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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.     5072         OF 2016 (ARISING OUT OF SLP (Civil) NO.5455 OF 2014)

UDDAR GAGAN PROPERIES LTD.                       …APPELLANT

VERSUS SANT SINGH & ORS.                         ...RESPONDENTS

WITH CIVIL APPEAL NOs.  5073-5077          OF 2016

(ARISING OUT OF SLP (Civil) NOS.5630-5634 OF 2014)

WITH CIVIL APPEAL NOs.    5079-5085          OF 2016

(ARISING OUT OF SLP (Civil) NOS.5641-5647 OF 2014)

WITH CIVIL APPEAL NO.      5086           OF 2016  (ARISING OUT OF SLP (Civil) N.5656 OF 2014)

WITH CIVIL APPEAL NO.     5100         OF 2016

(ARISING OUT OF SLP (Civil) NO.25843 OF 2014)

WITH CIVIL APPEAL NOs.   5087-5099         OF 2016

(ARISING OUT OF SLP (Civil) NO.19931-19943 OF 2014)

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J U D G M E N T   

ANIL R. DAVE, J.

1. Leave granted. Principal question which has fallen for

consideration is whether the power of the State to acquire

land for a public purpose has been used in the present case

to facilitate transfer of title of the land of original owners to a

private builder to advance the business interest of the said

builder which is not legally permissible. Further question is

whether on admitted facts, the acquisition of land is entirely

or  partly  for  a  private  company  without  following  the

statutory procedure for the said purpose.  Further question is

how in the facts and circumstances relief could be moulded.   

2. Vide notification dated 11th April, 2002, 850.88 acres of

land was proposed to be acquired for residential/commercial

Sector  27-28,  Rohtak,  Haryana  by  the  Haryana  Urban

Development  Authority  under  the  Haryana  Urban

Development Authority Act, 1977 (‘the 1977 Act’).  However,

the final notification dated 8th April, 2003 under Section 6 of

the Land Acquisition Act,  1894 (‘the 1894 Act’), according to

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the  impugned  order  of  the  High  Court,  was  in  respect  of

441.11 acres.   Award dated 6th April, 2005 was for 422.44

acres.   Appellant  –Uddar  Gagan  Properties  Limited  (‘the

Builder’)  who  is  a  Builder-cum-Developer  entered  into

collaboration agreements with some of the farmers – owners

whose land was under acquisition on 02nd March,  2005 for

development  of  a  Colony  in  accordance  with  the  Haryana

Development and Regulation of Urban Areas Act, 1975(‘the

1975 Act’).  The Builder made applications on and around 21st

March,  2005  to  the  Director,  Town  and  Country  Planning,

Chandigarh, Haryana for grant of licence to develop a colony

on land covering about 280 acres.  The licences were granted

on and around 12th June, 2006 and corresponding land was

released from acquisition.   The licences were addressed to

the owners but remitted to the builder.   This was followed by

execution  of  sale  deeds  in  favour  of  the  builder  through

power of attorney holder of the land owners.

3. It  was on these undisputed facts that the High Court

was  called  upon  to  examine  the  questions  on  a  group  of

petition/s  by  the  land  owners  which  are  framed  in  the

impugned judgment as follows :-  

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[i] Whether the object behind the subject-acquisition was to achieve a bona-fide public purpose or to use it  as  a  cloak  for  the  private  benefit  of Builder-cum-Developer?  [ii] Whether the power of 'eminent domain' has been exercised in violation of Articles 14, 21 and 300-A of the Constitution?  [iii] Whether it is lawful to enter into 'Agreement to Sell'  or 'Collaboration Agreement'  in respect of the land under acquisition and can an instrument of sale be executed in respect of such land?  [iv]  Whether a writ  court  in  exercise of  its  powers under Article 226 of the Constitution is competent to annul a sale-transaction executed in violation of and on playing a fraud on the Statute?  [v] Whether the orders granting Licenses or releasing the acquired land have been passed in favour of 11 th respondent  in  accordance  with  provisions  of  1975 State Act?   [vi] Whether the petitioners have got locus standi to challenge the 'licences' or the orders of  release of the acquired land in favour of respondent No. 11?  [vii]  Whether  writ  petitions  suffer  from  inordinate delay and latches?”

4. It was held that in view of the scheme of the 1977 Act,

the  notified public  purpose for  acquisition was  covered by

Section  3(f)(ii)  and  (iv)  of  the  1894  Act,  but  the  events

following  the  notification  for  acquisition  unfolded  different

story.   After  receipt  of  notices  by  the  land  owners  under

Section 9 of the 1894 Act, calling upon them to appear before

the Collector for determination of compensation, the builder

suddenly surfaced in March,  2005 and applied for grant of

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licences  for  setting  up colony on the land covered by the

notification  and  paid  full  sale  consideration  to  the  land

owners.   The  Government  files  deceptively  projected  the

initiative  to  release  land  at  the  instance  of  farmers  and

owners while the real fact was to transfer the title of land to

the builder.  Factual matrix  based  on record noticed in the

judgment of the High Court is as follows :-

“[60]. Awards No. 1, 2 and 3 were admittedly passed on 06th April, 2005 i.e. a day before the expiry of the statutory period of two years. As per the categoric stand taken by the Land Acquisition Collector in the written  statement  initially  filed,  he  took  over  the possession of land and handed-over it to the Estate Officer,  HUDA,  Rohtak  on  that  very  day,  i.e.,  06th April, 2005. The official record also substantiates this plea of the respondents. On doing so, the acquired land  stood  vested  absolutely  in  the  State Government, free from all encumbrances by virtue of Section 16 of the 1894 Act.

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[62]. The Government Files pertaining to the grant of licence  or  release  of  land  in  favour  of  11th respondent  have  been  deceptively  captioned  as  if the entire initiative to seek the release of land is at the instance of  the farmer–owners  of  the acquired land. That very record, however, falsifies this facade. The application dated 21st March, 2005 [receipt No. 2461] is on the letter-head of respondent No. 11. It is signed by one of its Directors. Form 'LC-I', however, earlier thumb impressions of previous owners along with the attested copies of 'Power of Attorney' and 'Collaboration  Agreements'  executed  by  them  in favour of respondent No. 11. The Application Forms refer to deposits of demand drafts of lacs of rupees. Who  paid  that  requisite  fee  or  statutory  charges?

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Was  it  by  the  farmers  whose  land  already  stood acquired  and who had not  received even  a  single penny  of  compensation?  OR  was  it  deposited  by respondent  No.  11?  The  copies  of  Demand  Drafts answer this query as every penny was deposited by respondent  No.  11  only.  The  illiterate  or semi-illiterate farmers had no knowledge except that their  land  was  under  acquisition  and  there  was  a Builder willing to pay them a price which was much more than the Government compensation.  

[63].  It  is  quite  unfortunate  and  misleading  that every  relevant  Government  file  recites,  say  for example, that “Shri Surat Singh and other individuals have  submitted  request  on  LC-I  for  setting  up  of Residential  Plotted Colony over  an area measuring 84.04  Acres.......  the  applicants  have  deposited  an amount  of  '`34,09140/-  towards  Scrutiny  Fee  and `42,02000/-  towards  Licence  Fee'.  The  said application was dealt with first time vide office note dated 19th August, 2005 yet no where it is disclosed that  the  land  had  already  been  acquired,  award passed and it stood vested in the State free from all encumbrances.  In  the  subsequent  notings,  the so-called 'applicants' disappeared and all the Officers starting  from  the  District  Town  Planner  onwards, have worked over-board to  contribute  in  favour  of the claim of 11th respondent.”

5. It was concluded :-  

“[69]. From the facts noticed above, there can be no different  conclusion  but  to  infer  that  though  the proposal  to  acquire  land  for  the  development  of Urban Sectors at Rohtak was mooted, approved and was  taken  to  a  logical  conclusion  for  a  bona-fide public  purpose.  However,  during  the  interregnum and before passing the Award, an unholy nexus to promote the private interest  of  respondent  No.  11 sprouted  which  de-railed  the  public  purpose  of acquisition  and  led  to  the  misuse  of  power  under Section  48  of  the  1894  Act.  Respondent  No.  11 exploited the moments of suspense and succeeded

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in  entering  into  distress-sale  agreements  with  the desperate owners who were sandwiched and had no other choice but to give in for a comparatively better offer.  

[70]. To say that the landowners entered into varied contracts  with  Respondent  No.11  voluntarily, willingly or without undue pressure is too farcical to be  believed.  There  is  a  natural  and  conventional bondage  between the  land  and  its  tiller.  A  farmer seldom  sells  the  land  save  for  the  compelling reasons.  Agricultural  being  their  only  source  of survival, the loss of land is a terrible nightmare for any  farmer.  The  Land  Acquisition  Collectors  never assess the compensation as per actual market value of the land and the only yardstick to be followed is the  Collector's  rate  fixed  for  the  purpose  of registration charges. The farmer can not sell the land in  open  market  as  on  issuance  of  Section  4 notification  all  sale  transactions  are  invariably banned.  These moments  of  fear  and anxiety must have prompted respondent No. 11 to indulge in the best  bargain.  For  the  farmers  the  offer  was  like 'better  you  give  the  wool  than  the  whole  sheep'. There was no free trade for the farmers. Their choice was limited   : to accept the State compensation at the Collector's rate or a better offer given by State sponsored  private  builder.  There  was  inequality  of bargaining power.  The determination  of  land value was not at all in the control of farmers. They were gropping in the dark. They had no clue that the land will  be  released.  They  accepted  the  unreasonable and unfair unilateral terms and lost their land.

[71]. The sale price of the land was determined by respondent  No.  11  and  not  by  the  market  forces. Given a choice between retaining their land or selling it  to the Builder  for  the offered-price,  not  a single farmer  would  have  agreed  to  sell  it.  The circumstances  forced  the landowners  to  accede to the  offer  made  by  11th  respondent  made.  It  is  a proven  case  of  unconscionable  bargain  exerted through undue influence and fraud, both. The sample 'agreements'  on  record  truly  reveal  that illiterate/semi-literate farmers were asked to sign the

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documents on dotted-lines forcing them to sell  out most  of  their  ancestral  holdings.  The  en-mass 'Agreements'  conclusively  belie  the  plea  of need-based bona-fide sales. How the Courts should deal  with  the  unconscionable  contracts  which  are injurious to public good and public interest, has been eloquently answered by the Supreme  Court  in  Central  Inland  Water  Transport Corporation Limited & Anr. Vs. Brojo Nath Ganguly & Anr. [1986] 3 SCC, 156 saying that “......Article 14 of the Constitution guarantees to all persons  equality  before  the  law  and  the  equal protection  of  laws........This  principle  is  that  the courts will not enforce and will, when called upon to do  so,  strike  down  an  unfair  and  unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power......For instance, the above principle  will  apply  where  the  inequality  of bargaining power is the result of the great disparity in  the  economic  strength  of  the  contracting parties.........It  will  also apply  where a man has no choice or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed  or  standard form or  to  accept  a  set  of rules  as  part  of  the  contract,  however  unfair, unreasonable  and  unconscionable  a  clause  in  that contract or form or rules may be.....”.

[72].  If  there  were  good  and  justifiable  reasons, though  conspicuously  missing  from the record,  for not  proceeding  with  the  subject-acquisition,  the State Government as a guardian of people's rights could shelve off its previous plan to develop Sector 27-28  at  Rohtak  through  the  State  agency  and release the land to its owners. It, however, did not do so.  Rather,  the  State  unleashed  the  threat  of  its mighty power under the ruse of eminent domain and created a psycho-fear in the mind of poor farmers that they would, if did not agree, lose the land and its value both.

[73].  We  may  now  also  deal  with  yet  another vigorously argued plea that the land was as a matter of  fact  released  from  acquisition  or  most  of  the

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licences were granted to respondent  No.  11 under the directions of this Court. The official respondents in the written statements have repeatedly referred to  CWP Nos.  14451 to 14453 of  2010  which were allowed by a learned Single Judge on 06th December, 2010 directing the State and its authorities to extend the  benefit  of  Section  48  of  the  1894  Act  to  the landowners and grant them licences. It is pertinent to mention that while CWP No. 14451 of 2010 was filed by M/s Uddar Gagan Properties Private Limited – respondent  No.  11  along  with  some  land-owners represented  it,  in  the  2nd  case  also  the  said Builder-cum-Developer was one of the writ petitioner and  the  other  farmers  were  also  impleaded “THROUGH THEIR POWER OF ATTORNEY HOLDER – SHRI  SANJAY  JAIN...”,  namely,  the  authorised representative  of  respondent  No.  11.  All  the  three writ petitions were, thus, filed by respondent No. 11 only. It is interesting to note that the learned Single Judge in his order dated 06th December, 2010 has said  that  “Two  sets  of  replies  have  been  filed  by respondents no. 1 and 2. While admitting the entire factual  averments  made  in  the  writ  petitions regarding the ownership of the acquired land by the petitioners, their applications for grant of licence and release of the part of the land and grant of licence to the petitioners in CWP No.14452 of 2010 and 14451 of  2010,  it  is  stated  that  possession  of  the  land where the Rabi crop was standing could not be taken over  by  the  Estate  Officer,  HUDA,  Rohtak/Land Acquisition Collector, Hissar as the land owners were granted  time  upto  30.4.2005  at  their  request. Subsequently, the matter was referred to the Deputy Commissioner,  Rohtak  who  vide  his  report  dated 17.3.2006  confirmed  the  possession  of  the  land owners upto October, 2005. Thereafter on account of status quo issued by the High Court in CWP Nos.1893 and 1894 of 2006, possession of tracts of  land for which licence was granted could not be taken over from the petitioners”. [Emphasis applied].  

[74].  It  may  be  seen  that  'the  public  purpose'  of acquisition,  the factum of taking possession of  the acquired land on 06th April, 2005, non-existence of any Government policy or a provision in the Statute

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to grant Licence for an acquired land etc. etc. were not disclosed before the learned Single Judge. Only selective  information  convenient  to  the  cause  of respondent No. 11 was brought on record. There is a serious doubt on the nature of contest given by the official  respondents  who  took  it  like  a  'friendly match'.  The  collusion  between  respondent  No.  11 and the senior functionaries is writ large in the fact that  despite  unambiguous  opinion  given  by  the Advocate General, Haryana that it was a fit case to file Letters Patent Appeal, the Department secured a contrary opinion from the office of LR, Haryana and allowed  the  judgment  of  learned  Single  Judge  to attain  finality.  In  this  entire  process,  the Constitutional  Office  of  the  Advocate  General  was also  belittled.  We  fail  to  understand  as  how  the opinion  given  by  the  Advocate  General  could  be over-ruled by securing a tailor-made opinion from an inferior authority.

[75]. The names of landowner-farmers were kept at the forefront in the Government files or before the Court  to  hide  the  identity  of  respondent  No.  11 wherever  possible  and  to  give  a  misleading impression  as  if  the  real  beneficiaries  of  State largess were the small time landowners. The fact of the matter is that the farmers have not got even an inch of the released land, which has been formally transferred in favour of respondent No. 11 through the Sale Deeds executed in January, 2007, again by General  Power  of  Attorney holders  of  the  farmers, namely,  authorised  representatives  of  respondent No. 11. The only irresistible conclusion can be that the  farmers  stood  ousted  from  the  scene  since March/April,  2005  and it  was  the  11th  respondent who  masqueraded  for  them,  otherwise  where  was the  occasion  for  the  landowners  to  execute  Sale Deeds on 25th January, 2007 through the Power of Attorneys obtained from them in March, 2005?

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[79]. The Vendors and the Vendee both had full and informed knowledge of the fact that the transacted land  had  since  been  acquired  and  Award  also

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passed. The Vendee was aware of the fact that the Vendors did not possess a clean title,  yet the Sale Deeds  were  presented  and  got  registered,  after about  two years  of  the passing of  the Awards,  on 06th April, 2005. Every such transaction in respect of the acquired land was indeed null and void having no existence in the eyes of law.  

[80]. ………… Secondly, it is not a case of challenging the Sale Deeds for the breach of any bilateral terms and conditions or on the conventional grounds where a question of fact has to be proved. The incidental relief to declare the Sale Deeds as null and void is an offshoot  of  the  broader  issues  raised  by  the petitioners  including  those  hovering  around  the systematic colourable exercise of power by the State apparatus.  A  Constitutional  Court  while  performing its  solemn  duty  as  a  Trustee  of  the  fundamental rights of the citizens shall thus be well within its right to lift the veil and unmask the private object behind an  acquisition  carried  out  in  disregard  to  the mandate of Articles 14 and 300-A of the Constitution.

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[82].  Power  of  land  acquisition  vested  under  the 1894 Act could be invoked only in public interest and not for creating land-bank in  favour  of  respondent  No.  11  through  distress sales.  The  State  can  not  force  the  landowners  to surrender their title in favour of and at a price to be dictated by a private beneficiary. The notified public purpose was only a ruse to enable respondent No. 11 to purchase the land at the lowest possible price for maximizing the profiteering. It is so well settled that an  action  to  be  taken  in  a  particular  manner  as provided  by  a  Statute,  must  be  taken,  done  or performed in the manner prescribed or not at all. The rule laid down by the Privy Council in Nazir Ahmad Vs. King Emperor,  AIR 1936 PC, 253 that “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”, has been approved and further expanded by the Apex Court  in  a  catena of  decisions.  When an action  is taken  in  furtherance  of  explicit  power  given  by  a

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Statute, the legitimacy of invoking such power shall depend entirely upon the extent of achieving the net-end object for which the Statute enables the exercise of  such power.  These principles have been violated in whole-some in the case in hand as the pretended public purpose was neither intended nor was finally achieved.

[83]. There is too much hype created by the official respondents with reference to the legislative Scheme of the 1975 State Act.  At the cost of  repetition,  it may be mentioned that applications for the grant of Licences were moved mostly in  March/  April,  2005 though  respondent  No.  11  continued  dropping  in such  applications  in  the  year  2006  also.  All  the Licences were issued after passing of the Award in April, 2005 and before the execution of Sale Deeds in January,  2007.  The Builder  did not  own an inch of land, yet every licence was addressed to it and sent with a specific enclosure that respondent No. 11 was the sole owner of the licensed and released land. The issuance of  licence,  in  our  considered view,  was a fraud played on the policy behind the 1975 Act. We say so for the reasons that Section 2[d] of the Act defines 'colonizer' to mean “an individual, company or  association,  body  of  individuals,  whether incorporated  or  not,  owning  land  for  converting  it into a colony.....”. Section 2[k] defines the expression 'owner' to include a person in whose favour a lease of land in an urban area for not less than 99 years has been granted. Section 3[1] mandatorily requires that “any owner desiring to convert his land into a colony”  can  make  an  application  for  the  grant  of Licence.  Sub-Section  [2]  obligates  the  Director  to inquire into “title to the land”. Similarly, Rule 3 of the Haryana  Development  and  Regulation  of  Urban Areas  Rules,  1976  requires  an  owner  of  the  land desirous of setting up a colony to apply along with requisite documents including “copy or copies of all title  deeds...”.  A  mis-directed  reliance  has  been placed on Rule  17 of  these Rules  which  says that “the Colonizer shall not transfer the licence granted to him under Rule 12 to any other person without the prior approval of the Director”. It has already been dealt with in extenso that the true owners were left

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with  no  choice  but  to  enter  into  the  Collaboration Agreements  with  the  Builder,  who  was  so  sure  of obtaining the licences and getting the land released that  he ousted the owners  from the consequential benefits of the licences in 2005 itself by paying them “entire  sale  consideration”  for  the  land which  had already  vested  in  the  State  free  from  all encumbrances.  

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[87].  Repeated  reference  to  Section  48[1]  of  the 1894  Act  is  also  equally  misconceived  and misplaced. The Full Bench in Ram Murti Sarin's case [supra] says that if possession has not been taken by the  Land  Acquisition  Collector  as  per  the  Award announced by it, the State Government can allow the acquisition proceedings to lapse without any notification under  Section 48 of the Act, if it is no longer interested in  acquisition of land. Had the official  respondents  followed  the  law  in  letter  and spirit after arriving at the conclusion that the State was not interested in acquisition of land, the one and only consequence ought to have been to allow the acquisition to lapse and resultant return of land to the original  owners.  Here is  a case where artificial reasons were created, the records were fudged with the  aid  of  the  Deputy  Commissioner,  Rohtak,  to mislead the fact that the possession of acquired land was  not  taken  while  announcing  the  Award.  The responsible officers of the State Government, in their anxiety  to  help  out  respondent  No.  11,  have completely  overlooked the interest of landowners or of  the  General  Public  to  whom thousands  of  plots could have been allotted at a fairly low price through the aegis of HUDA.

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[89]. The objection of delay or latches raised against the  petitioners  merits  rejection  at-least  on  two counts.  Firstly,  it  is  decipherable  from  the Government  record  that  the  process  of  granting licences  or  releasing  the  land  commenced  in  the

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year 2006 and continued till the year 2011. In fact, till the last date of hearing, the official respondents, for the reasons best known to them, did not deem it necessary to bring it on record as to how much land [out  of  422.44  acres]  has  since  been  released  in favour  of  respondent  No.  11.  It,  however,  appears from the submissions made at the bar that a major chunk  of  land  has  now  gone  into  the  hands  of respondent No. 11 in due course of  time except a few  patches  where  the  State/  HUDA  intends  to develop  'public  utilities'  to  facilitate  the  said respondent.  Secondly,  no  development  whatsoever has been carried out  till  date and it  was informed that the land is still lying in its original form without any  construction  having  been  made.  (emphasis added) ”

6. It is clear from the findings recorded by the High Court

that the transfer of title of land, covered by the notification

for acquisition, in favour of a builder, who sought release of

land for setting up of a colony, was clearly to defeat the law

and the notified purpose of acquisition.  It was observed that

on this  undisputed factual  position,  the plea of  alternative

remedy of seeking annulment of sale deed by a suit could not

be entertained.  Relief of setting aside of sale transaction was

incidental and consequential to the finding of illegal exercise

of  power  to  release  the  land  covered  by  acquisition

proceedings to the builder who was not the original owner. It

became  necessary  to  undo  the  illegality  and  systematic

fraud. It was undisputed that the builder did not own an inch

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of  land  prior  to  acquisition  and  it  was  only  the  land

acquisition  proceedings  coupled  with  the  capacity  of  the

builder to seek licences for colonization of land covered by

acquisition which enabled it to acquire title.  Contrary to the

legal mandate of requirement of a colonizer owning of its own

land, ownership of land could not be allowed to be acquired

by  the  sword  of  acquisition  on  the  head  of  the  original

owners.  

7. The High Court has observed that circumstances of the

situation  which  created  helplessness  for  the  farmers  to

surrender their rights and unholy nexus of the builder with

the  officers  of  the  Government  resulted  in  constitutional

guarantee  of  equality  and  fair  play  being  defeated  and

acquisition power being abused to transfer the land to the

builder  in  the  name of  acquisition  by  the  State  for  public

purpose.

8. On the aspect of moulding the relief, following operative

order was passed :-

[94].  In  the  light  of  the  discussion  and  for  the reasons stated above, we allow these writ petitions in the following terms:-  

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[i] Since the subject acquisition neither intended nor  has  achieved  its  'public  purpose',  the notifications dated 11th April, 2002 and 8th April, 2003 issued under Sections 4 and 6 of the Land Acquisition  Act,  1894  are  hereby  quashed  in entirety.  As  a  result  thereto,  the  subsequent awards  passed  on  06th  April,  2005  can  not sustain and are consequently quashed;  

[ii]  As  a  necessary  corollary,  the  licences granted  to  respondent  No.  11- Builder-cum-Developer  dated  12th June,  2006, 1st August, 2006, 1st September, 2006 or issued thereafter, even if not not brought on record but pertaining  to  the  acquired  land,  are  hereby declared null and void and quashed;

[iii] Consequently, the release orders like dated 12th June, 2006 [P-28 and P-29] or any such like release orders  pertaining  to  the  land acquired vide the notifications dated 11th April, 2002 and 08th April, 2003, passed in purported exercise of powers under Section 48[1] of the 1894 Act are hereby quashed; [iv] As a result of the declaration and directions issued  at  [ii]  and  [iii]  above,  the  Sale  Deeds executed  in  favour  of  respondent  No.  11  on different dates in January, 2007 in respect of the acquired land are declared to be null and void and non-existent in the eyes of law;  

[v]  Those  landowners  who  have  neither received  compensation  nor  entered  into  any Collaboration  or  Agreements  to  Sell  with respondent  No.  11,  shall  be  restored  with  the possession of their respective land forthwith.

[vi]  Those  landowners  who  have  received compensation  but  have  not  entered  into  any Collaboration  or  Agreements  to  Sell  with respondent No. 11, shall also be returned their respective land subject  to  their  deposit  of  the entire  amount  of  compensation  along  with simple interest at the rate of 9% as prescribed under  Section  28  of  the  Land  Acquisition  Act,

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1894. The possession shall be restored in their favour  within  one  week  of  refund  of  the compensation amount;

[vii]  Those  landowners  who have  entered  into Collaboration  or  Agreements  to  Sell  with respondent  No.  11,  shall  be  given  option  to return the Sale Consideration received by them from  respondent  No.  11  along  with  simple interest  @  7%  per  annum  within  a  period  of three  months  from  the  date  of  receipt  of certified copy of this order. If any one of them has  received  compensation  from  the  State, he/she shall be required to refund the same in the  manner  as  laid  down  for  the  landowners falling in direction No. [vi] above. On doing so, the  possession  of  their  acquired  land  shall  be restored to them within one week;  

[viii] If any of the landowners falling in Category [vii] above fails to return the sale consideration to  respondent  No.  11  or  the  compensation amount to the State, title of his/her land to that extent,  shall  stand  transferred  in  favour  of respondent No.11;

[ix]  If  the  landowners  fail  to  return  the consideration amount to the private Builder as directed above and Respondent No. 11 perfects its  title  qua  their  land,  the  State  Government would  be  free  to  grant  Licence  to  the  said respondent  to  the  extent  of  such  land,  if  so permissible under the 1975 Act;

[x] Respondent No. 11 shall be entitled to seek refund of the Licence fee, CLU or other statutory charges from the State,  within  a period of  six months but without any interest, to the extent and for  the land which shall  stand released in favour of the original owners;  

[xi]  There  shall  be  cost  of  `50,000/-  [Fifty Thousand] in each case on respondent  No. 11 which it shall deposit within one month with [i] Mediation  and  Conciliation  Centre  and  [ii]

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Lawyers'  Welfare  Fund  of  High  Court  Bar  in equal share.”

9. When the matter first came up for hearing before this

Court, reliance was placed on an order of this Court dated 5th

August,  2011  in  SLP  (Civil)……/2011  (CC  12415  of  2011),

titled  State  of  Haryana  versus  Sindhu  Education

Foundation granting stay of the High Court judgment.  The

order of this Court in the said case has been referred to in the

impugned  order  also.   The  said  petition  has  been

subsequently dismissed by this Court on 7th September, 2015

(being  SLP  (Civil)  No.22354  of  2011).   This  Court,  while

issuing  notice,  granted  stay  of  operation  of  the  impugned

judgment.   However,  vide order dated 13th March,  2015, it

was  clarified  that  stay  could  not  mean  that  any  further

development could be effected on the property.   However,

certain  interlocutory  applications  have  been  filed  wherein

applicants claim to have purchased the plots on and after 6th

February, 2012, during pendency of the litigation to support

the appellant-builder.   Applications have also been filed by

some land owners who were not party before the High Court

to  support  the impugned judgment.   Even though persons

who claimed to have purchased the plots during pendency of

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litigation may have no right whatsoever to oppose the writ

petitions, we have heard counsel representing them only with

a view to consider the diverse view points presented before

the Court.   

10. We  have  heard  Shri  Shyam  Divan,  learned  senior

counsel for the builder, S/Shri Harish N. Salve and Dr. Rajeev

Dhawan,  learned senior  counsel,  apart  from other  counsel,

also appearing for the builder or the purchasers and Shri K.K.

Venugopal,  learned senior counsel  for the land owners and

other  counsel  for  the  land  owners.   We  have  also  heard

learned  counsel  for  the  State.   The  record  has  also  been

produced by the State.

11. The  contentions  on  behalf  of  the  appellants  are  that

there is nothing wrong with the policy of the State to permit

colonization by a private builder and the said policy is not

under challenge. The policy is permitted by the 1975 Act and

the High Court had issued a direction to consider the case of

the appellant as per the said policy.  In spite of the award, the

possession continued with  the land owners  and the power

under Section 48 of the 1894 Act was validly exercised for

releasing the land.  Irrespective of  the merits,  the petition

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was  liable  to  be  dismissed  on  the  grounds  of  delay  and

latches and also on the principle of approbate and reprobate

since the land owners had executed sale-deeds in favour of

the  builder  and  taken  benefit  of  collaboration  from  the

builder.  It was also submitted that the operative direction in

the impugned judgment giving options to the land owners “to

retain the land or to receive the compensation paid to them

by the builder with interest or to refund the compensation

collected to the State”, will result in a truncated colony being

set up which will  be contrary to the concept of  integrated

development.  It was also submitted that the High Court has

wrongly assumed that there was no policy applicable to the

present situation permitting colonization.  Reliance was also

placed on policy dated 26th March, 2000.  Shri Divan pointed

out  that  as  per  report  of  the  Chartered  Accountants,  the

builder  had  spent  a  sum of  Rs.64.58  crores  on  payments

made to  the  original  land  owners  and  to  the  Government

towards stamp duty and registration charges.   The builder

has also spent on development and construction,  EDC/IDC,

financial  cost,  licence/scrutiny  fee/conversion  charges,

office/admin  and  other  expense  amounting  to  a  sum  of

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Rs.174.62  crores.  The  builder  had  collected  a  sum  of

Rs.114.91  crores  from  third  parties  towards  sale

consideration of carved out plots/units in residential plotted

colony  at  Sector  27  (part  in  Section  26  &  28)  Rohtak,

Haryana.  Thus, the builder had already spent approximately

Rs.100 crores in excess of the amount it had received and will

not be able to recover the same from the land owners if the

land is to be returned against consideration collected from

them.  Dr. Dhawan added that the issues of undue influence

could be decided only in a suit.  The finding of mala fide was

recorded unmindful of the standard of the proof required and

requirement  of  impleading  party  against  whom  allegation

was made.  In any case, the relief could be moulded having

regard  to  the  transactions  which  had  already  taken  place

laying down law prospectively.   It  was also submitted that

after  acquisition,  the  HUDA  could  dispose  of  the  acquired

land  even  without  carrying  out  any  development  thereon.

Acquisition could not be challenged after the award.  Bona

fide  purchasers  were  entitled  to  restitution.   Shri  Salve

submitted that as against the problem of farmers on account

of the forcible acquisition, equally serious problem of urban

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middle-classes for living space needs to be considered.  Once

acquisition is quashed, the validity of sale by farmers to the

builders should be left to be gone into in private law remedy

where equity could be balanced.  If  the acquisition is valid

and the order of release under Section 48 is quashed, the

land has to revert  to the State.   In  this  fact  situation, the

impugned  order  could  not  be  justified.   In  absence  of

cross-examination and weighing of equities,  the land could

not  be  returned  to  the  land  owners  who  have  already

received the compensation or the sale consideration.   The

alleged fraud and undue influence or coercion may render a

contract  voidable  but  not  void  and  the  civil  court  has  to

balance  equities  for  setting  aside  such  a  sale.   Learned

counsel for the State submitted that the object of the policy

to  permit  colonization  by  a  private  builder  is  to  prevent

haphazard constructions.  The policy helped integrated fast

development and enabled the State to impose restrictions for

reserving houses for weaker sections.  It was submitted that

the roads have already been constructed and in case release

of land in favour of the builder was to be quashed, the land

should revert to the HUDA.   

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12. Opposing the above submissions, Shri K.K. Venugopal,

learned senior counsel of the land owners submitted that the

facts speak for themselves.  The builder has emerged on the

eve  of  making  of  the  award  to  make  huge  profits  by

exploiting helplessness of land owners facing imminent threat

of losing land under the notifications.   The builder obtained

power  of  attorney  in  favour  of  its  nominee  and  the  land

owners signed documents finding no other way to save their

land irrespective of illegality of the State action.  The builder

could  have  taken  the  risk  of  investing  money  in  illegally

dealing with the land covered by acquisition only if  it  had

assurance from the authorities that the land will be released

to it  even though law did  not  permit  it.   Thus,  creating  a

situation which compelled the land owners to surrender their

rights  in  favour  of  a  builder  was  abuse  of  the  power  of

acquisition.   In  such  a  situation,  the  land  owners  had  no

means to know the name of the officers or their precise role

in advancing the illegality.   Undisputed facts  unequivocally

indicate  clear  fraud  and  abuse  of  power.   Relief  could  be

moulded by overlooking technicalities to advance justice.  It

was  also  submitted  that  the  State  Government  itself  had

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ordered  CBI  investigation  in  some  identical  cases  as  also

noted in the order of this Court dated 6th October, 2015 in SLP

(Civil) No.5725/2015 (Rameshwar & Anr. vs. State of Haryana

& Ors.).   

13. We have given serious thought to the rival contentions.

We have found no reason whatsoever to disagree with the

finding recorded by the  High Court  that  present  case is  a

gross  abuse  of  law  on  account  of  unholy  nexus  of  the

concerned authorities and the builder to enable the builder to

profiteer.  The  land  could  either  be  taken  by  State  for  a

compelling public purpose or returned to the land owners and

not to the builder.   

14. There could be no objection to acquisition of land for a

compelling public purpose nor to regulated development of

colonies, but entertaining an application for releasing of land

in  favour  of  the  builder  who  comes  into  picture  after

acquisition notification and release of  land to  such builder

tantamounts to acquisition for a private purpose.  It amounts

to transfer of resources of poor for the benefit of the rich.  It

amounts to permitting profiteering at the cost of livelihood

and existence of a farmer.  This is against the philosophy of

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the Constitution and in violation of guaranteed fundamental

rights  of  equality  and right  to  property  and to  life.   What

cannot be done directly cannot be done indirectly also.   

15. This apart, if State is to be party to directly or indirectly

select  beneficiary  of  State  largess  –  which  in  present  fact

situation the State certainly is – objectivity and transparency

are essential elements of exercise of public power which are

required  to  be  followed.   It  is  patent  that  the  State  has

enabled  the  builder  to  enter  the  field  after  initiation  of

acquisition  to  seek  colonization  on  the  land  covered  by

acquisition.  In absence of State’s action, it was not possible

for  the  builder  to  enter  into  the  transactions  in  question

which was followed by withdrawal from acquisition.  But for

assurance  from some quarters,  the builder  could not  have

made investment nor land owners could have executed the

transactions  in  question.   Such  fraudulent  and  clandestine

exercise of power by the State is not permitted by law.  This

is in violation of Public Trust Doctrine laid down inter alia in

Reliance  Natural  Resources Ltd. versus Reliance Industries

Ltd.1,  Centre for Public Interest Litigation versus UOI2; Special 1 (2010) 7 SCC 1;  2  (2012) 3 SCC 1

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Reference 1 of 2012 U/A 143(1) of Constitution of India3 and

Manohar Lal Sharma versus Principal Secretary4.

16. Reliance  on  Policy  dated  6th March,  2000  is

misconceived.  The subject of the said document is :

“Release of and from acquisition owned/ purchased by  the  developers  before  the  issue  of  notification under Section – 4 of the Land Acquisition Act, 1894 but submitted application for grant of permission for change  of  land  use  for  starred  hotels/  licence  for setting up of residential colonies thereafter.”

(emphasis added)

17. Thus,  the policy is  applicable only to  release of  such

land  from  acquisition  as  is  owned/  purchased  by  the

developers before the issue of notification under Section 4 of

the Land Acquisition Act, 1894.  This condition was required

to be strictly complied with and no person other than original

owners prior to acquisition could directly or indirectly avail of

the said policy.   Even a bona fide error  could not justify a

patent illegality.  In the present case, it is undisputed case of

the builder itself  that it did not have even an inch of land

before the notification in question.   It is also patent that the

application for grant of licence, though purportedly made by 3 (2012) 10 SCC 1 4 (2014) 9 SCC 516

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the  land  owners,  has  in  fact  been  made  by  the  builder.

Reference to the order of the High Court dated 25th March,

2008  in  Civil  Writ  Petition  No.  4767  of  2008  filed  by  the

builder is of no avail to the appellant as it is only a direction

to consider the claim of  the writ  petitioners in accordance

with law.  The validity of claim of the builder has not been

adjudicated upon in the said order.  Even in order dated 6th

December, 2010 in Civil Writ Petition No. 14452 of 2010 and

other  connected  matters,  there  was  no  consideration  or

adjudication of the issue with regard to the validity of release

of land in favour of a builder who came into picture after the

acquisition  notification,  which  took  away  the  basis  of  the

claim for any relief.   

18. While  it  is  true  that  a  belated  petition  cannot  be

entertained under Article 226 of the Constitution, it  is  well

settled that this is only a rule of practice based on sound and

proper  exercise  of  discretion  and  not  a  jurisdictional  bar.

Exercise  of  discretion  to  quash  an  illegal  action  based  on

fraud or abuse of law even belatedly may not be liable to be

interfered with under Article 136 of the Constitution.  When

the land sought to be acquired for a public purpose is allowed

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to  be  transferred  to  private  persons,  any  administrative

action or private transaction could be held to be vitiated by

fraud5.   There is no legal sanction for such action, as already

explained.

19. It  is  well  settled  that  use  of  power  for  a  purpose

different  from  the  one  for  which  power  is  conferred  is

colourable exercise of power.  Statutory and public power is

trust and the authority on whom such power is conferred is

accountable for its exercise.  Fraud on power voids the action

of  the  authority6-7.   Mala  fides can  be  inferred  from

undisputed facts even without naming a particular officer and

even without positive evidence8.   In the present case, abuse

of power in dealing with the matter by the functionaries of

the State is  more than clear  as  rightly  found by the High

Court.  Challenge to acquisition may not be confined to those

who  have  not  accepted  the  amount  of  compensation  or

consideration.  Once such order/transaction is vitiated there

could  be  no  estoppel  on  the  ground  that

5 Royal Orchid Hotels v. G. Jayarama Reddy (2011) 10 SCC 608, para 22 6  State of Punjab v. Gurdial Singh (1980) 2 SCC 417 7  Greater Noida Industrial Development Authority v. Devendra Kumar (2011) 12 SCC 375, para 39 8  State of Punjab v. Ramjilal (1970) 3 SCC 602, pr 9-10; Express Newspapers (P) Ltd. V. UOI    xx(1986) 1 SCC 133, pr. 119-120

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compensation/consideration has been received, as the land

loser has little choice in the face of acquisition9.   

20. Acquisition of land is a serious matter.  It may result in

depriving a tenure holder not only of his property but also his

profession,  livelihood  and  social  security10.   Even  plight  of

investors  in  plots/  flats  in  land  covered  by  acquisition  or

litigation  cannot  be  a  ground  to  ignore  illegal  actions  of

depriving a farmer of his land11.  As already observed, and is

settled law, State’s power of compulsory acquisition cannot

be used to  enable a private entity  to  acquire  title  even if

private person offers more compensation than the State.12   It

is also well settled that no legitimacy can be conferred to an

abuse of  power to  advance  a  private  purpose by invoking

doctrine of prospective overruling13.   

21. We are also conscious of the legal position that under

the  scheme  of  the  1894  Act,  the  land  losers  get

compensation as on the date of Section 4 notification.  Any

transfer of title thereafter for release of land to a person who 9 (2011) 12 SCC 375, para 43. 10 ibid, para 45 11 ibid,  para 47 12 State of Bihar v. Kameshwar Singh, AIR (1952) SC 252, pr. 45, 52; Chairman Indore Vikas     Pradhikaran v. Pure Industrial Coke (2007) 8 SCC 705, pr 53-56; Devinder Singh v. State of Punjab  (2008) 1 SCC 728  13 Bangalore City Cooperative v. The State of Karnataka (2012) 3 SCC 727, para 41

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is not owner on the date of notification under Section 4 can

be viewed as abuse of power under Section 48 of the Act.

Moreover, no such transferee can claim any right other than

compensation.  While notification under Section 4 of the 1894

Act may not prevent creation of an encumbrance on the land,

such encumbrance does not bind the Government14.

22. In  view of  the  above,  we do not  find  any  ground  to

interfere  with  the finding recorded by the High Court  that

there was an abuse of power in releasing the land in favour of

the builder.   Once it is found that action of the State and the

builder resulting in transfer of land from land owners to the

builder was without any authority of law and by colourable

exercise  of  power,  none  of  the  contentions  raised  by  the

builder  could  accepted15.  We  may  consider  the  issue  of

moulding relief separately but the builder cannot be allowed

to retain the land acquired illegally.   Undoing of such illegal

actions would clearly be in the interests of justice. The wrong

has to be remedied.   

14 (1995) 2 SCC 528,  [Gyan Chand v. Gopala & Ors.]; (1995) 5 SCC 335   [Mahavir & Anr. v.  Rural Institute, Amravati & Anr.]; (1996) 3 SCC 124 [The U.P. Jal Nigam, Lucknow Thr. its  Chairman & Anr. v. M/s. Kalra Properties Pvt. Ltd., Lucknow & Ors.];  (2008) 9 SCC 177 [Meera  Sahni v. Lieutenant Governor of Delhi] and (2014) 15 SCC 394, pr. 14-15; (2012) 12 SCC 133 pr.18 15   (2007) 9 SCC 304  

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23. We find that the operative part of the order passed by

the  High  Court  needs  modification.   The  entirety  of  the

acquisition need not be quashed.  What needs to be quashed

is the abuse of power and illegal consequential actions which

took place after the acquisition notifications.  The High Court

has  rightly  observed  that  the  notified  public  purpose  was

valid but the subsequent events resulted in illegality.   The

High Court also rightly held that it  will  be inappropriate to

release the land in favour of the builder by permitting the

builder  to  take  over  the  property  and  granting  licence  for

colonization  on  the  land  covered  by  acquisition16.  Further,

view of the High Court that doctrine of severability cannot be

invoked and the entire acquisition was liable to be quashed

needs modification in the facts of this case.  

24. In view of the above, it is not necessary to refer to all

the decisions cited on behalf of the appellant on the question

that the court may not entertain a belated petition or may

apply the doctrine of promissory estoppel or approbate and

reprobate or insist on strict proof of mala fidies or to confine

16 Para 69 of the impugned judgment which has already been quoted.  

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the relief to an individual who approaches the court on facts

which speak for themselves.

25. Once release of land under acquisition is found to be

mala  fide or  arbitrary  exercise  of  power,  acquisition  of

released land stands revived17. The operative direction of the

High  Court  to  quash  the  acquisition  to  the  extent  it  has

neither been challenged nor concerns the land transferred to

a private builder by abusing the power of acquisition or on

account of any extraneous considerations does not appear to

be justified.  Similarly the direction of permitting the builder

to retain the land of those land owners who are not able to

refund the sale consideration received by them may permit

the builder to illegally retain the land.  Moreover, it may not

be practicable in the present fact situation to restore the land

to the land owners but they can be duly compensated while

restoring the land to the State to use it  for notified public

purpose.  Person whose land is taken for houses for others

cannot be rendered homeless and unemployed.  This will be

sheer  exploitation.   In  view of  the  conduct  of  the  builder,

agreeing with the view of the High Court, we do not propose

17  (2014) 15 SCC 394, para 14

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to allow any interest to the builder while permitting refund/

reimbursement to it.  From the impugned judgment there is

nothing to show that the developments which are now relied

upon had taken place on the date of filing of the writ petition.

It  has  been  specifically  held  in  para  89  of  the  impugned

judgment  that  no  development  had  taken  place  till  the

judgment of the High Court. Any subsequent transactions or

development are of  no consequence for  rights of  parties.18

Any  subsequent  transactions  entered  into  by  the  builder

cannot be taken into account and are hit by the principle of

lis pendens.  In any case it was for the builder to inform the

third parties to whom the plots have been sold, that the land

was under litigation.  If the third parties have purchased the

land  knowing  fully  about  the  litigation,  they  have  clearly

taken risk and their remedy will be only against the builder.  If

pendency of litigation was suppressed, the third parties can

take their remedies against the builder.  Without prejudice to

their  said  private  remedies,  the  court  may  try  to  balance

equities to the extent possible. We are also of the view that if

the authorities have proceeded to entertain applications for

18 ibid, pr 11

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licence to give undue benefit to the builder by way of helping

him to take over land under the cloud of acquisition, it may

call for action against those who have misused their power

and to find out the considerations for such misuse.   

26. Land  is  scarce  natural  resource.   Owner  of  land  has

guarantee against being deprived of his rights except under a

valid  law  for  compelling  needs  of  the  society  and  not

otherwise.   The  commercial  use  of  land  can  certainly  be

rewarding to an individual.  Initiation of acquisition for public

purpose may deprive the owner of valuable land but it cannot

permit another person who may be able to get permission to

develop colony to take over the said land.  If the law allows

the State to take land for housing needs, the State itself has

to keep the title or dispose of land consistent with Article 14

after  completion  of  acquisition.   If  after  initiation  of

acquisition, process is not to be completed, land must revert

back to owner on the date of Section 4 notification and not to

any  one  else  directly  or  indirectly.   This  is  not  what  has

happened.

27. As already observed,  the power to  release land from

acquisition has to be exercised consistent with the doctrine of

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public trust and not arbitrarily.  Functioning of a democratic

government demands equality and non-arbitrariness.  Rule of

law is the foundation of a democratic society. 19

28. However,  having  regard  to  the  irreversible  situation

which  has  been  brought  about,  though  in  normal

circumstances land may have reverted to land owners, the

relief will have to be moulded .  

29. Keeping the above in mind, we are of the view that ends

of justice will be served by moulding the relief as follows:

i) Notifications dated 11th April, 2002, 8th April, 2003

and awards dated 6th April, 2005 are upheld.  The

land covered thereby vests in HUDA free from all

encumbrances.   HUDA  may  forthwith  take

possession thereof.  

(ii) All  release  orders  in  favour  of  the  builder  in

respect of land covered by the Award in exercise

of powers under Section 48 are quashed.   

19  NOIDA Entrepreneurs Assn. v. NOIDA (2011) 6 SCC 508, prs. 40-41

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iii) Consequently,  all  licences  granted  in  respect  of

the  land  covered  by  acquisition  will  stand

transferred to HUDA.   

iv) Sale  deeds/  other  agreements  in  favour  of  the

builder in respect  of  the said  land are quashed.

The  builder  will  not  be  entitled  to  recover  the

consideration  paid  to  the  owners  but  will  be

entitled  to  reimbursement  as  indicated

hereinafter.   Creation of any third party rights by

the builder also stand quashed.

v) The sale consideration paid by the builder to the

land  owners  will  be  treated  as  compensation

under the award.    The land owners will  not be

required to refund any amount. The land owners

who  have  not  received  compensation  will  be  at

liberty to receive the same.  The land owners will

also be at liberty to prefer reference under Section

18  of  the  1894  Act  within  a  period  of  three

months,  if  such  reference  has  not  been  earlier

preferred.

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vi) The  builder  will  be  entitled  to  refund/

reimbursement  of  any  payments  made  to  the

State, to the land owners or the amount spent on

development  of  the  land,  from  HUDA  on  being

satisfied  about  the  extent  of  actual  expenditure

not exceeding HUDA norms on the subject.  Claim

of the builder will be taken up after settling claim

of  third  parties  from  whom  the  builder  has

collected money.  No interest will  be payable on

the said amount.   

vii) The  third  parties  from  whom  money  has  been

collected by the builder will be entitled to either

the refund of the amount, out of and to the extent

of  the amount payable to the builder under the

above direction, available with the State, on their

claims being verified or will be allotted the plots at

the  price  paid  or  price  prevalent  whatever  is

higher.   No interest  will  be payable  on the said

amount.  

viii) The State shall give benefit of “Rehabilitation and

Resettlement of Land Acquisition Oustees” policy

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of the State/  HUDA to the land owners.  Area so

required shall be reserved out of the acquired land

itself.  

ix) The  State  Government  may  enquire  into  the

legality and bona fides of the action of the persons

responsible  for  illegally  entertaining  the

applications of the builder and releasing the land

to it, when it had no title to the land on the date of

the notification under Section 4 of the 1894 Act

and proceed against them in accordance with law.

x) This Judgment be complied with within one year.   

xi) Quarterly  progress  report  of  the  action taken in

pursuance of this judgment be filed by the State in

this Court and final report of compliance may be

filed  within  one  month  after  expiry  of  one  year

from  today  for  such  further  direction  as  may

become necessary.   

30. The matters will  be treated as disposed of except for

consideration of the report of compliance to be submitted by

the State Government.   

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………………………………………………..J.                           [ ANIL R.  DAVE ]

………………………………………………..J.        [ ADARSH KUMAR GOEL ]

NEW DELHI; MAY 13, 2016.  

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