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NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2152 OF 2008

Poona Timber Merchants and  Saw Mill Owners Association …Appellant

versus

State of Maharashtra and others …Respondents

WITH

CIVIL APPEAL NO. 2153 OF 2008

CIVIL APPEAL NO. 2154 OF 2008

CIVIL APPEAL NO. 2155 OF 2008

CIVIL APPEAL NO. 2156 OF 2008

J U D G M E N T

G.S. SINGHVI, J.

1. Whether negotiations between the landowners and the perceived beneficiaries  

of the reservation of land in the Development plan prepared under the Maharashtra  

Regional and Town Planning Act, 1966 (for short, ‘the Act’) can be treated as steps  

for  the  acquisition of  land as  contemplated  under  Section 127 of  the Act  is  the  

question which arises for consideration in these appeals filed against order dated  

29.4.2005/2.5.2005 passed by the Division Bench of the Bombay High Court in Writ  

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Petition No.7846/2004 M/s. C.V. Shah and A.V. Bhat v. the State of Maharashtra and  

others, Writ Petition No.9644/2004 Tajuddin Mohhammadbhai Somaji and another v.  

the State of Maharashtra and others and Writ Petition No.5077/2004 Poona Timber  

Merchants and Saw Mill Owners Association v. the State of Maharashtra and others  

whereby it was declared that the reservation of land bearing Survey No.577 Hissa  

No.1, Survey No.577 Hissa No.2, Survey No. 577 Hissa No.3 and Survey No.578  

Hissa No.1 (part) for ‘timber industries’ will be deemed to have lapsed because the  

land was not acquired within six months of the receipt of purchase notice.

2. In the revised Development plan of Pune City notified on 5.1.1987, the land in  

question was shown in the zone designated for ‘timber industries’. On 18.8.1988,  

M/s.  C.V.  Shah and  A.V.  Bhat  entered  into  an  agreement  with the  members  of  

Timber  Merchants  Association (for  short,  ‘the  Association’)  for  sale  of  the  land  

owned by them and received a sum of Rs.35,37,500/- as earnest money. They also  

agreed to execute a tripartite agreement involving Pune Municipal Corporation (for  

short,  ‘the  Corporation’).  After  about  three  years,  the  landowners  entered  into  

another  agreement  dated  14.7.1991  for  conveyance  of  the  land in favour  of  the  

members of the Association either by inter vivos transaction or through acquisition  

procedure.  

3. On 25.4.1989, the Standing Committee of the Corporation resolved to approve  

acquisition of the land in question and authorised the Municipal Commissioner to  

take steps for that purpose. Thereafter, letter dated 31.5.1989 was sent to Collector,  

Land Acquisition, Pune for issue of notification under Section 126(2) of the Act read  

with  Section  6  of  the  Land  Acquisition  Act,  1894  (for  short,  ‘the  1894  Act’).  

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However, no further step was taken by the Corporation or the State Government and  

the required notification was not issued.  

4. On 23.9.1998, the advocate representing the Association got published notice  

in the newspaper ‘Prabhat’ in regard to purchase of the land in question. He also sent  

letter dated 8.10.1998 to Shri Kiran Kothadiya, advocate for M/s. C.V. Shah and  

A.V. Bhat on the same issue. The latter sent reply dated 5.3.1999 stating therein that  

the transaction cannot  be  finalised  because  the  land was subject  to  Urban Land  

(Ceiling and Regulation) Act, 1976 (for short, ‘the 1976 Act’).   

5. On 7.10.2000, M/s. C.V. Shah and A.V. Bhat and the Association executed  

deed and cancelled the agreements for sale dated 18.8.1988 and 14.7.1991.  The  

relevant portions of the cancellation deed are extracted below:

“The parties hereto mutually and voluntarily cancel, revoke and terminate the  transaction relating to the property bearing Survey No.578/1, 578/2, 577/1 ad- measuring  “Hectare  13.27  Ares”  or  thereabout,  situate  at  village  Munjeri  (Bibwewadi) of the City of Pune, Taluka Pune City, District Pune, within the  limits of the Registration District of Pune, Jt Sub.Registrar, Haveli No.1 and  the Municipal Corporation of the City of Pune, in “reservation”/ Zoning for  the  timber  market  under  the  Development  Plan  of  Pune  City  (the  said  “Land”) witnessed by the agreements dated 18.08.1988 and confirmed by  the agreements dated 14.07.1991 (both the documents are referred to as the  said “Agreements”).

The Association, with the consent of the Consenting Party (including  sub.   numbers) renounce all claims, rights, title and interest under the said    Agreements relating to the said Land, inducing the right to seek acquisition  thereof.

The parties hereto release each other from all the obligations towards  each other and hereby declare that the said Agreements stands cancelled,  revoked and terminated and none of the parties hereto shall have claims, in- terest, title or right against each other under the, in respect of or relating to,  either  the  said  Agreements  or  any  of  the  matters  thereunder  or  relating  thereto.

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The Promoter/Owners has paid to the members of the Association and  the Consenting Party No.2 to 16, the amount mentioned in the ANNEX- URE given herewith, towards the refund of the amount so far paid to the Pro- moter/Owners, and the lump sum compensation, as mutually decided, in full  accord and satisfaction towards relinquishment of all rights. The Associa- tion and the Consenting Party do hereby confirm receipt thereof, in full and  final settlement of all the claims of the Association and the Consenting Party  No.1 against the Promoter/Owners.

The Association and the Consenting Party declare and assure the Pro- moter/Owners that they have not done any act, deed or thing encumbering  or in any way creating any right, title or interest of any third party relating to   the said Land or any part thereof.

The  Association  and  the  Consenting  Party  further  declare  that  the  Promoter/Owners shall be entitled to deal with and/or dispose of and/or take  any steps for seeking release of the said Land from the reservation / Zoning  at its sole discretion and choice. The Association shall not have any griev- ance whatsoever against the Promoter/Owners relating thereto.

The Association and the Consenting Party hereby, declare and assure the  Promoter/Owners  that  their  respective  General  Body  vide  the  resolution  No.06, dated 06.09.2000, and Managing Committee resolution No.02 dated  14.08.2000, respectively (True copies of which are annexed herewith) have  resolved to accordingly cancel, revoke and terminate the said Agreements,  and have approved and sanctioned this Deed of Cancellation.”

(emphasis supplied)

6. After executing the cancellation deed, the landowners issued purchase notice  

dated 15.11.2000 under Section 127 of the Act. The same was rejected by the City  

Engineer of the Corporation vide his letter dated 13.12.2000, which reads as under:

“Pune Municipal Corporation

Shivajinagar, Pune-5

Development Plan Office

Outward No.DPO/1826

Date : 13/12/2000

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To, M/s C.V. Shaha & A.V. Bhat C/o. V.D. Karjatkar C/15, Erandwana, Ambika Apartment, Karve Road, Pune-411 004.

Sub. :- Acquisition of land at S. No. 578/1, Bibwewadi (Munjeari), Pune.  

Ref. :- Purchase Notice sent by you on 8/11/2000.

Sir, The purchase notice for land acquisition sent by you u/s  

127, at respect of land at S. No. 578/1 of Bibwewadi, which is  reserved for fire brigade, is rejected, for following reasons.

1)Latest 7/12 extract for the said land is not submitted. 2)Latest demarcation certificate for the said land is not submit- ted. 3)Zoning demarcations as per development plan of Pune Munic- ipal corporation is not submitted.

Sd/- City Engineer  

Pune Municipal Corporation”

7. On receipt of aforesaid communication, M/s. C. V. Shah and A. V. Bhat sent  

letter dated 16.2.2001 to the City Engineer informing him about execution of the  

cancellation  deed  with  the  request  to  take  necessary  steps  in  accordance  with  

purchase notice dated 15.11.2000.  That letter reads as under:

“Date : 16/2/2001

From, M/s C.V. Shaha & A.V. Bhat  A.S.T.-l, Success Chambers,  1232, Deccan Gymkhana, Pune - 4.

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To, City Engineer Pune Municipal Corporation  Pune - 5.

Sub. : Cancellation of acquisition proceeding's in respect of land  reserved for Timber Industries at S. No. 577/1 & 578/1, Bibwe- wadi.

Ref. : 1) Purchase notice issued by us u/s 127 of MRTP Act on  15/11/2000. 2)Your letter DPO 1874, dt. 13/12/2000. 3)Our letter Dt. 15/1/2001.

Sir, Vide letter mentioned in ref.2) above, you have informed  

us about ongoing land acquisition proceeding.

To carry out land acquisition procedure without difficulty  & to carry out land acquisition procedure without delay, after  sanctioning necessary resolution in Hon. Standing Committee &  to  avoid  any  litigation/difficulties  which  may  be  created  by  owner of the property,  Timber Merchants  Association entered  into an agreement with us on 18/8/1988 & 14/7/1991. Accord- ingly we never created any litigation or created hindrance in ac- quisition procedure, instituted by PMC & we always cooperated  Timber Merchants Association & PMC.

But now as per cancellation deed on 7/10/2000, between  Association of Timber Industries & us, Association do not re- quire the land here after. They have given no objecting for taking  necessary steps for getting the zoning of the said land changed  and for canceling acquisition proceeding's.

The officer of the association of "Poona Timber Industries  Associations & Poona Timber Small Scale Industries Associa- tion" has passed necessary resolution in their general body meet- ing & managing committee meeting by majority & have signed  the cancellation deed.  The copies of said resolutions are also  part & parcel of the cancellation deed.

As mentioned in para 2 on page 5 of cancellations deed,  Associations has surrendered their all rights, including rights of  acquisition & as mentioned in para no. 6 on page 6, it is clearly  

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mentioned that owner of land is at liberty to deal with said land  as per their wish.

As association has mentioned that they do not need said  land,  we request  you to pass necessary resolution in standing  committee for canceling the acquisition proceedings & to cancel  acquisition proceedings & take necessary steps in response to  my letter mentioned in ref. 3 above.

Enclosed along with true copy of cancellation deed dated  7/10/2000.

      Your Sincerely  For M/s C.V. Shah & A.V. Bhat,

 Sd/- Sanjay C. Shaha  

Partner”

8. In view of the letter of the landowners, the City Engineer vide his letter dated  

12.3.2001 asked the President of the Association to attend the meeting to be held on  

16.3.2011 (the record produced before the Court does not show as to what actually  

transpired in that meeting).  

9. In the meanwhile, Additional Collector and Competent Authority passed order  

dated 26.2.2001 whereby he declared that the provisions of the 1976 Act are not  

applicable to the land in question.  As a sequel to this, fresh negotiations appear to  

have taken place between the parties and M/s. C.V. Shah and A.V. Bhat conveyed its  

willingness to sell the land for Rs.  350/- per sq. yard. This was discussed in the  

meeting held in the office of the City Engineer on 12.6.2011, the minutes of which  

are reproduced below:  

“A Meeting was held between the Poona Merchants Small Scale Indus- tries (Association and The president, standing committee  of PMC on 12-6-2001 in the office of commissioner of PMC.  

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The said  meeting  was called  for  the  shifting  process  at  s.no.577,578,579, The minutes of meeting is as follows.

1.  Initially  a  meeting  was  held  with  the  owners  of  property  s.no.577,578,579 The landlords have dis –agreed with the rate of  Rs. 135 per sq.ft. as per quoted in the meeting dt.6-6-2001. They  have also submitted the copies of sale deed of nearby residence  in their locality. According to them in their area the applicable  rate is of Rs. 300 & above, per sq.mt. thene their demand is for  Rs. 350/- per sq.ft. They further submitted that they would ap- proach the court of law for enhancement of amount if the in- creased rate is not fulfilled.

2. The rate of amount communicated to the Timbers Association  by the city Engg. On dt. 6-6-2001 is Quoted approximately & it  can be changed. The association is bound to pay the amount as  per Land Acquisition at It  the landlords reject the rate & ap- proach the count, then they shall pay the amount as per direc- tions of the court, if any encroachment in it.

3. Association has rejected the change of rate & they insisted  upon written communication of the proposed rate. But unless &  until the special land acquisition officer no. 15 pune gives the  rate in writing to supply it in writing city Engg. is unable to sup- ply it in writing to the Association.

4. The landlords informed that they are ready & willing to give  their lands if the rate of Rs.350/- is satisfied.

5. The landlords shall communicate their intention & their rate  written form to PMC.”

(reproduced from the Civil Appeal paper book)

10. However,  the  negotiations  held  between  the  parties  did  not  result  in  the  

execution of the sale deed in favour of the Association or its members.  

11. After two years and five months, the landowners filed an application under  

Section 37 of the Act and prayed that the land may be released from the reservation.  

The concerned Minister accepted the request of the landowners and passed order  

dated 6.2.2011 for de-reservation.  However, that order could not be implemented  8

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because of the objections raised by some persons.  The landowners then filed writ  

petitions for grant of a declaration that the reservation of the land will be deemed to  

have lapsed because the Planning Authority, i.e., the Corporation did not take steps  

for its acquisition within six months of the receipt of purchase notice.

12. The  Division  Bench  of  the  High  Court  noted  factual  matrix  of  the  case,  

referred to the relevant statutory provisions and held:

“In our conclusion, therefore, the stand of the Pune Municipal  Corporation that the steps were already taken prior to the service  of the purchase notice is fallacious for more than one reason. For  one, there is no decision by the Planning Authority or for that  matter by the General Body of the Pune Municipal Corporation  to acquire the subject land and send the proposal for acquisition  of  the  subject  lands  to  the  State  Government.  The  other,  communication  dated  20.4.1989  from  the  Municipal  Commissioner,  Pune  Municipal  Corporation  to  the  Municipal  Secretary,  does  not  reflect  any  decision  by  the  Municipal  Commissioner for acquisition of the subject land but rather it is  for  seeking  approval  of  the  Standing  Committee.  Then  the  Commissioner is not competent to exercise the functions of the  Planning Authority prescribed in section 127 of the MRTP Act,  1966  even  by  virtue  of  section  68  of  the  BPMC  Act.  The  resolution of the Standing Committee passed on 25.4.1989 is of  no legal worth. Last but not the least, the letter dated 31.5.1989  of  the  Assistant  Municipal  Commissioner  (Special),  Pune  Municipal  Corporation  addressed  to  the  Collector,  Land  Acquisition Department, Pune for the acquisition of the subject  land  under  the  Land  Acquisition  Act  is  without  any  legal  authority. The letter dated 31.5.1989 of the Assistant Municipal  Commissioner to the concerned Collector cannot be held to be  an  application by the  Planning Authority  to  the  Collector  for  acquisition of the subject land for want of any legal authority to  him in that  regard.  Section 68(2) of the BPMC Act does not  improve the case as there is nothing on record to show that the  Commissioner  has  empowered  the  Assistant  Commissioner  in  this regard by written order after  obtaining approval from the  Standing  Committee.  Moreover  what  Commissioner  himself  cannot do even with the aid of section 68(1) of the BPMC Act, a  fortiori,  the  Assistant  Commissioner  cannot  do  by  virtue  of  section 68(2). The proposal dated 31.5.1989, thus, sent by the  

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Assistant  Municipal  Commissioner  to  the  Collector,  Land  Acquisition Department cannot be said to be lawful proposal by  the  Planning Authority  to  the  State  Government  and  for  that  matter,  to  the  concerned  Collector  for  the  acquisition  of  the  subject land.

We have, thus, no hesitation in holding that the communication  dated  31.5.1989  by  the  Assistant  Municipal  Commissioner  (Special),  Pune Municipal  Corporation to  the  Collector,  Land  Acquisition Department, Pune for acquisition of the subject land  and issuance of notification under section 126(2) of the MRTP  Act, 1966 and section 6 of the Land Acquisition Act is not a  proposal by the Planning Authority and not a step for acquisition  as contemplated by section 127 of the MRTP Act, 1966.”

13. During the pendency of the appeal,  several interlocutory applications were  

filed  by  the  landowners  for  disposal  of  the  cases  in  terms  of  the  judgment  in  

Shrirampur  Municipal  Council,  Shrirampur  v.  Satyabhamabai  Bhimaji  Dawkher  

(2013) 5 SCC 627.   Their prayer has been opposed by the Corporation and the  

Association.  In  paragraphs  5  to  11  of  affidavit  dated  12.7.2013,  Shri  Lalchand  

Kasturchand Sanghvi,  President  of  the  Association has  spelt  out  the  reasons  for  

shifting the timber industries from their present site to the land belonging to M/s.  

C.V.Shah and A.V.Bhat.  In paragraphs 12 to 14, he has referred to the negotiations  

held with the landowners and the sanction accorded by the Standing Committee of  

the  Corporation  for  the  acquisition  of  the  land  and  indirectly  blamed  the  State  

Government for delay in the issuance of notification under Section 6 of the 1894 Act.  

In paragraph 26,  the deponent has referred to  the negotiations held between the  

parties and pleaded that the judgment in Girnar Traders v. State of Maharashtra (II)  

(2007) 7 SCC 555 and Shrirampur Municipal Council’s case are distinguishable.  He  

has also relied upon the minority view in Girnar Traders (II) and averred that by  

order dated 27.3.2008, another Bench had expressed the agreement with minority  

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view.  For the sake of reference, paragraphs 5 to 11, 17 and 24 of the affidavit of Shri  

Lalchand Kasturchand Sanghvi, are reproduced below:

“5. That the Maharashtra Regional and Town Planning Act, 1966 (hereinafter referred to as the "MRTP  Act") was enacted by the State Legislature for making provision for planning the development and use  of land in the State of Maharashtra. It is submitted that Section 21 of the MRTP Act provides for prepa - ration  of  Development  Plan  by  the  Planning  Authority  (in  the  present  case  Pune  Municipal  Corporation). It  is stipulated Section 22 that the Development Plan would indicate the manner in  which land in a particular area would be used and / or developed. It is pertinent to mention herein   that under the Development Plan, land is reserved for a designated purpose. It may be pointed out  herein that in the present case 21 hectares of land situated at Village Munjeri (Bibwewadi), Taluka  Haveli, District Pune was reserved for "Timber Industries" by a notification dated 5 January 1987 un- der the draft Development Plan. The draft Development Plan was approved and notified and came  into force with effect from 15 February 1987. Out of the said 21 hectares of land, 11 hectares was  owned by the predecessor in title of respondent no. 3 in the present appeal whereas 10 hectares was  owned by the respondent no. 4 in the present appeal.  

6. That it is provided under Section 126 of the MRTP Act, any land reserved under the Development  Plan shall be deemed to be land needed for public purpose within the meaning of the Land Acquisition  Act, 1894 (hereinafter referred to as the "Act of 1894"). Apart from the deeming provision in the MRTP  Act, the land reserved in the present case was factually held to have been reserved for public purpose  by the Hon’ble High Court in the impugned judgment and order. Thus it is unimpeachable fact that the  land was reserved for public purpose.

7. That at this stage, it may be relevant to mention that presently the timber market in the city of   Pune is situated in the heart of the city which is densely populated. The location of the timber market is  causing inconvenience not only to the traders, but also to the general public as due to movement of   lorries and trucks, traffic gets stalled in the city. Besides timber is a volatile material and there is likeli- hood of it catching fire. Therefore the location of the timber market in the heart of the city was not a   desirable situation and was not in public interest. In view of this fact reservation for timber industry  was made in the Development Plan, as mention above. It may be relevant to mention herein that this is  the only land reserved for timber industry in the whole Development Plan.

8. That after reserving the plot for timber industry, the Pune Municipal Corporation requested the tim- ber merchants to shift their establishments from the present location to the newly reserved land in the  larger public interest. On such request being made by the Corporation, the timber merchants cooper- ated with the Corporation and they decided to move their establishments to the newly reserved plot.  Accordingly they took various steps as would be indicated hereinafter the Association was always  ready and willing and still is ready and willing to take any steps which may be necessary for shifting the  timber market including making any payment towards the cost of acquisition to the land lowers/ Corpo- ration. The Association has already made provision for the same in their bank account.

9. That it is most humbly submitted that use of the reserved land for timber industry would be in the  interest of general public of the city of Pune and it would defeat public purpose if the timber market is  not shifted from the heart of the city to the newly reserved land. It is most humbly submitted that the  overriding public interest demands that even presuming that there have been some lapses on the part  of the State Government and the Municipal Corporation or even the Association, it ought to be con - doned and acquisition of the land for public purpose ought to be allowed. However, the respondents  now want to defeat the public purpose and make private gains by using the land for residential purpose  by raising technical and frivolous objections.  

10. That under the Provisions of Section 126(1) of the MRTP Act, the land reserved by for any public   purpose can be acquired in 3 ways" (a) by an agreement with the landowner and payment of the  agreed amount (b) by granting Floor Space Index (FSI) or Transferable Development Rights (TDR) to the  landowner in lieu of the agreed amount and (c) by making an application to the State Government for   acquisition of the land under the Act of 1894.  

11. That in the present case, the facts of the case would disclose that there was private negotiation  between the parties i.e. the respondent no. 3 (landowner) and the Timber Merchants Associations after  the reservation of the land for Timber Industries in 1987. The negotiation ultimately resulted in an  agreement dated 18 August 1988 between the respondent no. 3 and the Timber Merchants Associa- tions' members. Pursuant to the said agreement consideration also passed from the Timber Merchants  Association to the landowner.  The Association paid Rs. 35,37,500/- towards earnest  money to  the  landowner way back in 1988, a substantial sum of money in 1988. The landowner agreed to enter into  a tripartite agreement with the Timber Merchants Association and the Pune Municipal Corporation and  also agreed for passing of a consent award under the provisions of the Act of 1894.

17. That it is submitted that the aforesaid paragraphs would clearly demonstrate that steps were   taken by the Pune Municipal Corporation for acquisition of the land in 1989 itself i.e. at a time when  

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there was not even a purchase notice from the landowners in existence. It may be very relevant to  mention here that Pune Municipal Corporation could not have itself issued notification under Section 6  of the Act of 1894, which is the sole prerogative of the State Government. For taking steps for acquisi- tion, Pune Municipal Corporation could only have requested the State Government for publication of no- tification under Section 5. The Corporation had done that way back in 1989 itself. Thereafter the publi - cation of Section 6 notification has to be done by the State Government. Therefore it is most humbly  submitted that the Corporation cannot be faulted with delaying the matter and it had clearly taken all   possible and reasonable steps towards acquisition of the land in question.

24.  That it is only after 26 February 2001 that the land could be legally retained by the landowners  and the question of acquisition of the land by the Pune Municipal Corporation arose. It is submitted that   prior to 26 February 2001, since it was not even clear that the land could be retained by the landown - ers, the question of acquisition of land under the provisions of Act of 1894 could not have arisen. In any  event, as shown in the earlier paragraphs, . steps for acquisition had been taken by the Pune Municipal  Corporation way back in 1989 and all that was within the power and the jurisdiction of the Corporation  for acquisition of the land had been done by the Corporation. Thus the purchase notice sent by respon- dent no. 3 was clearly misconceived and is not at all a valid purchase notice as contemplated under   Section 127 of the MRTP Act.”

(emphasis supplied)

14. Learned  senior  counsel  appearing for  the  Corporation and  the  Association  

assailed the impugned order on the ground that the view expressed therein is contrary  

to the plain language of Section 126 read with Section 127 of the Act and argued that  

the declaration made by the High Court is liable to be set aside because the land had  

been  acquired  by  private  negotiations.   Shri  T.  R.  Andhyarujina,  learned  senior  

counsel appearing for the Association extensively referred to affidavits filed by the  

parties in the interlocutory applications to drive home the point that the parties, i.e.,  

the landowners and the Association had, with the intervention of the officers of the  

Corporation executed two agreements dated 18.8.1988 and 14.7.1991 and submitted  

that the cancellation agreement is liable to be ignored because the same is vitiated  

due to fraud and misrepresentation.  He submitted that the landowners misled the  

Association in signing the cancellation agreement and then served purchase notice  

under Section 127 and this is an ample evidence of its mala fides. Learned counsel  

emphasised that the reservation of land cannot be deemed to have lapsed because the  

purchase  notice was rejected by the City Engineer  vide letter  dated  13.12.2000.  

Learned counsel also invited our attention to order passed by two Judge Bench in  

Poona Timber Merchants & Saw Mill Owners Association v. State of Maharashtra  12

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(2008) 17 SCC 357  and submitted that the matter should be referred to a larger  

Bench. Learned counsel for the writ petitioners supported the impugned order and  

argued that the appeal should be dismissed in view of the judgment of the three  

Judge Bench in Shrirampur Municipal Council’s case. He submitted that there is no  

need of making reference to the larger Bench because by an order dated 8.12.2010  

the five Judges’ Bench before which these appeals were placed directed that the  

matter need be heard by a Bench of three Judges.  

15. We have considered the respective submissions and carefully scrutinized the  

record  including  the  affidavits  and  documents  filed  by  the  parties  along  with  

interlocutory applications. In furtherance of the order passed by two Judge Bench in  

Poona Timber Merchants & Saw Mill Owners Association’s case these appeals were  

placed before the Constitution Bench along with Civil Appeal Nos. 3703/2003 M/s.  

Girnar Traders v. State of Maharashtra and others. On 8.12.2010, the Constitution  

Bench passed the following order:

“Having heard learned counsel on both sides, we are of the view  that the matters need to be heard a Bench of three Judges of this  Court. The Registry is directed to place these matters in the final  hearing list after the judgment is pronounced in the case of M/s.  Girnar Traders v. State of Maharashtra and others [Civil Appeal  No.3703 of 2003].”

16. In view of the above order, it is not possible to accept the submission of the  

learned counsel  for  the  appellants  that  the  matter  should be  referred  to  a  larger  

Bench,  more  so,  because  the  issue  has  already  been  concluded  in  Shrirampur  

Municipal Council’s case. In that case, the Court referred to the relevant provisions  

of  the  Act  including  Sections  126  and  127  of  the  Act  (paragraphs  27-33)  and  

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observed:   

“Section 126(1) lays down that  when any land is required or  reserved for any of the public purposes specified in any plan or  scheme,  the  planning authority,  development  authority,  or  any  appropriate authority can acquire the same by an agreement by  paying an agreed amount, or by granting the landowner or the  lessee  floor space  index or  transferable  development rights  in  lieu of the area of land surrendered free of cost and free from all  encumbrances  and  further  additional  floor  space  index  or  transferable  development  rights  against  the  development  or  construction of the amenities on the surrendered land at his cost,  or  by  making  an  application  to  the  State  Government  for  acquiring  such  land  under  the  1894  Act.  Once  the  land  is  acquired by an agreement under Section 126(1)(a) or by grant of  floor space index or additional floor space index or transferable  development rights under Section 126(1)(b) or under the 1894  Act,  the  same  vests  in  the  planning  authority,  development  authority or appropriate authority, as the case may be. Section  126(2) empowers the State Government to make a declaration  under Section 6 of the 1894 Act. The proviso to this sub-section  fixes  the  time-limit  of  one  year  for  making such  declaration.  Section 126(3) lays down that on publication of a declaration  under Section 6 of the 1894 Act, the Collector shall proceed to  take order for the acquisition of the land under the 1894 Act and  the provisions of that Act shall apply to such acquisition with the  modification regarding market value as specified in clauses (i) to  (iii) of that sub-section. Section 126(4) contains a non obstante  clause and provides that if a declaration is not made within the  period referred to in sub-section (2), or having been made, such  period  expired  at  the  commencement  of  the  Maharashtra  Regional and Town Planning (Amendment) Act, 1993, the State  Government can make fresh declaration under the 1894 Act. This  is subject to the rider that in such an event, market value of the  acquired land shall be determined with reference to the date of  fresh declaration. Section 127 speaks of lapsing of reservation. It  lays down that if any land reserved, allotted or designated for  any purpose specified in any plan prepared and sanctioned under  the 1966 Act is not acquired by agreement within ten years from  the date on which a final regional plan or final development plan  comes into force or if proceedings for the acquisition of such  land  under  the  1966  Act  read  with  the  1894  Act  are  not  commenced  within  that  period,  the  owner  or  any  person  interested in the land may serve notice on the planning authority,  development  authority  or  appropriate  authority  to  that  effect.  

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That section further lays down that if the land is not acquired or  no steps are  commenced for its  acquisition within six months  from the date of service of notice, the reservation, etc. shall be  deemed to have lapsed and the land shall be deemed to have  been released from such reservation,  etc.  so  as  to  enable  the  owner to develop the same.”

17. The  three  Judge  Bench  then  referred  to  the  judgments  in  Municipal  

Corporation of Greater  Bombay v. Hakimwadi Tenants’ Association (1988) Supp  

SCC  55,  Girnar  Traders  (II)  and  rejected  the  argument  that  there  was  conflict  

between the judgments of the two Judge Bench in Hakimwadi Tenants’ case and the  

majority judgment in Girnar Traders (II) by recording the following observations:  

“In our view, there is no conflict between the judgments of the  two-Judge Bench in Hakimwadi Tenants’ Assn. and the majority  judgment  in  Girnar  Traders  .  In  both  the  cases,  this  Court  emphasised that if any private land is shown as reserved, allotted  or designated for any purpose specified in any development plan,  the same may be acquired within ten years either by agreement  or by following the procedure prescribed under the 1894 Act,  and if proceedings for the acquisition of land are not commenced  within that period and a further period of six months from the  date of service of notice under Section 127 of the 1966 Act, then  the  land  shall  be  deemed  to  have  been  released  from  such  reservation, allotment, etc. In Hakimwadi Tenants’ Assn., notice  under  Section  127  was  issued  on  1-7-1977.  The  State  Government did not take any steps for the acquisition of land  within  next  six  months.  The  learned  Single  Judge  and  the  Division  Bench  of  the  High Court  held  that  in  terms  of  the  second part of Section 127, the reservation of land for recreation  ground will be deemed to have lapsed. This Court unequivocally  approved the view expressed by the High Court (paras 10 and  11). The majority judgment in Girnar Traders  appears to suggest  that the question considered and decided in Hakimwadi Tenants’  Assn was slightly  different,  but having carefully gone through  paras 10 and 11 of the first judgment, we are convinced that the  question involving interpretation of Section 127 was very much  considered and decided by the two-Judge Bench in favour of the  landowner and there is no conflict in the opinion expressed in the  two judgments.

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We are further of the view that the majority in Girnar Traders  had rightly observed that  steps  towards the acquisition would  really commence when the State Government takes active steps  for the acquisition of the particular piece of land which leads to  publication of the declaration under Section 6 of the 1894 Act.  Any other interpretation of the scheme of Sections 126 and 127  of the 1966 Act will make the provisions wholly unworkable and  leave the landowner at the mercy of the Planning Authority and  the State Government.”

The Three Judge Bench further observed:  

“The expression “no steps as aforesaid” used in Section 127 of  the 1966 Act has to be read in the context of the provisions of  the 1894 Act and mere passing of a resolution by the Planning  Authority or sending of a letter to the Collector or even the State  Government  cannot  be  treated  as  commencement  of  the  proceedings for the acquisition of land under the 1966 Act or the  1894 Act. By enacting Sections 125 to 127 of the 1966 Act, the  State Legislature has made a definite departure from the scheme  of acquisition enshrined in the 1894 Act. But a holistic reading of  these  provisions  makes  it  clear  that  while  engrafting  the  substance of some of the provisions of the 1894 Act in the 1966  Act and leaving out other provisions, the State Legislature has  ensured that the landowners/other interested persons, whose land  is utilised for execution of the development plan/town planning  scheme, etc., are not left high and dry. This is the reason why  time-limit of ten years has been prescribed in Section 31(5) and  also  under  Sections  126  and  127  of  the  1966  Act  for  the  acquisition  of  land,  with  a  stipulation  that  if  the  land  is  not  acquired within six months of the service of notice under Section  127 or steps are not commenced for acquisition, reservation of  the  land  will  be  deemed  to  have  lapsed.  Shri  Naphade’s  interpretation  of  the  scheme  of  Sections  126  and  127,  if  accepted, will lead to absurd results and the landowners will be  deprived of their right to use the property for an indefinite period  without  being  paid  compensation.  That  would  tantamount  to  depriving the citizens of their property without the sanction of  law  and  would  result  in  violation  of  Article  300-A of  the  Constitution.”

The  Court  finally  referred  to  the  judgment  of  the  Constitution  Bench  in Girnar  

Traders v. State of Maharashtra (2011) 3 SCC 1 (Girnar Traders – III) (paragraphs  

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125 to 138) and held that the observations contained in para 133 of Girnar Traders  

(III) unequivocally support the majority view in Girnar Traders (II).  

18. In our opinion, the ratio of the judgment in Shrirampur Municipal Council’s  

case is squarely applicable to these appeals.  The argument of the learned counsel  

that  the  acquisition  proceedings  will  be  deemed to  have  commenced  within the  

meaning of Section 126 read with Section 127 of the Act because the landowners  

had executed agreements for sale with the members of the Association is without  

merit and is liable to be rejected.

19. Section  126  (1)  postulates  acquisition  of  land  by  Planning  Authority,  

Development  Authority,  or  as  the  case  may  be,  by  Appropriate  Authority  by  

agreement by paying an agreed amount or by granting the landowner or the lessee,  

subject,  however,  to the lessee paying the lessor or  depositing with the planning  

authority etc., for payment to the lessor, an amount equivalent to the value of the  

lessor’s interest,  floor space index (FSI) or transferable land against the area of land  

surrendered free of cost or by making an application to the State Government for  

acquiring such land by invoking the provisions of the 1894 Act. The section does not  

even  make  a  mention  of  the  acquisition  by  private  negotiations  between  the  

landowner and the intended beneficiary of the reservation. Therefore, the appellants  

cannot rely upon the agreements  dated 18.8.1988 and 14.7.1991 for advancing an  

argument that the land in question had already been acquired by negotiations. That  

apart,  the agreements executed between the Association and M/s.  C.V. Shah and  

A.V. Bhat had been voluntarily cancelled by parties on 7.10.2000 and on the date of  

issuance of purchase notice the agreements for sale did not exist. Therefore, the same  

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cannot be made basis for recording a finding that the land had been acquired by  

negotiations.

20. The rejection of purchase notice by the City Engineer of the Corporation vide  

letter dated 13.12.2000 was inconsequential because the documents placed before  

the Court do not show that he was authorised to act on behalf of the Corporation. In  

any case,  the  failure  of  the  Competent  Authority  to  acquire  the  land  within six  

months  of  the  receipt  of  purchase  notice  resulted  in  deemed  lapsing  of  the  

reservation.

21. In the result, the appeals are dismissed.

22. As a sequel to the above, all the pending applications are disposed of.

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

         ………………………….J.         (V. GOPALA GOWDA)

New Delhi; August 7, 2013.

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