Section 4 as well as compliance of Section
6 of the Act.”
The learned counsel further places reliance on the decision of this Court
in the case of Royal Orchid Hotels Ltd. v. G. Jayaram Reddy & Ors.[7],
wherein it was held that if the land is to be acquired for a company, then
the State Government and the company are bound to comply with the
provisions contained in Part VII of the L.A. Act.
The learned counsel further submits that the argument advanced on behalf
of TML that the cost of acquisition has been borne by the public exchequer,
if accepted, would in fact make this an even more egregious violation of
the L.A. Act. It is submitted that this would not only mean that a
colourable device has been used to circumvent the provisions of Part VII of
the L.A. Act, but that there has also been a clear violation of Section 41
of the L.A. Act, which provides that the cost of acquisition must be borne
by the company and not by the State.
The learned counsel thus, submits that the entire land acquisition
proceedings being a colourable exercise of power carried out in violation
of the L.A. Act and the relevant Rules be set aside.
Mr. Rakesh Dwivedi, the learned senior counsel appearing on behalf of the
State of West Bengal in the appeal arising out of SLP (C) No. 13645 of 2008
submits that the acquisition of land in Singur for TML is illegal as the
same has been done in complete violation of the provisions of Sections 4
and 6 of the L.A. Act, as well as the non-compliance with Part VII of the
L.A. Act and Rules applicable for acquisition of land in favour of a
Company.
The learned senior counsel takes us through the cabinet notes with
reference to the requisition letter of TML, extracted supra and submits
that it becomes very clear from a perusal of the documents on record that
the scouting and selection of land was done completely by TML, much before
the issuance of the notification under Section 4 of the L.A. Act. The
learned senior counsel further submits that initially, TML had submitted a
proposal of requirement of 600 acres of land, which was subsequently
increased to 1000 acres without any justification for seeking such vast
extent of lands in favour of TML. This action of the State Government and
its officers shows a complete non application of mind on the part of the
cabinet while assessing how much land is needed for the project, before
acquiring lands at the behest of TML.
The learned senior counsel further submits that post the amendment to the
L.A. Act in the year 1984, it becomes clear that the acquisition for a
company must comply with the requirements of Part VII of the L.A. Act, and
must only be done in accordance with the same. The same cannot be fused
with acquisition of land for a public purpose. The learned senior counsel
places reliance on the Statement of Objects and Reasons of the Amendment
Act 68 of 1984, the relevant part of which has been extracted supra.
The learned senior counsel further submits that Parliamentary Debates
relating to the Amendment Act 68 of 1984 also indicate that acquisition for
company could be done only under Part VII of the L.A. Act.
The learned senior counsel places reliance on the decision of the Madhya
Pradesh High Court in the case of Chaitram Verma and Ors. v. Land
Acquisition Officer, Raipur and Ors.[8] and the Allahabad High Court in the
case of Pooran and Ors. v. State of U.P. and Ors.[9], wherein it has been
held that after the amendment to the L.A. Act in the year 1984,
acquisition of land for a company can happen only in accordance with Part
VII of the L.A. Act.
The learned senior counsel further contends that the doctrine of infusion
of public revenue by the government or by corporations covered by Section
3(cc) of the L.A. would not be available after the amendments made in the
year 1984. In the pre-1984 legal position, there was lack of clarity in the
inclusive definition of public purpose in Section 3(f) to the L.A. Act.
Therefore, the Supreme Court in a number of cases resorted to the second
proviso to Section 6 for holding that infusion of public revenue would make
the acquisition for a company an acquisition for public purpose. After the
exclusion of companies from the purview of Section 3(f) of the L.A. Act,
infusion of public revenue cannot be resorted to for holding that
acquisition of land in favour of a company is one for public purpose. The
learned senior counsel thus, submits that the reliance placed by the
learned senior counsel appearing on behalf of TML on the pre-1984
decisions, including Pandit Jhandu Lal v. State of Punjab[10] , Somawanti
v. State of Punjab[11], Jage Ram v. State of Haryana[12] and Aflatoon v.
Lt. Governor of Delhi[13] is misplaced as the same have no application to
the facts of the instant case as the same pertain to the pre-1984
situation. It is further submitted that the reliance placed upon the
decisions of this Court in the cases of Pratibha Nema (supra) and Amarnath
Ashram (supra) has no bearing on the facts of the instant case as the same
have not correctly appreciated the scope of the 1984 amendment to the
provision Section 3 (f) of the L.A. Act.
The learned senior counsel further contends that the objections filed by
the landowners/ cultivators before the Land Acquisition Collector after
publication of the notification under Section 4 of the L.A. Act were also
rejected under Section 5-A(2) of the L.A. Act in a mechanical manner
without any application of mind. The learned senior counsel contends that
the State Government of West Bengal also recorded its satisfaction under
Section 6 of the L.A. Act by recording its satisfaction mechanically,
without considering the need of the lands. It is further submitted by the
learned senior counsel that with regard to conducting an inquiry under
Section 5-A(2) of the L.A. Act, this Court has held in a catena of
decisions that it is a valuable right available to the land owners and
cultivators, and therefore, it casts a statutory obligation on the part of
the Collector and the State Government to consider the objections and take
a decision in accordance with law. The application of mind by the concerned
Land Acquisition Collector including the State Government before issuing
the notification under Section 6 of the Act, for acquisition of lands is a
sine qua non. The learned senior counsel places reliance on the decision of
this Court in the case of Raghubir Singh Sherawat v. State of Haryana and
Ors.[14], wherein it has been held as under:
“In this context, it is necessary to remember that the rules of natural
justice have been ingrained in the scheme of Section 5A with a view to
ensure that before any person is deprived of his land by way of compulsory
acquisition, he must get an opportunity to oppose the decision of the State
Government and/or its agencies/instrumentalities to acquire the particular
parcel of land. At the hearing, the objector can make an effort to convince
the Land Acquisition Collector to make recommendation against the
acquisition of his land. He can also point out that land proposed to be
acquired is not suitable for the purpose specified in the notification
issued under Section 4(1). Not only this, he can produce evidence to show
that another piece of land is available and the same can be utilized for
execution of the particular project or scheme. Though, it is neither
possible nor desirable to make a list of the grounds on which the landowner
can persuade the Collector to make recommendations against the proposed
acquisition of land, but what is important is that the Collector should
give a fair opportunity of hearing to the objector and objectively consider
his plea against the acquisition of land. Only thereafter, he should make
recommendations supported by brief reasons as to why the particular piece
of land should or should not be acquired and whether or not the plea put
forward by the objector merits acceptance. In other words, the
recommendations made by the Collector must reflect objective application of
mind to the objections filed by the landowners and other interested
persons.”
The learned senior counsel further places reliance on the observations made
by this Court in the case of Surinder Singh Brar & Ors. v. Union of
India[15] to submit that the Collector did not apply his mind at all while
considering the objections under Section 5-A (2) of the L.A. Act. In that
case, this Court observed as under:
“The reason why the LAO did not apply his mind to the objections filed by
the Appellants and other landowners is obvious. He was a minion in the
hierarchy of the administration of the Union Territory of Chandigarh and
could not have even thought of making recommendations contrary to what was
contained in the letter sent by the Administrator to Surinder Singh Brar.
If he had shown the courage of acting independently and made recommendation
against the acquisition of land, he would have surely been shifted from
that post and his career would have been jeopardized. In the system of
governance which we have today, junior officers in the administration
cannot even think of, what to say of, acting against the wishes/dictates of
their superiors. One who violates this unwritten code of conduct does so at
his own peril and is described as a foolhardy. Even those constituting
higher strata of services follow the path of least resistance and find it
most convenient to tow the line of their superiors. Therefore, the LAO
cannot be blamed for having acted as an obedient subordinate of the
superior authorities, including the Administrator. However, that cannot be
a legitimate ground to approve the reports prepared by him without even a
semblance of consideration of the objections filed by the Appellants and
other landowners and we have no hesitation to hold that the LAO failed to
discharge the statutory duty cast upon him to prepare a report after
objectively considering the objections filed under Section 5A(1) and
submissions made by the objectors during the course of personal hearing.”
The learned senior counsel thus, contends that the acquisition of the vast
tracts of lands of the owners/cultivators, depriving them of their
constitutional rights for non-compliance with the mandatory procedure as
provided under Section 5-A (2) and Part VII of the L.A. Act. Therefore the
acquisition proceedings are void ab initio in law.
Mr. K. Parasaran, the learned senior counsel appearing on behalf of WBIDC
adopts the arguments advanced by learned senior counsel Mr. Rakesh Dwivedi
on behalf of the West Bengal State Government.
On the other hand, Mr. Abhishek Manu Singhvi, the learned senior counsel
appearing on behalf of TML contends that the government is free to acquire
certain lands keeping in mind a certain entity, and the mere fact that the
acquisition of lands has been done keeping that entity in mind will not
render the acquisition invalid. It is submitted that the State of West
Bengal as a matter of Industrial Policy decided to make efforts to
establish more manufacturing industries with a view to attract more private
sector investment in the manufacturing industry. The tremendous growth
potential of automobile industry in the State of West Bengal would have
boosted economy, created job opportunities, direct and indirect, and have
had an impact on the secondary employment in the associated service
sectors. The learned senior counsel further places strong reliance on the
constitution bench decision of this Court in the case of Aflatoon (supra),
wherein this Court has held that the acquisition of land for the “planned
development of Delhi” was a valid public purpose. It was held that the fact
that after the acquisition, the land was handed over to the co-operative
housing societies would not attract Part VII of the L.A. Act, 1894. This
Court has held as under:
“24. It was contended by Dr. Singhvi that the acquisition was really for
the cooperative housing societies which are companies within the definition
of the word 'company' in Section 3(e) of the Act, and, therefore, the
provisions of Part VII of the Act should have been complied with. Both the
learned Single Judge and the Division Bench of the High Court were of the
view that the acquisition was not for 'company. We see no reason to differ
from their view. The mere fact that after the acquisition the Government
proposed to hand over, or, in fact, handed over, a portion of the property
acquired for development to the cooperative housing societies would not
make the acquisition one for 'company'. Nor are we satisfied that there is
any merit in the contention that compensation to be paid for the
acquisition came from the consideration paid by the cooperative societies.
In the light of the averments in the counter affidavit filed in the writ
petitions here, it is difficult to hold that it was cooperatives which
provided the fund for the acquisition. Merely because the Government
allotted a part of the property to cooperative societies for development,
it would not follow that the acquisition was for cooperative societies, and
therefore, Part VII of the Act was attracted.”
The learned senior counsel further placed reliance on the decision of this
Court in the case of Mandir Shree Sita Ramji v. Land Acquisition Collector
& Ors.[16], wherein it was held as under:
“12. We have considered the submissions of both the sides. In our view,
there is no merit in the challenge to the proposed acquisition on the
ground that the acquisition was for the purposes of the society covered by
Agreement dated 9th May, 1972. The subsequent Notification is merely a
follow up of the earlier Notification. The entire acquisition is for
"planned development of Delhi". To be remembered that Appellants' land is
in the midst of the 35000 acres which have been acquired pursuant to the
Notification under Section 4 issued in 1959. The Agreement dated 19th May,
1972 does not specify that it is the Appellants' land which is to be
allotted to that Society. The Society is to be allotted some land and even
if Appellants' land is allotted to this Society, after acquisition, it will
not mean that the acquisition was for this Society. Therefore, the
provisions of Part VII of the Land Acquisition Act need not have been
complied with.”
The learned senior counsel submits that in the instant case, the mere fact
that TML looked at and inspected some sites before the lands were finally
acquired does not take away from the fact that the lands were, in fact,
acquired in favour of WBIDC for a public purpose. It is further submitted
that the fact that the compensation amount of Rs. 138 crores was deposited
by WBIDC and not by TML also keeps the acquisition of the lands in the
instant case out of the purview of Part VII of the L.A. Act and the
relevant Rules. It is submitted that the essential test to determine as to
whether the acquisition of the lands in question is for public purpose, is
whether the funds for acquisition are coming from public funds. The learned
senior counsel places reliance on the Constitution Bench decision of this
Court in the case of Pandit Jhandu Lal (supra), wherein it was held as
under:
“Section 6 is, in terms, made subject to the provisions of Part VII of the
Act. The provisions of Part VII, read with section 6 of the Act, lead to
this result that the declaration for the acquisition for a Company shall
not be made unless the compensation to be awarded for the property is to be
paid by a company. The declaration for the acquisition for a public
purpose, similarly, cannot be made unless the compensation, wholly or
partly, is to be paid out of public funds. Therefore, in the case of an
acquisition for a Company simpliciter, the declaration cannot be made
without satisfying the requirements of Part VII. But, that does not
necessarily mean that an acquisition of a Company for a public purpose
cannot be made otherwise than under the provisions of Part VII, if the cost
or a portion of the cost of the acquisition is to come out of public funds.
In other words, the essential condition for acquisition for a public
purpose is that the cost of the acquisition is should be borne, wholly or
in part, out of public funds. Hence, an acquisition for a Company may also
be made for a public purpose, within the meaning of the Act, if a part or
the whole of the cost of acquisition is met by public funds. If, on the
other hand, the acquisition for a Company is to be made at the cost
entirely of the Company itself, such an acquisition comes under the
provisions of Part VII. As in the present instance, it appears that part at
any rate of the compensation to be awarded for the acquisition is to come
eventually from out of public revenues, it must be held that the
acquisition is not for a Company simpliciter. It was not, therefore,
necessary to go through the procedure prescribed by Part VII. We,
therefore, agree with the conclusion of the High Court, though not for the
same reasons.”
The learned senior counsel further submits that the above position of law
was reiterated by this Court more recently in the case of Pratibha Nema v.
State of M.P.[17], wherein it was held as under:
“Thus the distinction between public purpose acquisition and Part VII
acquisition has got blurred under the impact of judicial interpretation of
relevant provisions. The main and perhaps the deceive distinction lies in
the fact whether cost of acquisition comes out of public funds wholly or
partly. Here again, even a token or nominal contribution by the Government
was held to be sufficient compliance with the second proviso to Section 6
as held in a catena of decisions. The net result is that by contributing
even a trifling sum, the character and pattern of acquisition could be
changed by the Government. In ultimate analysis, what is considered to be
an acquisition for facilitating the setting up of an industry in private
sector could get imbued with the character of public purpose acquisition if
only the Government comes forward to sanction the payment of a nominal sum
towards compensation. In the present state of law, that seems to be the
real position.”
The learned senior counsel further contends that this Court has in fact,
also held that it is enough if only a part of the amount comes from public
funds to make the acquisition as one for public purpose. Reliance has been
placed on the Constitution Bench decision of this Court in the case of
Somawanti (supra), wherein it was held as under:
“We would like to add that the view taken in Senja Naicken's case I.L.R.
(1926) Mad. 308 has been followed by the various High Courts of India. On
the basis of the correctness of that view the State Governments have been
acquiring private properties all over the country by contributing only
token amounts towards the cost of acquisition. Titles to many such
properties would be unsettled if we were now to take the view that 'partly
at public expense' means substantially at public expense. therefore, on the
principle of stare decisis the view taken in Senja Naicken's case I.L.R.
(1926) Mad. 308 should not be disturbed. We would, however, guard ourselves
against being understood to say that a token contribution by the State
towards the cost of acquisition will be sufficient compliance with the law
in each and every case. Whether such contribution meets the requirements of
the law would depend upon the facts of every case. Indeed the fact that the
State's contribution is nominal may well indicate, in particular
circumstances that the action of the State was a colourable exercise of
power. In our opinion 'part' does not necessarily mean a substantial part
and that it will be open to the Court in every case which comes up before
it to examine whether the contribution made by the state satisfies the
requirement of the law.”
It is further submitted that the said position was reiterated by this
Court in the case of Jage Ram (supra), wherein it was held that a
contribution of Rs.100/- by the State Government was sufficient to take the
acquisition of land outside the purview of Part VII of the L.A. Act.
The learned senior counsel further contends that the cabinet meeting and
cabinet memo do not substitute the notification under Section 4 of the L.A.
Act, as well as the inquiry by the Land Acquisition Collector. It is
submitted that even after the cabinet approval, it was upon the Land
Acquisition Collector to survey and decide whether the lands in question
can be acquired for that particular purpose or not. The discretion of the
Land Acquisition Collector was unfettered and uncompromised. It is
submitted that the inquiry of the Land Acquisition Collector was submitted
in the instant case, and all the requirements as provided for under Part II
of the L.A. Act were complied with while acquiring the lands in question in
the instant case.
We have heard the learned counsel appearing on behalf of all the parties.
Before we examine the contentions in detail and consider the matter on
merits, it is important to address an issue raised by Mr. Abhishek Manu
Singhvi and Mr. Gopal Jain, the learned senior counsel appearing on behalf
of TML, that the State of West Bengal cannot be allowed to resile from the
position taken by them in their pleadings, without even filing an
affidavit. It is contended by them that the State of West Bengal had
specifically contended before the High Court that Part VII of the L.A. Act
has no application in the instant case and the acquisition of land was one
which was done in the public interest. The learned senior counsel submit
that even before the Supreme Court, the State of West Bengal has stated in
its counter affidavit that establishing a new industry is the public
purpose as envisaged under Section 3(f) of the L.A. Act and that in the
instant case, it was the state government which had acquired the lands in
favour of WBIDC for the purpose of fulfilling its industrialization policy
in the State of West Bengal.
Dr. Abhishek Manu Singhvi, learned senior counsel very vehemently contends
that the State Government of West Bengal and WBIDC cannot be allowed to
change their stand before this Court in these proceedings at the time of
arguments merely because of change of Government in the State of West
Bengal after the completion of the land acquisition proceedings. It is
further contended that the change of stand by the State government at this
stage without filing an affidavit amounts to violation of the principles of
natural justice. Strong reliance is placed by him on the decision of this
Court in the case of Jal Mahal Resort (P) Ltd. v. K.P. Sharma[18] in this
regard.
Further reliance is placed by him on the decision of this Court in the case
of Andhra Pradesh Dairy Development Corpn. Federation v. B. Narasimha
Reddy[19], wherein it was held as under:
“40. In the matter of Government of a State, the succeeding Government is
duty bound to continue and carry on the unfinished job of the previous
Government, for the reason that the action is that of the "State", within
the meaning of Article 12 of the Constitution, which continues to subsist
and therefore, it is not required that the new Government can plead
contrary from the State action taken by the previous Government in respect
of a particular subject. The State, being a continuing body can be stopped
from changing its stand in a given case, but where after holding enquiry it
came to the conclusion that action was not in conformity with law, the
doctrine of estoppel would not apply. Thus, unless the act done by the
previous Government is found to be contrary to the statutory provisions,
unreasonable or against policy, the State should not change its stand
merely because the other political party has come into power. "Political
agenda of an individual or a political party should not be subversive of
rule of law". The Government has to rise above the nexus of vested interest
and nepotism etc. as the principles of governance have to be tested on the
touchstone of justice, equity and fair play. The decision must be taken in
good faith and must be legitimate.”
Reliance is also placed by him on the decision of this Court in the case of
M.I. Builders Pvt. Ltd. v. Radhey Shyam Sahu & Ors.[20], wherein it was
held as under:
“……No doubt Mahapalika is a continuing body and it will be estopped from
changing its stand in the given case. But when Mahapalika finds that its
action was contrary to the provisions of law by which it was constituted
there could certainly be no impediment in its way to change its stand.
There cannot be any estoppel operating against the Mahapalika.”
It is further contended that State government should not be allowed to
change its stand merely because some other political party has come into
power after the acquisition proceedings and the legal proceedings of the
land owners were concluded in the High Court by passing the impugned common
judgment and order.
Mr. Rakesh Dwivedi, learned senior counsel appearing on behalf of the
State of West Bengal on the other hand rebuts the above submission made by
the learned senior counsel appearing on behalf of TML. It is submitted that
there is absolutely no law which mandates that upon the change of
government, the stance taken earlier cannot be changed, more so, when the
earlier stance is clearly opposed to both law and public policy. The
learned senior counsel submits that even in the case of A.P. Dairy (supra)
on which reliance has been placed upon by the learned senior counsel
appearing on behalf of TML, this Court has held that the state can change
its stand if it is found that the act done by the previous government is
contrary to provisions of law or is against public policy.
The learned senior counsel further submits that in the instant case,
having regard to the nature of acquisition of lands made by the previous
Government, the lands were acquired by the State Government in exercise of
its eminent domain power without following the statutory provisions
contained in Sections 3(f), 4 and 6 of the L.A. Act as well as Part VII of
the L.A. Act. It is submitted that the previous government of the state has
violated statutory provisions of the L.A. Act in acquiring the vast extent
of lands having immense agricultural potential, thus depriving the
agricultural occupation of a large number of land owners/ cultivators,
thereby depriving them of their constitutional and fundamental rights
guaranteed under the Constitution of India. It is submitted that the
acquisition of the lands in the instant case has been made at the instance
of TML. Therefore, the previous Government has violated the law in
acquiring the lands. It is submitted that the stand of the present
government becomes clear from the fact that it enacted the Singur Act,
2011, the constitutional validity of which has been challenged by TML by
way of filing petitions, which were allowed by the High Court, against
which judgment, the State Government filed SLPs which are currently pending
before this Court. Therefore, the State Government has changed its stand in
not justifying the acquisition proceedings.
We are unable to agree with the contentions advanced by the learned senior
counsel appearing on behalf of TML. While it is true that rule of law
cannot be sacrificed for the sake of furthering political agendas, it is
also a well established position of law that a stand taken by the state
government can be changed subsequently if there is material on record to
show that the earlier action of the acquisition of lands by the State
Government was illegal or suffers from legal malafides or colourable
exercise of power.
Further, in any case, it is also well settled position of law that this
Court is not bound by affidavits and counter affidavits filed by the
parties. In exercise of its power under Article 136 of the Constitution of
India, this Court can examine the material on record in order to determine
whether the action of the previous state government in acquiring the lands
in the instant case was in accordance with law or not. In the case of
P.S.R. Sadanatham v. Arunachalam[21], a Constitution Bench of this Court
held as under:
“7. ………In express terms, Article 136 does not confer a right of appeal on a
party as such but it confers a wide discretionary power on the Supreme
Court to interfere in suitable cases. The discretionary dimension is
considerable but that relates to the power of the court. The question is
whether it spells by implication, a fair procedure as contemplated by
Article 21. In our view, it does. Article 136 is a special jurisdiction. It
is residuary power; it is extraordinary in its amplitude, its limit, when
it chases injustice, in the sky itself. This Court functionally fulfils
itself by reaching out to injustice wherever it is and this power is
largely derived in the common run of cases from Art 136…………”
(emphasis laid by this Court)
In the instant case, the cabinet records, communication between TML and
representative of the State Government, the notifications published under
Sections 4 and 6 of the L.A. Act are all on record. We shall examine the
same to assess the validity of the acquisition of the lands in these
proceedings.
The above said preliminary objection, as has been raised by the learned
senior counsel appearing on behalf of TML is thus, not accepted. We now
proceed to decide the matter on merits.
On the basis of the factual and rival legal contentions advanced on behalf
of the learned counsel appearing on behalf of the parties as well as the
material produced on record and from perusal of the original files, the
following points would arise for consideration of this Court:
Whether the lands involved in these proceedings have been acquired for a
public purpose or for a Company (TML)?
If the lands have been acquired for a Company, whether the procedure
provided for under Part VII of the L.A. Act has been complied with by the
state government?
Whether the inquiry as contemplated under Section 5-A(2) of the L.A. Act
has been duly conducted by the Land Acquisition Collector?
Whether the Land Acquisition Collector has assigned reasons in his report
for rejecting the objections raised by the landowners/cultivators after
application of mind?
Whether the report of the Land Acquisition Collector is based on the
decision of the State Government taken prior to issuing notification under
Section 6 of the L.A. Act?
Whether the awards have been passed after holding due inquiry under
Section 9 of the L.A. Act and also in compliance with the principles of
natural justice?
Whether the compensation awarded in favour of the land owners/cultivators
is based on a proper appreciation of the market value of the land?
What is the legal effect on the acquisition proceedings of not conducting
an inquiry under Section 5-A (2) and passing composite awards under Section
11 of the L.A. Act?
What order can be passed in these proceedings at this stage?
Answer to Point Nos. 1 and 2
Issue Nos. 1 and 2 are inter-related, hence, they are answered together as
under:
Section 3(f) of the Act defines acquisition of land for 'public purpose' by
the State Government, which reads thus:
“3(f) the expression “public purpose' includes—
…………
(iii) the provision of land for planned development of land from public
funds in pursuance of any scheme or policy of Government and subsequent
disposal thereof in whole or in part by lease, assignment or outright sale
with the object of securing further development as planned;
(iv) the provision of land for a corporation owned or controlled by the
State;
…………
(vi) the provision of land for carrying out any educational, housing,
health or slum clearance scheme sponsored by Government, or by any
authority established by Government for carrying out any such scheme, or,
with the prior approval of the appropriate Government, by a local
authority, or a society registered under the Societies Registration Act,
1860 (21 of 1860), or under any corresponding law for the time being in
force in a State, or a co-operative society within the meaning of any law
relating to co-operative societies for the time being in force in any
State;
(vii) the provision of land for any other scheme of development sponsored
by Government or, with the prior approval of the appropriate Government, by
a local authority;
………
but does not include acquisition of lands for Companies”
(emphasis laid by this Court)
The definition of the term 'Company' was inserted in the definition of
Section 3(e) of the L.A. Act by Act 68 of 1984 with effect from 24.09.1984.
Section 3(e) of the L.A. Act defines a company as:
“(i) a company as defined in Section 3 of the Companies Act, 1956 (1 of
19560 other than a Government Company referred to in cl. (cc)
…………”
Section 3(f) of the L.A. Act, which defines what public purpose is for the
purpose of acquisition of land, clearly indicates that the acquisition of
land for companies is not covered within the public purpose. It is in light
of this statutory scheme under the provisions of the L.A. Act that it
becomes crucial to examine whether the lands in question were acquired for
a public purpose or was it acquired by the State Government for a company
(TML) in the instant case.
A perusal of the notification issued under Section 4(1) of the L.A. Act
extracted supra clearly shows that the proposed lands in the notification
are needed for the setting up of the Tata Small Car project in mouza
Berabery, P.S. Singur, District Hooghly.
The Cabinet Memo dated 30.05.2006, extracted supra, at Serial No. 3
mentioned acquisition of lands measuring 1053 acres by WBIDC for the
purpose of setting up of the Tata Motor’s ‘Small Car Project’ in the State
of West Bengal. The said Cabinet Memo received the approval of the Chief
Minister on 05.06.2006 after which the notification under Section 4 of the
L.A. Act was published in the official gazette.
As far as the proposal is concerned, there is nothing on record to
indicate that WBIDC made such requisition to the State Government giving
its proposal for acquisition of the proposed lands mentioned in the
notification issued under Section 4 of the L.A. Act, which are required for
‘public purpose’ as defined under Section 3(f) (iii) of the L.A. Act, which
enables the WBIDC to give requisition for acquiring the lands in its favour
for the planned development of land out of the public funds in pursuance of
any scheme or policy of Government. As is evident from the Notifications
issued under the L.A. Act and from the cabinet memo, there is no mention
about such requisition being made by the Corporation to the State
Government regarding the proposed lands being required for acquisition in
favour of WBIDC for planned development of land in pursuance of any scheme
or policy of the Government. Even from a perusal of the letter dated
29.08.2006, written by the Joint Secretary, Land and Land Reforms
Department, Government of West Bengal, it becomes clear that the state
government did not apply its mind while considering the need of the land
and merely followed the document on which the Collector had signed. It
reads as under:
“It is clear from the report and records relating to the proceedings u/s 5A
of the L.A. Act, 1894 received from the L.A. Collector after disposal of
objections from the persons having rights and interest in land in the
Berabari and Khaserbari mouzas of Singur PS where 6 LA cases comprising for
setting up Tata Small Car Project have been initiated, that the Collector
did not find any objection having merits for change/ modification of the
area within the conceived area of acquisition and he has recommended the
land covered u/s 4 notification in the aforesaid mouzas are fit for
acquisition for the public purpose on behalf of WBIDC, the RB.
On perusal of the reports and records we may agree to the above
recommendation of the Collector and issue declaration u/s/ 6 as prescribed
in the aforesaid Act.”
The letter of the Joint Secretary mentions the WBIDC to be the
requisitioning body. However, the same finds no mention in the notification
issued under Section 6 of the L.A. Act, the relevant portion of which has
been extracted supra.
Even if the argument advanced on behalf of TML were to be accepted, that it
was the policy of the state government to generate employment and increase
socio economic development in the State, the relevant policy documents are
not forthcoming in the original acquisition files which were made available
for this Court. Thus, by no stretch of imagination can the acquisition of
lands in the instant case be said to be at the instance of WBIDC, or for
the fulfilment of some scheme of the Corporation or the State Government.
Thus, it cannot be said to attract Section 3(f)(iii), (iv) or (vi) either.
On the contrary, what is on record is the minutes of meetings between the
representatives of the West Bengal Government and TML dated 17.03.2006,
which state that TML is interested in setting up a ‘special category
project’ in the State to manufacture 2,50,000 units for its ‘Small Car
Project’. As per the project requirement mentioned in the letter written by
Deputy General Manager TML to the Principal Secretary, Commerce &
Industries Department, Government of West Bengal dated 19.01.2006, 400
acres of land were required for setting up of the factory, 200 acres for
vendor park and 100 acres for township. The said letter was forwarded by
the Commerce and Industries Department to the Principal Secretary, Land and
Land Reforms Department on 24.01.2006 and the Finance Secretary for their
consideration and seeking their views in this regard. It is undisputed fact
that the State Government has not deposited the public money towards the
cost of acquisition of land to initiate the acquisition proceedings to show
that the acquisition of lands is for public purpose which is an essential
requirement under the provision of Section 6 of the L.A. Act. As can be
seen, the notification issued under Section 6 of the L.A. Act merely
provides that the land is needed for the setting up of the Tata Small Car
project, which is a public purpose under the L.A. Act. In the case of Usha
Stud and Agricultural Farms Pvt. Ltd. v. State of Haryana & Ors.[22], a
three judge bench of this Court, after adverting to a catena of case law on
the subject held as under:
“The ratio of the aforesaid judgments is that Section 5-A(2), which
represents statutory embodiment of the rule of audi alteram partem, gives
an opportunity to the objector to make an endeavour to convince the
Collector that his land is not required for the public purpose specified in
the notification issued under Section 4(1) or that there are other valid
reasons for not acquiring the same. That section also makes it obligatory
for the Collector to submit report(s) to the appropriate Government
containing his recommendations on the objections, together with the record
of the proceedings held by him so that the Government may take appropriate
decision on the objections. Section 6(1) provides that if the appropriate
Government is satisfied, after considering the report, if any, made by the
Collector under Section 5-A that particular land is needed for the
specified public purpose then a declaration should be made. This
necessarily implies that the State Government is required to apply mind to
the report of the Collector and take final decision on the objections filed
by the landowners and other interested persons. Then and then only, a
declaration can be made under Section 6(1).”
(emphasis laid by this Court)
Thus, there seems to be no application of mind either at the stage of
issuance of the notification under Section 4 of the L.A. Act, or the report
of Collector under Section 5-A (2) of the L.A. Act or the issuance of the
final notification under Section 6 of the L.A. Act. Such an acquisition, if
allowed to sustain, would lead to the attempt to justify any and every
acquisition of land of the most vulnerable sections of the society in the
name of ‘public purpose’ to promote socio-economic development.
On the other hand, it is the Corporation which has raised the cost of
acquisition by way of taking loan from nationalized banks and the same is
said to have been deposited with the State Government. As has rightly been
contended by Mr. Kalyan Banerjee, learned senior counsel by placing
reliance on various decisions of this Court, which have been adverted to
supra, WBIDC cannot even be said to be a local authority for the purpose of
the L.A. Act and therefore the deposit of money towards acquisition cost
does not satisfy the statutory requirement under Section 6 of the Act.
Thus, the contention advanced by the learned senior counsel appearing on
behalf of TML that the acquisition in the instant case is one for public
purpose as the funds for same have come from public revenue, also cannot be
accepted. Thus, neither there is a scheme of the Government, nor the funds
have been derived from the public revenue and that is why the acquisition
in the instant case cannot be said to be one for ‘public purpose’.
The contention advanced by the learned senior counsel appearing on behalf
of TML that this Court has consistently taken the view that acquisition in
favour of a statutory corporation or development authority for land
development including industrial development, makes the acquisition of
lands one for ‘public purpose’, as defined under Section 3(f) (iv) or (vii)
of the L.A. Act and there is no need to follow the procedure for
acquisition as laid down in Part VII of the L.A. Act, cannot be accepted by
me. After the passing of the Land Acquisition Amendment Act, 1984,
acquisition of land for a company is no longer covered under ‘public
purpose’ in view of Section 3(f)(viii) of the L.A. Act. Apart from the
above statutory provisions inserted by way of an amendment the Objects and
Reasons for such amendment referred to supra upon which strong reliance has
been placed by Mr. Colin Gonsalves and Mr. Rakesh Dwivedi, learned senior
counsel on behalf of the owners and State would make it abundantly clear
that the mandatory procedure as laid down under Part VII of the L.A. Act
read with the rules framed there under was not followed by the State
Government before the notifications were published.
From a perusal of both the statutory provisions of the L.A. Act as well as
the case law on the subject referred to supra upon which strong reliance
has been rightly placed by the learned senior counsel on behalf of the
owners/cultivators and State Government, it becomes clear that the state
government can acquire land under the public purpose clauses (iv) and (vii)
of the Act for industrial estates, housing colonies and economic
parks/zones even where the type of industry has been identified. So, an
acquisition made for an industrial estate of a particular type of industry
like small cars is permissible under the ‘public purpose’ for the purpose
of the L.A. Act under the above clauses of Section 3 (f) of the Act.
Before land could be acquired, the procedure consistent with the statutory
provisions of law must be followed mandatorily. There is nothing in law
which would support the acquisition of land for a particular Company under
the guise of ‘public purpose’, rendering the exception provided under
Section 3(f)(viii) of the L.A. Act useless and nugatory.
In the case of Devender Pal Singh (supra), this Court has held that when
the acquisition of land is for a public purpose, it is Part II of the L.A.
Act which would apply and where the acquisition of land is at the instance
of a Company, the procedure to be adopted is laid down in Part VII of the
L.A. Act. It was held as under:
“40. Distinction between acquisition under Part II and Part VII are self-
evident. The State was not only obligated to issue a notification clearly
stating as to whether the acquisition is for a public purpose or for the
company. Section 6 categorically states so, as would appear from the second
proviso appended thereto.
41. A declaration is to be made either for a public purpose or for a
company. It cannot be for both.
42. It is furthermore trite that Land Acquisition Act is an expropriatory
legislation. (See Hindustan Petroleum Corporation Ltd. v. Darius Shapur
Chenai and Ors.; and Chairman, Indore Vikas Pradhikaran v. Pure Industrial
Cock & Chem. Ltd. and Ors.)
43. Expropriatory legislation, as is well-known, must be strictly
construed. When the properties of a citizen is being compulsorily acquired
by a State in exercise of its power of Eminent Domain, the essential
ingredients thereof, namely, existence of a public purpose and payment of
compensation are principal requisites therefore. In the case of acquisition
of land for a private company, existence of a public purpose being not a
requisite criteria, other statutory requirements call for strict
compliance, being imperative in character.”
(emphasis laid by this Court)
The decisions of this Court in the cases of Pandit Jhandu Lal (supra),
Somawanti (supra), Jage Ram (supra) and Aflatoon (supra) upon which strong
reliance has been placed by the learned senior counsel appearing on behalf
of TML, have no bearing on the facts of the instant case, as they were
decided prior to the enactment of the Land Acquisition (Amendment) Act,
1984, except the decision of this Court in the case of Pratibha Nema
(supra).
In the case of Pratibha Nema, this Court did not consider the statement of
objects and reasons of the Land Acquisition (Amendment) Act, 1984, the
relevant portion of which has been extracted supra. Further, the fact
situation in that case was also very different as this Court was dealing
with acquisition of land for the purpose of setting up a ‘diamond park’
pursuant to the policy decision by the state government of Madhya Pradesh.
In this day and age of fast paced development, it is completely
understandable for the state government to want to acquire lands to set up
industrial units. What, however, cannot be lost sight of is the fact that
when the brunt of this ‘development’ is borne by the weakest sections of
the society, more so, poor agricultural workers who have no means of
raising a voice against the action of the mighty state government, as is
the case in the instant fact situation, it is the onerous duty of the state
Government to ensure that the mandatory procedure laid down under the L.A.
Act and the Rules framed there under are followed scrupulously otherwise
the acquisition proceedings will be rendered void ab initio in law.
Compliance with the provisions of the L.A. Act cannot be treated as an
empty formality by the State Government, as that would be akin to handing
over the eminent domain power of State to the executive, which cannot be
permitted in a democratic country which is required to be governed by the
rule of law. This Court in the case of State of Punjab v. Gurdial
Singh[23], has held with regard to the legal mala fides as under:
“9. The question, then, is what is mala fides in the jurisprudence of
power? Legal malice is gibberish unless juristic clarity keeps it separate
from the popular concept of personal vice. Pithily put, bad faith which
invalidates the exercise of power-sometimes called colourable exercise or
fraud on power and oftentimes overlaps motives, passions and satisfactions-
is the attainment of ends beyond the sanctioned purposes of power by
simulation or pretension of gaining a legitimate goal. If the use of the
power is for the fulfillment of a legitimate object the actuation or
catalysation by malice is not legicidal. The action is bad where the true
object is to reach an end different from the one for which the power is
entrusted, goaded by extraneous considerations, good or bad, but irrelevant
to the entrustment. When the custodian of power is influenced in its
exercise by considerations outside those for promotion of which the power
is vested the court calls it a colourable exercise and is undeceived by
illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark
even in Law when he stated: "I repeat...that all power is a trust-that we
are accountable for its exercise-that, from the people, and for the people,
all springs, and all must exist". Fraud on power voids the order if it is
not exercised bona fide for the end designed. Fraud in this context is not
equal to moral turpitude and embraces all cases in which the action
impugned is to effect some object which is beyond the purpose and intent of
the power, whether this be malice- laden or even benign. If the purpose is
corrupt the resultant act is bad. If considerations, foreign to the scope
of the power or extraneous to the statute, enter the verdict or impel the
action, mala fides or fraud on power, vitiates the acquisition or other
official act.”
(emphasis laid by this Court)
In the case of S. Pratap Singh v. State of Punjab[24], a constitution bench
of this Court has held that:
“In legal parlance it would be a case of a fraud on a power, though no
corrupt motive or bargain is imputed. In this sense, if it could be shown
that an authority exercising a power has taken into account - it may even
be bona fide and with the best of intention,- as a relevant factor
something which it could not properly take into account, in deciding
whether or not to exercise the power or the manner or extent to which it
should be exercised, the exercise of the power would be bad. Sometimes
Courts are confronted with cases where the purposes sought to be achieved
are mixed, - some relevant and some alien to the purpose. The courts have,
on occasions, resolved the difficulty by finding out the dominant purpose
which impelled the action, and where the power itself is conditioned by a
purpose, have proceeded to invalidate the exercise of the power when any
irrelevant purpose is proved to have entered the mind of the authority (See
Sadler v. Sheffield Corporation [1924] 1 CH 483. as also Lord Denning's
observation Earl fitzwilliam etc. v. Minister of T. & C. Planning [1951] 2
K.B. 284,. This is on the principle that if in such a situation the
dominant purpose is unlawful then the act itself is unlawful and it is not
cured by saying that they had another purpose which was lawful.”
(emphasis laid by this Court)
It is also a well settled principle of law that if the manner of doing a
particular act is prescribed under any statute the act must be done in that
manner or not at all. In the case of Babu Verghese & Ors. v. Bar Council Of
Kerala & Ors.[25], this Court has held as under:
“31. It is the basic principle of law long settled that if the manner of
doing a particular act is prescribed under any Statute, the act must be
done in that manner or not at all. The origin of this rule is traceable to
the decision in Taylor v. Taylor which was followed by Lord Roche in Nazir
Ahmad v. King Emperor who stated as under :
“Where a power is given to do a certain thing in a certain way, the thing
must be done in that way or not at all.”
32. This rule has since been approved by this Court in Rao Shiv Bahadur
Singh and Anr. v. State of Vindhya Pradesh and again in Deep Chand v. State
of Rajasthan. These cases were considered by a Three-Judge Bench of this
Court in State of Uttar Pradesh v. Singhara Singh and Ors. and the rule
laid down in Nazir Ahmad's case (supra) was again upheld. This rule has
since been applied to the exercise of jurisdiction by courts and has also
been recognized as a salutary principle of administrative law.”
(emphasis laid by this Court)
In the instant case, what makes the acquisition proceedings perverse is
not the fact that the lands were needed for setting up of an automobile
industry, which would help to generate employment as well as promote socio
economic development in the State, but what makes the acquisition
proceedings perverse is that the proper procedure as laid down under Part
VII of the L.A. Act read with Rules was not followed by the State
Government. The acquisition of land for and at the instance of the company
was sought to be disguised as acquisition of land for ‘public purpose’ in
order to circumvent compliance with the mandatory provisions of Part VII of
the L.A. Act. This action of the State Government is grossly perverse and
illegal and void ab initio in law and such an exercise of power by the
state government for acquisition of lands cannot be allowed under any
circumstance. If such acquisitions of lands are permitted, it would render
entire Part VII of the L.A. Act as nugatory and redundant, as then
virtually every acquisition of land in favour of a company could be
justified as one for a ‘public purpose’ on the ground that the setting up
of industry would generate employment and promote socio economic
development in the State. Surely, that could not have been the intention of
the legislature in providing the provisions of Part VII read with 3 (f) of
the L.A. Act. From a perusal of the materials on record from the original
files, the relevant extracts from the letters addressed by TML to the
State Government of West Bengal and Cabinet notes which have been extracted
and discussed supra, it becomes clear that in the instant case, the lands
in question were acquired by the State Government for a particular Company
(TML), at the instance of that Company. Further, the exact location and
site of the land was also identified by TML. Even the notifications issued
under Sections 4 and 6 of the L.A. Act clearly state that the land in
question was being acquired for the ‘Small Car Project’ of TML. In view of
the foregoing reasons, by no stretch of imagination can such an acquisition
of lands be held to be one for ‘public purpose’ and not for a company. If
the acquisition of lands in the instant case does not amount to one for the
company, I do not know what would.
In view of the aforesaid categorical findings recorded by me based on the
materials on record, including cabinet memo, minutes of meetings between
representatives of the state government and TML as well as the
notifications issued under Sections 4 and 6 of the L.A. Act, 1984, it is
clear that the acquisition of lands in the instant case is for the Company
(TML). Admittedly, the procedure for acquisition as contemplated under
Sections 39, 40 and 41 of Part VII of the L.A. Act read with Rules 3, 4 and
5 of the Land Acquisition (Companies) Rules, 1963 has not been followed, as
the acquisition was sought to be guised as one for ‘public purpose’ under
Sections 3(f) (iii), (iv) and (vii) of the L.A. Act. The acquisition of
land in the instant case in favour of the Company is thus, improper for not
following the mandatory procedure prescribed under Part VII of the L.A. Act
and Rules and therefore the acquisition proceedings are liable to be
quashed.
Further, even after the lands were acquired in its favour, TML could not
start operations in accordance with the terms of the lease deed. The same
becomes clear from a perusal of the letter dated 28.09.2010 written by the
Managing Director, India Operations of TML to the Managing Director of
WBIDC, which reads as under:
“We had proposed an integrated Automobile Plant consisting of manufacturing
operations by Tata Motors as well as co-locating vendors in the same
complex.You were kind enough to lease 645 acres to Tata Motors and 290
acres to vendors as recommended by Tata Motors……
We, therefore, concluded that a peaceful environment could not be created
for normal working of the plant and we had to take the most painful
decision to close the operations on 3rd October, 2008. Meanwhile, we also
took permission from you to remove our equioment and machinery, which we
have now done. We, invested Rs. 440 crores and of course continue to incur
Rs. 1 crore per month towards maintenance. This is an addition to the
investment of about Rs. 171 crores (inclusive of Rs. 40 crores for land
premium charges) done by our vendors.
…………
We have also had discussions with the Hon’ble Industry Minister as well as
with the Industry Secretary for finding various alternative uses for this
plant. In this respect, we would like to submit that we could also consider
the option of moving out from the premises provided we and our vendors are
compensated for the cost of the buildings, sheds on the premises and
expenses incurred in developing the infrastructure which remains on the
premises.
……………”
Thus, it is an undisputed fact that even once the cost of acquisition was
borne by WBIDC by way of raising loan from banks, TML did not start
operations and held on to the possession of the land. It did not engage in
any other manufacturing activity either. Subsequently, TML also removed the
machinery from the concerned plant and shifted the same to the state of
Gujarat and the lands in question have since been resumed by WBIDC.
In view of the foregoing reasons, Point Nos. 1 and 2 are answered in
favour of the land owners/cultivators.
Answer to Point Nos. 3, 4 and 5
From a perusal of the materials on record and original acquisition files,
it is evident that a large number of objections were filed by the land
owners before the notification was issued under Section 4 of the L.A. Act.
The same were not considered properly under Section 5-A (2) of the L.A.
Act. Notices were issued to the objectors individually but the same could
not be served upon the owners/cultivators of the proposed lands to be
acquired. It is further mentioned in the record that the announcements
were made through loudspeakers and by publications in the newspapers. It
has been submitted by Mr. Rakesh Dwivedi, learned senior counsel appearing
on behalf of the State of West Bengal that once a decision was taken to
serve the land owners/cultivators individually then it should have been
ensured by the Land Acquisition Collector that the notices were so served.
However, the fact that the same was not done is evident from a perusal of
the acquisition files maintained by the State Government.
Even though the land owners/cultivators did not appear before the Land
Acquisition Collector, the objections filed by them ought to have been
considered objectively by him as required under Section 5-A (2) of the L.A.
Act. Additionally, seven objections were filed under Section 5-A itself and
some of the objections pertained to persons who were already running
industrial units. The names of the objectors are as follows:
“
1. Kuldip Maity of Beraberi, P.S. Singur;
2. Subir Kumar Pal, Director of M/s Shree Bhumi Steel Pvt. Ltd., P.S.
Singur;
3. M/s. Shanti Ceramics Pvt. Ltd., P.S. Singur;
4. Prashanta Kumar Jana, Vill-Habaspota, Singur;
5. M/s. Ajit Services Station on behalf of Tapan Kumar Bera, Advocate;
6. M/s. Shree Padma Sagar Exports Pvt. Ltd. of Singherbheri, P.S.
Singur”
Some of these objectors were not given the opportunity to be heard as
required under Section 5-A (2) of the L.A. Act. The same ought to have been
given to them as required both under the statutory provisions of the L.A.
Act as well as the principles of natural justice, as the acquisition of
lands of the objectors would entail a serious civil consequence. In the
case of Mandir Shri Sita Ramji v. Lt. Governor of Delhi[26], a Constitution
Bench of this Court has held that it is the mandatory duty cast upon the
Collector to follow the provision of Section 5-A (2) of the L.A. Act as
under:
“5. The learned Single Judge allowed the writ petition on the basis that
the appellant had no opportunity of being heard by the Collector under
Section 5-A. The duty to afford such an opportunity is mandatory. A
decision by the Government on the objection, when the Collector afforded no
opportunity of being heard to the objector, would not be proper. The power
to hear the objection under Section 5-A is that of the Collector and not of
the appropriate Government. It is no doubt true that the recommendation of
the Land Acquisition Collector is not binding on the Government. The
Government may choose either to accept the recommendation or to reject it;
but the requirement of the section is that when a person’s property is
proposed to be acquired, he must be given an opportunity to show cause
against it. Merely because the Government may not choose to accept the
recommendation of the Land Acquisition Collector, even when he makes one,
it cannot be said that he need not make the recommendation at all but leave
it to the Government to decide the matter. In other words, the fact that
the Collector is not the authority to decide the objection does not
exonerate him from his duty to hear the objector on the objection and make
the recommendation.”
(emphasis laid by this Court)
In the case of Babu Ram v. State of Haryana[27], this Court observed as
under:
“30. As indicated hereinabove in the various cases cited by Mr. Pradip
Ghosh and, in particular, the decision in Krishnan Lal Arneja case, in
which reference has been made to the observations made by this Court in Om
Prakash case, it has been emphasized that a right under Section 5-A is not
merely statutory but also has the flavour of fundamental rights under
Articles 14 and 19 of the Constitution. Such observations had been made in
reference to an observation made in the earlier decision in Gurdial Singh
case and keeping in mind the fact that right to property was no longer a
fundamental right, an observation was made that even if the right to
property was no longer a fundamental right, the observations relating to
Article 14 would continue to apply in full force with regard to Section 5-A
of the L.A. Act.”
(emphasis laid by this Court)
From a perusal of the proceedings before the Collector, which are made
available to this Court, it becomes clear that the same have been rejected
without assigning any clear reasons or application of mind.
Thus, the report of the Collector is not a valid report in the eyes of
law. The State Government has mechanically accepted the same without
application of mind independently before issuing notification under Section
6 of the L.A. Act declaring that the lands are required for establishment
of automobile industry by TML. Therefore, the point nos. 3, 4 and 5 are
answered against the State Government and in favour of the land
owners/cultivators.
Answer to Point Nos. 6, 7 and 8
After issuing the notifications under Section 6 of the L.A. Act declaring
that the lands have been acquired for the purpose of industrial
development, a statutory duty is cast upon the Collector to issue notice to
the land owners/cultivators, as required under Section 9 of the L.A. Act,
to determine the market value of the acquired land and award compensation
as required under Section 11 of the L.A. Act which is mandatory for taking
possession of the land by the State Government.
As can be seen from material on record, no individual notices were
served upon the land owners/cultivators. A joint inquiry appears to have
been conducted by the Land Acquisition Collector without giving them an
adequate opportunity to establish their claim for determination of
reasonable compensation for acquisition of lands by presenting true and
correct market value of the lands. The determination of market value of
lands by clubbing a number of cases together and passing a composite award
is no award in the eyes of law. The inquiry, as contemplated under Section
11 of the L.A. Act, is a quasi judicial exercise of power on the part of
the Collector in awarding just and reasonable compensation to the
landowners/cultivators. That has not been done in the instant case.
Further, the proviso to Section 11(1) of the L.A. Act provides that no
award shall be made by the collector without the previous approval of
either the appropriate government or such officer authorised by it for the
above purpose. It was also brought to the notice of this Court that
supplementary awards were also passed which is not legally permissible in
law. For non-compliance of the above provisions of the L.A. Act, the
composite awards are vitiated in law and therefore, the same are also
liable to be quashed.
Accordingly, the point nos. 6, 7 and 8 are answered in favour of the land
owners.
……………………………………………………J.
[V. GOPALA GOWDA]
O R D E R
The points formulated above have been answered by separate opinions.
However we concur on the question of quashing the impugned acquisition
proceedings and reliefs to be granted to the land owners/cultivators. The
appeals are allowed, the common judgment and order dated 18.01.2008 passed
in W.P. No. 23836 (W) of 2006 and connected writ petitions by the High
Court of Calcutta is set aside. The acquisition of land of the
landowners/cultivators in the instant case is declared as illegal and void.
Since the nature of the acquired lands has been changed in view of the
acquisition, we direct the Survey Settlement Department of the State
Government of West Bengal to conduct a survey and identify the mouzas of
lands acquired with reference to lay out plans, other connected records,
village maps and survey settlement records of the lands in question within
10 weeks from the date of receipt of the copy of this order, in order to
identify the respective portions of land which needs to be returned to the
respective landowners/cultivators. Let possession of the lands be restored
to the landowners/cultivators within 12 weeks from the date of receipt of
the copy of this judgment and order. The compensation which has already
been paid to the land owners/cultivators shall not be recovered by the
state government as they have been deprived of the occupation and enjoyment
of their lands for the last ten years. The landowners/cultivators who have
not withdrawn the compensation are permitted to withdraw the same which is
in deposit either with the Land Acquisition Collector or the Court.
……………………………………………………J.
[V. GOPALA GOWDA]
……………………………………………………J.
[ARUN MISHRA]
New Delhi,
August 31, 2016
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 8438 OF 2016
[Arising out of SLP (C) No.8463/2008]
Kedar Nath Yadav etc. etc. … Appellants
Vs.
State of West Bengal & Ors. … Respondents
With
[C.A. No.8440/2016 (@ SLP [C] No.10731 of 2008;
C.A. No.8441/2016 (@ SLP [C] No.11783 of 2008;
C.A. No.8444/2016 (@ SLP [C] No.11830 of 2008;
C.A. No.8446/2016 (@ SLP [C] No.12360 of 2008;
C.A. No…8447/2016 (@ SLP [C] No.12724 of 2008;
C.A. No.8453/2016 (@ SLP(C) No.25580/2016 - CC No.13645 of 2008; and
C.A. No.8449/2016 @ SLP(C) No.22491 of 2008.]
J U D G M E N T
ARUN MISHRA, J.
1. Leave granted.
2. I have gone through the draft judgment, however I find myself unable
to agree with the same except on points for determination nos. 3, 4 and 5
framed by esteemed brother for the reasons mentioned hereinafter.
Since esteemed Brother has taken pains to elaborate the facts and
submissions in detail they need not be restated.
IN RE. QUESTION NOS. 1 AND 2
3. Question Nos.1 and 2 are inter-related and the main question for
consideration is whether the acquisition of land is for a company and if so
procedure provided under Part VII of the Land Acquisition Act, 1894
(hereinafter referred to as “the Act”) is required to be complied with by
the State Government.
4. “Public purpose” has been defined in section 3(f) of the Land
Acquisition Act. The definition is inclusive and the Amendment Act, 1984
excludes the acquisition for company from the definition of “public
purpose”. Acquisition of land for company has been dealt with under Part
VII of the Act. Under section 39 previous consent of the appropriate
Government and execution of agreement is necessary for acquiring land for a
company. Both sections 6 to 16 and sections 18 to 37 shall not be used to
acquire land for any company under Part VII unless the previous consent of
the appropriate Government has been obtained and company has executed the
agreement as provided in section 41 of the Act. Section 41 further provides
that in the case of acquisition for a company the payment of the cost of
acquisition has to be borne by the company and other matters as specified
in section 41 are also to be provided in the agreement. Such an agreement
is required to be published in the Official Gazette and a statutory force
is given to its terms on which the public shall be entitled to use the
work.
5. Section 3(f) though excludes the acquisition for a company. However,
at the same time it is inclusive definition and it is provided in section
3(f) that it includes the provision for development of land from public
funds in pursuance of any scheme or policy of the Government and subsequent
disposal thereof in whole or in part by lease, assignment or outright sale
with the object of securing further development as planned. Public purpose
in section 3(iv) also includes the provision of land for a corporation
owned or controlled by the State. The west Bengal Industrial Corporation is
established by the State.
6. Public purpose has to be adjudged in the background of the facts of
the instant case and the State of West Bengal decided to make effort to
establish manufacturing industries with a view to attract more private
sector investment and foreign direct investment for industrialization at
par with the model adopted by other progressive States. It has considered
the offer of TML – manufacturer of Nano car - as an opportunity for
establishing manufacturing industry so as to further grab attention of
automobile industry in the State of West Bengal to boost its economy for
creating job opportunities, direct and indirect impact on secondary
employment in the associated services. The proceedings were initiated under
the Land Acquisition Act and the West Bengal Industrial Development
Corporation (WBIDC) was the acquiring body which bore the entire cost of
acquisition.
Section 6 of the Act is extracted hereunder :
“6. Declaration that land is required for a public purpose.— (1) Subject
to the provisions of Part VII of this Act, when the appropriate Government
is satisfied after considering the report, if any, made under section 5A,
sub-section (2), that any particular land is needed for a public purpose,
or for a Company, a declaration shall be made to that effect under the
signature of a Secretary to such Government or of some officer duly
authorised to certify its orders, and different declarations may be made
from time to time in respect of different parcels of any land covered by
the same notification under section 4, sub-section (1), irrespective of
whether one report or different reports has or have been made (wherever
required) under section 5A, sub-section (2):
Provided that no declaration in respect of any particular land covered by a
notification under section 4, sub-section (1),—
published after the commencement of the Land Acquisition (Amendment and
Validation) Ordinance, 1967 (1 of 1967) but before the commencement of the
Land Acquisition (Amendment) Act, 1984 68 of 1984) shall be made after the
expiry of three years from the date of the publication of the notification;
or
published after the commencement of the Land Acquisition (Amendment) Act,
1984, shall be made after the expiry of one year from the date of the
publication of the notification:]
[Provided further that] no such declaration shall be made unless the
compensation to be awarded for such property is to be paid by a Company, or
wholly or partly out of public revenues or some fund controlled or managed
by a local authority.
[Explanation 1.—In computing any of the periods referred to in the first
proviso, the period during which any action or proceeding to be taken in
pursuance of the notification issued under section 4, sub-section (1), is
stayed by an order of a Court shall be excluded.
[Explanation 2.—Where the compensation to be awarded for such
property is to be paid out of the funds of a corporation owned or
controlled by the State, such compensation shall be deemed to be
compensation paid out of public revenues].
(2) [Every declaration] shall be published in the Official Gazette, [and
in two daily newspapers circulating in the locality in which the land is
situate of which at least one shall be in the regional language, and the
Collector shall cause public notice of the substance of such declaration to
be given at convenient places in the said locality (the last of the date of
such publication and the giving of such public notice, being hereinafter
referred to as the date of publication of the declaration), and such
declaration shall state] the district or other territorial division in
which the land is situate, the purpose for which it is needed, its
approximate area, and where a plan shall have been made of the land, the
place where such plan may be inspected.
(3) The said declaration shall be conclusive evidence that the land is
needed for a public purpose or for a Company, as the case may be; and,
after making such declaration the [appropriate Government] may acquire the
land in a manner hereinafter appearing.”
It is apparent from the provisions contained in second proviso to section 6
that declaration under section 6 shall not be made unless the compensation
to be awarded for such property is to be paid by a company either wholly or
partly out of public revenues or some fund controlled or managed by a local
authority. The Explanation second to section 6(1) of the Act makes it clear
that where the compensation awarded for the property is to be paid out of
funds of a corporation owned or controlled by the State, such compensation
shall be deemed to be compensation paid out of public revenue. Thus
Explanation second makes it clear that when corporation pays the funds for
acquisition of the property that such compensation shall be deemed to be
paid out of public revenue. As already mentioned above the acquisition for
a corporation is indeed within the public purpose as defined in section
3(f)(iv). Thus the concept of funds in section 6 as amended in 1984 comes
into play in the case of acquisition of a land for a corporation and it is
not necessary that the State Government itself should bear the cost of
acquisition so as to make it expenditure out of public revenue even
expenditure by the corporation owned or controlled by the State for
acquisition shall be deemed to be made out of public revenues and when the
land had been acquired for a corporation the land is to be vested in the
Corporation though lease of the land has been granted to the company – Tata
Motors Ltd., for short TML – for its aforesaid project. In my opinion it
would remain acquisition for a public purpose as provided in section 3(f)
of the Act; as also opined in the various decisions to be adverted
hereinafter of this Court.
7. Acquisition of land for establishing such an industry would
ultimately benefit the people and the very purpose of industrialization,
generating job opportunities hence it would be open to the State Government
to invoke the provisions of Part II of the Act. When Government wants to
attract the investment, create job opportunities and aims at the
development of the State and secondary development, job opportunities, such
acquisition is permissible for public purpose.
8. In Somawanti v. State of Punjab AIR 1963 SC 151, the concept of
“public purpose” has been considered by this Court as under :
“53. “Public Purpose” as explained by this Court in Babu Barkaya Thakur
case (1961) 1 SCR 128 : AIR 1960 SC 1203 means a purpose which is
beneficial to the community. But whether a particular purpose is beneficial
or is likely to be beneficial to the community or not is a matter primarily
for the satisfaction of the State Government. In the notification under
Section 6(1) it has been stated that the land is being acquired for a
public purpose, namely, for setting up a factory for manufacturing various
ranges of refrigeration compressors and ancillary equipment. It was
vehemently argued before us that manufacture of refrigeration equipment
cannot be regarded as beneficial to the community in the real sense of the
word and that such equipment will at the most enable articles of luxury to
be produced. But the State Government has taken the view that the
manufacture of these articles is for the benefit of the community. No
materials have been placed before us from which we could infer that the
view of the Government is perverse or that its action based on it
constitutes a fraud on its power to acquire land or is a colourable
exercise by it of such power.
54. Further, the notification itself sets out the purpose for which the
land is being acquired. That purpose, if we may recall, is to set up a
factory for the manufacture of refrigeration compressors and ancillary
equipment. The importance of this undertaking to a State such as the Punjab
which has a surplus of fruit, dairy products etc. the general effect of the
establishment of this factory on foreign exchange resources, spread of
education, relieving the pressure on unemployment etc. have been set out in
the affidavit of the respondent and their substance appears in the earlier
part of this judgment. The affidavits have not been controverted and we
have, therefore, no hesitation in acting upon them.”
9. In Jage Ram & Ors. v. State of Haryana & Ors. (1971) 1 SCC 671, this
Court held that setting up of a factory for purpose of manufacture of China-
ware and Porcelain-ware including wall Glazed Tiles was a public purpose.
This Court has held thus :
“8. There is no denying the fact that starting of a new industry is in
public interest. It is stated in the affidavit filed on behalf of the State
Government that the new State of Haryana was lacking in industries and
consequently it had become difficult to tackle the problem of unemployment.
There is also no denying the fact that the industrialisation of an area is
in public interest. That apart, the question whether the starting of an
industry is in public interest or not is essentially a question that has to
be decided by the Government. That is a socio-economic question. This Court
is not in a position to go into that question. So long as it is not
established that the acquisition is sought to be made for some collateral
purpose, the declaration of the Government that it is made for a public
purpose is not open to challenge. Section 6(3) says that the declaration of
the Government that the acquisition made is for public purpose shall be
conclusive evidence that the land is needed for a public purpose. Unless it
is shown that there was a colourable exercise of power, it is not open to
this Court to go behind that declaration and find out whether in a
particular case the purpose for which the land was needed was a public
purpose or not: see Smt. Somavanti v. State of Punjab AIR 1963 SC 151 and
Raja Anand Brahma Shah v. State of U.P. AIR 1967 SC 1081. On the facts of
this case there can be hardly any doubt that the purpose for which the land
was acquired is a public purpose.”
10. In Narayan Govind Gavate v. State of Maharashtra (1977) 1 SCC 133,
this Court held that development and utilization of land as residential
industrial area qualified as “public purpose”. This Court held that :
“6. In writ petitions before the High Court, the submission that no public
purpose existed was not pressed in view of the decision of this Court in
Somavanti Smt v. State of Punjab AIR 1963 SC 151. In Ramtanu Cooperative
Housing Society Ltd. Shri v. State of Maharashtra (1970) 3 SCC 323,
acquisition of land for development of industrial areas and residential
tenements for persons to live on industrial estates was held to be legally
valid for a genuinely public purpose. This ground, therefore, need not
detain us, although the appellants, who are owners of the properties
acquired, have formally raised it also by means of the six appeals filed by
them (Civil Appeals 1616-1621 of 1969). In agreement with the High Court,
we hold that notifications under Section 4(1) of the Act were valid in all
these cases.”
11. In Arnold Rodricks v. State of Maharashtra (1966) 3 SCR 885 the
acquisition of land for development and utilization as industrial and
residential area met the test of “public purpose”. This Court laid down
thus :
“We may further take up the question of the validity of Section 3(f)(2). In
our view it is not necessary to decide this point because we have come to
the conclusion that the notifications issued under Sections 4 and 6
specified a public purpose; the purpose specified was “development and
utilization of the said lands as industrial and residential areas”. In our
opinion this purpose is a public purpose within the Land Acquisition Act as
it stood before the amendment made by the Bombay Legislature and it is not
necessary for the respondents to rely on the amendment to sustain the
notification. ..
It was urged before us that the State Government was not entitled to
acquire property from A and give it to B. Reliance was placed on the
decision of the Supreme Judicial Court of Massachusetts (204 Mass. 607) .
But as pointed out by this Court, public purpose varies with the times and
the prevailing conditions in localities, and in some towns like Bombay the
conditions are such that it is imperative that the State should so all it
can to increase the availability of residential and industrial sites. It is
true that these residential and industrial sites will be ultimately
allotted to members of the public and they would get individual benefit,
but it is in the interest of the general community that these members of
the public should be able to have sites to put up residential houses and
sites to put up factories. The main idea in issuing the impugned
notifications was not to think of the private comfort or advantage of the
members of the public but the general public good. At any rate, as pointed
out in Babu Barkva Thakur v. State of Bombay [(1961) 1 SCR 128 at p 137] a
very large section of the community is concerned and its welfare is a
matter of public concern. In our view the welfare of a large proportion of
persons living in Bombay is a matter of public concern and the
notifications served to enhance the welfare of this section of the
community and this is public purpose. In conclusion we hold that the
notifications are valid and cannot be impugned on the ground that they were
not issued for any public purpose.” [Emphasis supplied]
12. In Sooraram Pratap Reddy & Ors. v. District Collector, Ranga Reddy
District & Ors. (2008) 9 SCC 552 this Court has considered concept of
“eminent domain” and has referred to SusetteKelo v. City of New London 162
L.Ed 439 = 545 US 469 wherein it had been observed that “using eminent
domain for economic development impermissibly blurs the boundary between
the public and private takings”. Government’s pursuit of a public purpose
might benefit individual purpose. Samuel Berman v. Andrew Parker, 99 L.Ed
27, has also been referred to wherein it has been observed that public
ownership cannot be said to be the sole method of promoting the public
purposes of community redevelopment projects. Other decisions as to public
domain have also been referred to. “Eminent domain” has been discussed thus
:
“43. “Eminent domain” may be defined as the right or power of a sovereign
State to take private property for public use without the owner’s consent
upon the payment of just compensation. It means nothing more or less than
an inherent political right, founded on a common necessity and interest of
appropriating the property of individual members of the community to the
great necessities and common good of the whole society. It embraces all
cases where, by the authority of the State and for the public good, the
property of an individual is taken without his consent to be devoted to
some particular use, by the State itself, by a corporation, public or
private, or by a private citizen for the welfare of the public (American
Jurisprudence, 2d, Vol. 26, pp. 638-39, Para 1; Corpus Juris Secundum, Vol.
29, p. 776, Para 1; Words and Phrases, Permanent Edition, Vol. 14, pp. 468-
70).
44. “Eminent domain” is thus inherent power of a governmental entity to
take privately owned property, especially land and convert it to public
use, subject to reasonable compensation for the taking (vide P. Ramanatha
Aiyar’s Advanced Law Lexicon, Vol. 2, p. 1575).
45. The term “eminent domain” is said to have originated by Grotius, legal
scholar of the seventeenth century. He believed that the State possessed
the power to take or destroy property for the benefit of the social unit,
but he believed that when the State so acted, it was obligated to
compensate the injured property owner for his losses. In his well-known
work De Jure, Belli etPacis, the learned author proclaimed:
“The property of subject is under the eminent domain of the State, so that
the State or he who acts for it may use, alienate and even destroy such
property, not only in the case of extreme necessity, in which even private
persons have a right over the property of the other, but for the ends of
public utility, to which ends those who founded civil society must be
supposed to have intended the private ends should give way.”
46. Blackstone too believed that the State had no general power to take
private property of landowners, except on the payment of a reasonable
price. The right of the State or the sovereign to its or his own property
is absolute while that of the subject or citizen to his property is only
paramount. The citizen holds his property subject always to the right of
the sovereign to take it for a public purpose. The power of eminent domain
is merely a means to an end viz. larger public interest.
47. The power of eminent domain does not depend for its existence on a
specific grant. It is inherent and exists in every sovereign State without
any recognition thereof in the Constitution or in any statute. It is
founded on the law of necessity. The power is inalienable. No legislature
can bind itself or its successors not to exercise this power when public
necessity demands it. Nor can it be abridged or restricted by agreement or
contract.
48. Nichols in his classic book Eminent Domain defines it (eminent domain)
as “the power of sovereign to take property for public use without the
owner’s consent”.
49. Another constitutional expert (Cooley) in his treatise on the
Constitutional Limitations, states:
“More accurately, it is the rightful authority which must rest in every
sovereignty to control and regulate those rights of a public nature which
pertain to its citizens in common and to appropriate and control individual
property for the public benefit, as the public safety, convenience or
necessity may demand.”
50. Willis in his well-known work Constitutional Law discusses two
viewpoints as to exercise of power of eminent domain. The older and
stricter view was that unless the property was dedicated for user by the
public at large or a considerable section thereof, it would not be for
public use or for public purpose. The modern and more liberal view,
however, is that it is not an essential condition of public use that the
property should be transferred to public ownership or for public user and
it is sufficient that the public derives advantage from the scheme.
51. In Fallbrook Irrigation District v. Bradley 41 L Ed 369 : 164 US 112
(1896) an Act of California provided for the acquisition of lands whenever
fifty landowners or a majority of them in a particular locality required it
for construction of a watercourse, the object of the legislation being to
enable dry lands to be brought under wet cultivation. The validity of the
Act was challenged on the ground that the acquisition would only benefit
particular landowners who could take water from the channel and the public
as such had no direct interest in the matter and consequently there was no
public user. The contention was right if narrow view was to be accepted but
was not well founded if liberal view was to be adopted. Rejecting the
contention, the Court observed: (L Ed pp. 389-90)
“To irrigate and thus to bring into possible cultivation these large masses
of otherwise worthless lands would seem to be a public purpose and a matter
of public interest, not confined to the landowners, or even to any one
section of the State. The fact that the use of the water is limited to the
landowners is not, therefore, a fatal objection to this legislation. It is
not essential that the entire community, or even any considerable portion
thereof, should directly enjoy or participate in an improvement in order to
constitute a public use. … It is not necessary, in order that the use
should be public, that every resident in the district should have the right
to the use of the water.” (emphasis supplied)
The above statement of law was reiterated in subsequent cases.
52. In Rindge Co. v. County of Los Angeles 67 L Ed 1186 : 262 US 700 (1922)
the Court observed that: (L Ed p. 1192)
“… It is not essential that the entire community, nor even any considerable
portion, should directly enjoy or participate in an improvement in order to
constitute a public use”.
53. In New York City Housing Authority v. Muller 270 NYP 333 : 105 ALR 905
certain lands were acquired in pursuance of a governmental project for
clearing slums and providing housing accommodation to persons with low
income. The validity of the acquisition was questioned on the ground that
the use was private and not public. The Court, however, rejected the
contention and stated:
“Over many years and in a multitude of cases the courts have vainly
attempted to define comprehensively the concept of a public use; and to
formulate a universal test even though it were possible, would in an
inevitably changing world be unwise if not futile.”
… and holding that those purposes were for the benefit of the public the
Court went on to observe:
“It is also said that since the taking is to provide apartments to be
rented to a class designated as persons of low income or to be leased or
sold to limited dividend corporations the use is private and not public.
This objection disregards the primary purpose of the legislation. Use of a
proposed structure, facility or service by everybody and anybody is one of
the abandoned, universal tests of a public use.”(emphasis supplied)
54. In Murray v. LaGuardia 291 NY 320 a town corporation was formed for
acquiring certain lands. It was financed by Metropolitan Insurance Company
which held all the stocks of the corporation. The owners of the lands
contended that the scheme was to benefit only few individuals and the
Insurance Company which was a private corporation and there was no public
use in the project. The Court, however, rejected the argument. Dealing with
the contention that there was no public use in the project because the
Insurance Company was benefited, the Court observed:
“Nor do we find merit in the related argument that unconstitutionality
results from the fact that in the present case the statute permits the city
to exercise the power of ‘eminent domain’ to accomplish a project from
which ‘Metropolitan’, a private corporation may ultimately reap a profit.
If upon completion of the project the public good is enhanced it does not
matter that private interests may be benefited.” (emphasis supplied)
55. In Samuel Berman v. Andrew Parker 99 L Ed 27 : 348 US 26, owners
instituted an action of condemnation of their property under the District
of Columbia Redevelopment Act, 1945. Plans were approved and the Planning
Commission certified them to the agency for execution. The agency undertook
the exercise of redevelopment of the area. It was contended by the
landowners that the project was not public project and their property could
not be acquired. Rejecting the contention, the Court observed that it does
not sit to determine whether a particular housing project is or is not
desirable.
56. The concept of public welfare is broad and inclusive. The values it
represents are spiritual as well as physical, aesthetic as well as
monetary. It is within the power of the legislature to determine that the
community should be beautiful as also healthy, spacious as also clean, well
balanced as also carefully patrolled. According to the Court, the Congress
and its authorised agencies have made determinations that take into account
a wide variety of values and it was not for the Court to reappraise them:
“… If those who govern the District of Columbia decide that the nation’s
capital should be beautiful as well as sanitary, there is nothing in the
Fifth Amendment that stands in the way.” (Samuel Berman case 99 L Ed 27, L
Ed p.38 : 348 US 26)
57. Dealing with the contention that the project was undertaken by one
businessman for the benefit of another businessman, the Court observed:
(Samuel Berman case[supra])
“The public end may be as well or better served through an agency of
private enterprise than through a department of government—or so the
Congress might conclude. We cannot say that public ownership is the sole
method of promoting the public purposes of community redevelopment
projects. What we have said also disposes of any contention concerning the
fact that certain property owners in the area may be permitted to
repurchase their properties for redevelopment in harmony with the overall
plan. That, too, is a legitimate means which Congress and its agencies may
adopt, if they choose.” (emphasis supplied)
58. In Hawaii Housing Authority v. Midkiff 81 L
Ed 2d 186 : 467 US 229 (1984) the Court held that, no doubt there is a role
for courts to play in reviewing a legislature’s judgment of what
constitutes a public use, even when the eminent domain power is equated
with the police power. But the Court in Berman (supra) made clear that it
is “extremely narrow”. The Court emphasised that any departure from this
judicial restraint would result in courts deciding on what is and what is
not a governmental function and in their invalidating legislation on the
basis of their view on that question. And the court would not substitute
its judgment for a legislature’s judgment as to what constitutes a public
use “unless the use be palpably without reasonable foundation”.
59. Recently, in SusetteKelo v. City of New London 162 L Ed 439 : 545 US
469 the landowners challenged the city’s exercise of eminent domain power
on the ground that it was not for public use. The project in question was a
community project for economic revitalisation of the city of New London for
which the land was acquired. It was submitted by the learned counsel for
the respondents that the facts in Kelo (supra) were similar to the facts of
the present case. For that the counsel relied upon the integrated
development project. Dealing with the project, the Court stated: [Kelo case
(supra)]
“The Fort Trumbull area is situated on a peninsula that juts into Thames
River. The area comprises approximately 115 privately owned properties, as
well as the 32 acres of land formerly occupied by the naval facility
(Trumbull State Park now occupies 18 of those 32 acres). Parcel 1 is
designated for a waterfront conference hotel at the center of a ‘small
urban village’ that will include restaurants and shopping. This parcel will
also have marinas for both recreational and commercial uses. A pedestrian
‘riverwalk’ will originate here and continue down the coast, connecting the
waterfront areas of the development. Parcel 2 will be the site of
approximately 80 new residences organised into an urban neighbourhood and
linked by public walkway to the remainder of the development, including the
State park. This parcel also includes space reserved for a new US Coast
Guard Museum. Parcel 3, which is located immediately north of the Pfizer
facility, will contain at least 90,000 sqft of research and development
office space. Parcel 4A is a 2.4 acre site that will be used either to
support the adjacent State park, by providing parking or retail services
for visitors, or to support the nearby marina. Parcel 4B will include a
renovated marina, as well as the final stretch of the riverwalk. Parcels 5,
6 and 7 will provide land for office and retail space, parking, and water-
dependent commercial uses.”
The Court also stated:
“Two polar propositions are perfectly clear. On the one hand, it has long
been accepted that the sovereign may not take the property of A for the
sole purpose of transferring it to another private party B, even though A
is paid just compensation. On the other hand, it is equally clear that a
State may transfer property from one private party to another if future
‘use by the public’ is the purpose of the taking; the condemnation of land
for a railroad with common-carrier duties is a familiar example.”
The Court noted the contention of the petitioners that “using eminent
domain for economic development impermissibly blurs the boundary between
public and private takings”. It also conceded that quite simply, the
Government’s pursuit of a public purpose might benefit individual private
parties, but rejected the argument by stating:
“When the legislature’s purpose is legitimate and its means are not
irrational, our cases make clear that empirical debates over the wisdom of
other kinds of socio-economic legislation are not to be carried out in the
Federal Courts.”
60. The Court reiterated: (Samuel Berman case (supra)
“The public end may be as well or better served through an agency of
private enterprise than through a department of government—or so the
Congress might conclude. We cannot say that public ownership is the sole
method of promoting the public purposes of community redevelopment
projects.”
61. The above principles have been accepted and applied in India also.
Immediately after the Constitution came into force, this Court had an
occasion to consider the power of eminent domain in the leading case of
Charanjit Lal Chowdhury v. Union of India AIR 1951 SC 41 : 1950 SCR 869.
Referring to the doctrine of eminent domain in the American legal system,
Mukherjea, J. (as His Lordship then was) stated: (Charanjit Lal case
(supra)
“48. It is a right inherent in every sovereign to take and appropriate
private property belonging to individual citizens for public use. This
right, which is described as eminent domain in American law, is like the
power of taxation, and offspring of political necessity, and it is supposed
to be based upon an implied reservation by Government that private property
acquired by its citizens under its protection may be taken or its use
controlled for public benefit irrespective of the wishes of the owner.”
62. In Commr. & Collector v. Durganath Sarma AIR 1968 SC 394 : (1968) 1 SCR
561 drawing distinction between police power and power of eminent domain,
this Court observed: (SCC p. 399, para 9)
“9. … In the exercise of its eminent domain power the State may take any
property from the owner and may appropriate it for public purposes. The
police and eminent domain powers are essentially distinct. Under the police
power many restrictions may be imposed and the property may even be
destroyed without compensation being given, whereas under the power of
eminent domain, the property may be appropriated to public use on payment
of compensation only.”
63. In Coffee Board v. CCT (1988) 3 SCC 263 referring to American
authorities, Mukharji, J. (as His Lordship then was) stated: (SCC p. 282,
para 29)
“29. … It is trite knowledge that eminent domain is an essential attribute
of sovereignty of every State and authorities are universal in support of
the definition of eminent domain as the power of the sovereign to take
property for public use without the owner’s consent upon making just
compensation.”
64. In Scindia Employees’ Union v. State of Maharashtra (1996) 10 SCC 150
this Court observed: (SCC p. 152, para 4)
“4. … The very object of compulsory acquisition is in exercise of the power
of eminent domain by the State against the wishes or willingness of the
owner or person interested in the land. Therefore, so long as the public
purpose subsists the exercise of the power of eminent domain cannot be
questioned. Publication of declaration under Section 6 is conclusive
evidence of public purpose. In view of the finding that it is a question of
expansion of dockyard for defence purpose, it is a public purpose.”
65. In Sharda Devi v. State of Bihar (2003) 3 SCC 128 this Court said: (SCC
p. 144, para 27)
“27 … The power to acquire by the State the land owned by its subjects
hails from the right of eminent domain vesting in the State which is
essentially an attribute of sovereign power of the State. So long as the
public purpose subsists, the exercise of the power by the State to acquire
the land of its subjects without regard to the wishes or willingness of the
owner or person interested in the land cannot be questioned.”
13. The definition of “Public purpose” as amended in 1984 has been
considered in Sooraram Pratap Reddy (supra) thus :
“67. The expression “public purpose” is of very wide amplitude. It is
merely illustrative and not exhaustive. The inclusive definition does not
restrict its ambit and scope. Really, the expression is incapable of
precise and comprehensive definition. And it is neither desirable nor
advisable to attempt to define it. It is used in a generic sense of
including any purpose wherein even a fraction of the community may be
interested or by which it may be benefited.
68. We may also refer to few decisions wherein the expression came up for
consideration of courts.
69. Before about a century, in Hamabai Framjee Petit v. Secy. of State for
India in Council AIR 1914 PC 20 certain lands were sought to be acquired
for erecting buildings for the use of government officials. The action was
challenged in the High Court of Judicature at Bombay contending that the
purpose of acquisition could not be said to be “public purpose”. Negativing
the arguments and upholding the acquisition, Batchelor, J. observed:
(Hamabai case).
“… ‘General definitions are, I think, rather to be avoided where the
avoidance is possible, and I make no attempt to define precisely the extent
of the phrase “public purposes” in the lease; it is enough to say that, in
my opinion, the phrase, whatever else it may mean, must include a purpose,
that is, an object or aim, in which the general interest of the community,
as opposed to the particular interest of individuals, is directly and
vitally concerned.’ ”(emphasis supplied)
The aggrieved appellant approached the Privy Council. The Council in
Hamabai Framjee Petit v. Secy. of State for India in Council AIR 1914 PC 20
approved the above observations of Batchelor, J. Speaking for the Judicial
Committee, Lord Dunedin stated: (IA p. 47)
“… all that remains is to determine whether the purpose here is a purpose
in which the general interest of the community is concerned. Prima facie
the Government are good judges of that. They are not absolute judges. They
cannot say: ‘Sic volo sic jubeo’, but at least a court would not easily
hold them to be wrong. But here, so far from holding them to be wrong, the
whole of the learned Judges, who are thoroughly conversant with the
conditions of Indian life, say that they are satisfied that the scheme is
one which will redound to public benefit by helping the Government to
maintain the efficiency of its servants. From such a conclusion Their
Lordships would be slow to differ, and upon its own statement it commends
itself to their judgment.” (emphasis supplied)
70. In Veeraraghavachariar v. Secy. of State for India AIR 1925 Mad 837
certain vacant sites were acquired for enabling panchamas to build houses.
It was argued that this was not a public purpose as the benefits of the
acquisition were to go only to few individuals. The contention was rejected
by the Court observing that it is not possible to define what a public
purpose is. There can be no doubt that provision of house sites for poor
people is a public purpose for it benefits a large class of people and not
one or two individuals.
71. In State of Bihar v. Kameshwar Singh AIR 1952 SC 252 a Constitution
Bench of this Court was examining vires of certain provisions of the Bihar
Land Reforms Act, 1950 and other State laws in the context of Article 31 of
the Constitution (as then stood). The constitutional validity was
challenged on the ground that the Act failed to provide for compensation
and there was lack of public purpose. The Court, however, negatived the
contention. As to “public purpose”, Mahajan, J. (as His Lordship then was),
observed: (Kameshwar Singh case [supra])
“208. … The expression ‘public purpose’ is not capable of a precise
definition and has not a rigid meaning. It can only be defined by a process
of judicial inclusion and exclusion. In other words, the definition of the
expression is elastic and takes its colour from the statute in which it
occurs, the concept varying with the time and state of society and its
needs. The point to be determined in each case is whether the acquisition
is in the general interest of the community as distinguished from the
private interest of an individual.” (emphasis supplied)
In the concurring judgment, S.R. Das, J. (as His Lordship then was) stated:
(Kameshwar Singh case (supra), AIR p. 290, para 106)
“106. From what I have stated so far, it follows that whatever furthers the
general interests of the community as opposed to the particular interest of
the individual must be regarded as a public purpose. With the onward march
of civilisation our notions as to the scope of the general interest of the
community are fast changing and widening with the result that our old and
narrower notions as to the sanctity of the private interest of the
individual can no longer stem the forward flowing tide of time and must
necessarily give way to the broader notions of the general interest of the
community. The emphasis is unmistakably shifting from the individual to the
community. This modern trend in the social and political philosophy is well
reflected and given expression to in our Constitution.” (emphasis supplied)
72. In State of Bombay v. Ali Gulshan AIR 1955 SC 810 a Constitution Bench
of this Court considered vires of the Bombay Land Requisition Act, 1948
(Act 23 of 1948). Interpreting provisions of the Constitution and Schedule
VII thereof, the Court held that requisition of property by the Government
of Bombay for accommodation of foreign consulate could be said to be
“public purpose”. It was held that every State purpose or Union purpose is
a public purpose but there may be acquisition or requisition which is
neither for the State nor for the Union and yet it may be for a “public
purpose”; for instance, acquisition for construction of hospital or
educational institution by a private individual or institution.
73. In State of Bombay v. R.S. Nanji AIR 1956 SC 294 land was requisitioned
for accommodating employees of Road Transport Corporation. It was contended
that there was no “public purpose” and hence the action was illegal.
Referring to Hamabai(supra), Ali Gulshan AIR 1955 SC 810 and State of
Bombay v. Bhanji Munji AIR 1955 SC 41, the Constitution Bench stated that
the expression “public purpose” must be decided in each case examining
closely all the facts and circumstances of the case. On the facts of the
case, it was held that a breakdown in the organisation of the Corporation,
leading to dislocation of the road transport system would create a chaotic
condition to the detriment of the interest of the community. Providing
living accommodation for its employees is a statutory activity of the
Corporation and it is essential for the Corporation to provide such
accommodation in order to ensure an efficient working of the road transport
system and it must, therefore, be held to be “public purpose”.
74. In the leading case of Somawanti v. State of Punjab AIR 1963 SC 151
certain lands were acquired by the Government for public purpose viz. for
setting up a factory for manufacturing various ranges of refrigeration
compressors and ancillary equipments. It was contended that acquisition was
not for “public purpose” and hence it was unlawful.
75. Interpreting inclusive definition of “public purpose” in the Act,
Mudholkar, J. stated: (Somawanti case, AIR p. 161, para 24)
“24. … This is an inclusive definition and not a compendious one and,
therefore, does not assist us very much in ascertaining the ambit of the
expression ‘public purpose’. Broadly speaking the expression ‘public
purpose’ would, however, include a purpose in which the general interest of
the community, as opposed to the particular interest of individuals, is
directly and vitally concerned.”
It was also observed that “public purpose” is bound to vary with the times
and the prevailing conditions in a given locality and, therefore, it would
not be a practical proposition even to attempt a comprehensive definition
of it. It is because of this that the legislature has left it to the
Government to say what is a public purpose and also to declare the need of
a given land for a public purpose.
76. In Arnold Rodricks v. State of Maharashtra AIR 1966 SC 1788 this Court
held that the phrase “public purpose” has no static connotation, which is
fixed for all times. It is also not possible to lay down a definition of
what public purpose is, as the concept of public purpose may change from
time to time. It, however, involves in it an element of general interest of
the community which should be regarded as a public purpose.
77. In Bhim Singhji v. Union of India (1981) 1 SCC 166 this Court held that
the concept of public purpose implies that acquisition or requisition of
property is in the interest of general public and the purpose for which
such acquisition or requisition is made directly and vitally subserves
public interest.
78. Recently, in Daulat Singh Surana v. Collector (L.A.) (2007) 1 SCC 641
land was sought to be acquired for construction of office of the Deputy
Commissioner of Police (Security Control). It was contended that there was
no element of public purpose and hence the acquisition was not in
accordance with law. Negativing the contention and upholding the
acquisition, the Court held that the expression “public purpose” includes a
public purpose in which greatest interest of the community as opposed to a
particular interest of an individual is directly concerned. The concept is
not static but changes with the passage of time. Power of eminent domain
can, therefore, be exercised by the State in public interest.
79. A “public purpose” is thus wider than a “public necessity”. Purpose is
more pervasive than urgency. That which one sets before him to accomplish,
an end, intention, aim, object, plan or project, is purpose. A need or
necessity, on the other hand, is urgent, unavoidable, compulsive. “Public
purpose should be liberally construed, not whittled down by
logomachy.”(emphasis supplied)
80. In State of Karnataka v. Ranganatha Reddy (1977) 4 SCC 471 Krishna
Iyer, J. stated: (SCC p. 502, para 57)
“57. … There may be many processes of satisfying a public purpose. A wide
range of choices may exist. The State may walk into the open market and buy
the items, movable and immovable, to fulfil the public purpose; or it may
compulsorily acquire from some private person’s possession and ownership
the articles needed to meet the public purpose; it may requisition, instead
of resorting to acquisition; it may take on loan or on hire or itself
manufacture or produce. All these steps are various alternative means to
meet the public purpose. The State may need chalk or cheese, pins, pens or
planes, boats, buses or buildings, carts, cars, or eating houses or any
other of the innumerable items to run a welfare-oriented administration or
a public corporation or answer a community requirement. If the purpose is
for servicing the public, as governmental purposes ordinarily are, then
everything desiderated for subserving such public purpose falls under the
broad and expanding rubric. The nexus between the taking of property and
the public purpose springs necessarily into existence if the former is
capable of answering the latter. On the other hand, if the purpose is a
private or non-public one, the mere fact that the hand that acquires or
requires is Government or a public corporation, does not make the purpose
automatically a public purpose. Let us illustrate. If a fleet of cars is
desired for conveyance of public officers, the purpose is a public one. If
the same fleet of cars is sought for fulfilling the tourist appetite of
friends and relations of the same public officers, it is a private purpose.
If bread is ‘seized’ for feeding a starving section of the community, it is
a public purpose that is met but, if the same bread is desired for the
private dinner of a political maharajah who may pro tem fill a public
office, it is a private purpose. Of course, the thing taken must be capable
of serving the object of the taking. If you want to run bus transport you
cannot take buffaloes.”
81. As observed by Bhagwati, J. (as His Lordship then was) in National
Textile Workers’ Union v. P.R. Ramakrishnan (1983) 1 SCC 228 the law must
adapt itself with the changing socio-economic context. His Lordship said:
(SCC p. 255, para 9)
“9. … We cannot allow the dead hand of the past to stifle the growth of the
living present. Law cannot stand still; it must change with the changing
social concepts and values. If the bark that protects the tree fails to
grow and expand along with the tree, it will either choke the tree or if it
is a living tree, it will shed that bark and grow a new living bark for
itself. Similarly, if the law fails to respond to the needs of changing
society, then either it will stifle the growth of the society and choke its
progress or if the society is vigorous enough, it will cast away the law
which stands in the way of its growth. Law must therefore constantly be on
the move adapting itself to the fast changing society and not lag behind.”
(emphasis supplied)
82. Finally, we may refer to the Tenth Report of the Law Commission of
India on “The Law of Acquisition and Requisitioning of Land” wherein the
Law Commission considering the meaning of “public purpose” under the Act,
stated:
“37. (a) Public purpose.—Public purpose is not defined in the Act. There is
only an inclusive definition which relates to village sites in districts.
In other respects, there is no indication in the Act of any test for
determining whether a purpose is a public purpose or not. A large number of
suggestions have been received by us urging that we should clearly and
exhaustively define the term ‘public purpose’. In an ever-changing world,
the connotation of the expression ‘public purpose’ must necessarily change.
If a precise definition is enacted, it would become rigid and leave no room
for alteration in the light of changing circumstances. It would leave no
room for the courts to adjust the meaning of the expression according to
the needs of the times.”
(emphasis supplied)
Referring to leading authorities on eminent domain and “public purpose”,
the Commission observed:
“38. … It is, in our view, neither possible nor expedient to attempt an
exhaustive definition of public purposes. The only guiding rule for the
determination of its meaning is that the proposed acquisition or
requisition should tend to promote the welfare of the community as distinct
from the benefit conferred upon an individual. The mere fact that the
immediate use is to benefit a particular individual would not prevent the
purpose being a public one, if in the result it is conducive to the welfare
of the community. The question is exhaustively discussed in P. Thambiran
Padayachi v. State of Madras AIR 1952 Mad 756 by Venkatarama Aiyar, J. All
that can, therefore, be attempted in a legislation of this kind is to
provide an inclusive definition, so as to endow it with sufficient
elasticity to enable the courts to interpret the meaning of the expression
‘public purpose’ according to the needs of the situation, and this is what
we have attempted.”
This Court has observed in Sooraram Pratap Reddy (supra) that public
purpose is of very wide amplitude. It has referred to State of Bombay v.
Ali Gulshan, AIR 1955 SC 810 where considering the public purpose it was
held that there may be acquisition or requisition which is neither for the
State nor for the Union yet it may be for public purpose. Daulat Singh
Surana & Ors. v. First Land Acquisition Collector & Ors. (2007) 1 SCC 641
has also been referred to in which it has been laid down that public
purpose includes a purpose in which the greatest interest is of community
as opposed to particular interest of an individual is directly concerned.
The concept is not static but changes with the passage of time. Power of
eminent domain can therefore be exercised by the State only in public
interest. The project in hand would have definitely served the public
purpose and public purpose should be liberally construed, not whittled down
by logomachy. It has been observed in National Textile Workers’ Union v.
P.R.Ramakrishnan & Ors. (1983) 1 SCC 228 that law must change with the
changing social concepts and values. If the law fails to respond to needs
of changing society, then either it will stifle the growth of the society
and choke its progress or if the society is vigorous enough, it will cast
away the law which stands in the way of its growth. Law must constantly be
on the move adapting itself to the fast-changing society and not lag
behind, that is, to adjust to the meaning of the expression according to
the needs of the times in the matter of public purpose. That is the purpose
behind the inclusive definition of public purpose in section 3(f) also.
14. This Court has again considered the public purpose in Nand Kishore
Gupta v. State of Uttar Pradesh and Ors. (2010) 10 SCC 282. On a
consideration of various judgments in Sooraram Pratap Reddy v. District
Collector (2008) 9 SCC 552, JhanduLal v. State of Punjab (AIR 1961 SC 343)
and various other decisions, this Court has laid down thus :
“56. During the debate, our attention was invited to Section 3(f) of the
Act, which contains a definition for “public purpose”. It was pointed out
that where the acquisition is for the Company, it cannot amount to a public
purpose. There can be no dispute about this proposition that where the
acquisition of land is for the companies, it cannot amount to a public
purpose. It was, therefore, our endeavour to find out whether this land was
for the Company and we are quite satisfied with a finding recorded by the
High Court that this acquisition was not for the Company but was for the
public purpose.
57. The Expressway is a work of immense public importance. The State gains
advantages from the construction of an expressway and so does the general
public. Creation of a corridor for fast-moving traffic resulting into
curtailing the travelling time, as also the transport of the goods, would
be some factors which speak in favour of the Project being for the public
purpose. Much was stated about the 25 million sq m of land being acquired
for the five parcels of land. In fact, in our opinion, as has rightly been
commented upon by the High Court, the creation of the five zones for
industry, residence, amusement, etc. would be complementary to the creation
of the Expressway.
58. It cannot be forgotten that the creation of land parcels would give
impetus to the industrial development of the State creating more jobs and
helping the economy and thereby helping the general public. There can be no
doubt that the implementation of the Project would result in coming into
existence of five developed parcels/centres in the State for the use of the
citizens. There shall, thus, be the planned development of this otherwise
industrially backward area. The creation of these five parcels will
certainly help the maximum utilisation of the Expressway and the existence
of an Expressway for the fast-moving traffic would help the industrial
culture created in the five parcels. Thus, both will be complimentary to
each other and can be viewed as parts of an integral scheme. Therefore, it
cannot be said that it is not a public purpose.
59. We must, at this stage, take into account the argument that the whole
compensation is coming wholly from the Company and not from the Government
or from YEIDA. The appellants invited our attention to Clause 4.1(d) of the
Concession Agreement. On that basis, it was argued that the Company has
paid the compensation cost and, therefore, the acquisition is clearly
covered under Part VII of the Act, and there may be no public purpose if
the acquisition is made for the Company and it is the Company who has to
shell out the whole compensation. Now, this argument is clearly incorrect.
60. Even if we accept for the sake of argument that all this compensation
is coming from the Company, we must firstly bear it in mind that the
Company gets no proprietary or ownership rights over the Project assets.
Now, if it is presumed that the compensation is coming from the Company,
then it will have to be held that the whole assets would go to the Company.
At least that is envisaged in Part VII of the Act. Here, that is not the
case. The assets are to revert back to the acquiring body or, as the case
may be, the Government. Even the lands which are utilised for the
construction of the Expressway are to go back to the Government barely
after 36 years i.e. after the Company has utilised its rights to recover
the toll on the Expressway. Secondly, it must be borne in mind that the
Concession Agreement has been executed in February 2003, whereas the
acquisition process started somewhere in the month of September 2007.
61. When the Concession Agreement was executed, the cost factor was not
known. The acquiring body was only to make available the land to the
concessionaire to implement the Project. There would be a number of
difficulties arising, as for example, it would be clearly not contemplated
that the land would be made available without any value or that there would
be no scheme for the State Government for recovering the expenses that it
would incur in obtaining the land. The learned counsel appearing for the
State as also for the Company and YEIDA argued that in order to overcome
and iron out such difficulties, the Agreement provides that the land would
be leased on a premium equivalent to the acquisition cost. This argument
proceeds on the basis of Clause 4.3(C) of the Concession Agreement. It is
to be noted then that the premium of the land was not going to be just the
acquisition cost, but also the lease rent of Rs. 100 per hectare.
Therefore, the State Government was to earn Rs. 100 per hectare for the
total acquired land, which was about 25 million sq m over and above the
compensation to be decided. The mention of the compensation amount in
addition to the lease money of Rs. 100 per hectare would clearly provide
that the whole compensation was not going to be paid by the Company alone.
This is apart from the fact that through this Agreement, only the extent of
the compensation payable by the Company to YEIDA was decided. However, once
all the amounts went to the coffers of YEIDA, it would lose its independent
character as a premium. When it goes into the coffers of YEIDA, it is YEIDA
which would make the payments of the estimated compensation and thereby it
would be as if the compensation is paid not by the Company, but by YEIDA.
62. The respondents have relied on the law laid down in Pratibha Nema case
(2003) 10 SCC 626, more particularly, paras 24 and 25 therein. The
respondents also argued relying upon the decision in Naihati Municipality
v. Chinmoyee Mukherjee (1996) 10 SCC 632. The respondents argued that the
law laid down in Pratibha Nema case (supra) emanates from the judgment in
Naihati Municipality v. Chinmoyee Mukherjee (supra).
63. Two judgments in State of Karnataka v. All India Manufacturers
Organisation (2006) 4 SCC 683 and Sooraram Pratap Reddy v. Collector (2008)
9 SCC 552 were pressed in service by the respondents.
64. The first judgment in State of Karnataka v. All India Manufacturers
Organisation (supra) pertain to Bangalore-Mysore Infrastructure Corridor
Project. While considering what the public purpose was, this Court in paras
76, 77, 78 and 79 took stock of the contention, whereby it was suggested
that land far away from the actual alignment of the road and periphery had
been acquired and, therefore, even if the implementation of the Highway
Project was assumed to be for the public purpose, the acquisition of the
land far away therefrom would not amount to a public purpose nor would it
be covered by the provisions of the Karnataka Industrial Areas Development
Act, 1966 (the KIAD Act).
65. In the present case also, it was argued that the lands which are being
acquired for the interchange would not at all be necessary. Further, it was
argued that the five parcels of land which are being acquired for the
development of five industrial townships, could not be said to be for the
public purpose nor could it be said to be a part of the present integrated
scheme. This Court had refuted this argument holding that even in case of
Bangalore-Mysore Highway Project, the lands even a little away from the
main alignment of the road, had to be a part of this Project and the
Project was an integrated infrastructure development project and not merely
a highway project. It was conceived originally as the Bangalore-Mysore
Infrastructure Corridor Project, which conceived of the development of
roads between Bangalore and Mysore, for which there were several
interchanges in and around the periphery of the city of Bangalore, together
with numerous developmental infrastructure activities along with the
highway at several points. The situation is no different in the present
case. Therefore, the contention that this acquisition was not for public
purpose, is rejected.
66. In Sooraram Pratap Reddy v. Collector (supra) the same question cropped
up which has been mentioned in paras 9, 10 and 11 of the judgment
suggesting that there was no public purpose and in fact, it was an
acquisition for a private company under Part VII of the Act and, therefore,
the power of eminent domain would have no application to such case. The
contentions raised in that judgment in paras 16, 17 and 18 are almost
similar to the contentions raised herein. The Court has extensively dealt
with the question of public purpose in para 66 and has taken stock of
practically all the cases till para 109 therein. It will not be necessary
for us to repeat all the case law and the questions raised and considered
in these paragraphs, such as industrial policy of the State, acquisition
for Company, etc.
67. In fact, while considering the contention regarding the industrial
policy of the State, the Court has taken into consideration the oft quoted
case of Dhampur Sugar (Kashipur) Ltd. v. State of Uttaranchal (2007) 8 SCC
418 where this Court has come to the conclusion that in the absence of
illegality or violation of law, a court of law will not interfere in the
policy matters. Similar is the case here, where the development of the
industrial infrastructure along the Expressway for the overall betterment
of the region and further for the industrialisation of the otherwise
backward region of Uttar Pradesh, was considered as a policy. In this
judgment again, the Court has extensively considered the question as to
whether and under what circumstances, the acquisition could be said to be
the acquisition for the Company. In that, the Court has also considered the
decision in Babu Barkya Thakur v. State of Bombay AIR 1960 SC 1203.
68. The Court quoted the observations in the aforementioned decision in
Babu Barkya Thakur v. State of Bombay (supra) to the following effect: (AIR
1960 SC p. 1207, para 10)
“10. … These requirements indicate that the acquisition for a company also
is in substance for a public purpose inasmuch as it cannot be seriously
contended that constructing dwelling houses, and providing amenities for
the benefit of the workmen employed by it and construction of some work of
public utility do not serve a public purpose.”
69. We have already considered this question that in the present case,
there is nothing to indicate that the acquisition is for the Company i.e.
for Jaiprakash Industries Ltd. It is only, therefore, that we are at pains
to point out that the Government was only using the Company for
implementing its policy.
70. In the aforementioned judgment of Sooraram Pratap Reddy v. Collector
(supra), Hon’ble Thakker, J. has also referred to the decision in Jhandu
Lal v. State of Punjab AIR 1961 SC 343 where the acquisition was for
construction of houses by members of Thapar Industries Cooperative Housing
Society Ltd., Yamuna Nagar. The challenge was that there was non-compliance
with the provisions of Part VII of the Act, though the acquisition was for
the Company under Part VII of the Act. The High Court, in that case, held
that the acquisition was for a public purpose and there was no need to
comply with the provisions of Part VII of the Act.
71. In fact, practically all the decisions on the subject of acquisition
for the Company and public purpose have been considered in this judgment of
Sooraram Pratap Reddy v. Collector (supra), which itself is a locus
classicus. Ultimately, this Court came to the conclusion that the
acquisition made by the State of Andhra Pradesh could not be faulted, as it
was in pursuance of policy decision for development of the city of
Hyderabad and in pursuance of that policy, an integrated project was taken
up for development of the city of Hyderabad into a business-cum-leisure
tourism infrastructure centre. The Court also came to the conclusion that
Andhra Pradesh Infrastructure and Investment Corporation (APIIC) in the
reported decision was a nodal agency like YEIDA in the present case which
was to generate the revenue and help the development of infrastructure for
industrialisation of the area. The Court also recognised that such
instrumentality of the State would have the power of eminent domain. Like
the present case, the Court held the Project to be an integrated and
indivisible project. We have no doubt that in the present case also, the
Expressway as well as the five parcels which are to be developed are part
of an integrated and indivisible project.
72. In Sooraram Pratap Reddy v. Collector (supra) it has also been found
that the entire amount of the compensation was to be paid by the State
agency APIIC, just like in the present case, where the entire amount is to
be paid by YEIDA, which agency is working as a nodal agency for the
execution of the Project. The Court has also found that where the power of
eminent domain is exercised mala fide or for collateral purposes and dehors
the Act or in an irrational or unreasonable manner or when the purpose is
“no public purpose” and the fraud on statute is apparent, a writ court can
undoubtedly interfere. It has been found very specifically here that the
present matter is not suffering from the above defects.
73. In this judgment, the subject of eminent domain has been discussed and
considered with thoroughness and all the ramifications of the principle of
eminent domain have been discussed. We have already culled out the
principles emanating from this decision in the earlier part of this
judgment and even at the cost of repetition, we may say that this judgment
is practically, the law-setter on the subject of eminent domain, as also on
the other allied subjects of acquisition. The judgment has also explained
the concept of “public purpose”, which has been held to be wider than
“public necessity”. The judgment proceeds on a basis that merely because
the benefit goes to a particular section of the society, the acquisition
does not cease to be for the public purpose. It has been specifically held
that where the State is satisfied about the existence of a public purpose,
the acquisition would be governed by Part II of the Act, as has happened in
the present matter.
74. The judgment in Sooraram Pratap Reddy v. Collector (supra) is an
authoritative pronouncement on the mode of payment, as also on the
construction of Sections 40 and 41 of the Act. In fact, this judgment is a
complete answer to the argument of the appellants that this acquisition is
not for public purpose.”
15. A conjoint reading of the provisions contained in sections 3(f), 6,
other provisions of Part II and the provisions contained in Part VII of the
Act makes it clear that there can be an acquisition for public purpose and
ultimately land may go on lease or other mode of transfer to a company and
in case the compensation is paid out of public revenue, it would be an
acquisition for a public purpose under Part II and in case compensation is
borne as per the agreement provided in section 41, it would be an
acquisition under Part VII of the Act. Though acquisition for public
purpose can also be for the purpose of industrialization or for a company
in case setting up of the company has a public purpose behind it as
provided in section 3(f) and payment of compensation for acquisition of
land is made out of public revenue as per the provisions of section 6 as
amended in 1984.
16. This Court in the decisions before the amendment of sections 3, 3(f)
and 6 in 1984 in the pre-amended period in the cases of Babu Barkya Thakur
v. State of Bombay, AIR (1960) SC 1203, Pandit Jhandu Lal v. State of
Punjab, AIR (1961) SC 343, R.L. Arora v. State of Uttar Pradesh (1962)
Supp. 2 SCR 149, Somawanti v. State of Punjab (1963) 2 SCR 774, Jage Ram &
Ors. v. State of Haryana & Ors. (1971) 1 SCC 671, Indrajeet C. Parekh v.
State of Gujarat (1975) 1 SCC 824, Aflatoon v. Lt. Governor of Delhi (1975)
4 SCC 285, Bai Malimabu v. State of Gujarat & Ors. (1978) 2 SCC 373;
Manubhai Jethalal Patel v. State of Gujarat (1983) 4 SCC 553, Srinivasa
Cooperative House Building Society Ltd. v. Madam Gurumurthy Sastry & Ors.
(1994) 4 SCC 675 in which notification was published on 8.2.1979; and
Mandir Sita Ramji v. Land Acquisition Collector & Ors., (2005) 6 SCC 745 in
which notifications under section 4 were published on 13.11.1959 and
13.3.1975 has taken the view that an acquisition for a company could also
be for public purpose where the Government provides compensation out of
public revenue. The contribution of the Government could even be small that
is Rs.100/- or so. Though the contribution so made would have to be judged
in the facts of the case by the doctrine of colorable exercise of power.
17. Even after the amendments made in definition of “public purpose” in
section 3(f) and other provisions of Part II and Part VII of the Act in the
year 1984, where the acquisition was initiated after the amendment has been
made, the amended provisions has been taken into consideration by this
Court in various decisions referred to hereinafter.
18. In Amarnath Ashram Trust Society & Anr. v. Governor of U.P. & Ors.
(1998) 1 SCC 591 which is a decision rendered post-amendment wherein this
Court has observed thus :
“4. The appellant wants land adjacent to its school building for the
purpose of a playground for its students. The land belongs to Respondent 5.
So it tried to obtain it from Respondent 5 by offering a price higher than
its market value but did not succeed. It, therefore, moved the State
Government to acquire that land for it. The Government agreed and issued
notification under Section 4 of the Land Acquisition Act on 1-8-1986
notifying its intention to acquire that land for a public purpose namely
“playground of students of Amar NathVidya Ashram (Public School), Mathura”.
Thereafter, inquiries under Section 5-A and under Rule 4 of the Land
Acquisition (Company) Rules, 1963 were made. The Government also entered
into an agreement with the appellant as required by Section 40(1) of the
Act on 11-8-1987. It then issued a declaration under Section 6 on 4-9-1987
mentioning the fact that the report made under sub-rule (4) of Rule 4 of
the Land Acquisition (Company) Rules, 1963 was considered by the Government
that the Land Acquisition Committee constituted under Rule 3 of the said
Rules was consulted, that the agreement entered between the appellant and
the Governor was duly published that the Governor was satisfied that the
land mentioned in the schedule is needed for construction of a playground
for students of Amar NathVidya Ashram (Public School), Mathura by the Amar
Nath Ashram Trust, Mathura. This acquisition of land was challenged by the
owner by a writ petition filed in the Allahabad High Court. An interim
order was passed directing the parties to maintain status [pic]quo as
regards possession. During the pendency of the said petition, on 1-5-1992,
the Government denotified the land from acquisition in exercise of its
power under Section 48 of the Land Acquisition Act. The appellant
challenged that notification by filing a writ petition in the High Court.
The petition filed by the appellant and the one filed by the owner were
heard together. The petition filed by the owner was dismissed as
infructuous and the petition filed by the appellant was dismissed on the
ground that the decision of the State Government to withdraw from the
acquisition for the reason that the acquisition having been proclaimed as
one for a public purpose a part of cost of acquisition was required to be
borne by the State and as no such provision was made, it was not likely to
be sustained if challenged, cannot be said to be contrary or illegal.
6. It is now well established that if the cost of acquisition is borne
either wholly or partly by the Government, the acquisition can be said to
be for a public purpose within the meaning of the Act. But if the cost is
entirely borne by the company then it is an acquisition for a company under
Part VII of the Act. It was so held by this Court in Jhandu Lal v. State of
Punjab AIR 1961 SC 343. This decision was relied upon by the learned
counsel for the State to support his contentions but it is difficult to
appreciate how it supports him. It is held in that case that it is not
correct to say that no acquisition for a company for a public purpose can
be made except under Part VII of the Act. In that case a part of the cost
was to be borne by the Government and, therefore, it was held that it was
not necessary to comply with the provisions of Part VII of the Act.
Admittedly, in the present case the entire cost of acquisition is to be
borne by the appellant-Society and, therefore, it is an acquisition for a
company and not for a public purpose. That is also borne out by the
notification issued under Section 6 of the Act which states “that the land
mentioned in the schedule below is needed for the construction of
playground for students of Amar NathVidya Ashram (Public School), Mathura
in District Mathura by the Amar Nath Ashram Trust, Mathura”. Therefore,
simply because in the notification issued under Section 4 of the Act it was
stated that the land was needed for a public purpose, namely, for a
playground for students of Amar Nath Vidya Ashram (Public School), Mathura,
it cannot be said that the acquisition is for a public purpose and not
under Chapter VII for the appellant-Society in view of subsequent events
and the declaration made under Section 6. The learned counsel for the State
also relied upon the decision of this Court in Srinivasa Coop. House
Building Society Ltd. v. Madam Gurumurthy Sastry (1994) 4 SCC 675 wherein
this Court has held (at p. 676, SCC Headnote) that though there is
“no provision in the Act to say that when a land is required for a company,
it may also be for a public purpose. However, even the acquisition for a
company, unless utilisation of the land so acquired is integrally connected
with public use, resort to the compulsory acquisition under Chapter VII
cannot be had”.
It was submitted on the basis of this observation that even in case of an
acquisition for a company an element of public purpose has to be there and
if for that reason it was believed by the Government that it was necessary
for it to make substantial contribution from public revenue so as to avoid
the charge of colourable exercise of powers, the decision of the Government
to withdraw from the acquisition cannot be said to be arbitrary or illegal.
The aforesaid observation was made by this Court in the context of
requirement of Section 40 of the Act and they cannot be construed to mean
that no land cannot (sic can) be acquired by the State Government without
making substantial contribution towards the cost of acquisition. We cannot
read something more in the said observation than what they were intended to
convey. The provisions of Part VII and particularly the provisions
regarding payment of the entire costs of the acquisition would otherwise
become redundant.
9. In an acquisition under Part VII of the Act, position of the company or
the body for which the land is acquired is quite different from that of the
owner of the land. As a result of withdrawal from the acquisition whereas
the owner of land is ordinarily not likely to suffer any prejudice or
irreparable loss, the company for whose benefit the land was to be
acquired, may suffer substantial loss.
10. However, it is not necessary to go into this larger question whether in
such a case the State Government can withdraw from acquisition without the
consent of the company as the justification given by the Government is
otherwise not sustainable. As stated earlier the reason given by the
Government for withdrawing from the acquisition is that as no part of the
cost of acquisition was to be borne by the Government the acquisition could
not have been sustained as for a public purpose. We have already pointed
out that in this case the acquisition was not for a public purpose but it
was an acquisition for a company under Chapter VII of the Act. In respect
of an acquisition for a company under Chapter VII of the Act law does not
require that the State should also bear some cost of acquisition to make it
an acquisition for public use. Thus the decision of the Government to
withdraw from acquisition was based upon a misconception of the correct
legal position. Such a decision has to be regarded as arbitrary and not
bona fide. Particularly in a case where as a result of a decision taken by
the Government the other party is likely to be prejudicially affected, the
Government has to exercise its power bona fide and not arbitrarily. Even
though Section 48 of the Act confers upon the State wide discretion it does
not permit it to act in an arbitrary manner. Though the State cannot be
compelled to acquire land compulsorily for a company its decision to
withdraw from acquisition can be challenged on the ground that power has
been exercised mala fide or in an arbitrary manner. Therefore, we cannot
accept the submission of the learned counsel for the State that the
discretion of the State Government in this behalf is absolute and not
justiciable at all.” (emphasis supplied)
19. This Court has laid down that in case cost of acquisition is borne
either wholly or partly by the Government, the acquisition can be said to
be for a public purpose. If the cost is entirely borne by the company then
the acquisition is for a company under Part VII of the Act.
20. In Pratibha Nema & Ors. v. State of M.P. & Ors. (2003) 10 SCC 626,
considering the amended provisions it was observed :
“6. In order to appreciate the contentions set out above in a proper
perspective, it would be appropriate to advert to certain basic provisions
of the Act and recapitulate the well-settled principles relating to public
purpose and acquisition of land under Part II and Part VII of the Act.
Section 4(1) which occurs in Part II of the Act contemplates a notification
to be published in the Official Gazette etc. whenever it appears to the
appropriate Government that land in any locality is needed for any public
purpose or for a company. Thereupon, various steps enumerated in sub-
section (2) could be undertaken by the authorized officer. There is an
inclusive definition of “public purpose” in clause (f) of Section 3. This
clause was inserted by Central Act 68 of 1984. Many instances of public
purpose specified therein would have perhaps been embraced within the fold
of public purpose as generally understood. Maybe, by way of abundant
caution or to give quietus to legal controversies, the inclusive definition
has been added. One thing which deserves particular notice is the rider at
the end of clause (f) by which the acquisition of land for companies is
excluded from the purview of the expression “public purpose”. However,
notwithstanding this dichotomy, speaking from the point of view of public
purpose, the provisions of Part II and Part VII are not mutually exclusive
as elaborated later.
7. The concept of public purpose (sans inclusive definition) was succinctly
set out by Batchelor, J. in a vintage decision of the Bombay High Court. In
Hamabai Framjee Petit v. Secy. of State for India AIR 1914 PC 20 the Privy
Council quoted with approval the following passage from the judgment of
Batchelor, J.: (AIR p. 21)
“General definitions are, I think, rather to be avoided where the avoidance
is possible, and I make no attempt to define precisely the extent of the
phrase ‘public purposes’ in the lease; it is enough to say that, in my
opinion, the phrase, whatever else it may mean, must include a purpose,
that is, an object or aim, in which the general interest of the community,
as opposed to the particular interest of individuals, is directly and
vitally concerned.”
8. The Privy Council then proceeded to observe that prima facie the
Government are good judges to determine the purpose of acquisition i.e.
whether the purpose is such that the general interest of the community is
served. At the same time, it was aptly said that they are not absolute
judges. This decision of the Privy Council and the words of Batchelor, J.
were referred to with approval by a Constitution Bench in Somawanti v.
State of Punjab, AIR 1963 SC 151 and various other decisions of this Court.
9. We may now advert to Section 6. It provides for a declaration to be made
by the Government or its duly authorized officer that a particular land is
needed for a public purpose or for a company when the Government is
satisfied after considering the report, if any, made under Section 5-A(2).
It is explicitly made clear that such declaration shall be subject to the
provisions of Part VII of the Act which bears the chapter heading
“Acquisition of Land for Companies”. Thus, Section 6 reiterates the
apparent distinction between acquisition for a public purpose and
acquisition for a company. There is an important and crucial proviso to
Section 6 which has a bearing on the question whether the acquisition is
for a public purpose or for a company. The second proviso lays down that
“no such declaration shall be made unless the compensation to be awarded
for such property is to be paid by a company, or wholly or partly out of
public revenues or some fund controlled or managed by a local authority”.
Explanation 2 then makes it clear that where the compensation to be awarded
is to be paid out of the funds of a corporation owned or controlled by the
State, such compensation shall be deemed to be compensation paid out of
public revenues. Thus, a provision for payment of compensation, wholly or
partly, out of public revenues or some fund controlled or managed by a
local authority is sine qua non for making a declaration to the effect that
a particular land is needed for a public purpose. Even if a public purpose
is behind the acquisition for a company, it shall not be deemed to be an
acquisition for a public purpose unless at least part of the compensation
is payable out of public revenues which includes the fund of a local
authority or the funds of a corporation owned or controlled by the State.
However, it was laid down in Somawanti case (supra) that the notification
under Section 6(1) need not explicitly set out the fact that the Government
had decided to pay a part of the expenses of the acquisition or even to
state that the Government is prepared to make a part of contribution to the
cost of acquisition. It was further clarified that the absence of a
provision in the budget in respect of the cost of acquisition, whole or
part, cannot affect the validity of the declaration. The majority Judges of
the Constitution Bench also clarified that a contribution to be made by the
State need not be substantial and even the token contribution of Rs100
which was made in that case satisfied the requirements of the proviso to
Section 6(1). The contribution of a small fraction of the total probable
cost of the acquisition does not necessarily vitiate the declaration on the
ground of colourable exercise of power, according to the ruling in the said
case. Following Somawanti (supra), the same approach was adopted in Jage
Ram v. State of Haryana (1971) 1 SCC 671. The question, whether the
contribution of a nominal amount from the public exchequer would meet the
requirements of the proviso to Section 6, had again come up for
consideration in Manubhai Jehtalal Patel v. State of Gujarat (1983) 4 SCC
553. D.A. Desai, J. after referring to Somawanti (supra), speaking for the
three-Judge Bench observed thus: (SCC p. 555, para 4)
“It is not correct to determine the validity of acquisition keeping in view
the amount of contribution but the motivation for making the contribution
would help in determining the bona fides of acquisition. Further in
Malimabu case (1978) 2 SCC 373 contribution of Re 1 from the State revenue
was held adequate to hold that acquisition was for public purpose with
State fund. Therefore, the contribution of Re 1 from public exchequer
cannot be dubbed as illusory so as to invalidate the acquisition.”
10. In Somawanti case (supra) the following note of caution was sounded:
(AIR p. 169, para 52)
“We would, however, guard ourselves against being understood to say that a
token contribution by the State towards the cost of acquisition will be
sufficient compliance with the law in each and every case. Whether such
contribution meets the requirements of the law would depend upon the facts
of every case. Indeed the fact that the State’s contribution is nominal may
well indicate, in particular circumstances, that the action of the State
was a colourable exercise of power. In our opinion ‘part’ does not
necessarily mean a substantial part and that it will be open to the Court
in every case which comes up before it to examine whether the contribution
made by the State satisfies the requirement of the law. In this case we are
satisfied that it satisfies the requirement of law.”
11. A three-Judge Bench of this Court in Indrajit C. Parekh v. State of
Gujarat (1975) 1 SCC 824 without much of elaboration, relegated the
observations in the above passage to very narrow confines by stating thus:
(SCC p. 827, para 3)
“In view of the decision in this case that a nominal contribution out of
public revenues would satisfy the requirement of the proviso to Section
6(1) the observation ‘whether such contribution meets the requirement of
the law would depend upon the facts of every case’ must necessarily be
taken to refer to the requirement of some law other than the proviso to
Section 6(1). No such law was pointed out to us; and it is not necessary
for the purposes of this appeal to enter on a discussion as to what such
other law could be.”
12. Another important provision is sub-section (3) of Section 6 which
enjoins that the declaration (required to be published in the Official
Gazette etc.) shall be conclusive evidence that the land is needed for a
public purpose or for a company and on publication of declaration, the
appropriate Government is enabled to acquire the land in accordance with
the other provisions of the Act. This sub-section came up for
interpretation of this Court in Somawanti case (supra). The Court
emphasised that the conclusiveness contemplated by sub-section (3) is not
merely regarding the satisfaction of the Government on the question of need
but also with regard to the question that the land is needed for a public
purpose or for a company, as the case may be. However, the learned Judges
highlighted an important exception to the finality or conclusiveness of the
declaration under Section 6(1). It was observed thus: (AIR p. 164, para 36)
“That exception is that if there is a colourable exercise of power the
declaration will be open to challenge at the instance of the aggrieved
party. The power committed to the Government by the Act is a limited power
in the sense that it can be exercised only where there is a public purpose,
leaving aside for a moment the purpose of a company. If it appears that
what the Government is satisfied about is not a public purpose but a
private purpose or no purpose at all the action of the Government would be
colourable as not being relatable to the power conferred upon it by the Act
and its declaration will be a nullity. Subject to this exception, the
declaration of the Government will be final.”
13. The main contention of the learned Senior Counsel for the appellant, as
already noticed, rests on the plea of colourable exercise of power.
14. Colourable exercise of power or mala fides in the province of exercise
of power came up for discussion in State of Punjab v. Gurdial Singh (1980)
2 SCC 471. In the words of Krishna Iyer, J.: (SCC p. 475, para 9)
“Pithily put, bad faith which invalidates the exercise of power — sometimes
called colourable exercise or fraud on power and oftentimes overlaps
motives, passions and satisfactions — is the attainment of ends beyond the
sanctioned purposes of power by simulation or pretension of gaining a
legitimate goal. … When the custodian of power is influenced in its
exercise by considerations outside those for promotion of which the power
is vested the court calls it a colourable exercise and is undeceived by
illusion. … Fraud on power voids the order if it is not exercised bona fide
for the end designed. Fraud in this context is not equal to moral turpitude
and embraces all cases in which the action impugned is to effect some
object which is beyond the purpose and intent of the power, whether this be
malice-laden or even benign. If the purpose is corrupt the resultant act is
bad. If considerations, foreign to the scope of the power or extraneous to
the statute, enter the verdict or impel the action, mala fides or fraud on
power vitiates the acquisition or other official act.”
15. The above exposition of law unfolds the right direction or the line of
enquiry which the court has to pursue to test the validity of declaration
made under Section 6(1) exalted by the legal protection accorded to it
under sub-section (3).
16. In order to proceed on these lines, the ambit and contours of public
purpose as understood by this Court in certain decided cases has to be
taken note of. We have already noticed the broad and general meaning of the
expression “public purpose” as stated by Batchelor, J. nearly a century
back. In the particular context of setting up industries by private
enterprise, this Court’s perspective of public purpose is discernible from
certain decided cases to which we shall make reference.
17. In Jage Ram case (supra) the public purpose mentioned in the
notifications under Sections 4 and 6 was “the setting up of a factory for
the manufacture of Chinaware and porcelain ware”. The State Government had
contributed a sum of Rs 100 as was done in the case of Somawanti (supra)
towards the cost of the land. The question arose whether it was necessary
for the Government to proceed with the acquisition under Part VII of the
Act. Holding that acquisition under Part VII need not have been resorted
to, this Court proceeded to discuss the question whether the acquisition
was intended for a public purpose. K.S. Hegde, J. speaking for the Court
observed thus: (SCC p. 674, para 8)
“8. There is no denying the fact that starting of a new industry is in
public interest. It is stated in the affidavit filed on behalf of the State
Government that the new State of Haryana was lacking in industries and
consequently it had become difficult to tackle the problem of unemployment.
There is also no denying the fact that the industrialization of an area is
in public interest. That apart, the question whether the starting of an
industry is in public interest or not is essentially a question that has to
be decided by the Government. That is a socio-economic question. This Court
is not in a position to go into that question. So long as it is not
established that the acquisition is sought to be made for some collateral
purpose, the declaration of the Government that it is made for a public
purpose is not open to challenge. Section 6(3) says that the declaration of
the Government that the acquisition made is for public purpose shall be
conclusive evidence that the land is needed for a public purpose. Unless it
is shown that there was a colourable exercise of power, it is not open to
this Court to go behind that declaration and find out whether in a
particular case the purpose for which the land was needed was a public
purpose or not: see Somawanti v. State of Punjab (supra) and Raja Anand
Brahma Shah v. State of U.P., AIR 1967 SC 1081. On the facts of this case
there can be hardly any doubt that the purpose for which the land was
acquired is a public purpose.”
18. In Somawanti case (supra) setting up a factory for the manufacture of
refrigeration compressors and ancillary equipment, was held to subserve
public purpose. The importance of such industry to a State such as Punjab
which had surplus food and dairy products, the possible generation of
foreign exchange resources and employment opportunities were all taken into
account to hold that public purpose was involved in establishing the
industry. It was observed: (AIR p. 169, para 55)
“55. On the face of it, therefore, bringing into existence a factory of
this kind would be a purpose beneficial to the public even though that is a
private venture.”
The decision in Jage Ram case (supra) was cited with approval by this Court
in Bajirao T. Kote v. State of Maharashtra (1995) 2 SCC 442. In R.L. Arora
v. State of U.P. AIR 1964 SC 1230 a Constitution Bench of this Court
observed that there was a definite public purpose behind the acquisition of
land for taking up works in connection with the setting up of a factory for
production of textile machinery parts. However, that was in the context of
a case of acquisition under Part VII.
19. These decisions establish that a public purpose is involved in the
acquisition of land for setting up an industry in the private sector as it
would ultimately benefit the people. However, we would like to add that any
and every industry need not necessarily promote public purpose and there
could be exceptions which negate the public purpose. But, it must be borne
in mind that the satisfaction of the Government as to the existence of
public purpose cannot be lightly faulted and it must remain uppermost in
the mind of the court.
20. Having noted the salient provisions and the settled principles
governing the acquisition for a public purpose, it is time to turn to Part
VII dealing with acquisition of land for companies. The important point
which we would like to highlight at the outset is that the acquisition
under Part VII is not divorced from the element of public purpose. The
concept of public purpose runs through the gamut of Part VII as well.
21. “Company” is defined to mean by Section 3(e) as: (i) a company within
the meaning of Section 3 of the Companies Act other than a government
company, (ii) a society registered under the Societies Registration Act
other than a cooperative society referred to in clause (cc), and (iii) a
cooperative society governed by the law relating to the cooperative
societies in force in any State other than a cooperative society referred
to in clause (cc). An industrial concern employing not less than 100
workmen and conforming to the other requirements specified in Section 38-A
is also deemed to be a company for the purposes of Part VII. In order to
acquire land for a company as defined above, the previous consent of the
appropriate Government is the first requirement and secondly, the execution
of agreement by the company conforming to the requirements of Section 41 is
another essential formality. Section 40 enjoins that consent should not be
given by the appropriate Government unless it is satisfied that: (1) the
purpose of the acquisition is to obtain land for erection of dwelling
houses for workmen or for the provision of amenities connected therewith;
(2) that the acquisition is needed for construction of some building or
work for a company which is engaged or about to engage itself in any
industry or work which is for a public purpose; and (3) that the proposed
acquisition is for the construction of some work that is likely to be
useful to the public. The agreement contemplated by Section 41 is meant to
ensure the compliance with these essentialities. It is also meant to ensure
that the entire cost of acquisition is borne by and paid to the Government
by the company concerned. Thus, it is seen that even in a case of
acquisition for a company, public purpose is not eschewed. It follows,
therefore, that the existence or non-existence of a public purpose is not a
primary distinguishing factor between the acquisition under Part II and
acquisition under Part VII. The real point of distinction seems to be the
source of funds to cover the cost of acquisition. In other words, the
second proviso to Section 6(1) is the main dividing ground for the two
types of acquisition. This point has been stressed by this Court in
Srinivasa Coop. House Building Society Ltd. v. Madam Gurumurthy Sastry
(1994) 4 SCC 675 at para 12: (SCC p. 684)
“In the case of an acquisition for a company simpliciter, the declaration
cannot be made without satisfying the requirements of Part VII. But that
does not necessarily mean that an acquisition for a company for a public
purpose cannot be made otherwise than under the provisions of Part VII, if
the cost or a portion of the cost of the acquisition is to come out of
public funds. In other words, the essential condition for acquisition is
for a public purpose and that the cost of acquisition should be borne,
wholly or in part, out of public funds.”
The legal position has been neatly and succinctly stated by Wanchoo, J.
speaking for the Constitution Bench in R.L. Arora v. State of U.P., AIR
1962 SC 764. This is what has been said: (AIR pp. 767-68, para 5)
“Therefore, though the words ‘public purpose’ in Sections 4 and 6 have the
same meaning, they have to be read in the restricted sense in accordance
with Section 40 when the acquisition is for a company under Section 6. In
one case, the notification under Section 6 will say that the acquisition is
for a public purpose, in the other case the notification will say that it
is for a company. The proviso to Section 6(1) shows that where the
acquisition is for a public purpose, the compensation has to be paid wholly
or partly out of public revenues or some fund controlled or managed by a
local authority. Where however the acquisition is for a company, the
compensation would be paid wholly by the company. Though therefore this
distinction is there where the acquisition is either for a public purpose
or for a company, there is not a complete dichotomy between acquisitions
for the two purposes and it cannot be maintained that where the acquisition
is primarily for a company it must always be preceded by action under Part
VII and compensation must always be paid wholly by the company. A third
class of cases is possible where the acquisition may be primarily for a
company but it may also be at the same time for a public purpose and the
whole or part of compensation may be paid out of public revenues or some
fund controlled or managed by a local authority. In such a case though the
acquisition may look as if it is primarily for a company it will be covered
by that part of Section 6 which lays down that acquisition may be made for
a public purpose if the whole part of the compensation is to be paid out of
the public revenues or some fund controlled or managed by a local
authority. Such was the case in Pandit Jhandu Lal v. State of Punjab, AIR
1961 SC 343.… It is only where the acquisition is for a company and its
cost is to be met entirely by the company itself that the provisions of
Part VII apply.”
22. Thus the distinction between public purpose acquisition and Part VII
acquisition has got blurred under the impact of judicial interpretation of
relevant provisions. The main and perhaps the decisive distinction lies in
the fact whether the cost of acquisition comes out of public funds wholly
or partly. Here again, even a token or nominal contribution by the
Government was held to be sufficient compliance with the second proviso to
Section 6 as held in a catena of decisions. The net result is that by
contributing even a trifling sum, the character and pattern of acquisition
could be changed by the Government. In ultimate analysis, what is
considered to be an acquisition for facilitating the setting up of an
industry in the private sector could get imbued with the character of
public purpose acquisition if only the Government comes forward to sanction
the payment of a nominal sum towards compensation. In the present state of
law, that seems to be the real position.” (emphasis supplied).
In Pratibha Nema (supra) on due consideration of amended provisions,
this Court has clearly laid down that the existence or non-existence of a
public purpose is not a primary distinguishing factor between the
acquisition under Part II and acquisition under Part VII. The real point of
distinction seems to be the source of funds to cover the cost of
acquisition. The second proviso to section 6(1) is the main driving ground
for the two types of acquisitions. The amendment made in 1984 in section 6
does not deal with the concept of token consideration for such acquisition
paid out of the public revenues. The second provision to section 6(1) makes
it clear that where the compensation to be awarded for such property is to
be paid out of the funds of the corporation, it is deemed to be
compensation paid out of public revenue. Section 6 requires compensation
determined to be paid out of the funds of the corporation then it would be
deemed to be expenditure out of public revenue to make it acquisition under
Part II. In the instant case corporation has paid entire compensation. It
is not a case of token amount paid out of public revenue.
21. In Devinder Singh & Ors.v. State of Punjab & Ors. (2008) 1 SCC 728,
this Court has considered concept of public purpose and observed that when
an application is filed by a company for acquisition but the decision of
the State has to be seen how it intended to deal with such a prayer, is a
relevant factor. In case of public purpose the acquisition could be made at
public expense. Therefore, evidently the provisions made in Part II shall
be resorted to. On the other hand if the State forms an opinion that
acquisition may not be for public purpose then the State would not bear the
expenses and then the procedure laid down in Part VII shall be resorted to.
This Court has laid down thus :
“16. When a request is made by any wing of the State or a government
company for acquisition of land for a public purpose, different procedures
are adopted. Where, however, an application is filed for acquisition of
land at the instance of a “company”, the procedures to be adopted therefor
are laid down in Part VII of the Act. Although it may not be decisive but
the conduct of the State as to how it intended to deal with such a
requisition, is a relevant factor. The action of the State provides for an
important condition to consider as to whether the purpose wherefor a
company requests it for acquisition of land is a public purpose and/or
which could be made at public expenses either as a whole or in part,
wherefor evidently provisions laid down in Part II shall be resorted to. On
the other hand, if the State forms an opinion that the acquisition of land
at the instance of the company may not be for public purpose or, therefore
the expenses to be incurred therefor either in whole or in part shall not
be borne by the State, the procedures laid down in Part VII thereof have to
be resorted to. The procedures laid down under Part VII of the Act are
exhaustive. The Rules have been framed prescribing the mode and manner in
which the State vis-à-vis the company should proceed. It provides for
previous consent of the appropriate Government, execution of the agreement,
previous inquiry before a consent is accorded, publication of the
agreement, restriction on transfer, etc. It also provides for statutory
injunction that no land shall be acquired except for the purpose contained
in Clause (a) of sub-section (1) of Section 40 of the Act for a private
company which is not a government company. For the purpose of Section 44-B
of the Act, no distinction is made between a private company and a public
limited company.
37. In this case we may notice that purported contribution had been made
only after the writ petitions were filed. Ordinarily, this Court would not
have gone into the said question but the agreement provides for payment of
entire compensation by the Company. We do not know as to at what stage the
State thought it fit to meet a part of the expenses for acquisition of
land. Such an opinion on the part of the State having regard to the
statutory scheme should have been formed prior to entering into the
agreement itself. The agreement does not mention about any payment of a
part of compensation by the State. We, in the absence of any other material
on record, must hold that the State had not formed any opinion in that
behalf at least when the agreement was executed. The wisdom in all
probabilities dawned on the officers of the State at a later stage.
38. Satisfaction on the part of the State required to be arrived at upon
formation of opinion on the basis of materials brought on record for the
purpose of Part II of the Act are different from that of Part VII. Once the
appropriate Government arrives at a decision that the land sought to be
acquired is needed for a public purpose, the court would not go behind it,
as the same may furnish a valid argument for upholding an acquisition under
Part II. But when an acquisition is made under Part VII, the conditions and
precedents therefor as contained in the Companies Rules must be satisfied.
On the face of record, if it can be shown that the Government had ignored
the mandatory provisions of the Act, the acquisition would have to be
struck down.
39. In Shyam Behari v. State of M.P., AIR 1965 SC 427 it was held: (AIR p.
429, para 3)
“3. … In the second place, the declaration under Section 6 may be made that
land is needed for a company in which case the entire compensation has to
be paid by the company. It is clear therefore that where the entire
compensation is to be paid by a company, the notification under Section 6
must contain a declaration that the land is needed for a company. No
notification under Section 6 can be made where the entire compensation is
to be paid by a company declaring that the acquisition is for a public
purpose, for such a declaration requires that either wholly or in part,
compensation must come out of public revenues or some fund controlled or
managed by a local authority.”
40. Distinction between acquisition under Part II and Part VII is self-
evident. The State was not only obligated to issue a notification clearly
stating as to whether the acquisition is for a public purpose or for the
Company. Section 6 categorically states so, as would appear from the second
proviso appended thereto.
41. A declaration is to be made either for a public purpose or for a
company. It cannot be for both.
54. In Srinivasa Coop. House Building Society Ltd. v. Madam
Gurumurthy Sastry (1994) 4 SCC 675, noticing Somawanti (supra) wherein it
was held that the manufacturing of the articles was for the benefit of the
community and to save substantive part of foreign exchange and staff
quarters to workmen, it was held: (SCC p. 684, para 12)
“12. … On the other hand, in the case of an acquisition for a company, the
compensation has to be paid by the company. In such a case there can be an
agreement under Section 41 for transfer of the land acquired by the
Government to the company on payment of the cost of acquisition, as also
other matters. The agreement contemplated by Section 41 is to be entered
into between the company and the appropriate Government only after the
latter is satisfied about the purpose of the proposed acquisition, and
subject to the condition precedent that the previous consent of the
appropriate Government has been given to the acquisition. Section 6 is in
terms, made subject to the provisions of Part VII of the Act. The
declaration for acquisition for a company shall not be made unless the
compensation to be awarded for the property is to be paid by a company. In
the case of an acquisition for a company simpliciter, the declaration
cannot be made without satisfying the requirements of Part VII. But that
does not necessarily mean that an acquisition for a company for a public
purpose cannot be made otherwise than under the provisions of Part VII, if
the cost or a portion of the cost of the acquisition is to come out of
public funds. In other words, the essential condition for acquisition is
for a public purpose and that the cost of acquisition should be borne,
wholly or in part, out of public funds. Hence an acquisition for a company
may also be made for a public purpose, within the meaning of the Act, if a
part or the whole of the cost of acquisition is met by public funds. If, on
the other hand, the acquisition, for a company is to be made at the cost
entirely of the company itself, such an acquisition comes under the
provisions of Part VII.”
55. The approach of the High Court in this behalf, in our opinion, is
totally erroneous. A provision of a statute is either mandatory or
directory. Even if a provision is directory, the same should be
substantially complied with. It cannot be ignored in its entirety only
because the provision is held to be directory and not an imperative one.
56. In this case admittedly there has been no compliance with Rule 4. If
Rule 4 has not been complied with, the exercise of jurisdiction under Part
VII must be held to have been erroneous.” (emphasis supplied)
In the case of Devinder (supra) the acquisition was under Part VII
and the State contribution of Rs.100/- towards cost of acquisition came
during the pendency of the writ petition. This Court has held that the
acquisition which was for a company could not be termed into acquisition
for a public purpose by making a nominal contribution during the pendency
of the writ petition. However, this Court has laid down that the source of
funds to cover the cost of acquisition is determinative of the
applicability of the procedure in Part II or Part VII of the Act. In case
fund is coming from the company then Part VII would apply and not
otherwise.
22. In Sooraram Pratap Reddy’s case (supra), this Court has also dealt
with the submission where the acquisition is for a private company whether
it would be governed by the provisions of Part VII of the Act whereas the
submission of the respondent was that pursuant to the Government policy it
was to be acquired by APIIC and the entire compensation was to be paid by
APIIC. As such the acquisition would fall under Part II of the Act. This
Court has discussed the matter thus:
“96. Whereas the contention of the appellants is that the so-called
acquisition is for a private company and hence it would be governed by Part
VII of the Act, the stand of the respondents is that it was in pursuance of
industrial policy of the State that land was to be acquired by APIIC and
the entire amount of compensation was to be paid by APIIC and as such the
acquisition is covered by Part II of the Act.
97. Our attention has been invited by the learned counsel for both the
parties to some of the decisions on this issue.
98. Babu Barkya Thakur v. State of Bombay, AIR 1960 SC 1203 was probably
the first leading decision of this Court on the point. In that case, a
notification was issued by the erstwhile State of Bombay on 3-4-1959 under
Section 4 of the Act wherein it was stated that the lands specified in the
Schedule attached to the notification were likely to be needed for the
purpose of M/s Mukund Iron & Steel Works Ltd., a company registered under
the Companies Act, 1913. The petitioner lodged objections challenging the
notification on the ground that the lands were not required for “public
purpose” and the proceedings were vexatious and malicious. In the counter-
affidavit filed by the Special Land Acquisition Officer, it was denied that
the acquisition of the land was not for the public purpose and the
proceedings were, therefore, vitiated. The Court, after referring to the
Preamble and the relevant provisions of the Act, held that acquisition for
company under the Act was for a “public purpose” inasmuch as constructing
dwelling houses and providing amenities for the benefit of workmen employed
by the company would serve public purpose. The Court observed: (AIR pp.
1206-07, para 10)
“10. … Further, though it may appear on the words of the Act contained in
Part II, which contains the operative portions of the proceedings leading
up to acquisition by the Collector that acquisition for a company may or
may not be for a public purpose, the provisions of Part VII make it clear
that the appropriate Government cannot permit the bringing into operation
the effective machinery of the Act unless it is satisfied as aforesaid,
namely, that the purpose of acquisition is to enable the company to erect
dwelling houses for workmen employed by it or for the provision of
amenities directly connected with the company or that the land is needed
for construction of some work of public utility. These requirements
indicate that the acquisition for a company also is in substance for a
public purpose inasmuch as it cannot be seriously contended that
constructing dwelling houses, and providing amenities for the benefit of
the workmen employed by it and construction of some work of public utility
do not serve a public purpose.” (emphasis supplied)
99. In Pandit Jhandu Lal v. State of Punjab, AIR 1961 SC 343 the land of
the appellant was sought to be acquired for construction of houses by
members of Thapar Industries Cooperative Housing Society Ltd., Yamuna
Nagar. Proceedings were, therefore, initiated for acquisition of land under
Part II of the Act. The action was challenged, inter alia, on the ground
that there was non-compliance with the provisions of Part VII of the Act
and the proceedings were liable to be quashed as the said procedure had not
been followed. The High Court held that the land was acquired for a public
purpose and there was no need to comply with the provisions of Part VII,
even though the company was to pay the entire amount of compensation (which
according to this Court was not factually correct). The aggrieved landowner
approached this Court.
100. According to this Court (in Pandit Jhandu Lal case (supra), the main
point for determination was whether or not the acquisition proceedings had
been vitiated by reason of the admitted fact that there was no attempt made
by the Government to comply with the requirement of Part VII of the Act.
Referring to Babu Barkya (supra) this Court held that the conclusion
arrived at by the High Court was “entirely correct”, though the process of
reasoning by which it had reached the conclusion was erroneous.
101. The Court (in Pandit Jhandu Lal case (supra) observed that the Act
contemplates acquisition for (i) a public purpose, and (ii) for a company;
thus, conveying the idea that acquisition for a company, is not for a
public purpose. It was also observed that the purposes of public utility,
referred to in Sections 40 and 41 of the Act were akin to public purpose.
Hence, acquisition for a public purpose as also acquisition for a company
are governed by considerations of public utility. But the procedure for the
two kinds of acquisitions is different and if it is for a company, then
acquisition has to be effected in accordance with the procedure laid down
in Part VII. Considering the ambit and scope of Sections 6 and 39 to 41 and
referring to Babu Barkya (supra), the Court observed: (Pandit Jhandu Lal
case (supra), AIR pp. 346-47, para 8)
“8. … There is no doubt that, as pointed out in the recent decision of this
Court, the Act contemplates for a public purpose and for a company, thus
conveying the idea that acquisition for a company is not for a public
purpose. It has been held by this Court, in that decision, that the
purposes of public utility, referred to in Sections 40-41 of the Act, are
akin to public purpose. Hence, acquisition for a public purpose as also
acquisitions for a company are governed by considerations of public
utility. But the procedure for the two kinds of acquisitions is different,
insofar as Part VII has made substantive provisions for acquisitions of
land for companies. Where acquisition is made for a public purpose, the
cost of acquisition for payment of compensation has to be paid wholly or
partly out of Public Revenues, or some fund controlled or managed by a
local authority. On the other hand, in the case of an acquisition for a
company, the compensation has to be paid by the company. But, in such a
case, there has to be an agreement, under Section 41, for the transfer of
the land acquired by the Government to the company on payment of the cost
of acquisition, as also other matters not material to our present purpose.
The agreement contemplated by Section 41 is to be entered into between the
company and the appropriate Government only after the latter is satisfied
about the purpose of the proposed acquisition, and subject to the condition
precedent that the previous consent of the appropriate Government has been
given to the acquisition. The ‘previous consent’ itself of the appropriate
Government is made to depend upon the satisfaction of that Government that
the purpose of the acquisition was as laid down in Section 40. It is, thus,
clear that the provisions of Sections 39-41 lay down conditions precedent
to the application of the machinery of the Land Acquisition Act, if the
acquisition is meant for a company.” (emphasis supplied)
102. The Court then dealt with the extent and applicability of Section 6 of
the Act and stated: (Pandit Jhandu Lal case (supra), AIR p. 347, para 8)
“8. … Section 6 is in terms made subject to the provisions of Part VII of
the Act. The provisions of Part VII, read with Section 6 of the Act, lead
to this result that the declaration for the acquisition for a company shall
not be made unless the compensation to be awarded for the property is to be
paid by a company. The declaration for the acquisition for a public
purpose, similarly, cannot be made unless the compensation, wholly or
partly, is to be paid out of public funds. Therefore, in the case of an
acquisition for a company simpliciter, the declaration cannot be made
without satisfying the requirements of Part VII. But, that does not
necessarily mean that an acquisition for a company for a public purpose
cannot be made otherwise than under the provisions of Part VII, if the cost
or a portion of the cost of the acquisition is to come out of public funds.
In other words, the essential condition for acquisition for a public
purpose is that the cost of the acquisition should be borne, wholly or in
part, out of public funds. Hence, an acquisition for a company may also be
made for a public purpose, within the meaning of the Act, if a part or the
whole of the cost of acquisition is met by public funds. If, on the other
hand, the acquisition for a company is to be made at the cost entirely of
the company itself, such an acquisition comes under the provisions of Part
VII. As in the present instance, it appears that part at any rate of the
compensation to be awarded for the acquisition is to come eventually from
out of public revenues, it must be held that the acquisition is not for a
company simpliciter. It was not, therefore, necessary to go through the
procedure prescribed by Part VII. We, therefore, agree with the conclusion
of the High Court, though not for the same reasons.” (emphasis supplied)
106. In R.L. Arora (II) v. State of U.P, AIR 1962 SC 764 this Court held
that in view of the amendment made in the Act, even if the acquisition did
not satisfy conditions laid down under clause (a) and clause (b) of sub-
section (1) of Section 40 of the Act, it would be valid, if they satisfy
conditions in clause (aa) introduced by the Amendment Act. It was also held
that once the Government decided to acquire land for public purpose, such
acquisition cannot be challenged on the ground that procedure laid down in
Part VII had not been followed. The Court, keeping in view the Land
Acquisition (Amendment) Act, 1962 (Act 31 of 1962), held that clause (aa)
of sub-section (1) of Section 40 as inserted by Act 31 of 1962 did not
contravene Article 31(2) or Article 19(1)(f) of the Constitution.
Accordingly, the acquisition was held legal and valid.
107. A special reference may be made to a decision of the Division Bench of
the High Court of Gujarat in Motibhai Vithalbhai Patel v. State of Gujarat
AIR 1961 GUJ 93. In Motibhai (supra) land was sought to be acquired for a
company, namely, Sarabhai Chemicals for its expansion. It was contended
that acquisition was not for public purpose under Section 4 of the Act and
it was bad in law.
108. Considering the relevant provisions of the Act as also leading cases
on the point, the Court (in Motibhai case (supra) held that even if the
acquisition of land is for a private concern whose sole aim is to make
profit, the intended acquisition of land would materially help in saving
foreign exchange in which the public is also vitally concerned in our
economic system. It can, therefore, be said to be a public purpose and
would not be bad. The Court stated: (Motibhai case (supra), AIR p. 104,
para 42)
“42. This is just as well. So diverse and varied can be the activities,
engagements and operations which may redound to the general benefit of the
public and in which the general interest of the public can be said to be
really involved that it is impossible to expect a definition exclusive or
inclusive which will aptly meet every particular objective within the
matrix of public purpose and not fail in some circumstances. The expression
is of convenient vagueness and the court can at best give temporary
definiteness but not definitiveness to the undefined and shifting
boundaries of a field which now seems likely to raise some frequent and
fighting issues and give rise to different problems for adjudication.”
It was also observed: (Motibhai case (supra), AIR p. 104, para 43)
“43. Public purpose is not a constant. The scope of an expression
which conjugates general interest of the public must necessarily depend
inter alia on social and economic needs and broad interpretation of the
democratic ideal. It must alter as social and economic conditions alter.
The social and economic theorist may contend for an extremely wide
application of this concept of public purpose and overemphasise the element
of the general interest of the public. The reactionary on the other hand
may strive for stringent restraints on its shifting boundaries and oppose
any shift in emphasis. The true rule of the matter would seem to lie
midway. The Court will not attach too much weight to the apparent character
of the activity or agency but would prefer to lean in favour of an
application of the rule which has regard to the substance of the matter and
embraces activities, engagements and operations which would serve the
common good as being affected with public interest. The application of the
rule must rest on the modern economic system of a welfare State having its
own requirements and problems. The application of the rule would not be
governed by right distinctions nor would the economic principle be allowed
to be blurred by the blending of forms and interests.” (emphasis supplied)
The Court proceeded to state: (Motibhai case (supra), AIR p. 104, para 44)
“44. In the field of economic progress and interest of the public the
application of the rule would include operations which are more or less
indispensable to the community. The very lack of definitiveness of the
expression public purpose, somewhat paradoxical though it may seem requires
that the field of its coverage must extend to concerns which are fit to
serve the common welfare. That coverage can include activities open to the
initiative of both private enterprise and public administration for private
enterprise is certainly amenable to public control and can be an efficient
instrument of economic benefit.”
Upholding the acquisition, the Court concluded: (Motibhai case (supra), AIR
p. 105, para 48)
“48. … It cannot be ignored that Respondent 2 Company is a scheduled
industry controlled by the provisions of the Industries (Development and
Regulation) Act, 1951. The price of its products is subject to these
controls. We are also satisfied that the public is vitally concerned in the
saving of foreign exchange in our present economic situation and that this
is an aspect of the matter which has to be borne in mind. We are satisfied
that the respondents are correct in their submission that the intended
acquisition of lands in dispute would materially help in the saving of such
exchange. We have to consider together all the aspects of the case which
redound to and result in the benefit of the public and on an assessment of
all the facts and circumstances of the case and the cumulative effect of
the same we are of the opinion that the land in dispute is needed for a
public purpose as contended by the respondents. We may add that the
notifications under Sections 4 and 6 are not defective on any of the
grounds urged before us on behalf of the petitioner as held by us and the
declaration under Section 6 is conclusive evidence that the land in dispute
is needed for a public purpose.”
111. In Aflatoon v. Lt. Governor of Delhi (1975) 4 SCC 285 land was sought
to be acquired for “Planned Development of Delhi”. Neither the master plan
nor the zonal plan was ready. The question before this Court was whether
acquisition proceedings could have been initiated in the absence of master
plan or zonal plan. Considering the relevant provisions of the Delhi
Development Act, 1957, the Court held that the proceedings did not get
vitiated in the absence of such plan. The Court observed that acquisition
generally precedes development. If for proper development, land is sought
to be acquired, such action could not be said to be illegal, unlawful or in
colourable exercise of power. It was also contended that the acquisition
was for company inasmuch as after acquisition, the Government proposed to
hand over the property or a portion thereof to cooperative housing
societies and since procedure in Part VII of the Act was not followed, the
acquisition was not valid. Even the said contention was negatived by the
Court observing that merely because the Government allotted a portion of
the property to cooperative societies, Part VII did not get attracted and
the acquisition could not be held invalid. (See also Ajay Krishan Shinghal
v. Union of India (1996) 10 SCC 721.)
112. In S.S. Darshan v. State of Karnataka (1996) 7 SCC 302 land was sought
to be acquired under the Act for public purpose, namely, for setting up
Information Technological Park. Challenging the acquisition, it was
contended by the petitioners that the acquisition was mala fide and in
colourable exercise of power since primarily the acquisition was for a
private limited company and not for the State. The relevant part of the
notification read thus: (S.S. Darshan case (supra), SCC p. 304, para 5)
“The lands shown in the annexed index are required for a public purpose,
that is, to establish information technological park through Karnataka
Industrial Areas Development Board.” (emphasis supplied)
Emphasising the fact that the acquisition was through the Board, this Court
ruled that acquisition was for a public purpose. The notification stated
about public purpose of establishment of information technological park
through the Board. Considering various clauses in the joint venture
agreement, the Court held that the cumulative effect of all went to show
that acquisition was for the public purpose of setting up technological
park by the Government of Karnataka through the Karnataka Industrial Areas
Development Board and was, therefore, valid.
113. In W.B. Housing Board v. Brijendra Prasad Gupta (1997) 6 SCC 207 land
was acquired for providing houses to poor people. The action was
challenged, inter alia, on the ground that the Housing Board was to earn
profit and hence it could not have been said to be a public purpose.
Refuting the contention and upholding the acquisition, the Court took note
of the fact that it was a matter of common knowledge that there is acute
shortage of housing accommodation both in rural and urban areas of the
country. The Court also stated that since late the prices of real estate
have sky-rocketed making it beyond the reach of low income and middle
income groups of people, hence, the State has a duty to give shelter to
homeless people, specially, to the people of the low income group. If for
that purpose it sought to acquire land, it could not be said that
acquisition was illegal or unlawful.
114. Regarding earning of profit, the Court stated: (Brijendra Prasad Gupta
case (supra), SCC p. 225, para 26)
“26. Simply because there is an element of profit, it could not make the
whole scheme illegal. A private entrepreneur will certainly look to some
profit but to see that the profit motive does not lead to exploitation even
of the rich and that the houses are available to the poor people and to
middle class people at nominal or affordable prices, or even on no-profit-
no-loss basis, the Housing Board exercises the necessary control. It is
certainly a public purpose to provide houses to the community especially to
poor people for whom the prices are beyond their means and they would
otherwise never be able to acquire a house.”
The Court concluded: (Brijendra Prasad Gupta case (supra), SCC p. 225, para
28)
“28. The Court must shake off its myth that public purpose is served only
if the State or the Housing Board or the joint sector company does not earn
any profit. There cannot be any better authority than the State or the
statutory corporation to supervise or monitor the functions of the joint
venture company. Courts will certainly step in if the public purpose is
sought to be frustrated.”(emphasis supplied)
116. Reliance was also placed on State of Karnataka v. All India
Manufacturers Organisation (2006) 4 SCC 683. In that case, the Government
of Karnataka undertook a mega project for developing its transport and
communication system. A memorandum of understanding was entered into
between the State Government and a company for implementation of the
project and lands were acquired. A public interest litigation (PIL) was
filed in the High Court alleging that the land was not needed for public
purpose and yet excess land was acquired and had been given to a company.
The action was, therefore, illegal, unlawful and mala fide. Negativing the
contention and upholding the action, this Court observed that the project
was an integrated infrastructure development project and not merely a
highway project. As an integrated project, it required acquisition and
transfer of lands even away from the main alignment of the road.
Acquisition of land and giving it to the company was, therefore, legal and
lawful and did not suffer from mala fides.
127. We would have indeed considered the contention of the learned counsel
for the appellants closely in the light of earlier decisions of this Court.
We are, however, of the view that on the facts and in the circumstances of
the present case, the Government was right in forming an opinion and
reaching a satisfaction as to “public purpose” and in initiating
proceedings under Sections 4 and 6 and in invoking Part II of the Act. We,
therefore, refrain from undertaking further exercise. In our considered
opinion, it is not necessary for us to enter into larger question in view
of “fact situation” in the instant case.
Conclusions
128. Applying the aforesaid principles to the case on hand, in our
considered opinion, it cannot be said that the proceedings initiated by the
State for acquisition of land under the Land Acquisition Act, 1894 are
illegal, unlawful, unwarranted, mala fide, fraud on statute or have been
taken in colourable exercise of power.
131. In our judgment, the respondents are right in submitting that in case
of integrated and indivisible project, the project has to be taken as a
whole and must be judged whether it is in the larger public interest. It
cannot be split into different components and to consider whether each and
every component will serve public good. A holistic approach has to be
adopted in such matters. If the project taken as a whole is an attempt in
the direction of bringing foreign exchange, generating employment
opportunities and securing economic benefits to the State and the public at
large, it will serve public purpose.
132. It is clearly established in this case that the infrastructure
development project conceived by the State and executed under the auspices
of its instrumentality (APIIC) is one covered by the Act. The joint venture
mechanism for implementing the policy, executing the project and achieving
lawful public purpose for realising the goal of larger public good would
neither destroy the object nor vitiate the exercise of power of public
purpose for development of infrastructure. The concept of joint venture to
tap resources of private sector for infrastructural development for
fulfilment of public purpose has been recognised in foreign countries as
also in India in several decisions of this Court.
133. The entire amount of compensation is to be paid by State agency
(APIIC) which also works as nodal agency for execution of the project. It
is primarily for the State to decide whether there exists public purpose or
not. Undoubtedly, the decision of the State is not beyond judicial
scrutiny. In appropriate cases, where such power is exercised mala fide or
for collateral purposes or the purported action is dehors the Act,
irrational or otherwise unreasonable or the so-called purpose is “no public
purpose” at all and fraud on statute is apparent, a writ court can
undoubtedly interfere. But except in such cases, the declaration of the
Government is not subject to judicial review. In other words, a writ court,
while exercising powers under Articles 32, 226 or 136 of the Constitution,
cannot substitute its own judgment for the judgment of the Government as to
what constitutes “public purpose”. (emphasis supplied)
Thus this Court has laid down that when the entire compensation is to
be paid by APIIC, it is for the State to decide whether there exists a
public purpose or not, though the decision of the State is not beyond
judicial scrutiny. Whether it is exercised mala fide or collaterally or de
hors of the Act and no public purpose would be served, court can interfere.
The expenditure out of the funds of the APIIC was held to be from public
revenue as provided in Explanation 2 of section 6(1) of the Act.
23. In Urmila Roy & Ors. v. Bengal Peerless Housing Development Co. Ltd.
& Ors. (2009) 5 SCC 242, this Court has considered the amended provisions
and Explanation 2 of section 6 and held that the expenditure is the test
for applicability of the procedure prescribed in Part II as it was borne by
the State Government or the Housing Board that the acquisition was for Part
II and not Part VII of the Act. This Court has held thus:
“38. A perusal of the second proviso and Explanation 2 of Section 6 in
particular reveals that if the compensation awarded for the property is
paid substantially out of the funds of a corporation owned or controlled by
the State, such compensation will be deemed to be paid out of public funds
and as such would satisfy the test of acquisition for a public purpose.
39. We see from the record that as per the letter issued by the Land
Acquisition Collector on 13-11-2001 to the Housing Ministry of the State
Government, a request had been made that a sum of Rs 3 crores which
represented about 50% of the compensation of the acquired land be
deposited. This memo had been forwarded by the State Government to the
Housing Board and on 23-11-2001 a sum of Rs 1.70 crores towards
compensation had been sent by Bengal Peerless to the Land Acquisition
Collector through the Housing Board.
40. It appears that on 30-10-2003 the State Government had requested the
Housing Board to make arrangements for the balance payment of compensation
of about Rs 82,04,138 and by a memorandum of 31-10-2003 the Government of
West Bengal had directed the Housing Board to pay the additional balance
compensation which too was defrayed by an account payee cheque dated 3-11-
2003 drawn on Bank of Maharashtra. The accounts statement of Bank of
Maharashtra was produced before us for perusal and this statement supports
the argument that the aforesaid amount had, indeed, been paid from the
funds of the Housing Board which is completely owned and controlled by the
State Government.
41. In their written submissions the appellants have doubted the accuracy
of this accounts statement, by asserting that they had not been able to
verify its contents as it had been produced for the first time in this
Court. We find that even if this objection is accepted and the statement
ruled out of consideration, the other evidence on record does indicate that
a substantial part of the compensation had been paid from the government
funds.
43. In Indrajit Parekh v. State of Gujarat (1975) 1 SCC 824 in which a
somewhat restricted meaning has been given to the extremely broad
parameters laid down in Pratibha Nema case (supra), but it has nonetheless
been observed that if a reasonable amount of compensation had been drawn
out of government funds, it would satisfy the requirement of a public
purpose as per the Act.
44. In the present case, as already mentioned above, we find that a
substantial part of the compensation has, indeed, been paid by the State
Government or by the Housing Board which clearly satisfies the test of
public purpose. In this background, we endorse the finding of the Division
Bench that the procedure envisaged in Part II and not in Part VII of the
Act would be applicable. This is precisely what has been done.”
24. In Nand Kishore Gupta & Ors. v. State of U.P. & Ors. (2010) 10 SCC
282, this Court has referred to the decisions in Devinder Singh (supra) and
Pratibha Nema (supra) and has laid down that there was no conflict in the
decisions. This Court has considered the matter thus :
“80. During the debate, the decision in Devinder Singh v. State of Punjab
(2008) 1 SCC 728 was also referred to. It was urged that there was a
conflict in this decision and the decision in Pratibha Nema case (2003) 110
SCC 626. This was a case where the petitioners who were the owners of the
agricultural lands, had challenged the acquisition of lands for M/s
International Tractors Ltd. It was claimed that the land was being acquired
for public purpose i.e. setting up Ganesha Project of M/s International
Tractors Ltd. at various villages. The High Court had held that the land
acquisition was for public purpose. This Court explained the “public
purpose” as defined in Section 3(f) of the Act and noted that the
aforementioned Ganesha Project was not a project of the State, but the one
undertaken by the Company M/s International Tractors Ltd. The Court then
went on to consider Sections 40 and 41 of the Act along with Rule 4 of the
Land Acquisition (Companies) Rules, 1963 and came to the conclusion that
the same could not be a public purpose as the whole compensation was coming
from the coffers of the Company. In that view, the Court further came to
the conclusion that the State not having followed the provisions of
Sections 40 and 41 of the Act, the whole process had suffered illegality.
81. The Court also considered the decision in Pratibha Nema case (supra)
and distinguished the same by making a comment to the following effect:
(Devinder Singh case (supra), SCC p. 738, para 22)
“22. … But we must hasten to add that the Bench did not have any occasion
to consider the question as to whether the State is entitled to take
recourse to the provisions of both Part II and Part VII of the Act
simultaneously.”
The Court, however, refused to go into the nicety of the question and
observed that in a case of acquisition for a public company, public purpose
is not to be assumed and the point of distinction between acquisition of
lands under Part II and Part VII of the Act would be the source of funds to
cover the cost of acquisition. The Court also considered the judgment of
this Court in Somawanti v. State of Punjab, AIR 1963 SC 151, Jage Ram v.
State of Haryana (1971) 1 SCC 671 and Shyam Behari v. State of M.P. AIR
1965 SC 427 Ultimately, the Court came to the conclusion that the necessary
provisions not having been found, the view of the High Court was not
correct, whereby it had upheld the land acquisition, holding it to be for
the public purpose.
82. We have closely seen the judgment in Devinder Singh (supra) however,
the factual situation in the judgment is quite different. In our opinion,
the judgment will not help the appellants to contend that the present land
acquisition is not for public purpose. We also do not think that there is
any serious conflict between the decision in Pratibha Nema case (supra) and
the decision in Devinder Singh v. State of Punjab (supra), so as to require
a reference to the larger Bench. In our opinion, the decision in Pratibha
Nema case (supra) applies to the fact situation in this case.
83. Therefore, considering the overall factual situation, we are of the
opinion that the High Court was right in holding that the acquisition was
made for the public purpose. We find from the order of the High Court that
the High Court has considered the question of public purpose keeping in
mind the correct principles of law. We are, therefore, of the opinion that
the contention raised by the learned counsel for the appellants that this
acquisition was not for the public purpose for various reasons which we
have discussed, is not correct.”
25. In my opinion for the purpose of acquiring land in the instant case
it was not necessary to have recourse to the provisions contained in
Chapter VII of the Act. The proposal submitted to the Cabinet on 30.5.2006
indicates that the West Bengal Industrial Development Corporation (WBIDC)
was the acquiring body to acquire 1053 acres of land for Small Car Project
of TML at Singur which was comprised in Gopal Nagar, Singherberi, Beraberi,
Khaserberi and Bajemelia. Thus the Cabinet has approved the said proposal.
WBIDC was associated with the project right from the beginning and was
instrumental in getting the land identified by the TML for the purpose of
selection. The memo for the Standing Committee of the Cabinet on Industry
dated 26.7.2006 contains the decision of acquisition of land for public
purpose under Land Acquisition Act it was made considering the following
facts :
“(B) Declaration of Acquisition as Public Purpose under the LA Act
Keeping in view the importance of this Industrial investment in the
automobile sector for the industrial development of the State, and keeping
in view the fact that the land is being acquired by the West Bengal
Industrial Development Corporation as the Requiring Body, and WBIDC being a
Corporation owned and controlled by the State Government, it is proposed
that this acquisition be done for public purpose in terms of Section
3(f)(iv) of the Land Acquisition Act, 1894.
The matter is accordingly placed before the Standing Committee of the
Cabinet on Industries for decision on the following :
Approval of the revised package of incentives as described in item A above;
Approval for taking up land acquisition for public purpose as described in
item B above.”
The Standing Committee has approved the same as apparent from the
Minutes placed on record. Notification under section 4 of the Act was
published in the Gazette on 21.7.2006 in which it was mentioned that the
land is likely to be needed by the Government/Government
undertaking/Development Authorities at the public expense for public
purpose, viz., employment generation and socio-economic development of the
area by setting up small car project. Though it was not specifically
mentioned that the WBIDC is to be the acquiring body but a decision had
already been taken in this regard and the aforesaid expression Government
Undertaking/Development authorities would include acquisition by WBIDC as
the Government has decided to treat it as a public purpose as it was to
generate direct employment to 1800 persons and by direct employment through
vendors and through other service providers to 4700 persons approx. Similar
is the position with respect to declaration under section 6 of the Act. As
the Government has treated the acquisition for a public purpose and the
entire money has been paid by WBIDC consequently by mere mention that the
land was required for the small car project of TML would not make it an
acquisition for a company under Part VII. Non-mention of WBIDC cannot be
taken to be an illegality impinging the validity of the notification under
section 4 of the Act. The fact that the application was filed by TML
indicating its willingness for setting up the industry would not also make
it an acquisition for a company but how the State has dealt with the same,
would be the decisive factor. Since WBIDC was involved right from the
beginning by the State Government and a decision was taken by the State
Government that WBIDC would be the acquiring authority and WBIDC was
involved in identification of the land and the reports were submitted by it
to the Government, the acquisition was for WBIDC is apparent as the land
was to vest in the WBIDC and it has paid the compensation. Payment of
premium amount as per the conditions of lease agreement fastened upon the
TML would also not make it a compensation paid by TML as already discussed
hereinabove. In my opinion it was not necessary for the State Government to
deposit the amount of compensation as compensation paid by the corporation
is also to be treated out of public revenue.
26. The aims and objects of the amendment of section 3(f) when taken into
consideration would not alter the aforesaid position of law. Acquisition of
land for a company or for industrialization if it is for public purpose
would be covered under section 3(f) as amended and when corporation is the
acquiring authority and amount of compensation is borne by it in entirety
and land has been ultimately leased out to TML for its project by it the
acquisition would remain for a public purpose under section 3(f) attracting
Part II of the Act. The procedure adopted under Part II cannot be said to
be impermissible. It cannot be said to be acquisition under guise of public
purpose so as to violate the intendment of exclusion of the company from
section 3(f) as amended.
27. Considering the various decisions rendered by this Court in post-
amendment period in Amarnath Ashram Trust Society & Anr. v. Government of
U.P. & Ors., Pratibha Nema, Devinder Singh v. State of Punjab, Sooraram
Pratap Reddy, Urmila Roy & Ors. v. Bengal Peerless Housing Development Co.
Ltd. & Ors., and Nand Kishore Gupta v. State of U.P. discussed hereinabove
are binding on a Co-ordinate Bench and I find no reason to take a different
view on merits .
28. Even otherwise I feel bound by the principle of stare decisis in view
of the aforesaid consistent decisions of this Court. In WamanRao v. Union
of India (1981) 2 SCC 362, it has been laid down that the rule of stare
decisis requires that it is unnecessary to enquire or determine as to what
was the rationale of the earlier decision which is said to operate as stare
decisis. In Union of India v. Raghubir Singh (1989) 2 SCC 754, it has been
laid down that the law declared by this Court should be certain, clear and
consistent. The doctrine of binding precedent has the merit of promoting
certainty and consistency in judicial decisions. In Krishena Kumar v. Union
of India (1990) 4 SCC 207, law to the similar effect has been laid down
when departure is rendered necessary to vindicate plain, obvious principles
of law and remedy continued injustice. In Mishri Lal v. Dhirendra Nath,
(1999) 4 SCC 11 it has been laid down that the doctrine is based on ‘public
policy’ and should be adhered to subserve the ends of justice.
In Central Board of Dawoodi Bohra Community v. State of Maharashtra (2005)
2 SCC 673, it has been observed that the doctrine has the merit of
promoting certainty and consistency in judicial decisions, and enables an
organic development of the law, besides providing assurance to the
individual as to the consequence of transactions forming part of daily
affairs. In Shanker Raju v. Union of India (2011) 2 SCC 132 it has been
observed that a judgment, which has held the field for a long time, should
not be unsettled. The view which has held the field for a long time should
not be disturbed only because another view is possible. In Fida Hussain v.
Moradabad Development Authority & Anr. (2011) 12 SCC 615 it has been
observed that the decision of two Judges is binding on another Division
Bench of two Judges. Following observations have been made by this Court in
Union of India v. Raghubir Singh (1989) 2 SCC 754 :
“28. We are of the opinion that a pronouncement of law by a Division Bench
of this Court is binding on a Division Bench of the same or a smaller
number of Judges, and in order that such decision be binding, it is not
necessary that it should be a decision rendered by the Full Court or a
Constitution Bench of the Court.”
In Union of India v. Paras Laminates (P) Ltd. (1990) 4 SCC 453 it has been
observed that a Co-ordinate Bench should not disturb the decision on an
identical question. The rationale of this rule is the need for continuity,
certainty and predictability in the administration of justice. It is
necessary to inculcate confidence in the administration of justice as laid
down in Joint Commissioner of Income Tax, Surat v. Saheli Leasing and
Industries Ltd. (2010) 6 SCC 384. It cannot be referred to a larger Bench
unless there is an error apparent on its face or that a particular earlier
decision was not noticed, which has a direct bearing or has taken a
contrary view. In The Keshav Mills Co. Ltd. v. CIT, AIR 1965 SC 1636 a
Constitution Bench of this Court has observed that in reviewing and
revising its earlier decision, in the interests of the public good or for
any other valid and compulsive reasons, it must be the constant endeavour
and concern of this Court to introduce and maintain an element of certainty
and continuity in the interpretation of law.
29. In my opinion, on merits the view taken by this Court does not
require reconsideration at all and otherwise also I find no ground in view
of the consistent decisions to take a different view.
30. For the aforesaid reasons I respectfully disagree with the conclusion
of esteemed brother on question numbers 1 and 2.
IN RE. QUESTION NOS. 3, 4 AND 5
31. Coming to question nos. 3, 4 and 5 as they are inter connected, it
appears that even before issuance of notification under section 4 of the
Act decision has been taken to acquire the land in question. The
notification under section 4 is an introductory measure. Section 4 of the
Act is extracted hereunder :
“4. Publication of preliminary notification and powers of officers
thereupon.—(1) Whenever it appears to the appropriate Government that land
in any locality is needed or is likely to be needed for any public purpose
or for a company a notification to that effect shall be published in the
Official Gazette and in two daily newspapers circulating in that locality
of which at least one shall be in the regional language and the Collector
shall cause public notice of the substance of such notification to be given
at convenient places in the said locality (the last of the dates of such
publication and the giving of such public notice, being hereinafter
referred to as the date of publication of die notification).
(2) Thereupon it shall be lawful for any officer, either generally or
specially authorized by such Government in this behalf, and for his
servants and workmen,—
to enter upon and survey and take levels of any land in such locality; to
dig or bore in the sub-soil;
to do all other acts necessary to ascertain whether the land is adapted for
such purpose;
to set out the boundaries of the land proposed to be taken and the intended
line of the work (if any) proposed to be made thereon;
to mark such levels, boundaries and line by placing marks and cutting
trenches; and,
where otherwise the survey cannot be completed and the levels taken and the
boundaries and line marked to cut down and clear away any part of any
standing crop, fence or jungle:
Provided that no person shall enter into any building or upon any enclosed
court or garden attached to a dwelling-house (unless with the consent of
the occupier thereof) without previously giving such occupier at least
seven days’ notice in writing of his intention to do so.”
32. It is apparent from section 4(2) that after notification is issued it
shall be lawful for any officer to enter upon and survey and to do all the
acts which are necessary to ascertain whether land is adapted for such
purpose. The notification is of exploratory character and it does not
proprio motu result in acquisition. The proposal for acquisition in any
particular locality ripens into definite proceedings where Government is
satisfied how land is needed for public purpose. Section 4(1) does not
require land to be defined or identified but requires locality to be stated
so as to file objection under section 5 of the Act. In the instant case the
Cabinet has taken a decision to acquire the said land beforehand for which
a notification has ultimately been issued under sections 4 followed by
declaration under section 6 of the Act. The right under section 5A of the
Act is a valuable right has been laid down in various decisions cited at
bar referred hereinafter.
33. In Raghubir Singh Sherawat v. State of Haryana & Ors. (2012) 1 SCC
792 it was observed thus :
“39. In this context, it is necessary to remember that the rules of natural
justice have been ingrained in the scheme of Section 5-A with a view to
ensure that before any person is deprived of his land by way of compulsory
acquisition, he must get an opportunity to oppose the decision of the State
Government and/or its agencies/instrumentalities to acquire the particular
parcel of land. At the hearing, the objector can make an effort to convince
the Land Acquisition Collector to make recommendation against the
acquisition of his land. He can also point out that the land proposed to be
acquired is not suitable for the purpose specified in the notification
issued under Section 4(1). Not only this, he can produce evidence to show
that another piece of land is available and the same can be utilised for
execution of the particular project or scheme.”
In Kamal Trading (P) Ltd. v. State of W.B. (2012) 2 SCC it was held thus :
“25. According to the appellant, the notification under Section 4 of the LA
Act was not served on the owner companies. However, upon coming to know of
this notification, the appellant vide their letter dated 8-9-1997 submitted
objections running into four pages containing 8 paragraphs. We have already
noted that the Second Land Acquisition Officer adjourned the hearing on one
occasion as requested by the appellant. He, however, refused to adjourn the
matter any further. The second request was rejected. We feel that looking
to the nature of the issues involved, the Second Land Acquisition Officer
could have adjourned the proceedings after putting the appellant to terms
because hearing the representative of the owner companies was mandatory. In
any event, if he did not want to adjourn the proceedings and wanted to
consider the objections in the absence of the counsel for the owner
companies and assuming such a course is permissible in law, he should have
dealt with the objections carefully and not in such a light-hearted manner
because a heavy responsibility rested on his shoulders.” (emphasis
supplied)
34. In Surinder Singh Brar & Ors.v. Union of India & Ors. (2013) 1 SCC
403 it was observed thus :
“69. In the context of the statement contained in the first line of the
paragraph titled “Observations”, we repeatedly asked ShriSudhirWalia,
learned counsel assisting Dr Rajiv Dhavan to show as to when the LAO had
summoned the revenue records and when he had conducted spot inspection but
the learned counsel could not produce any document to substantiate the
statement contained in the two reports of the LAO. This leads to an
inference that, in both the reports, the LAO had made a misleading and
false statement about his having seen the revenue records and conducted
spot inspection. That apart, the reports do not contain any iota of
consideration of the objections filed by the landowners. Mere reproduction
of the substance of the objections cannot be equated with objective
consideration thereof in the light of the submission made by the objectors
during the course of hearing. Thus, the violation of the mandate of Section
5-A(2) is writ large on the face of the reports prepared by the LAO.
(emphasis supplied)
70. The reason why the LAO did not apply his mind to the objections filed
by the appellants and other landowners is obvious. He was a minion in the
hierarchy of the administration of the Union Territory of Chandigarh and
could not have even thought of making recommendations contrary to what was
contained in the letter sent by the Administrator to Surinder Singh Brar.
If he had shown the courage of acting independently and made recommendation
against the acquisition of land, he would have surely been shifted from
that post and his career would have been jeopardised. In the system of
governance which we have today, junior officers in the administration
cannot even think of, what to say of, acting against the wishes/dictates of
their superiors. One who violates this unwritten code of conduct does so at
his own peril and is described as foolhardy. Even those constituting higher
strata of services follow the path of least resistance and find it most
convenient to tow the line of their superiors. Therefore, the LAO cannot be
blamed for having acted as an obedient subordinate of the superior
authorities, including the Administrator. However, that cannot be a
legitimate ground to approve the reports prepared by him without even a
semblance of consideration of the objections filed by the appellants and
other landowners and we have no hesitation to hold that the LAO failed to
discharge the statutory duty cast upon him to prepare a report after
objectively considering the objections filed under Section 5-A(1) and
submissions made by the objectors during the course of personal hearing.
(emphasis supplied).
76. Section 5-A, which embodies the most important dimension of the rules
of natural justice, lays down that any person interested in any land
notified under Section 4(1) may, within 30 days of publication of the
notification, submit objection in writing against the proposed acquisition
of land or of any land in the locality to the Collector. The Collector is
required to give the objector an opportunity of being heard either in
person or by any person authorised by him or by pleader. After hearing the
objector(s) and making such further inquiry, as he may think necessary, the
Collector has to make a report in respect of land notified under Section
4(1) with his recommendations on the objections and forward the same to the
Government along with the record of the proceedings held by him. The
Collector can make different reports in respect of different parcels of
land proposed to be acquired.
84. What needs to be emphasised is that hearing required to be given under
Section 5-A(2) to a person who is sought to be deprived of his land and who
has filed objections under Section 5-A(1) must be effective and not an
empty formality. The Collector who is enjoined with the task of hearing the
objectors has the freedom of making further enquiry as he may think
necessary. In either eventuality, he has to make report in respect of the
land notified under Section 4(1) or make different reports in respect of
different parcels of such land to the appropriate Government containing his
recommendations on the objections and submit the same to the appropriate
Government along with the record of proceedings held by him for the
latter’s decision. The appropriate Government is obliged to consider the
report, if any, made under Section 5-A(2) and then record its satisfaction
that the particular land is needed for a public purpose. This exercise
culminates into making a declaration that the land is needed for a public
purpose and the declaration is to be signed by a Secretary to the
Government or some other officer duly authorised to certify its orders. The
formation of opinion on the issue of need of land for a public purpose and
suitability thereof is sine qua non for issue of a declaration under
Section 6(1). Any violation of the substantive right of the landowners
and/or other interested persons to file objections or denial of opportunity
of personal hearing to the objector(s) vitiates the recommendations made by
the Collector and the decision taken by the appropriate Government on such
recommendations. The recommendations made by the Collector without duly
considering the objections filed under Section 5-A(1) and submissions made
at the hearing given under Section 5-A(2) or failure of the appropriate
Government to take objective decision on such objections in the light of
the recommendations made by the Collector will denude the decision of the
appropriate Government of statutory finality. To put it differently, the
satisfaction recorded by the appropriate Government that the particular
land is needed for a public purpose and the declaration made under Section
6(1) will be devoid of legal sanctity if statutorily engrafted procedural
safeguards are not adhered to by the authorities concerned or there is
violation of the principles of natural justice. The cases before us are
illustrative of flagrant violation of the mandate of Sections 5-A(2) and
6(1). Therefore, the second question is answered in the affirmative.
(emphasis supplied)
87. The proposition laid down in the aforementioned two judgments does not
support the stance of the Chandigarh Administration that even though there
is breach of the mandate of Section 5-A read with Section 6(1), the Court
cannot, after the issue of declaration under Section 6(1), nullify the
acquisition proceedings. As a matter of fact, the ratio of both the
judgments is that satisfaction of the appropriate Government envisaged in
Section 6(1) must be preceded by consideration of the report prepared by
the Collector after considering the objections filed under Section 5-A and
hearing the objectors. This necessarily implies that the Government must
objectively apply its mind to the report of the Collector and the
objections filed by the landowners and then take a decision whether or not
the land is needed for the specified public purpose. A mechanical
endorsement of the report of the Collector cannot be a substitute for the
requirement of application of mind by the Government which must be clearly
reflected in the record.
88. In addition to what we have observed on the issue of flagrant violation
of the two sections, it will be apposite to recapitulate the language of
the declarations issued under Section 6(1), which were published on 28-2-
2007. A reading of the declarations makes it clear that the authority
issuing the same was totally unmindful of the requirement of the statute.
This could be the only reason why instead of recording satisfaction of the
appropriate Government that the land is needed for a public purpose, the
notification uses the expressions “appears to the Administrator” and
“likely to be needed”. This only adds to the casualness with which the
entire issue of acquisition has been dealt with by the higher functionaries
of the Chandigarh Administration.
89. Adverting to the impugned order [Surinder Singh Brar v. Union of India,
W.P. (C) No. 5065 of 2007, decided on 18-3-2011 (P&H)], we find that the
High Court has not examined the substantive grounds on which the appellants
had challenged the acquisition of their land with the required seriousness
and failed to notice that the LAO had not at all considered several
objections including those relating to adverse impact on the environment
and ecology of the area raised by the landowners and mechanically
recommended the acquisition of land notified under Section 4(1), that the
reports of the LAO were not placed before the competent authority and that
even the Adviser had not objectively considered the reports of the LAO in
the light of the objections filed under Section 5-A(1) and simply appended
his signatures on the note prepared by the Secretary (Finance). This
omission on the High Court’s part has resulted in miscarriage of justice.”
35. In Gojer Brothers Private Ltd. & Anr. v. State of West Bengal & Ors.
(2013) 16 SCC 660 this Court observed :
“18. In Surinder Singh Brar v. Union of India (2013) 1 SCC 403, this Court
extensively considered the report prepared by the Land Acquisition Officer
and the decision taken by the administration of the Union Territory of
Chandigarh and observed: (SCC pp. 450-51, 455-58, paras 68-70, 76-79 & 84)
“68. A cursory reading of the reports of the LAO may give an impression
that he had applied his mind to the objections filed under Section 5-A(1)
and assigned reasons for not entertaining the same, but a careful analysis
thereof leaves no doubt that the officer concerned had not at all applied
his mind to the objections of the landowners and merely created a facade of
doing so. In the opening paragraph under the heading ‘Observations’, the
LAO recorded that he had seen the revenue records and conducted spot
inspection. He then reproduced the Statement of Objects and Reasons
contained in the Bill which led to the enactment of the Punjab New Capital
(Periphery) Control Act, 1952 and proceed to extract some portion of reply
dated 31-7-2006 sent by the Administrator to Surinder Singh Brar.
19. In Usha Stud and Agricultural Farms (P) Ltd. v. State of Haryana (2013)
4 SCC 210, the Court reiterated the propositions laid down in Raghbir Singh
Sehrawat case (2012) 1 SCC 792 and Kamal Trading (P) Ltd. v. State of W.B.
(2012) 2 SCC 25 and observed: (Usha Stud case (supra), SCC p. 227, para 30)
“30. The ratio of the aforesaid judgments is that Section 5-A(2), which
represents statutory embodiment of the rule of audi alteram partem, gives
an opportunity to the objector to make an endeavour to convince the
Collector that his land is not required for the public purpose specified in
the notification issued under Section 4(1) or that there are other valid
reasons for not acquiring the same. That section also makes it obligatory
for the Collector to submit report(s) to the appropriate Government
containing his recommendations on the objections, together with the record
of the proceedings held by him so that the Government may take appropriate
decision on the objections. Section 6(1) provides that if the appropriate
Government is satisfied, after considering the report, if any, made by the
Collector under Section 5-A(2) that particular land is needed for the
specified public purpose then a declaration should be made. This
necessarily implies that the State Government is required to apply mind to
the report of the Collector and take final decision on the objections filed
by the landowners and other interested persons. Then and then only, a
declaration can be made under Section 6(1).”
21. In our view, non-consideration of the objections filed under Section 5-
A(1) has resulted in denial of effective opportunity of hearing to the
appellant. The manner in which the Joint Secretary to the Government
approved the recommendation made by the Land Acquisition Collector
favouring acquisition of the property is reflective of total non-
application of mind by the competent authority to the recommendation made
by the Land Acquisition Collector and the report prepared by him.”
36. In Usha Stud & Agricultural Farms (P) Ltd. v. State of Haryana (2013)
4 SCC 210 this Court observed :
“30. The ratio of the aforesaid judgments is that Section 5-A(2), which
represents statutory embodiment of the rule of audialterampartem, gives an
opportunity to the objector to make an endeavour to convince the Collector
that his land is not required for the public purpose specified in the
Notification issued under Section 4(1) or that there are other valid
reasons for not acquiring the same. That section also makes it obligatory
for the Collector to submit report(s) to the appropriate Government
containing his recommendations on the objections, together with the record
of the proceedings held by him so that the Government may take appropriate
decision on the objections. Section 6(1) provides that if the appropriate
Government is satisfied, after considering the report, if any, made by the
Collector under Section 5-A(2) that particular land is needed for the
specified public purpose then a declaration should be made. This
necessarily implies that the State Government is required to apply mind to
the report of the Collector and take final decision on the objections filed
by the landowners and other interested persons. Then and then only, a
declaration can be made under Section 6(1).”
37. In Sharma Agro Industries v. State of Haryana & Ors. (2015) 3 SCC
341, it was observed :
“14. The Land Acquisition Collector in the present case has recommended to
the State Government that the land covered in these civil appeals need not
be acquired. On our direction, Mr. Manjit Singh, the learned Additional
Advocate General representing the State of Haryana has made available the
record pertaining to acquisition of the lands involved in these appeals.
The following is the relevant translated extract of the recommendations
made by the Land Acquisition Collector:
“On 16-1-2003 I visited the spot concerned for the purpose of inspection;
with the Kanoongo and Patwari belonging to the Revenue Department. A seller
has been established since 1981 in Khasra Nos. 3959, 3960, 3961/1, 3961/2,
3963, 3964, 3965, 3966/1, 3967, 3968 with a total area of 29 bighas 11
biswas. The Government of Haryana, Department of Industry, had also issued
a licence to the seller for this industry, and the same is operative till
date. An old factory is established in Khasra Nos. 3966/2, 3971/2, with a
total area of 1 bigha 11 biswas. Small-scale industry licences established
in Khasra Nos. 4000, 4001/2, 4001/1/1, 4001/1/2, 4001/1/3, 4002/1, 4002/2
where old factories along with lantered houses have been constructed. When
the land was acquired in 1986 in Sector 3, the abovementioned khasra
numbers were excluded from the acquisition process. Hence the
abovementioned land may be released, measuring total of 37 bighas and 13
biswas. The above numbers are leftover for acquirement.
sd/-
Land Acquisition Collector, Karnal”
The State Government has neither accepted the recommendations of the Land
Acquisition Collector nor assigned any reasons before issuing declaration
notification under Section 6 of the Act. The same is sought to be justified
by the learned Additional Advocate General contending that it is the
prerogative of the Government to either accept or reject the
recommendations of the Land Acquisition Collector with respect to the
proposed land to be acquired by issuing declaration notification under
Section 6 of the Act. This contention of the learned Additional Advocate
General is wholly untenable in law in view of the decisions referred to
above. However, after adverting to the decisions of this Court in the above
case and in the cases referred to supra, the said report of the Land
Acquisition Collector was neither accepted by the Government nor did the
Government assign any reasons before issuing the declaration notification
by holding that the land is required for public purpose, we are of the view
that the acquisition proceedings are vitiated in law.
15. The learned Senior Counsel for the appellants has rightly placed
reliance upon the decision of this Court in Vinod Kumar v. State of Haryana
(2014) 3 SCC 203, wherein this Court referred to the legal principle laid
down in Women’s Education Trust v. State of Haryana (2013) 8 SCC 99, and
has held as under: (SCC p. 119, para 35)
“35. What is most surprising is that the High Court did not even deal with
the issue relating to application of mind by the Government to the report
submitted by the Land Acquisition Collector under Section 5-A(2) along with
his recommendations. The documents produced before the High Court and this
Court do not show that the State Government had objectively applied mind to
the recommendations made by the Land Acquisition Collector and felt
satisfied that the land in question deserves to be acquired for the purpose
specified in the notification issued under Section 4(1). The record also
does not contain any indication as to why the State Government did not
consider it proper to accept the recommendations of the Land Acquisition
Collector. Therefore, there is no escape from the conclusion that the
impugned acquisition is ultra vires the provisions contained in Section 6
of the Act.””
38. In Vinod Kumar v. State of Haryana & Ors. (2014) 3 SCC 203 it was
observed thus:
“10. In Kamal Trading (P) Ltd. v. State of W.B. (2012) 2 SCC 25 it has been
held as under: (SCC pp. 29-30, paras 14-16)
“14. It must be borne in mind that the proceedings under the LA Act are
based on the principle of eminent domain and Section 5-A is the only
protection available to a person whose lands are sought to be acquired. It
is a minimal safeguard afforded to him by law to protect himself from
arbitrary acquisition by pointing out to the authority concerned, inter
alia, that the important ingredient, namely, ‘public purpose’ is absent in
the proposed acquisition or the acquisition is mala fide. The LA Act being
an expropriatory legislation, its provisions will have to be strictly
construed.
15. Hearing contemplated under Section 5-A(2) is necessary to enable the
Collector to deal effectively with the objections raised against the
proposed acquisition and make a report. The report of the Collector
referred to in this provision is not an empty formality because it is
required to be placed before the appropriate Government together with the
Collector's recommendations and the record of the case. It is only upon
receipt of the said report that the Government can take a final decision on
the objections. It is pertinent to note that declaration under Section 6
has to be made only after the appropriate Government is satisfied on the
consideration of the report, if any, made by the Collector under Section 5-
A(2). As said by this Court in Hindustan Petroleum Corpn. Ltd v. Darius
Shapur Chenai (2005) 7 SCC 627the appropriate Government while issuing
declaration under Section 6 of the LA Act is required to apply its mind not
only to the objections filed by the owner of the land in question, but also
to the report which is submitted by the Collector upon making such further
inquiry thereon as he thinks necessary and also the recommendations made by
him in that behalf.
16. Sub-section (3) of Section 6 of the LA Act makes a declaration under
Section 6 conclusive evidence that the land is needed for a public purpose.
Formation of opinion by the appropriate Government as regards the public
purpose must be preceded by application of mind as regards consideration of
relevant factors and rejection of irrelevant ones. It is, therefore, that
the hearing contemplated under Section 5-A and the report made by the Land
Acquisition Officer and his recommendations assume importance. It is
implicit in this provision that before making declaration under Section 6
of the LA Act, the State Government must have the benefit of a report
containing recommendations of the Collector submitted under Section 5-A(2)
of the LA Act. The recommendations must indicate objective application of
mind.” (emphasis supplied)
11. In Usha Stud and Agricultural Farms (P) Ltd. v. State of Haryana (2013)
4 SCC 210 it was held as under: (SCC p. 227, para 30)
“30. … Section 6(1) provides that if the appropriate Government is
satisfied, after considering the report, if any, made by the Collector
under Section 5-A(2) that particular land is needed for the specified
public purpose then a declaration should be made. This necessarily implies
that the State Government is required to apply mind to the report of the
Collector and take final decision on the objections filed by the landowners
and other interested persons. Then and then only, a declaration can be made
under Section 6(1).” (emphasis supplied)
12. Further, in Women's Education Trust v. State of Haryana (2013) 8 SCC
99, this Court has held as under: (SCC p. 119, para 35)
“35. What is most surprising is that the High Court did not even deal with
the issue relating to application of mind by the Government to the report
submitted by the Land Acquisition Collector under Section 5-A(2) along with
his recommendations. The documents produced before the High Court and this
Court do not show that the State Government had objectively applied mind to
the recommendations made by the Land Acquisition Collector and felt
satisfied that the land in question deserves to be acquired for the purpose
specified in the notification issued under Section 4(1). The record also
does not contain any indication as to why the State Government did not
consider it proper to accept the recommendations of the Land Acquisition
Collector. Therefore, there is no escape from the conclusion that the
impugned acquisition is ultra vires the provisions contained in Section 6
of the Act.” (emphasis supplied)
14. In the light of the foregoing cases, it is evident that the Government
has to consider the report of the Land Acquisition Collector while making
declaration of acquisition of land under Section 6 of the Act. Further, if
the Government is coming to a conclusion which is contrary to the report,
then the Government has to provide appropriate reasons for the same.”
39. In Gurbinder Kaur Brar & Anr. v. Union of India & Ors. (2013) 11 SCC
228 it was observed :
“9. We also agree with the learned counsel for the appellants that the
report of the Land Acquisition Officer was vitiated due to total non-
application of mind by the officer concerned to a large number of
substantive objections raised by the appellants under Section 5-A(1). He
mechanically rejected the objections and senior officers of the Chandigarh
Administration accepted the report of the Land Acquisition Officer despite
the fact that the same had been prepared in violation of Section 5-A(2).”
40. In the instant case it is apparent from the report that there is no
objective consideration of objections at any stage. The inquiry held and
the report sent under section 5A of the Act was clearly influenced by the
decision of the Cabinet taken before issuance of notification under section
4 of the Act to acquire land in certain J L numbers in particular mouza’s
as per the choice of location by TML which has prevailed whereas in the
matter of acquisition of such vast area comparative fertility aspect of
chunk of land to be selected ought to have been considered and land which
is more or less barren ought to have been preferred which exercise has not
been resorted to. Though the State Government could have taken decision
before issuance of notification under section 4 for setting up of project
however it could not have taken decision to acquire particular land in
various mouza’s before survey is undertaken as authorized by the provisions
contained in section 4 of the Act, the action of the State has the effect
of frustrating very purpose of holding inquiry under section 5A. The
inquiry held under section 5A is a farce and an eyewash neither the
Collector nor State Government considered the matter with objectivity as
mandated. Inquiry has not been done with open mind with requisite fairness
they were clearly influenced by decision of cabinet. Entire acquisition
stands vitiated in the facts and circumstances of the case. The case need
not be relegated to the stage of inquiry as project itself has been
abandoned.
41. However, for enquiry under section 5A individual notices are not
provided. It is not provided in the Act that individual notices should be
issued. The publications as envisaged under section 4 are enough and are
the only requirement of the law to be mandatorily observed pursuant to
which objections under section 5A are required to be filed. The
notification under section 4 is required to be published in the Official
Gazette and two daily newspapers; out of that one newspaper shall be in the
regional language, and public notice of such substance has to be given at
the convenient places in the locality. Within thirty days the objections
are to be filed under section 5A. Thus non-service of individual notices on
farmers would not vitiate the enquiry.
42. For the aforesaid reasons, I agree with the ultimate conclusion of
esteemed brother as to question nos.3, 4 and 5.
IN RE. QUESTION NUMBERS 6 TO 9
43. It appears that the award has been passed without issuance of notices
to holders on the pretext that it was not possible to serve them due to
prevailing situation. For determination of compensation individual notices
are required to be issued. Section 9(1) requires the Collector to publish
public notice for taking possession and for claims to compensation to be
made. Section 9(3) requires the Collector shall serve notice to the same
effect on the occupier if any, of the land and on all such persons known or
seem to be interested therein etc. In case the person interested resides
elsewhere notice has to be sent by post to the last known address or place
of business which has not been followed in the instant case. In my opinion
the service of personal notice is mandatory as required under section 9(3)
of the Act. Non-compliance of the provision would render the award invalid
requiring determination of compensation afresh at the same time it would
not have the effect on the validity of the notification under section 4 and
declaration made under section 6 of the Act. The award cannot be questioned
in the writ jurisdiction and non-issuance of individual notices under
section 9 would not vitiate the notification issued under sections 4 and
declaration made under section 6 of the Act. However, the fact remains that
proper procedure has not been followed in the instant matter. The question
of adequacy of the compensation determined cannot vitiate the acquisition.
It was also not disputed before us that after the award was passed on
merits, further consent awards were passed in favour of certain persons for
which no authority or provision of law could be shown. Be that as it may.
It would have no impact on validity of notification under section 4 or
declaration made under section 6 of the Act.
44. In my opinion question number 7 as to determination of proper
compensation cannot be considered in writ jurisdiction as any person
aggrieved by inadequacy of compensation has the remedy to seek reference as
provided in section 18 of the Act.
Accordingly I answer the question numbers 6, 7 and 8.
RELIEF
45. After acquisition of the land by WBDIC it granted lease to TML and
handed over possession. Ultimately, the TML could not start operations as
is apparent from its letter dated 28.9.2010. They had removed their
equipment and machinery also. Though the project would have been
beneficial, however in the circumstances it has moved out as environment
could not be created for normal working of the plant as mentioned in letter
of TML. The State Government has taken possession of the land from TML and
TML has abandoned its project in the State of West Bengal and has shifted
it to the State of Gujarat.
46. Possession has been taken ten years before from the landowners. In a
case where there are no sale-deeds evidence forthcoming compensation is
awarded to land-owners on annualized yield of 10 years as held by this
Court in Special Land Acquisition Officer v. Virupax Shankar Nadagouda
(1996) 6 SCC 124 and Collector, Land Acquisition v. Gana Ram Dhoba (1996) 1
SCJ 15. In the facts of this case it would be appropriate to direct that
land is given back to all land owners since they have been deprived of the
usufruct of the land for a decade as such the compensation paid to them
shall not be recovered. They are permitted to retain it or claim it in full
and final settlement of claim towards damages for deprivation of use of
their land etc.
47. In view of determination on question numbers 3, 4 and 5 and due to
violation of the provisions contained in section 5A of the Act, in the
facts of the case to do complete justice between the parties in exercise of
power under Article 142 of Constitution the entire proceedings pertaining
to land acquisition are quashed and case is not relegated in the instant
case to the stage of inquiry under section 5A of the Act as ordinarily
resorted to, as the very purpose of acquisition has failed and directing an
inquiry afresh would be an exercise in futility. The land shall be given
back to the land owners and compensation if any paid to them shall not be
recovered from them those who have not collected it are free to collect the
same in lieu of damages for deprivation of possession for ten years.
48. The impugned orders are set aside, the appeals are allowed with the
aforesaid directions. Parties to bear their own costs.
New Delhi; ………………………..J.
August 31, 2016. (Arun Mishra)
ITEM NO.1A-For JUDGMENT COURT NO.8 SECTION XVI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
C.A. No.8438/2016 @ Petition(s) for Special Leave to Appeal (C) No(s).
8463/2008
KEDAR NATH YADAV Petitioner(s)
VERSUS
STATE OF WEST BENGAL & ORS. Respondent(s)
WITH
C.A. No.8440/2016 @ SLP(C) No. 10731/2008
C.A. No.8441/2016 @ SLP(C) No. 11783/2008
C.A. No.8444/2016 @ SLP(C) No. 11830/2008
C.A. No.8446/2016 @ SLP(C) No. 12360/2008
C.A. No.8447/2016 @ SLP(C) No. 12724/2008
C.A. No.8453/2016 @ S.L.P.(C) No.25580/2016 @ SLP (C)...CC No. 13645/2008
C.A. No.8449/2016 @ SLP(C) No.22491/2008
Date : 31/08/2016 These matters were called on for pronouncement of
JUDGMENTS and ORDER today.
For Petitioner(s) Mr. B.P. Yadav, Adv.
Mr. Anindo Mukherjee, Adv.
Mrs Sarla Chandra,Adv.
Dr. M.P. Raju, Adv.
Mr. Ashwani Bhardwaj,Adv.
Mr. Joydeep Mukherjea, Adv.
Mr. Anip Sachthey,Adv.
Ms. Jyoti Mendiratta,Adv.
Mr. Prashant Bhushan,Adv.
Mr. Dharam Bir Raj Vohra,Adv.
For Respondent(s)
Mr. Sunil Kumar Verma,Adv.
Mr. Parijat Sinha,Adv.
Mr. Parijat Sinha,Adv.
Mr. Gopal Jain, Sr. Adv.
Mrs. Nandini Gore, Adv.
Mr. Abhishek Roy, Adv.
Ms. Tahira Karanjawala, Adv.
Mr. Sidharth Sharma, Adv.
Mr. Arjun Sharma, Adv.
Mrs. Manik Karanjawala, Adv.
Ms. Devina Sehgal, Adv.
For M/s. Karanjawala & Co.
Mrs Manik Karanjawala,Adv.
Mr. Avijit Bhattacharjee,Adv.
Hon'ble Mr. Justice V.Gopala Gowda and Hon'ble Mr. Justice Arun
Mishra pronounced separate judgments of the Bench comprising Hon'ble Mr.
Justice V. Gopala Gowda and Hon'ble Mr. Justice Arun Mishra.
Delay condoned in SLP(C)....CC No.13645 of 2008.
Leave granted.
The appeals are allowed in terms of the separate signed Reportable
Judgments and order.
Pending application(s), if any, stand(s) disposed of.
(VINOD KUMAR JHA) (SUMAN JAIN)
AR-CUM-PS COURT MASTER
| | | |
(Two Signed Reportable judgments along with Order are placed on the
file)
| | | |
-----------------------
[1] [2] (2008) 1 SCC 728
[3] [4] (1998) 1 SCC 591
[5] [6] AIR 1962 SC 764
[7] [8] AIR 1963 SC 1890
[9] [10] (1996) 8 SCC 758
[11] [12] ( 1985) 1 SCC 591
[13] [14] (2011) 10 SCC 608
[15] [16] A.I.R. 1994 MP 74
[17] [18] 2010 Supp All. L.J. 1
[19] [20] (1961) 2 SCR 459
[21] [22] (1963) 2 SCR 774
[23] [24] (1971) 1 SCC 671
[25] [26] (1975) 4 SCC 285
[27] [28] (2012) 1 SCC 792
[29] [30] (2013) 1 SCC 403
[31] [32] (2005) 6 SCC 745
[33] [34] (2003) 10 SCC 626
[35] [36] (2014) 8 SCC 804
[37] [38] (2011) 9 SCC 286
[39] [40] (1999) 6 SCC 464
[41] [42] (1980) 3 SCC 141
[43] [44] (2013) 4 SCC 210
[45] [46] AIR 1980 SC 318
[47] [48] AIR 1964 SC 72
[49] [50](1999) 3 SCC 422
[51] [52] (1975) 4 SCC 298
[53] [54] (2009) 10 SCC 115
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|Mouza | J.L. No |
|Gopal Nagar |13 |
|Singherberi |10 |
|Beraberi |05 |
|Khaserberi |11 |
|Bajemelia |12 |
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