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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)

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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.

2.   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

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and  Bajemelia,  P.S.  Singur,  District  Hooghly  were

dismissed.

3.  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

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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/  Parameter

Requireme nt

Remarks 1 Land  

(including vendor  park)

1000  acres

1)75% for Tata Motors land 25% for Vendor Park

2)Unconditional flexibility  for allotment to vendors

3)Land title on out-right sale basis, or long lease of 99  years transfer of title  after the lease period,  without condition.

4)Land to be stabilised/graded and given, or the cost to be reduced from the land cost.

2 Land for  schooling  and  township

1)Schooling land to be  allotted free of cost or  Government to promote  establishment of prominent  schools in proximity.

2)Land for township to be   given at 50% of rate  applied for factory land.

3 Power  (including vendor  park)

100 MVA Quality of power (50 Hz +/- 3%), availability from 2  sources, regulatory voltage +/- 5%

4 Water  (including vendor  park)

15000  cu.m

Potable water as per Indian Standards (IS-10500)

5 6 lane Approach road to be  

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road  around the boundary  of the  plant, and 4- lane  approach  road to  the site

available within 3 months  from the date of land  allotment.

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.

   ”   

4. 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

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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

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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”

5.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

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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:

1.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.

2.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.  

3.The  State  Government  will  construct  an integrated township of approximately 2000

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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.”

6.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

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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

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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)

7.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

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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.

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1.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.

2.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:

3. 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.

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Mouza  J.L. No Gopal Nagar 13 Singherberi 10 Beraberi 05 Khaserberi 11 Bajemelia 12

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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.

4.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)

8.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

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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

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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.    

9.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.”

  10. 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

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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

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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:

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“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………”

11. 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

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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.

12. 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

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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.

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13. 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.

14.  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

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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.

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15.The  learned  senior  counsel  places  reliance  on  the

decision of this Court in the case of  Devender Pal

Singh v. State of Punjab1, 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

1 (2008) 1 SCC 728

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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.

16.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:

2 (1998) 1 SCC 591

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Page 26

“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

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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. Arora3, 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

3 AIR 1962 SC 764

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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

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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

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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:-

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i)    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)

17. 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.  

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18. 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

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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

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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 & Ors4, 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

4 AIR 1963 SC 1890

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"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 Bengal5, 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

5 (1996) 8 SCC 758

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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

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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. 6 ( 1985) 1 SCC 591

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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.”

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19. 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.

20. 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

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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’.

21. 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 :- (i) 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 ;

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(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.

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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

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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

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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

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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.”

22. 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.

23. 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

7 (2011) 10 SCC 608

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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.

24. 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.

25. 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.

26. The learned senior counsel takes us through the

cabinet  notes  with  reference  to  the  requisition

letter of TML, extracted supra and submits that it

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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.

27. 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

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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.

28. 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.

29.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.

30. The  learned  senior  counsel  further  contends

that the doctrine of infusion of public revenue by

8 A.I.R. 1994 MP 74 9 2010 Supp All. L.J. 1

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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 Punjab10 , Somawanti

10 (1961) 2 SCR 459

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v. State of Punjab11, Jage Ram v. State of Haryana12

and  Aflatoon  v. Lt.  Governor  of  Delhi13 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.

31. 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

11 (1963) 2 SCR 774 12 (1971) 1 SCC 671 13 (1975) 4 SCC 285

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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

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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

14 (2012) 1 SCC 792

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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.”

32.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 India15

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

15 (2013) 1 SCC 403

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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.”

33. 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

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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.

34. 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.

35. 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

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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

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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.”

36. 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

16 (2005) 6 SCC 745

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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.”

37.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

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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

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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 17 (2003) 10 SCC 626

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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.”

38.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:

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“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.”

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39. 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.

40.  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

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while acquiring the lands in question in the instant

case.

41.  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

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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.

42.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. Sharma18 in this regard.

43.Further reliance is placed by him on the decision of

this  Court  in  the  case  of  Andhra  Pradesh  Dairy

18 (2014) 8 SCC 804

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Development  Corpn.  Federation  v. B.  Narasimha

Reddy19, 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.”

19 (2011) 9 SCC 286

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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.”

44. 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.

45. 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

20 (1999) 6 SCC 464

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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.

46. 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

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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.

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47.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.

48.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.

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Sadanatham  v. Arunachalam21, 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. 21 (1980) 3 SCC 141

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49.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.  

50. 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:

1.Whether the lands involved in these proceedings have been acquired for a public purpose or for a Company (TML)?

2.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?

3.Whether  the  inquiry  as  contemplated  under Section 5-A(2) of the L.A. Act has been duly conducted by the Land Acquisition Collector?  

4.  Whether  the  Land  Acquisition  Collector  has assigned  reasons  in  his  report  for  rejecting the  objections  raised  by  the landowners/cultivators  after  application  of mind?

5.  Whether  the  report  of  the  Land  Acquisition Collector is based on the decision of the State

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Government taken prior to issuing notification under Section 6 of the L.A. Act?

6.  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?

7.Whether the compensation awarded in favour of the  land  owners/cultivators  is  based  on  a proper appreciation of the market value of the land?

8.  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?

9.What order can be passed in these proceedings at this stage?

Answer to Point Nos. 1  and 2 51. 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

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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

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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)  …………”

52. 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.

53.  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.

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54. 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.

55.  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

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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

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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.

56.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

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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

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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,

22 (2013) 4 SCC 210

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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

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the society in the name of ‘public purpose’ to promote

socio-economic development.

57. 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

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why the acquisition in the instant case cannot be said

to be one for ‘public purpose’.

58.  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

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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.

59. 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

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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.

60. 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

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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)

61. 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

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decision of this Court in the case of Pratibha Nema

(supra).

62.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.

63.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

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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 Singh23,   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

23 AIR 1980 SC 318

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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)

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In the case of S. Pratap Singh v. State of Punjab24, 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

24 AIR 1964 SC 72

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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

25(1999) 3 SCC 422

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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)

64. 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

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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

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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.

65. 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

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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.

66. 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.

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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

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the  lands  in  question  have  since  been  resumed  by

WBIDC.

67. 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 68.  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

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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;

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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”

 69.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 Delhi26, 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

26 (1975) 4 SCC 298

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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) 70.In the case of Babu Ram v. State of Haryana27, this

Court observed as under:

“30. As indicated hereinabove in the 27 (2009) 10 SCC 115

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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.

71. 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

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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 72. 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.

73.   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

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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.

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Act, the composite awards are vitiated in law and

therefore, the same are also liable to be quashed.

74.  Accordingly, the point nos. 6, 7 and 8 are answered

in favour of the land owners.

                                ……………………………………………………J.                                   [V. GOPALA GOWDA]

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                      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

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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   

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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

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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

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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

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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), —

(i) 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

(ii) 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

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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

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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.

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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

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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

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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

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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

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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:

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“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

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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.

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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

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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

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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

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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

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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

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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 :

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“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,

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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)

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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

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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

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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,

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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

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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

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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

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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

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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

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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

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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

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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,

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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

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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

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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

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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 quo as regards possession. During the pendency of the said petition, on  1-5-1992,  the  Government  denotified  the  land  from

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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

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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

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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 :

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“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

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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

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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

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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

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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,

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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

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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

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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

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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

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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

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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.

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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

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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)

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“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

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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

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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

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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

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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

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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.

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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

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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

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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

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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

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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

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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

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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

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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.  

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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.

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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

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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

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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

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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 :

1. Approval of the revised package of incentives as described in item A above;

2. 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

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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

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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

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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

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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

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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;

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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

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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

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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

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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

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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),

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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

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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

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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

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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

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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

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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

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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)

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“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

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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

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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.

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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

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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

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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.

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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)

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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.

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                    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.  

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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)

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