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     IN THE SUPREME COURT OF INDIA   

 CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     No.5712     OF     2002      

GARG WOOLLEN PVT.LTD.                             .......APPELLANT

VERSUS

STATE OF U.P. & ORS                              ......RESPONDENTS  

J     U     D     G     M     E     N     T   

1. This appeal is directed against order dated 09.09.1997  

by which the Division Bench of the Allahabad High Court dismissed  

the writ petition filed by the appellant for quashing the  

acquisition of its land.

2. The appellant purchased the land comprised in Khasra  

No.262 of village Central Hope Town, Tehsil and District Dehradun  

by registered sale deed dated 19.10.1984 for setting up an  

industrial unit.  Its name was mutated in the revenue records on  

25.01.1985.  

3. The Government of Uttar Pradesh issued notification  

dated 8.5.1985 under Section 4(1) read with Section 17(1) of the  

Land Acquisition Act, 1894 (for short, 'the Act') for the  

acquisition of over 250 acres land including the land purchased  

by the appellant for planned development of industrial area in  

District Dehradun through the agency of Uttar Pradesh State  

Industrial Development Corporation (UPSIDC). The declaration  

under Section 6 was issued on 09.05.1985. Special Land  

Acquisition Collector, Dehradun passed award dated 22.11.1986.  

He took cognizance of the fact that industries were existing on  

some portions of Khasra Nos. 235 to 238 and 262 of which  

possession had not been taken and observed:

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"On the date of possession on dated 17.3.86, the  factories Everest Gas Cylinders Pvt.Ltd. and Garg  Wollen Pvt. Ltd. were found constructed and in  the initial stage of production and located on  Khasra Numbers 235, 236, 237, 238 and 262 area  respectively 0.56 acre, 0.63 acre, 0.38 acre,  0.65 acre and 3.65 acres; that on the land of  Khasra No.262, one tin covered room was found  constructed for the Textile Mill of Babu Lal  Jain.  Since, the time and constructions of the  construction of these factories was a matter of  dispute on 17.3.86, an area of 5.47 acre was  reduced from the total area of 251.38 acres and  possession was taken on the reduced area of 245- 91 acres and was handed over to the acquiring  body.  Notices were also issued to the factory  owners but they failed to report as to when and  in what circumstances, their factories were  constructed. It appears that the aforesaid  factories were constructed after the issue of  Section 4 notification and in that eventuality,  the compensation for the construction does not  become payable.  Because, the construction of the  factories would have been done after proper  sanction and after taking loans etc.; and more so  since heavy machinery has already been installed  and the production is in preliminary stage; and  since in these proceedings the acquiring body has  also the same purpose of developing industrial  plots and leasing the same for establishing  industrial units, it has been discussed with the  acquiring body, such acquired land shall be  leased to the owners of the constructed  factories, absorb the factories in its regulated  area and shall decide the dispute of standing  factories by mutual arrangement at its own level.  Therefore, after leaving aside the constructed  areas, the compensation for the land of the areas  0.56, 0.63, 0.33, 0.25 and 3.65, i.e. total 5.47  acres from Khasra No.235, 236, 237, 238 and 262  respectively, whose possession have not been  handed over to the acquiring department yet, will  be payable to the land-owners."     

(as contained in the paper book)  

4.The appellant challenged the acquisition proceedings in Writ  

Petition No. 2500/1988.  In paragraphs 4 to 6 and 12 to 17 of the

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writ petition, the appellant averred as under:

“4. That for constructing the said factory and  installing machines therein the petitioner had  taken a loan of Rs. 21.70 lakhs from U.P.  Financial Corporation. The petitioner started the  construction of the aforesaid building in the  year 1984 with the help of the aforesaid loan.

5. That the Superintending Engineer, Dehradun  sanctioned an electrical power connection of 70  horse power to the petitioner on 29.3.1985.

6. That by 26.1.1985 the petitioner had  incurred expenses to the tune of Rs. 2,29,888/-  as is clear from the report of the Chartered  Accountant dated 30-1-1985 a true copy whereof is  being filed herewith as Annexure-III.

12.That the aforesaid acquisition proceedings are  in colourable exercise of power and wholly  illegal as is clear from the facts stated  hereinafter.

13.That there was no urgency in the matter. There  was nothing to show that acquisition for the  alleged "planned development of Industrial area  in District Dehradun" was of such an urgent nature  that proceedings under section 5-A of the Act  should have been dispensed with.

It may be stated that the proceedings under  Section 5-A are themselves summary in  nature.Merely giving 30 days' time to file  objection to the proposed acquisition would in  any case have not interfered with the proposed  planned development of industrial area. There was  nothing to justify exclusion of inquiry under  Section 5-A of the Act.

14.That there was no material to justify existence  of any urgency for acquisition of the  petitioner's land. The opinion of the Governor  about the existence of urgency mentioned in the  impugned notifications is based on non-existing  materials and consequently the application of  Sections 17(1) and 17(4) of the Act to the case  is  illegal. 15.That, while issuing the impugned notifications  the State Government has not at all considered

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that the petitioner was also using the land for  an industrial project which was prestigious for  Dehradun, that the petitioner's factory had  already been constructed, that the petitioner had  been advanced a loan of Rs. 21.70 lakhs by the  U.P. Financial Corporation, that the petitioner  had incurred an expenditure of more than Rs.3.8  lakhs by August 1985 on the construction of the  factory etc.

16. That the petitioner has reasons to believe  that had the State Government been apprised of  the aforesaid facts by the land acquisition  authorities or had it taken the same into  consideration, it would never have applied the  provisions of Section 17(4) of the Act and would  not have dispensed with the inquiry under section  5-A of the Act.

17. That the Petitioner's factory over plots  no.262 (area 1.92 acre)cannot disturb the alleged  purpose of planned development of industrial area  even if this plot was excluded from acquisition.  Moreover,large patches open land are still lying  vacant in the neighbourhood and are available to  the U.P. State Industrial Development  Corporation. These patches are contiguous to the  land sought to be acquired. Had the petitioner  been given opportunity to file objection under  section 5~A of the Act,it would have brought oil  the aforesaid facts along with other facts to the  notice of the State Government .”

5.  In the counter affidavit filed on behalf of the respondents,  

it was not disputed that the appellant had established an  

industrial unit on the land purchased by it. However, the  

invoking of urgency clause was justified in the following words:

"Planned Development Scheme in the backward hilly  area is urgently needed to be implemented  according to the Government policy. In view cf  the urgency for  the development in the backward  hill area, the Govt. considered it necessary that  the proceedings under Section 5-A of the Land  Acquisition Act may be dispensed with so that the  land may be acquired without delay and the  development according to the planned scheme may  be implemented in the area. The Deputy General

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Manager of the U.P. State Industrial Development  Corporation Ltd. Kanpur submitted the application  in the proforma prescribed for acquisition of  land at village Central Hope Town Pargana  Pachpadan District Dehradun for planned  development of Industrial area through U.P. State  Industrial Development Corporation Ltd. on  23.10.84. The proposed acquisition was requested  to be made immediately without any delay,  otherwise there would be delay in setting up the  Industries for the planned development of the  backward hill area in the State.”  

“The Deputy General Manager, U.P. State  Industrial Development Corporation, Kanpur  prepared the scheme for setting up industries in  the backward hill area of Dehradun for the  planned development according to the policy of  the State Government.  The Deputy General Manager  of the Corporation submitted the requisition  application to the State Government through the  Collector for immediate steps so that land be  acquired and industries according to the planned  development in the backward hill may be set up  soon without any delay.  He had forwarded  necessary records and details of the plan to the  Government through the Collector.  The Collector  endorsed the plea of urgency of the  implementation of the planned Development Scheme  which was duly considered by the State Govt. and  the State Govt. was of the opinion that the  backward hill area of Dehradun should be  developed in planned way without delay according  to the Government policy and it was directed  under Sections 17(1) and 17(4) of the Land  Acquisition Act to dispense with the proceedings  under Section 5-A of the Land Acquisition Act.  The Government decided about the urgency on  material evidence on record.  The allegations  contrary in the paragraph under reply are  baseless and imaginary which are denied."

6. The Division Bench of the High Court did not consider the  

appellant's challenge to the invoking of urgency clause and  

dismissed the writ petition only on the ground that the appellant  

had made an incorrect statement about the construction of the

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factory prior to the issue of notification under Section 4(1) and  

had made an attempt to mislead the Court.  

7. At this stage, we may mention that this and the connected  

appeal being C.A. No. 5713 of 2002 - Everest Gas Cylinders Pvt.  

Ltd. v. State of U.P. and others were disposed of on 15.04.2009 by  

taking cognizance of the statement made by learned counsel for  

UPSIDC that the Corporation is willing to give the acquired land to  

the appellants on lease at the specified rates and statement of the  

appellants' counsel that the offer made by the Corporation was  

acceptable to their clients.  However, in view of some controversy  

relating to the price mentioned in the affidavit filed on behalf of  

UPSIDC, the order disposing of the appeals was recalled on  

15.07.2011.  On the same day, interlocutory application filed by  

M/s. Tirupati LPG Industries Limited for its impleadment as party-

respondent was allowed.

8. We have heard learned counsel for the parties and perused  

the record.

9. The question whether urgency clause embodied in Section  

17 can be invoked for the acquisition of land for planned  

industrial development was recently considered in Radhy Shyam  

(Dead) through L.Rs. and others v. State of U.P. and others  (2011)  

5 SCC 553.  In that case, the Government of Uttar Pradesh had  

acquired 205.0288 hectares land of village Makaura, Pargana  

Dankaur, Tehsil and District Gautam Budh Nagar for planned  

industrial development of the District.  Radhy Shyam and others  

challenged the acquisition on the ground that there was no  

justification to invoke the urgency provisions and to dispense with  

the application of Section 5A because planned industrial  

development of the district was not something which could not wait  

for few months' time within which inquiry under Section 5A could  

have been held.  Their writ petition was dismissed by the High  

Court by observing that the averments contained therein were not  

sufficient to call upon the respondents to place before the Court

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material to justify the exercise of power under Section 17(1) and  

17(4) of the Act.  This Court examined the scheme of the Act,  

referred to various judicial precedents including the judgments in  

Narayan Govind Gavate vs. State of Maharashtra (1977) 1 SCC 133,  

Munshi Singh vs. Union of India (1973) 2 SCC 337, State of Punjab  

vs. Gurdial Singh (1980) 2 SCC 471, Union of India vs. Mukesh Hans  

(2004) 8 SCC 14, Hindustan Petroleum Corporation Ltd. vs. Darius  

Shapur Chenai (2005) 7 SCC  627 and Anand Singh vs. State of U.P.  

(2010) 11 SCC 242 and laid down the following propositions:

"(i) Eminent domain is a right inherent in every  sovereign to take and appropriate property  belonging to citizens for public use. To put it  differently, the sovereign is entitled to reassert  its dominion over any portion of the soil of the  State including private property without its  owner’s consent provided that such assertion is on  account of public exigency and for public good. –  Dwarkadas Shrinivas v. Sholapur Spg. and Wvg. Co.  Ltd., AIR (1954) SC 119, Chiranjit Lal Chowdhuri  v. Union of India AIR (1951) SC 41 and Jilubhai  Nanbhai Khachar v. State of Gujarat (1995) Supp.  (1) SCC 596.   

(ii) The legislations which provide for compulsory  acquisition of private property by the State fall  in the category of expropriatory legislation and  such legislation must be construed strictly – DLF  Qutab Enclave Complex Educational Charitable Trust  v. State of Haryana (2003) 5 SCC 622; State of  Maharashtra v. B.E. Billimoria (2003) 7 SCC 336  and Dev Sharan v. State of U.P. (2011) 4 SCC 769.  

(iii)  Though, in exercise of the power of eminent  domain, the Government can acquire the private  property for public purpose, it must be remembered  that compulsory taking of one’s property is a  serious matter.  If the property belongs to  economically disadvantaged segment of the society  or people suffering from other handicaps, then the  Court is not only entitled but is duty bound to  scrutinize the action/decision of the State with  greater vigilance, care and circumspection keeping  in view the fact that the landowner is likely to

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become landless and deprived of the only source of  his livelihood and/or shelter.

(iv) The property of a citizen cannot be acquired  by the State and/or its agencies/instrumentalities  without complying with the mandate of Sections 4,  5-A and 6 of the Act.  A public purpose, however,  laudable it may be does not entitle the State to  invoke the urgency provisions because the same  have the effect of depriving the owner of his  right to property without being heard. Only in a  case of real urgency, the State can invoke the  urgency provisions and dispense with the  requirement of hearing the land owner or other  interested persons.    

(v) Section 17(1) read with Section 17(4) confers  extraordinary power upon the State to acquire  private property without complying with the  mandate of Section 5-A.  These provisions can be  invoked only when the purpose of acquisition  cannot brook the delay of even a few weeks or  months. Therefore, before excluding the  application of Section 5-A, the authority  concerned must be fully satisfied that time of few  weeks or months likely to be taken in conducting  inquiry under Section 5-A will, in all  probability, frustrate the public purpose for  which land is proposed to be acquired.  

(vi) The satisfaction of the Government on the  issue of urgency is subjective but is a condition  precedent to the exercise of power under Section  17(1) and the same can be challenged on the ground  that the purpose for which the private property is  sought to be acquired is not a public purpose at  all or that the exercise of power is vitiated due  to mala fides or that the authorities concerned  did not apply their mind to the relevant factors  and the records.

(vii)  The exercise of power by the Government  under Section 17(1) does not necessarily result in  exclusion of Section 5-A of the Act in terms of  which any person interested in land can file  objection and is entitled to be heard in support  of his objection.  The use of word “may” in sub- section (4) of Section 17 makes it clear that it  merely enables the Government to direct that the

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provisions of Section 5-A would not apply to the  cases covered under sub-section (1) or (2) of  Section 17.  In other words, invoking of Section  17(4) is not a necessary concomitant of the  exercise of power under Section 17(1).

(viii)  The acquisition of land for residential,  commercial, industrial or institutional purposes  can be treated as an acquisition for public  purposes within the meaning of Section 4 but that,  by itself, does not justify the exercise of power  by the Government under Section 17(1) and/or  17(4).  The Court can take judicial notice of the  fact that planning, execution and implementation  of the schemes relating to development of  residential, commercial, industrial or  institutional areas usually take few years.  Therefore, the private property cannot be acquired  for such purpose by invoking the urgency provision  contained in Section 17(1).  In any case,  exclusion of the rule of audi alteram partem  embodied in Sections 5-A (1) and (2) is not at all  warranted in such matters.

(ix)If land is acquired for the benefit of private  persons, the Court should view the invoking of  Sections 17(1) and/or 17(4) with suspicion and  carefully scrutinize the relevant record before  adjudicating upon the legality of such  acquisition."

10. In our view, proposition Nos.(v) to (ix) of the judgment  

in Radhy Shyam's case are squarely attracted in the present case  

and the acquisition of the appellant's land is liable to be  

quashed because the respondents have not produced any material to  

show that the State Government had formed a bonafide opinion on  

the issue of invoking of the provisions contained in Section 17(1)  

and 17(4) of the Act.  Learned counsel for the respondents could  

not show as to how this case is different from the case of Radhy  

Shyam in which the acquisition made for planned industrial  

development of Gautam Budh Nagar was quashed on the ground that  

the acquisition of land for industrial purpose does not justify  

invoking of the urgency provisions.

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11. In the result, the appeal is allowed, the impugned order  

is set aside and the acquisition of the appellant's land is  

quashed. It is, however, made clear that this Court has not  

expressed any opinion on the rights of the impleaded respondent  

and if any other litigation is pending, then the same shall be  

adjudicated by the competent Court without being influenced by the  

observations contained in this order.

               ................................J.     (G.S.SINGHVI)  

            ................................J.     (FAKKIR MOHAMED IBRAHIM KALIFULLA)

NEW DELHI; JULY 19, 2012.

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IN THE SUPREME COURT OF INDIA       CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     No.5713     OF     2002      

EVEREST CYLINDERS PVT.LTD.                         .......APPELLANT

VERSUS

STATE OF U.P. & ORS                               ......RESPONDENTS  

O       R       D       E       R   

This appeal is directed against order dated 09.09.1997  

passed by the Division Bench of the Allahabad High Court whereby  

the writ petition filed by the appellant questioning the  

acquisition of its land was dismissed.

Learned counsel for the parties agree that the main issue  

raised in this appeal is identical to the one raised in Civil  

Appeal No.5712 of 2002.

By a separate judgment passed today, we have allowed Civil  

Appeal No.5712 of 2002 and quashed the acquisition proceedings.

For the detailed reasons recorded in the aforesaid judgment,  

which shall be read as part of this order, the appeal is allowed,  

the order passed by the High Court is set aside and the  

acquisition of the appellant's land is quashed.   

               ................................J.     (G.S.SINGHVI)  

            ................................J.     (FAKKIR MOHAMED IBRAHIM KALIFULLA)

NEW DELHI; JULY 19, 2012.

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