REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7268 OF 2004

Mohanlal Nanabhai Choksi (Dead) by Lrs. ...Appellant(s)

- Versus -

State of Gujarat & Others ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. The appellants are the owners of the lands

bearing Survey Nos. 1587 to 1596, 1597-A-

Part, 1599 to 1601 of Ward No. 4 of Taluka

Choryasi of the city of Surat in Gujarat.

2. On 22.08.1980, the Standing Committee of

the Surat Municipal Corporation

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(hereinafter ‘SMC’), passed a resolution

with a proposal to the State Government,

under Section 78 of the Bombay Provincial

Municipal Corporations Act, 1949

(hereinafter ‘BPMC Act’), for initiating

land acquisition proceedings under the Land

Acquisition Act, 1894, for acquiring the

abovementioned land of the appellants. The

said land, admeasuring 7168.09 sq. mts.,

was to be acquired for the setting up of a

vegetable market. The said resolution was

approved and the proposal was sanctioned by

the State Government on 30.07.1981.

3. On 3.03.1986, the first Development Plan

under the Gujarat Town Planning & Urban

Development Act, 1976 (hereinafter the

‘Development Act’) was under preparation

for the Surat Urban Development Authority

(hereinafter ‘SUDA’). During the pendency

of the said plan, the State Government

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sanctioned the abovementioned proposal, and

therefore the land in question was kept

reserved for a vegetable market for SMC.

4. On 9.2.1990, a notification was issued

under Section 4 of the Land Acquisition

Act, 1894 for acquiring the lands of the

appellants. The appellants, on 14.3.1990,

filed their objections under Section 5A of

the Land Acquisition Act. However the

objections were overruled and then followed

a notification under Section 6 of the said

Act on 8.02.1991.

5. The appellants, on 16.3.1991, filed a

special civil application (No. 3435/1991)

before the Gujarat High Court, challenging

the notifications under Sections 4 and 6 of

the Land Acquisition Act.

6. In 1996-97, SUDA started revising the

Development Plan, and in its revision the

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land was shown as reserved for the

vegetable market of SMC.

7. On 17.05.2001, a notification was issued by

the State Government under Section 17 of

the Development Act, whereunder it was

proposed to de-reserve the lands that had

been reserved for the establishment of a

vegetable market by SMC and place them in

the residential zone. SMC objected to the

said proposal of de-reservation on

13.07.2001.

8. The Gujarat High Court by the impugned

judgment dismissed the special civil

application (No.3435/1991) on 1.02.2002 and

allowed the acquisition of the lands of the

appellants for setting up a vegetable

market.

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9. In the impugned judgment the Hon’ble High

Court, inter alia, held as follows:

a.A major part of the land in question was open

land, the construction upon it was very old

and hardly 1/10

th

of the land was occupied by

structures.

b.The land was required for a public purpose in

terms of Sections 78 of the BPMC Act, and 12

(2) (b) read with Section 20 of the

Development Act.

c.The other markets, which the appellants claim

as very closeby, were actually quite far

away. SMC needs to provide a market close to

the people so that they do not have to move

far to purchase their daily necessities. A

vegetable market is required to be near the

people, especially in India, as in India

people buy their fresh vegetables daily.

d.The notification dated 17.05.2001 made it

clear that it was a draft development plan,

and suggestions and objections were invited

from persons for modification of the said

Plan. Therefore, the notification dated

17.05.2001 was merely a proposal to modify

the draft Development Plan and did not

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reflect a decision to de-reserve the lands of

the appellants.

e.A reading of Section 63(12) read with Section

66(42) of the BPMC Act made it clear that

there was an obligatory duty on SMC to

construct and maintain a public market, for

which it can take appropriate action as

required under the Act. Further the scheme of

the Act clearly indicated that SMC was

competent to establish a market.

f.The appellants had raised a contention that

SMC had no right to acquire the land and at

most the State Government could acquire land.

The High Court dismissed the said contention

holding once a notification was published

under Section 6 after complying with the

provisions of the Land Acquisition Act, it

was conclusive evidence that the land was

required for a public purpose and the Court

could not go behind the said notification.

g.The appellants were neither agriculturalists

nor producers of agricultural produce, nor

dealers or office bearers of the Surat

Agricultural Produce Market Committee, and as

such they had no right to question the

authority of SMC to initiate acquisition

proceedings for a vegetable market.

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h.The 1963 Act applied only to bulk sales and

not retail sales. The SMC was providing a

market so that the retailers and consumers

have no difficulty in the sale/purchase of

commodities. Retailers were excluded from the

purview of the 1963 Act and Rules framed

thereunder. Thus, the SMC could set up the

vegetable market as it was doing the same for

retailers. The 1963 Act had been enforced to

regulate transactions between traders and

agriculturalists, in order to prevent

exploitation of the latter by the former.

Thus, a market for agriculturalists and

traders could only be set up under the

provisions of the 1963 Act, but the same did

not and would not apply to retailers dealing

in small quantities. There was nothing in the

1963 act to indicate that transactions

between the ultimate consumers and the

vendors was controlled or that the local

authority was prohibited from setting up a

vegetable market for the same.

10. The appellants on 19.3.1992 filed an SLP

(No.7559/2002), before this Court raising,

inter alia, the following main contentions:

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a.SMC, acting under the provisions of the BPMC

Act, had no authority to establish the

vegetable market as there was a later and

special Act passed by the Gujarat government,

namely the Gujarat Agricultural Produce

Market Act, 1963 (hereinafter the ‘1963 Act’)

and under 1963 Act a vegetable market could

only be established by a Market Committee

constituted under the 1963 Act.

b.There were markets already established within

a radius of 1 and 1/2 kms, and thus there was

no need to establish a vegetable market. It

was also contended that there was no

mandatory duty on the SMC to establish the

said market, and that establishing such a

market would only lead to traffic problems as

the area was a congested area in the middle

of the city. The appellants also stated that

the area sought to be acquired was occupied

by many tenants with many superstructures on

it.

c.The lands in question had been reserved in

the Final Development Plan of SUDA, but there

was a proposal to de-reserve the said lands

(by notification dated 17.05.2001), and thus

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the notifications under Sections 4 and 6 of

the Land Acquisition Act would not survive.

11. On 2.09.2004, the State Government issued a

notification under Section 17(1)(c) of the

Development Act sanctioning the revised

Development Plan (called the revised Final

Development Plan). In the said plan, the

State Government, due to the objections

raised by SMC, did not accept the proposal

for de-reservation of the appellants’

lands. Thus, the reservation of the lands

for a vegetable market for SMC was

continued.

12. On 22.04.2002, this Court in the pending

SLP stayed further steps regarding the

proposed acquisition of land and the

interim order of stay was continued on

5.11.2004.

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13.This Court is of the view that among the

contentions which have been raised by the

appellants herein, the one relating to non-

applicability of BPMC Act, to initiate an

acquisition by the State for establishment of a

vegetable market in the context of enactment of a

later and a special Act, namely, the 1963 Act, is

of some substance.

14.Admittedly, from the resolution of SMC, it is

clear that it was relying on Section 78 of the BPMC

Act for initiating its proposal of acquisition of

land for the establishment of a vegetable market.

Section 78 of the BPMC Act runs as under:

“78. Procedure when immovable property

cannot be acquired by agreement.-

(1) Whenever the Commissioner is unable

under section 77 to acquire by agreement

any immovable property or any easement

affecting any immovable property vested in

the Corporation or whenever any immovable

property or any easement affecting any

immovable property vested in the

Corporation is required for the purposes

10

of this Act, the State Government may, in

its discretion, upon the application of

the Commissioner made with the approval of

the Standing Committee and subject to the

other provisions of this Act, order

proceedings to be taken for acquiring the

same on behalf of the Corporation, as if

such property or easement were land needed

for a public purpose within the meaning of

the Land Acquisition Act, 1894 (1 of

1894).

(2) Whenever an application is made under

sub-section (1) for the acquisition of

land for the purpose of providing a new

street or for widening or improving an

existing street it shall be lawful for the

Commissioner to apply for the acquisition

of such additional land immediately

adjoining the land to be occupied by such

new street or existing street as is

required for the sites of buildings to be

erected on either side of the street, and

such additional land shall be deemed to be

required for the purposes of this Act.

(3) The amount of compensation awarded and

all other charges incurred in the

acquisition of any such property shall,

subject to all other provisions of this

Act, be forthwith paid by the Commissioner

and thereupon the said property shall vest

in the Corporation.”

15.A perusal of Sub-section(1) of Section 78 shows

that the State Government may, in its discretion,

upon application of the Commissioner, order

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proceedings to be taken for acquiring the land in

question if the SMC needs it for the purposes of

this Act. Section 63 of the BPMC Act provides for

certain categories of matters in respect of which

SMC is competent to take steps and one such step is

provided under Section 63(12). Under Sub-section 12

of Section 63, SMC can take steps for:

“63. (12)the construction or acquisition

and maintenance of public

markets and slaughter-houses and

tunneries and the regulation of

all markets and slaughter-houses

and tunneries;"

16.Section 2(33) of BPMC Act defines a ‘market’.

The said definition is very broad and is set out

herein below:

”2. (33)"market" includes any place

where persons assembly for the

sale of, or for the purpose of

exposing for sale, live-stock or

food for live-stock or meat,

fish, fruit, vegetables, animals

intended for human food or any

other articles of human food

whatsoever with or without the

consent of the owner of such

place, notwithstanding that

there may be no common

regulation of the concourse of

buyers and sellers and whether

or not any control is exercised

over the business of or the

persons frequenting the market

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by the owner of the place or any

other person;”

17.Relying on these provisions of BPMC Act, it has

been argued by the learned counsel for the

appellants that a Municipal Commissioner is

authorized to set up a market within the meaning of

Section 2(33) of BPMC Act. Such a market is much

wider than a vegetable market.

18.The learned counsel for the appellants

buttressed the argument by further reference to the

1963 Act. Referring to the Statement of Objects and

Reasons of the 1963 Act, learned counsel urged that

the said 1963 Act has been enacted to consolidate

and amend the law relating to buying and selling of

agricultural produce and the establishment of

markets for agricultural produce in the State of

Gujarat. The Statement of Objects and Reasons of

the 1963 Act, in the Gujarat Government Gazette

Extraordinary dated March 22, 1963 is as follows:

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“STATEMENT OF OBJECTS AND REASONS .

As regards the regulation of sales and

purchases of agricultural produce, there

is in force, in the Bombay area of the

State, the Bombay Agricultural Produce

Markets Act, 1939, and in the Saurashtra

area of the State, the Saurashtra

Agricultural Produce Markets Act, 1955.

There is no corresponding law in force in

the Kutch area of the State.

2. The aforesaid Bombay Act is on the

statute book for the last 23 years and

during that period it has undergone

various changes from time to time to suit

the development and growth of regulated

agricultural produce markets.

3. Government had appointed a Committee

under the Chairmanship of Shri

Jashvantlal Shah, the then Deputy

Minister for Co-operation, to review the

entire position of agricultural produce

markets in the light of the experience

gained in the day-to-day working thereof

and to suggest amendments, if any, to

the existing Law. Accordingly the

Committee has suggested various

amendments. In pursuance of the policy of

the State to bring about uniformity in

the laws in force in the State, it is

proposed to consolidate and amend the law

relating to the regulation of buying and

selling of agricultural produce in the

whole of the State Of Gujarat. The

present Bill seeks to achieve that

object. The Bill mainly follows the

Bombay Agricultural Produce Markets Act,

1939 (hereinafter referred to as "the

existing Act'). Various amendments

suggested by the Committee have also been

incorporated in the Bill.”

19.The learned counsel for the appellants further

urged that the Act of 1963 is a later and a special

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law for establishment of a market for agricultural

produce in the State. The learned counsel also

referred to the definition of ‘agricultural

produce’ under Section 2(i) of the 1963 Act and

argued that vegetables definitely come within the

definition of ‘agricultural produce’. He also

referred to the definition of ‘market’ under

Section 2(xii) of the 1963 Act to mean ‘a market

declared or deemed to be declared under the Act’;

as also to the definition of a ‘market area’ under

Section 2(xiii), which means ‘any area declared or

deemed to be declared to be a market area under

this Act.’

20.Reference was also made to ‘retail sale’ under

Section 2(xviii) of the 1963 Act, whereunder

‘retail sale’ means:

”2. (xviii) “retail sale” means a sale

of any agricultural produce

not exceeding such quantity

as a market committee may by

bye-laws determine to be a

retail sale in respect of

such agricultural produce;”

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21.This Court notes that sale and purchase in the

market area is controlled under Section 6(1) and

(2). Section 6(3) carves out an exception in the

following terms:

”6. (3) Nothing in sub-section (2)

shall apply to the purchase

or sale of any such

agricultural produce, if its

producer is himself its

seller and the purchaser

purchases it for his own

private consumption.”

22.The learned counsel for the appellants, relying

on these provisions urged that the establishment of

a vegetable market falls solely and squarely within

the provisions of the 1963 Act.

23.Under Chapter IX and section 49 of the 1963

Act, the State Government is authorized to acquire

any land within a market area if it is needed for

the purposes of this Act, i.e. the 1963 Act. Such

acquisition can be made under the provisions of the

Land Acquisition Act, 1894 or any other

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corresponding law for the time being in force.

Section 49 (1) and (2) are set out below:

“49. (1) The State Government may acquire

any land within a market area, which in

its opinion is needed for the purposes of

this Act, under the provisions of the

Land Acquisition Act, 1894 or any other

corresponding law, for the time being in

force.

(2) Such land shall be transferred by the

State Government to the market committee

on payment by the market committee of the

compensation awarded under the Land

Acquisition Act, 1894, or any other

corresponding law for the time being in

force and of all other charges incurred

by the State Government on account of the

acquisition, within such period and in

such manner as the State Government may,

by general or special order, determine

and on such transfer the land shall vest

in the market committee.”

24.The learned counsel for the appellants strongly

relied on Section 63 of the 1963 Act, which

excludes the application of Bombay Markets and

Fairs Act, 1862 or any other law for the time being

in force relating to the establishment, maintenance

and regulation of a market. Section 63 runs as

under:

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“63. Nothing contained in the Bombay

Markets and Fairs Act, 1862, or in any

law for the time being in force relating

to the establishment, maintenance or

regulation of a market shall apply to any

market area or affect in any way the

powers of a market committee or the

rights of a holder of a licence granted

under this Act to set up, establish or

continue any place for the purchase or

sale of any agricultural produce notified

under sub-section (1) of section 6 in

such area.”

25.The main argument of the learned counsel for

the appellants on the basis of the aforesaid

statutory framework is that if the State Government

wants to acquire any land for the establishment of

a vegetable market, the State Government must take

steps under the later and the special Act, which is

the 1963 Act. In other words, the State Government

cannot, in view of specific later legislative

enactment, i.e. the 1963 Act and Section 63

thereof, initiate acquisition proceedings to

establish a vegetable market on the basis of

resolution of SMC under Section 78 of BPMC Act.

26.The learned counsel for the respondents opposed

the aforesaid contentions and took us through the

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judgment of the High Court and submitted that the

1963 Act is meant for the cultivators and traders

and is not meant for common man. The learned

counsel also relied on various provisions of the

Gujarat Town Planning and Urban Development Act and

also urged that in view of sections 63(12) and 78

of the BPMC Act, the impugned action of SMC, which

has been affirmed by the High Court, is valid in

law and this Court may dismiss the special leave

petition.

27.After considering the rival submissions of the

parties, this court is of the opinion that the

contentions raised by the learned counsel for the

appellants deserved serious consideration by the

High Court.

28.However, the High Court in the impugned

judgment, with great respect, proceeded on various

issues but has not at all touched the questions

discussed above. In fact in paragraph 18 of the

impugned judgment, the High Court refused to answer

19

this question, inter alia, on the ground that the

appellants are neither agriculturalists nor the

purchasers of agricultural produces as specified in

the schedule nor dealers in such commodities nor

office bearers of Surat Agricultural Produce Market

Committee, nor have any right to make grievance on

behalf of Surat Agricultural Produce Market

Committee.

29.We are of the considered view that the High

Court was clearly in error in refusing to deal with

the aforesaid question on the grounds mentioned in

paragraph 18.

30.This court is further of the opinion that since

the property of the appellants is taken away as a

result of the aforesaid acquisition proceedings,

the appellants are entitled to raise the question

of non-applicability of the BPMC Act to initiate an

acquisition proceedings for establishing a

vegetable market, in view of the clear provisions

20

of the 1963 Act, which is a special and a later

Act.

31.The right of property, may no longer be a

fundamental right, but it enjoys the protection of

Article 300A of the Constitution to the extent that

there can be no deprivation of property save by

authority of law. Authority of law would obviously

mean valid authority of law. In a case of

deprivation of property by acquisition, ultimately

by Land Acquisition Act, 1894, which is a drastic

and expropriatory piece of legislation, the owners

of property, the appellants herein, are admittedly

entitled to raise all legally permissible

objections to the legality of an acquisition

proceeding.

32.Here as the High Court has proceeded on an

erroneous approach, its judgment cannot be

sustained in as much as the High Court refused

to examine the validity of the main challenge

raised by the appellants on a ground of their

21

lack of locus. This approach of the High Court,

with great respect, goes to the root of the

issue and makes its judgment very vulnerable.

33.For the reasons aforesaid, this Court cannot

sustain the impugned judgment of the High

Court, which is accordingly set aside. The

matter is remitted to the High Court for

decision of the writ petition afresh on the

questions discussed above and are specifically

formulated below.

34.The High Court may deal with all issues but

specifically the two following questions:

(i) Whether the 1963 Act, a later and a special

Act as compared to the 1949 Act would

prevail over the 1949 Act or whether a

harmonious construction is possible between

the 1963 Act and the 1949 Act on the

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footing that they seem to govern two

distinct and separate spheres of markets.

(ii)The impugned acquisition proceeds under

Section 78 of the BPMC Act. Section 78

peculiarly uses the term “property vested

in the corporation”. A plain reading of

the term seem to prima facie imply that the

SMC can only acquire property vested in it

and not private property. Thus, High Court

may decide the scope and extent of the said

expression in Section 78 of the BPMC Act

and determine issue of validity of the

impugned acquisition.

35.Since considerable time has elapsed, the High

Court is requested to take steps to hear out

the writ petition in light of the observations

made above, as early as possible, but

definitely within a period of 6 months from the

date of the production of this order before the

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High Court. However, the High Court is free to

decide the questions without being in any way

inhibited by any observation made in this

judgment, save and except its finding on two

issues. They are (i) the 1963 Act is a later

and special statute dealing with agricultural

produce and agricultural market, and (ii) the

appellants have, in view of the provisions of

Article 300A and the drastic provision of Land

Acquisition Act, the locus to challenge the

acquisition proceeding.

36.It is, however, made clear that it is open to

the parties to raise all legally permissible

contentions before the High Court. The appeal

is allowed to the extent indicated above.

37.No order as to costs.

.......................J.

(G.S. SINGHVI)

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.......................J.

New Delhi (ASOK KUMAR GANGULY)

October 4, 2010

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