As per the case facts, a High Court Division Bench had annulled land acquisition proceedings initiated under a State industrial development act, following appeals from landowners. Various appellants, including the ...
No Acts & Articles mentioned in this case
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No(s). 4678 OF 2021
(arising out of SLP (Civil) No. 23353 of 2012)
M/S. M.S.P.L. LIMITED …Appellant(s)
VERSUS
THE STATE OF KARNATAKA AND ORS. …Respondent(s)
WITH
CIVIL APPEAL No(s). OF 2022
(arising out of SLP (Civil) No. 23351 of 2012)
SRI SYED AHMED …Appellant(s)
VERSUS
THE STATE OF KARNATAKA AND ORS. …Respondent(s)
CIVIL APPEAL No(s). 46994719 OF 2021
(arising out of SLP (Civil) Nos. 2086620886 of 2012
THE KARNATAKA INDUSTRIAL AREA
DEVELOPMENT BOARD AND ANOTHER …Appellant(s)
VERSUS
SRI KAKARAL RAVIKUMAR AND OTHERS …Respondent(s)
1
CIVIL APPEAL No(s). 46794698 OF 2021
(arising out of SLP (Civil) Nos. 2131021329 of 2012
M/S. AARESS IRON & STEEL LTD. …Appellant(s)
VERSUS
THE STATE OF KARNATAKA AND ORS.
ETC. …Respondent(s)
AND WITH
CIVIL APPEAL No(s). 47454747 OF 2021
(arising out of SLP (Civil) Nos. 2191521917 of 2013
THE STATE OF KARNATAKA AND ANOTHER …Appellant(s)
VERSUS
SRI KAKARAL RAVIKUMAR AND OTHERS …Respondent(s)
J U D G M E N T
Vikram Nath, J.
1.Leave granted in SLP(C) No. 23351/2012.
2.The State of Karnataka (Civil Appeal No. 47454747 of
2021), the Karnataka Industrial Area Development Board (Civil
Appeal No. 46994719 of 2021), M/S MSPL Limited (Civil Appeal
No. 4678 of 2021) and AARESS Iron & Steel Limited (Civil Appeal
No. 46794698 of 2021) have jointly assailed the correctness of
the judgement and order dated 22.03.2012 passed by the
2
Division Bench of the Karnataka High Court, Circuit Bench at
Dharwad in a group of writ appeals filed by the land owners. By
the said judgment, the Division Bench allowed the writ appeals,
set aside the order of the learned Single Judge dated 17.03.2009
and the writ petitions were allowed. The notifications under
Sections 3(1), 1(3) and 28(1) of the Karnataka Industrial Areas
Development Act, 1966
1
were quashed.
3.Civil Appeal @ SLP (C) No. 23351 of 2012 is filed by a land
owner Syed Ahmed challenging the judgment dated 14.12.2011
passed by the Division Bench of the Karnataka High Court,
Circuit Bench at Dharwad in Writ Appeal No. 6098 of 2009
whereby the writ appeal was dismissed and the judgement of the
learned Single Judge dated 23.06.2008 dismissing the writ
petition {bearing number W.P.No. 18617 of 2007 (LAKIDAB)} was
affirmed. As the argument of the appellant is based upon the
Division Bench Judgement of the Karnataka High Court dated
22.03.2012 which is impugned in the group of Civil Appeals
referred to above, this matter has been taken up analogous with
the above said appeals.
Background
1 In short “the 1966 Act”
3
4. Two State Acts legislated in the State of Karnataka are
relevant for determination of issues in the present case.
Karnataka Industrial Areas Development Act, 1966 and the
Karnataka Industries (Facilitation) Act, 2002
2
.
(i) The 1966 Act came up with the following
preamble/object:
“An Act to make special provisions for securing the
establishment of industrial areas in the 1 [State of
Karnataka]1 and generally to promote the establishment
and orderly development of industries therein, and for that
purpose to establish an Industrial Areas Development
Board and for purposes connected with the matters
aforesaid. WHEREAS it is expedient to make special
provisions for securing the establishment of industrial areas
in the 1 [State of Karnataka]1 and generally to promote the
establishment and the orderly development of industries in
such industrial areas, and for that purpose to establish an
Industrial Areas Development Board and for purposes
connected with the matters aforesaid;”
(ii) The 2002 Act was enacted with the following
preamble/object:
“An Act to provide for the promotion of industrial
development and facilitation of new investments to simplify
the regulatory frame work by reducing procedural
requirements and rationalising documents and to provide for
an investor friendly environment in the State of Karnataka.
Whereas, it is expedient to provide for speedy
implementation of industrial and other projects in the State
by providing single point guidance and assistance to
promoters, reducing the procedural requirements,
rationalising documents and to ensure smooth
operation;”
2 In short “the 2002 Act”
4
5.The acquisition is for two companies viz. M/s MSPL
Ltd.
3
and M/s AARESS Iron and Steel Ltd.
4
, for setting up an
iron ore palletisation plant and an integrated steel plant
respectively.
6.Before setting out the facts it is relevant to note that
challenge to the notifications under Section 1(3) and 3(1) of
1966 Act is made only in W.P. No.6304 of 2008. This
petition relates to the land acquired for MSPL. The land
owner in this petition S. Narayana Reddy owned only 4.35
acres whereas the total land acquired for MSPL was approx:
110 acres. Thus, S.Narayana Reddy owned a fraction of land
being less than 4% of the total acquisition for MSPL. Rest of
the 10 petitions challenged the notification under Section 28
of 1966 Act. The writ petitioners therein in all the 10
petitions held less than 10% of the total land acquired for
AISL. For sake of convenience facts from the appeal of MSPL
have been recorded. It covers the relevant facts of the AISL
appeal also.
________________
3
In short “MSPL”
4
In short “AISL”
5
Chronology of events:
i.MSPL moved an application on 23.03.2005 before the
State High Level Clearance Committee
5
under the 2002
Act for approval of project to set up palletisation plant
and an integrated steel plant in Koppal Taluk of
Koppal District in the State of Karnataka.
ii.The SHLCC in its meeting dated 06.06.2005 approved
the proposal of the project of MSPL to establish 1.20
million TPA iron ore pellet plant and 1 million TPA
speciality steel plant (an integrated steel plant with an
initial capacity of 1 million TPA) with a total cost of Rs.
2296.26 Crores for both the plants.
iii.The SHLCC also approved infrastructural facilities for
the aforesaid project which included acquisition of
1034 acres of land by Karnataka Industrial Area
Development Board
63
setup under the 1966 Act.
iv.Government of Karnataka on the aforementioned
recommendations issued a Government Order dated
3
5
In short “SHLCC”
6
In short “KIADB”
6
22.12.2005 permitting MSPL to setup the project
and also approved the infrastructural facilities,
including 1034 acres of land to be acquired by the
KIADB.
v.MSPL on 04.01.2006 transferred all applications
made to the Government of Karnataka for setting up
of palletisation and iron and steel plant to AISL.
vi.Consequent to the above, AISL on 09.01.2006
applied for all applications submitted by MSPL to be
transferred in its name.
vii.On 16.01.2006, a further restructuring was made
by MSPL and it was communicated to the
Department of Industries that the palletisation
project was to be done by MSPL whereas the iron
and steel project was to be done by AISL.
viii.On 28.01.2006, the Land Audit Committee granted
approval of 1034 acres of land for acquisition.
ix.On 15.02.2006, Karnataka Udyog Mitra conveyed
the
decision dated 28.01.2006 to KIADB to give 1034
acres of land for the project.
x.The Government of Karnataka issued another
7
Government Order dated 22.03.2006 modifying
already approved project for pellet plant in favour of
the MSPL and integrated steel plant in the name of
AISL.
xi.The State Government issued notifications under
Section 1(3), 3(1) and 28(1) of the 1966 Act somewhere
between 09.11.2006 till 07.05.2007.
xii. The Karnataka State Pollution Control Board
7
4
on
19.10.2006 forwarded its inspection report for the
palletisation plant of MSPL.
xiii.The Special Land Acquisition Officer, KIADB on
20.11.2006 issued notice to the land owners under
Section 28(2) of 1966 Act inviting their objections.
xiv. On 12.04.2007, the Special Land Acquisition Office,
KIADB issued an order under Section 28 (3) of 1966
Act after dealing with each of the objections.
xv. Thereafter, notifications under Section 28(4) of 1966
Act was issued on 17.05.2007, 13.03.2008 and
17.04.2007 for a total area of 110 acres 24 guntas
4
7
In short KSPCB
8
required by MSPL. (Similar notifications were issued
for the land required for AISL)
xvi. The compensation under Section 29 (2) of 1966 Act
was determined at a sum of Rs. 3,64,98,000/ for
MSPL.
xvii. The Special Land Acquisition Officer, KIADB issued its
orders determining compensation of land in two
categories: Rs. 3 lac per acre for dry land and Rs. 3.50
lacs per acre for irrigated lands. The land owners were
requested to collect their compensation.
xviii. Writ Petition No. 10501 of 2007 and 10 other
petitions were filed praying for quashing of the
notifications issued under Section 28(4) of the 1966
Act for MSPL and AISL. It would be relevant to
mention that more than 90 per cent of the land owners
covering 90 per cent of the area acquired accepted the
compensation. It was only 10 per cent or less of the
land owners who had filed the above 11 petitions. In
Writ Petition No. 6304 of 2008 challenge was also
made to the grant under Sections 1(3) and 3(1) of the
9
1966 Act. The area of petitioners therein sought to be
acquired is only 4 acres and 34 guntas. Further the
Writ Petition No. 6304 of 2008 was with respect to the
land for the pelletisation plant being set up by MSPL
The other 10 petitions were for the land acquired for
AISL.
xix. On 31.01.2008, the Government of Karnataka issued
an order for transfer of land with respect to 110 acres
and 24 guntas.
xx. The transfer of possession took place on 10.03.2008
and both the companies MSPL and AISL were handed
over possession.
xxi. MSPL entered into an agreement with KIADB on
11.03.2008.
xxii. KSPCB gave its consent to MSPL to establish pellet
plant on 02.08.2008 and 01.12.2008.
xxiii. Further the Ecology and Environment Department of
Government of Karnataka gave environmental
clearance on 01.10.2010.
10
xxiv. On 17.03.2009, the learned Single Judge dismissed
all the 11 petitions.
xxv. Judgment of the Single Judge was challenged by way
writ appeals before the Division Bench.
xxvi. The Division Bench vide judgment dated 22.03.2012
allowed the appeals and quashed the acquisition
proceedings for the entire areas which was not even
challenged.
xxvii. Special Leave Petitions filed in this Court with a
request for interim order in favour of MSPL. This
Court granted interim protection on 27.07.2012 by
staying operation of the impugned judgment of the
Division Bench.
xxviii. The Ministry of Environment and Forest issued an
order dated 08.09.2014 providing that the plant may
be continued to operate.
xxix. The KSPCB issued an order dated 16.10.2014 asking
MSPL to apply for Terms of Reference (TOR) by
07.12.2014 and also to obtain environment clearance
11
within one year.
xxx. The Ministry of Environment and Forest vide letter
dated 23.09.2016 communicated environmental
clearance to MSPL.
7. The above chronology of events is part of the written note of
the appellant MSPL. No objection has been taken by the
respondents to the said chronology.
Proceedings before the High Court:
8.Before the learned Single Judge, the learned counsels for
land owners had raised two points as recorded in paragraph 3
thereof; the same is reproduced below:
“Sri Mahabaleshwar Goud, learned counsel appearing on
behalf of some of the petitioners canvassed mainly two
points: (a) The State Government has not issued Notification
under Section 1(3) of the KIADB Act and consequently,
Chapter 7 of the KIADB Act has not come into force in so far
as it relates to the present acquisition is concerned and
therefore, the acquisition notifications issued under Section
28(1) and 28(4) of the KIADB Act are bad in the eye of law,
and (b) the acquisition is in respect of only one company and
therefore, the same is not for public purpose. According to
him, it is the case of colourable exercise of power and the
action of the respondents is fraudulent and therefore, the
acquisition proceedings vitiate.”
9.Insofar as the first point was concerned regarding the
12
absence of notification under Section 1(3) of the 1966 Act, the
learned counsel appearing for KIADB produced the notification of
the Government dated 09.01.2006 notifying that chapter VII of
the 1966 Act would come into force in the relevant area. Insofar
as the second point is concerned that the acquisition was only for
one company and as such it could not be for public purpose, the
exercise being colourable exercise of power and the action of
respondents is fraudulent was dealt with by the learned Single
Judge in detail and relying upon the judgments of the Karnataka
High Court under the 1966 Act held that the second argument
would also fail. The learned Single Judge has also recorded in
the last paragraph that only 1/10 i.e. 10% of the land owners
submitted their grievances by filing the writ petitions. It further
gave reasons for not accepting their challenge in larger public
interest relying upon a judgment of this Court. The last
paragraph of the judgment of learned Single Judge is reproduced
hereinbelow:
“As aforementioned, the owners of only 1/10
th
of the lands
which are sought to be acquired are agitating their
grievances by filing these writ petitions. If the Notifications
under Section 28(1) and Section 28(4) of the KIADB Act are
set aside, qua these pockets of lands, then the entire
development activity in the industrial area will come to a
grinding halt and that would not be in the interest of anyone.
It is not advisable nor feasible to interfere with the
13
acquisition of such a large tract of lands when the occupants
of 9/10
th
of the acquired lands have not thought it fit to
challenge the acquisition proceedings. The aforesaid view of
mine is supported by the judgement of the Apex Court in the
case of OM PRAKASH AND ANOTHER vs STATE OF U.P.
AND OTEHRS ((1998) 6 SCC PAGE1). The individual’s right
of the land owner must yield place to the larger public
purposes. In view of the same, this Court declines to
interfere I the acquisition proceedings.”
10.The Division Bench allowed the appeals, and after setting
aside the judgement of the learned Single Judge proceeded to
quash the acquisition proceedings. In paragraph 127, the
Division Bench recorded its conclusions which are reproduced
hereunder:
“127.In the result, we sum up our conclusions as under:
i) In the Indian context, Judicial review of administrative
action is much more precise, pervasive and accurate than as
contemplated either under the English legal system or as
developed in the American legal system. In the wake of our
country having a written Constitution and laws made by
competent legislatures, judicial review of administrative
action is not merely confined to the question of decision
making process on the parameters of the same being
affected or vitiated due to unreasonableness, arbitrariness or
irrationality, which concepts are not capable of a precise
definition though many erudite authors have made good
contributions and administrative law is very much part of
jurisprudence but is on more substantial and precise
parameters such as on the touchstone of the statutory
provisions and the constitutional provisions and therefore
any decision and the process of making such a decision, if is
not in conformity with the relevant statutory provisions and
the constitutional provisions, the decision is affected and
cannot be sustained.
ii) Acquisition of private lands even for a public purpose,
while should always be in conformity with the laws
14
governing acquisition proceedings and existence of public
purpose which subserve a public interest is a sine quo none
of such acquisition proceedings, in a situation where
acquisition is of private agricultural lands belonging to
agriculturists and has the effect of affecting their very
livelihood and depriving them of their avocation, then the
acquisition proceedings will have to be tested even on the
touchstone of the constitutional provisions such as Articles
14, 21 and 300A of the Constitution of India and though
there is no corresponding safeguard as is provided under
Article 22 of the Constitution of India visavis violations of
Article 21, nevertheless, Courts will have to apply the test of
strict compliance with procedural requirements and any
deviation even from procedural requirement will vitiate
acquisition proceedings.
iii) Acquisition of lands under the provisions of the Karnataka
Industrial Areas Development Act, 1966 can only be for the
purpose of developing the subject lands as an industrial area
and by the Board and cannot be for the benefit of a private
industry or company or companies, particularly as the
notifications issued under the provisions of 1, 3 and 28 of the
Act, proclaiming that the subject lands are notified for
acquisition for the purpose of the board and when once it is
so, handing over of such lands to a private industrialist
amounts to an instance of improper exercise of power and for
a purpose other than the published and stated purpose, but
more importantly, distribution of such acquired land, whether
after development or before development, being in the nature
of distribution of largesse of the State, amounts to depriving
equal opportunity to all aspirants, who propose to set up
industries in industrial areas and when the State hands over
acquired lands to a private individual, it is therefore violative
of the equality clause in the Constitution of India. In this
regard, statement of law as enunciated in the single bench
decision of this Court in the case of Heggappanavara [supra],
later followed by another learned Single Judge in the case of
N. Somashekar [supra], on the basis of the judgment of the
Supreme Court in the case of RAMTANU [supra], does not
state the correct legal position as indicated in para 21 of the
judgment of the constitutional bench of the Supreme Court,
reading as under:
21. Counsel on behalf of the petitioners contended that
there was procedural discrimination between the Land
Acquisition Act and the Act in the present case. It was
said that there was a special procedure designed by
15
the Land Acquisition Act for acquisition of land for the
companies whereas in the present case the State was
acquiring land for companies without adopting the
procedure of the Land Acquisition Act. It is to be
remembered that the Act in the present case is a
special one having the specific and special purpose of
growth, development and organisation of industries in
the State of Maharashtra. The Act has its own
procedure and there is no provision in the Act for
acquisition of land for a company as in the case of
Land Acquisition Act. In the present case, acquisition
under the Act is for the purpose of development of
industrial estates or industrial areas by the
Corporation or any other purpose in furtherance of the
objects of the Act. The policy underlying the Act is not
acquisition of land for any company but for the one
and only purpose of development, organisation and
growth of industrial estates and industrial areas. The
Act is designed to have a planned industrial city as
opposed to haphazard growth of industrial areas in all
parts of the State. The Act is intended to prevent,
growth of industries in the developed parts of the
State. Industries are therefore to be set up in the
developing or new parts of the State where new
industrial towns will be brought into existence. The
object of the Act is to carve out planned areas for
industries. On one side there will be engineering
industries and on the other there will be chemical
industries. There will be localisation of industries with
the result that the residents and dwellers of towns and
cities will not suffer either from the polluted air or
obnoxious chemicals of industries or the dense growth
of industries and industrial population, within and
near about the residential areas. The Land Acquisition
Act is a general Act and that is why there is specific
provision for acquisition of land by the State for public
purpose and acquisition of land by the State For
companies. The present Act on the other hand is
designed the sole purpose of development of industrial
areas and industrial estates and growth and
development of industries within the State. Industrial
undertakings or persons who are engaged in
industries all become entitled to the facilities on such
industrial growth. Under the Land Acquisition Act
acquisition is at the instance of and for the benefit of a
company whereas under the present Act acquisition is
solely by the State for public purposes. The two Acts
16
are dissimilar in situations and circumstances.
though the examination by the Supreme Court of the
Maharashtra Act was in the context of the Constitutional
validity of the Maharashtra Act as being repugnant to the
Central Enactment Land Acquisition Act as we find the
purpose of acquisition of lands under the Maharashtra Act as
well as the Karnataka Act is both for the purpose of
developing industrial areas in the State, and therefore cannot
be held to be laying down the correct law and ratio as
indicated in the two single bench decisions of this Court to
this effect is hereby overruled.
iv) An approval of the project proposed by an entrepreneur
and cleared by the State high level clearance committee
under Section 5 of the Felicitation Act by itself cannot act as
an insurance against any possible violations, infractions,
illegalities or irregularities in the matter of acquisition of
private lands by the State Government in exercise of its
power under any enabling acquisition Acts including the
present act (KIAD Act, 1966). Such clearance cannot and
does not absolve the State Government from adhering to the
procedural requirements envisaged tinder the Acquisition Act
and in the instant case, under the provisions of the KIAD Act
and the legality or otherwise of the proceedings for
acquisition of lands has to bear scrutiny independently and
the mere approval of the project by the State high level
clearance committee cannot and will not validate the
illegalities or irregularities in the matter of acquisit ion of
land. On such an independent examination in the instant
case, we find from the records that the State Government as
an acquiring authority and the board as a statutory
development board, have not, only committed infractions of
statutory provisions of Sections 3(1) and 28 of the Act but
having also merely surrendered to the decision of the State
high level committee and have thereby abdicated their duties
and responsibilities under the acquiring Act.
v) Simultaneous issue of notifications by the State
Government for declaring an area as industrial area under
Section 3(1) of the Act for notifying the applicability of
ChapterVII of the Act in respect of an industrial area under
Section 1(3) of the Act and the State Government issuing the
notification of its intention to acquire any extent of land in an
industrial area for the purpose of development by the board,
particularly when different extent of lands are mentioned in
these notifications, betrays a clear lack of understanding of
17
the statutory provisions as well as lack of awareness to the
legislative scheme in making provisions in the Act for issuing
of not only notifications but also to gazette the same under
these three different statutory provisions and unless it is
factually and on record that the State Government is able to
establish a commensurate application of mind to the three
different enabling sections of the Act, a presumption that
either the notifications are validly issued or that the
notifications are fully in conformity with the procedural
requirement does not arise. For a valid acquisition of lands
by the State Government in exercise of its powers under
Section 28 of the Act, unless the State Government has
adhered to the procedural requirement under subsections (2)
to (8) of Section 28 of the Act, the acquisition proceedings get
vitiated, as the acquisition results in deprivation of not
merely land of agriculturists but also their livelihood and
denial of their avocation, and therefore the present
acquisition of land becomes unsustainable as procedural
requirements under these statutory provisions are not
adhered to in the present cases.
vi) Proceedings for acquisition of lands notified under Section
28 of the Act are also vitiated for the reason that the State
Government has not shown its awareness to the mandate of
subrule (3) of Rule 5 of the Environment (Protection) Rules,
1986, imposing restrictions and prohibitions on new projects
or activities based on their potential environmental impacts
in respect of the industries and the nature of industries
proposed to be set up by the fourth respondent in the subject
lands before embarking on acquisition proceedings. The
amended Rule has come into force as per notification dated
1492006 and in clear and emphatic terms envisages the
procedure for either granting or rejecting of prior
environmental clearance. In terms of the notification, even
before construction of new projects, it has to be
approved/permitted or cleared by the central government or
by the State level environment impact assessment authority,
constituted by the Central Government under subsection (3)
of Section 3 of the Environment (Protection) Act. The
industries proposed to be set up by respondents 4 and 5
having an annual production capacity far exceeding 20000
tonnes are a class of industries/activities within the meaning
of column 3(a) of the schedule to the notification and
therefore prior clearance by the Central Government was
essential. The State Government having embarked on the
acquisition proceedings by issue of preliminary notification
dated 9112006 i.e., subsequent to the publication of the
18
notification dated 1492006 under the provisions of the
Environment (Protection) Act, indicates that the State
Government had embarked on acquisition proceedings for the
benefit of a private company to set, up industries covered by
the notification even before it was known as to whether a
project of this nature can be cleared by the Central
Government and therefore the acquisition proceedings get
vitiated. Acquisition of private agricultural lands by the State
Government and in the name of a public purpose cannot be
either casual or without being aware of the suitability and
possibility of the acquired lands being available or otherwise
for the proposal. In this view of the matter the State action
affecting rights of citizens under Articles 21 and 300A of the
Constitution of India and in turn violating Article 14 also,
cannot pass muster before a constitutional Court.”
11.Based on the above conclusion, the Division Bench allowed
the bunch of appeals and quashed the notifications issued under
Sections 1(3), 3(1) and 28(1) of the 1966 Act. Aggrieved by the
same, the appeals have been preferred by not only the companies
for whose benefits the land was acquired but also by the KIADB
and the State of Karnataka. At the cost of repetition, it is pointed
out that Civil Appeal @ SLP (C) No. 23351 of 2012 has been
preferred by a land owner aggrieved by judgment dated
14.12.2011, whereby the writ appeal of the said petitioner was
dismissed, confirming the dismissal of the writ petition by the
learned Single Judge with respect to a challenge relating to
similar acquisition for a company BMM Ispat Ltd. on similar
grounds.
19
12.We have heard the learned counsel for the parties and
perused the material on record. Shri Krishnan Venugopal,
learned Senior counsel appearing for the MSPL, after taking us
through the chronology of events, summarised the findings and
reasonings given in the impugned judgment as follows:
a.The appellant being a ‘private’ company, its interests are not
public.
b.The appellant MSPL multiplied into two or three entities
even during the process of acquisition proceedings.
c.The 2002 Act cannot lead to a situation that ‘at the same
time it can never be by giving a go by to other statutory
requirements and procedural compliances.
d.The process followed in terms of Section 28 of the 1996 Act
was not proper and many land owners were complaining
about being dispossessed or thrown out of their land as
procedural requirements were not complied.
e.Section 28(7) of the 1996 Act is ‘draconian’.
f.There is no ‘public purpose’ when land is acquired for one
entity.
20
g.The KIADB has not examined the issue of Environmental
Clearance.
h.Acquisition proceedings, in the background of the 2002 Act,
are not in accordance with law and not for public purpose.
13.Mr. Venugopal also briefly summarised the conclusions
given in paragraph 127 of the impugned judgment, which have
already been reproduced above as follows:
i.KIADB cannot acquire lands for a single company/private
industrialist and the same is improper exercise of power. It
is also not in public interest.
ii.Approval of project by SHLCC under the 2002 Act is not
immunity against illegalities/irregularities in land
acquisition.
iii.Simultaneous issuance of Notifications under Sections 1(3),
3(1) and 28(1) of the 1966 Act for declaration of the land as
‘industrial area’ and its acquisition, ‘betrays a clear lack of
understanding of the statutory provisions as well as lack of
awareness to the legislative scheme’ and further, ‘unless it
is factually and on record that the State Government is able
21
to establish a commensurate application of mind to the
three different enabling sections of the 1966 Act, a
presumption that either the notifications are validly issued
or that the notifications are fully in conformity with the
procedural requirement does not arise’.
iv.State Government has not complied with the EIA
Notification for Environmental Clearance.
14.Shri Krishnan Venugopal, learned Senior Counsel then
advanced his submissions which are briefly summarised
hereunder:
a.Failure to appreciate following facts and material on
record
Approval of Project was after due consideration of material
i.The initiation of the entire process is based on an
application filed by Appellant and its consideration under
the 2002 Act. The Application was considered on
06.06.2005.
ii.The Government Order approving the Project was on
22.12.2005. The approval was not hastily done and the
22
Government Order in fact notes key features of the project.
iii.The approval for modification of the Government Order by
inclusion of AISL was based on an application filed by
MSPL. The details and relation between AISL and MSPL are
set out in additional documents, which discloses that MSPL
and AISL had common shareholders and were under same
management and ultimately, AISL was a wholly owned
subsidiary of MSPL.
iv.Full and complete disclosure was made by Applicant and
the same was duly considered and not mechanically
approved by Government of Karnataka. The High Court has
observed:
“106…..There is absolutely no application of mind at the
subsequent levels. A notification issued under Section 3 of the
Act in the name of the Act and for declaring an area mentions
names of respondent Nos. 4 and 5. Respondent No. 5 was
never an applicant before the State High Level Clearance
Committee, but, nevertheless, figures in the notification under
Section 3 of the Act. Even mentioning of the names do not
reveal or spell out as to how they figure there. No preamble or
legend is given to it. Then follows the application of chapterVII
in respect of the land notified.”
v.The above observations have not taken into consideration
the Government Order dated 22.03.2006. The grant of
land is also approved by the Land Audit Committee in its
23
meeting on 28.01.2006.
Objections of land owners duly considered
vi.Upon approval to the Project under the 2002 Act, the
notifications for land acquisition are issued under the 1966
Act. The Notifications for acquisition of land were issued on
09.11.2006: (A) declaration under Section 1(3) that Chapter
VII would apply (B) declaration under Section 3(1) that an
area is ‘industrial area’ for the 1966 Act and (C) acquisition
of land.
vii.Notice is only thereafter issued under Section 28(1) of the
1966 Act to the individual landowners to show cause as to
why land should not be acquired. In the present case, notice
under Section 28(2) was issued on 20.11.2006 and the
objections were duly considered. The Special Land
Acquisition Officer passed an order under Section 28(3) of
the KIAD Act after considering these objections.
viii.Sample Panchnama has also been placed before this
Hon’ble Court. Without any basis and despite material on
record, the High court has concluded that procedure in
terms of Section 28(3) was violated.
24
b.Failure to appreciate law
Scope of Facilitation Act
i.The High Court has erroneously concluded that the 2002
Act ‘virtually leaves no option to all other agencies of the
State whether statutory or otherwise and has produced in
them a state of submissiveness and they have mechanically
like robots acted in a compliant manner.’ It is submitted
that the very purpose of a SHLCC and Single Window
Clearance Committee would be defeated if the approval
granted by such committee is reviewed again and again by
other departments. The approach of the High Court will not
only render the text of the 2002 Act otiose and unworkable,
but will defeat the very purpose of the 2002 Act as set out in
the Statement of Object and Reasons.
ii.Further, the Hon’ble High Court has completly exceeded its
jurisdiction to review the very approval of the Project when
the only issue to have examined was – whether the mandate
of Section 28 of the 1966 Act was complied.
iii. The High Court’s conclusion that the 2002 Act leads to a
complete ‘go by’ to ‘statutory requirements and procedural
25
compliances’ is manifestly contrary to the record. The
approval of the project by the SHLCC, the State Government
Order along with the compliances in terms of site inspection
by KPSCB and even obtaining Environmental
Clearance, the approval in terms of the 2002 Act has not
given a ‘go by’ to statutory requirements and procedural
compliances.
iv.It is submitted that the High Court has erred in
appreciating the scope of the Facilitation Act. It is
submitted that the same is only for approval of proposal of a
project and not for construction and operation itself, which
are only subject to various other approvals.
Process under section 28 of 1966 Act
v.The High Court has concluded that the power of State
Government to take possession of land under Section 28(7)
of the 1966 Act is draconian. However, this power is
conferred only in the scenario that orders are passed after
considering objections and further notice to the landowners
in terms of Section 28(6) of the 1966 Act.
vi.It is only on the refusal in such an event that the power to
26
forcibly acquire land is conferred on the State Government.
Single entity being eligible Applicant
vii.It is submitted that the High Court has committed a grave
error of jurisdiction in reconsidering the approval granted to
the Project which was cleared by the SHLCC and also by
the Land Audit Committee. It is submitted that the High
Court could not have secondguessed the policy decision to
approve a palletisation and integrated steel plant.
viii.Without prejudice to the above contention, in any event, it is
submitted that a single applicant can be an eligible
applicant and there is no bar for the same.
ix.The conclusions fail to appreciate the socioeconomic
benefit to the State of Karnataka and the scope of what
constitutes ‘public purpose’.
15.Learned counsels appearing for AISL, State of Karnataka
and KIADB have majorly adopted the arguments advanced by Mr.
Krishnan Venugopal and have submitted that the impugned
judgment of the Division Bench be set aside. It is their
submission that the procedure as prescribed under the law has
27
been strictly adhered to.
16.On behalf of the respondent no.8 in the Appeal of MSPL,
Shri Shekhar S. Naphade, learned Senior counsel made
submissions. Other counsels appearing for other land owners in
the appeal of AISL have adopted the same. Briefly the arguments
advanced on behalf of the private respondents are reproduced
below:
a.MSPL and AISL did not have any Environmental Clearance,
in the absence of which the land could not have been
acquired for setting up the plant.
b.The land owner–respondents have not accepted any
compensation.
c.Just because 90% of acquirees have accepted
compensation, that does not validate an illegal acquisition.
d.This is a colourable exercise of power since the 1996 Act
does not contemplate acquisition for a private party directly.
An area has to be set up as an industrial area in which
private industry can be set up later. In the present case, the
procedure has been shortened at the behest of private
28
parties.
e.AISL was not even before the SHLCC and the only applicant
was MSPL. Hence, the acquisition for AISL is bad in law.
f.Division Bench considered the issues in detail and has
rightly quashed the notifications under 1966 Act. It does not
call for any interference. The appeal deserves to be
dismissed.
17.In so far as Civil Appeal @ SLP (C) No. 23351 of 2012 is
concerned, Shri Ankur S. Kulkarni, learned counsel, supported
the arguments of Mr. Shekhar S. Naphade. He has further
submitted that judgment of the Division Bench dated 22.03.2012
is correct on law and facts as such the Division Bench dismissing
the writ appeal by the impugned judgement dated 14.12.2011
committed an error and, therefore, needs to be set aside.
18.It may be noted here that depending upon the outcome of
the decision in the appeals filed by MSPL, AISL, KIADB and State
of Karnataka in which the judgment of the Division Bench dated
22.03.2012 is under challenge, the fate of the aforesaid Civil
Appeal of Syed Ahmad would rest.
29
19.Before proceeding to deal with the respective submissions, a
brief outline of the two state enactments i.e. 1966 Act and the
2002 Act, is spelled out.
1966 Act.
20. The object of the 1966 Act is already reproduced in the
earlier part of this order. It is for securing the establishment of
industrial areas and generally to promote the establishment and
orderly development of industries therein within the state of
Karnataka.
(i)Under section 1(3), it is provided that the Act would come
into force at once except Chapter VII which shall come into
force in such area and from such date as the State Government
may from time to time by notification specify on this behalf.
(ii)Section 2 deals with the definitions of the various words and
phrases used in the Act.
(iii) Under section 3(1), the State Government by Notification
may declare any area in the State to be an industrial area for
purposes of the Act.
(iv)Under section 6, a Board is to be established chaired by the
Secretary, Commerce and Industries Department. Its
30
constitution is provided therein and comprises of the following
as members:
●The Secretary, Finance Department;
●The Secretary, Housing and Urban Development;
●The Commissioner, Industrial Development;
●Director, Industries and Commerce;
●The Chairman and Managing Director, Karnataka State
Industrial Investment and Development Corporation
Limited;
●The Chairman, Karnataka State Pollution Control Board;
●The Director, Town Planning;
●The Managing Director, Karnataka State Small Industries
Development Corporation Limited;
●The Managing Director, Karnataka State Financial
Corporation;
●The Executive Member of the Board; and
●Two nominees of the Industrial Development Bank of India;
(v)The functions of the Board are enumerated in section 13
and further general powers of the Board are spelled out in
section 14 of the 1966 Act. The same are reproduced
hereunder:
31
“13. Functions. The functions of the Board shall
be,
(i) generally to promote and assist in
the rapid and orderly establishment,
growth and development of industries
[and to provide industrial infrastructural
facilities and amenity] in industrial
areas, and
(ii) in particular, and without prejudice
to the generality of clause (i), to,
(a) develop industrial areas
declared by the State Government and
make them available for undertakings to
establish themselves;
(b) establish, maintain, develop,
and manage industrial estates within
industrial areas;
(c) undertake such schemes or
programmes of works, either jointly with
other corporate bodies or institutions, or
with the Government or local or
statutory authorities, or on an agency
basis, as it considers necessary or
desirable, for the furtherance of the
purposes for which the Board is
established and for all purposes
connected therewith.
14. General powers of the Board. Subject to the
provisions of the Act, the Board shall have power,
(a) to acquire and hold such property, both movable
and immovable as the Board may deem necessary
for the performance of any of its activities and to
lease, sell, exchange or otherwise transfer any
property held by it on such conditions as may be
deemed proper by the Board;
(b) to purchase by agreement or take on lease or
under any form of tenancy any land, to erect such
buildings and to execute such other works as may
be necessary for the purpose of carrying out its
duties and functions;
32
(c) to provide or cause to be provided amenities
[industrial infrastructural facilities] and common
facilities in industrial areas and construct and
maintain or cause to be maintained works and
buildings therefor;
(d) to make available buildings on lease or sale or
leasecumsale to industrialists or persons intending
to start industrial undertakings;
(e) to construct buildings for the housing of the
employees of industries;
(f) (i) to allot to suitable persons [premises or parts
thereof] including residential tenements in the
industrial areas established or developed by the
Board;
(ii) to modify or rescind such allotments,
including the right and power to evict the
allottees concerned on breach of any of the
terms or conditions of their allotment;
(iii) to resume possession of premises or part
thereof including residential tenements in the
industrial area, or industrial estate in the
manner provided in section 34B.
(g) to delegate any of its powers generally or
specially to the Executive Member;
(h) to enter into and perform all such contracts as it
may consider necessary or expedient for carrying out
any of its functions; and
(i) to do such other things and perform such acts as it
may think necessary or expedient for the proper
conduct of its functions, and the carrying into effect
the purposes of this Act.
(vi) Chapter VII deals with the acquisition and disposal of the
land. Section 27 provides that the areas notified by the State
33
Government under section 1(3) would be applicable to this
Chapter with effect from the date specified in the notification.
Section 28 and its subsections (i) to (viii) provide the
procedure for acquisition of land. Section 29 provides for
determination of compensation of the land acquired. Section 30
provides that Land Acquisition Act, 1894 would mutatis
mutandis apply with respect to the provisions therein for
inquiry and award by the Deputy Commissioner, reference to
Court, apportionment and payment of compensation. Section
40 confers powers on the State Government to make rules and
section 41 confers power on the Board to frame regulations
with the previous approval of the State Government.
2002 Act:
21.This Act was promulgated for promotion of industrial
development and facilitation of new investments to simplify the
regulatory framework. Statement of objects and reasons is
reproduced below:
“STATEMENT OF OBJECTS AND REASONS. It is
considered necessary to provide for the promotion of
industrial development and facilitation of new
34
investments, to simplify the regulatory frame work,
by reducing the procedural requirements and
rationalising documents and to provide for an
investor friendly environment in the State of
Karnataka. The Bill among other things provides for
the following, namely:
1. Constitution of State High Level Clearance
Committee, State Level Single Window Clearance
Committee and District Level Single Window
Clearance Committee for consideration of application
from entrepreneurs intending to establish industries
in the State.
2. Appointment of Karnataka Udyoga Mitra as a
Nodal Agency at State Level and the District
Industries Centre at Nodal Agency at the District
level to undertake investment promotional activities
and to render necessary guidance and assistance to
entrepreneurs to setup industrial undertaking in the
State.
3. Providing Combined Application Form in lieu of
existing forms prescribed under various laws.
4. Facilitating entrepreneurs by furnishing a self
certification at the time of submitting the combined
application form to the Nodal Agency.
5. Rationalising inspections by various authorities.
6. Providing for deemed approval by the departments
or authorities in case of delay.
7. Penalty for entrepreneurs who fail to comply with
the conditions of undertaking in the self certification.
”
(i)Section 3(1) provided for establishment of a SHLCC
consisting of such members as may be notified by the State
Government to work as a single point clearance committee.
Under subsection (2), the SHLCC was to examine and consider
35
such proposals received from any entrepreneur relating to
setting up of any industrial or any other project in the State
with the minimum investment of Rs.100 Crores or above. The
functions of the SHLCC are provided in section 4 and its
powers are provided in section 5.
(ii)Under section 6, a State Level Single Window Clearance
Committee (SLSWCC) is to be notified by the State Government
which has the power to deal with the proposals with the
investment of more than Rs.15 Crores but less than Rs.100
Crores.
The powers of SLSWCC are provided in section 7 and section 8.
(iii)Similarly, there would be a District Level Single Window
Clearance Committee (DLSWCC) dealing with investments up
to Rs.15 Crores and its functions and powers spelled out in
paragraphs 10 and 11.
(iv)Under section 11(A), the Government could constitute a
State Level Empowered Committee which was to be chaired by
the Chief Secretary of the State, with Principal Secretaries of 10
different departments, Chairman of KSPCB, DirectorGeneral
and InspectorGeneral of Police & State Fire Extinguishing and
Emergency Services, Chief Executive Officer & Executive
36
Member of KIADB and the Commissioner for Industrial
Development & the Director for Industries and Commerce as its
members.
(v)There was also provision made for Nodal Agencies,
Karnataka Udyog Mitra at the State Level under section 12 and
its functions enumerated under section 13.
(vi)Section 14 provides for a Combined Application Form for
use of entrepreneurs for obtaining clearance to be prescribed
by the State Government to all the Clearance Committees.
(vii)Section 17 provides for deemed approval in case
clearance is not issued within stipulated time.
(viii)Section 18 provided for an appeal by any person
aggrieved by the decision of the abovementioned committees.
22.In the present case as stated in the chronology of events,
the MSPL had initially moved an application under the 2002 Act.
During the consideration of the said application by the State
Government, MSPL shared its projects of the two industries by
inducting AISL a fully owned subsidiary of MSPL. The
introduction of AISL was accepted by the State Government and
necessary applications were given by AISL also. The SHLCC had
37
earlier approved both the projects and one of the
recommendations was for acquisition of land under the 1966 Act.
The KIADB considered the recommendations of the SHLCC,
Karnataka Udyog Mitra & the State Government and accordingly
acquired the land as per the procedure prescribed under section
28 of the 1966 Act.
23.It is this acquisition of land for MSPL and AISL which is
under challenge in these proceedings. The Division bench having
quashed the acquisition as also the notifications under section
1(3) and section 3(1) along with section 28 of 1966 Act is now for
consideration in the present group of appeals.
24.Based upon the arguments advanced by the learned
counsels, the following issues arise in these appeals for our
consideration:
(I) Whether in the absence of environmental clearance, the
acquisition in question could have taken place?
(II) Whether the acquisition was vitiated in view of the
undue haste and nonapplication of mind by the competent
authorities?
38
(III) Whether the procedure prescribed under the 1966 Act
was duly followed?
(IV) Whether the acquisition for a single company could be
said to be for public purpose and could be made under the 1966
Act?
(V) Whether acquisition could be made for a nonapplicant
AISL under the 1966 Act without its application being routed
through SHLCC.
(VI) Whether the comparison with the Maharashtra
Industrial Development Act, 1962, placing reliance on the
judgment of this Court in the case of Shri Ramtanu Co
op.Housing Society Ltd. Vs. State of Maharashtra,
reported in
(197) 3 SCC 323 in the impugned judgment is correct?
(VII) Whether the conclusions arrived at in the impugned
judgment are vitiated on account of inclusion of value judgments
of policy views by the High Court?
(VIII) Whether the entire acquisition could be quashed upon
a petition by a fraction of landowners holding a fraction of
acquired land which is only 10 % or less of the total acquired
land?
A. Environmental Clearance.
39
25.On record environmental clearance has been given on
23.09.2016 by the Ministry of Environment and Forests,
Government of India, copy of which has been filed along with I.A.
No.118035 of 2017 in the appeal of MSPL. Prior to it, the Ministry
itself vide paragraph2 of the Notification dated 14.09.2006
provided that no Environment Clearance from MOEF was
required for securing land. It may also be relevant to note here
that KSPCB had given its clearance and no objection much
earlier for setting up the plant vide communication dated
02.08.2008. Further, the Ecology and Environmental Department
of Government of Karnataka had given clearance on 01.10.2010.
Further, the Ministry of MOEF had issued an order dated
08.09.2014 providing that the plant may be continued to operate.
Thereafter, the KSPCB issued an order dated 16.10.2014
requiring MSPL to apply for Terms of Reference by 07.12.2014
and to obtain environment clearance from MOEF within one year.
The MSPL accordingly applied as per the Terms of Reference and
was granted the environment clearance by MOEF vide
communication dated 23.09.2016. In view of the above facts, as
of date, no objection can be raised that there is no environmental
40
clearance certificate from the Ministry of Environment and Forest
as the same has already been issued on 23.09.2016.
B. Nonapplication of mind and undue haste.
26.From the chronology of events what is to be noted is that
the SHLCC after considering all aspects of the matter had
resolved to approve the project and had made recommendations
accordingly. Thereafter, the KIADB accepted the
recommendations of the SHLCC and the same also had due
approval of the Government at the highest level. The division
made by MSPL (the initial applicant) for setting up the two
industries by two different entities also had due approval of the
KIADB and the Government.
27.The original writ petitioners (land owners) had challenged
the notifications under Section 1(3), 3(1) and 28(1) of the 1966
Act on the ground of nonapplication of mind and undue haste.
No grounds were raised nor any foundation laid in the petitions
alleging mala fide. The object of the 2002 Act was primarily to
provide a Single Window Clearance by the High Level Committees
constituted under the 2002 Act. We have gone through the
reports and recommendations of the different Committees as also
41
the State Government and we find that all aspects of the matter
have been considered and a conscious decision has been taken
on the overall conspectus of the project and the proposals
submitted.
28.The meeting of the SHLCC dated 06.06.2005 was chaired by
the Chief Minister, State of Karnataka, the concerned Ministers
and Secretaries were also present in the meeting. The complete
project was discussed under different heads including the
background of the promoters, background of the company,
means of finance, infrastructure facilities, environment and
pollution control clearances, local employment, water
consumption, electricity consumption and incentives &
concessions.
29.The Government Order, thereafter, was issued on
22.12.2005 detailing the different facets of the proposal and
granting due approval for establishment of the palletization plant
as also the integrated steel plant with a total investment of
2292.26 crores and generating employment to one thousand
persons.
42
30.Thereafter, under the provisions of 1966 Act, the Land Audit
Committee in its meeting of 28
th
January, 2006, which was
chaired by the Principal Secretary, Department of Commerce &
Industries and Secretaries of other relevant Departments with
special invitees also took a conscious decision with respect to the
project submitted by MSPL for both the plants at subject Item
No.2.5 and recommended for acquisition of 1034 acres of land
and to intimate the same to the KIADB. It was thereafter that the
Nodal Agency of the State level i.e. Karnataka Udyog Mitra in its
meeting dated 15.02.2006 after considering the proceedings of
the SHLCC dated 6
th
June, 2005 and that of the Land Audit
Committee dated 28.01.2006 accepted the recommendation for
acquisition of 1034 acres of land.
31.These aspects were examined by this Court in Chairman &
MD, BPL Ltd. Vs. S.P. Gururaja, reported in (2003) 8 SCC 567.
This Hon’ble Court was dealing with a similar situation where a
State High Level Committee was constituted to grant approvals
and acquire land to the appellant therein. This process was
challenged in a public interest litigation. This Court was pleased
to dismiss the writ petition finding that:
43
17. The Company intended to set up more than one unit.
For the purpose of achieving the objective of economic
development of the State, the State is entitled to deal with
the applications of the entrepreneurs in an appropriate
manner. For the said purpose a High Level Committee was
constituted. The said Committee held its meeting on
10.10.1994 wherein not only the members referred to
hereinbefore but also various other officers were present.
Presumably, prior thereto the applications filed by the
Company were scrutinized by the competent authorities.
After detailed discussions, the High Level Committee
resolved: (a) to permit the unit to change the location from
Malur Indl. Area. to Dobespet Industrial Area; (b) to allot a
total of 500 acres of land for the three projects viz., Colour
Picture Tube, Colour Televisions and Battery, in Dobespet
Industrial Area, Nelamangala to, in lieu of the earlier
allotment of 100 acres of land at Malur Indl Area for the
Colour TV sets project, subject to the promoters indicating
the individual land requirement for Colour Picture Tube
project, Colour TV project and the battery project duly
justifying the requirement with necessary plans, block
diagrams, etc.
18. Similar considerations were made in respect of Colour
Television Picture Tube Project of the Company and
Manufacture of Batteries. The matter relating to allotment
of land is a statutory function on the part of the Board. In
terms of the provisions of the Act, consultations with the
State Government is required if Regulation 13 of the
Regulations in place of Regulation 7 is to be taken
recourse to. Does it mean that consultations must be held
in a particular manner, i.e. by exchange of
correspondences and in no other? Answer to the said
questions must be rendered in negative. The High Level
Committee was chaired by the Minister who in terms of
the Rules of Executive Business framed under Article 166
of the Constitution of India was entitled to represent the
State. Once a consultation takes place by mutual
discussion and a consensus is arrived at between
different authorities performing different functions under
the statutes, the purpose for which consultation was to be
made would stand satisfied. Under the Act or the
Regulations framed thereunder, no procedure for holding
such consultations had been laid down. In that situation it
was open to the competent authorities to evolve their own
procedure. Such a procedure of taking a decision upon
44
deliberations does not fall foul of Article 14 of the
Constitution of India. No malice of fact has been alleged in
the instant case.”
32.In view of the above, the finding in the impugned judgment
regarding nonapplication of mind and the submission of Mr.
Naphade to the aforesaid effect cannot be sustained.
33.Insofar as the notifications under Section 1(3), 3(1) and
28(1) of 1966 Act being issued on the same date, it may be noted
that there is no embargo on the same. The statutes do not
prohibit the same. Moreover, this issue has also been dealt with
by this Court in the case of Deputy General Manager (HRM) and
another Vs. Mudappa and others reported in 2007 (9) SCC
768. Para 30 of the said judgment is reproduced hereunder:
“In our judgment, the learned Single Judge was
wholly in error in taking such view and quashing the
notification. Upholding of such view would make
statutory provisions under the Act or similar
provisions in other laws, (for example, the Land
Acquisition Act, 1894) nugatory and otiose. We are
also of the view that the learned Single Judge
was not right in finding fault with the State
Authorities in issuing notifications under
Section 1(3), Section 3(1) and Section 28(1)
simultaneously. There is no bar in issuing such
notifications as has been done and no provision has
been shown to us by the learned counsel for the
contesting respondents which prevented the State
from doing so. Even that ground, therefore, cannot
help the landowners”.
45
34.The above view has the approval of this Court in its recent
order dated 28.01.2020 passed in Special Leave Petition (c)
No(s).9662 of 2013 (C. Jayaram and others Vs. The State of
Karnataka and others).
C. Procedure Prescribed under the 1966 Act duly followed:
35.As already noted above from the chronology of events given
in the earlier part of the judgment, the due procedure had been
followed. It is also to be noticed that the objections were invited
under the procedure prescribed in Section 28 of the 1966 Act and
the same were duly considered and disposed of, as such, it
cannot be alleged that the objections have not been considered
vitiating the acquisitions. In this respect it would be relevant to
mention that the Land Audit Committee approved the grant of
1034 acres of land in its meeting dated 28.01.2006, which was
duly accepted and approved by the State Nodal Agency,
Karnataka Udyog Mitra in its meeting dated 15.02.2006 and duly
communicated vide letter of even date to the KIADB to start the
process for acquisition. It was thereafter that the notifications
were issued under Section 3(1), 1(3) and 28(1) of the 1966 Act, on
09.11.2006. Simultaneous publication of the said notifications
46
has already been upheld to be not suffering from any illegality or
irregularity.
36.Pursuant to the notification under Section 28(1) of the 1966
Act, further steps were taken and after inviting objections and
disposing of the same, final declaration was made, compensation
was determined and thereafter possession taken. It would be also
relevant to state here that from the material on record, it is
apparent that the land was acquired in the name of the State,
thereafter transferred to the KIADB, which proceeded to allot the
same to MSPL and AISL respectively and, accordingly, lease
deeds were executed. The entire process as provided under the
Act has been strictly followed. The Division Bench in the
impugned judgment apparently was swayed by its own personal
views based on assumptions and having no material backing
which led to the quashing of the notifications.
D. Acquisition for a Single Company.
37.Section 28(1) of the KIAD Act is reproduced below:
“28. Acquisition of land. (1) if at any time, in the
opinion of the State Government, any land is required
for the purpose of development by the Board, or for
any other purpose in furtherance of the objects
47
of this Act, the State Government may by
notification, given notice of its intention to acquire
such land.” [Emphasis Provided]
The words for the purpose of development by the Board, and
or for any other purpose in furtherance of the objects of this Act
make it amply clear that the intention to acquire land in the
opinion of the State Government could be not only for the
purpose of development by the Board but for any other purpose
in furtherance of the objects of this Act. This gives power to
acquire land beyond development by KIADB. Further, the
regulations framed by the Board under Section 41 particularly
deal with this aspect in Regulation 13 which reads as under;
“Allotment of Plots in Special Cases: Notwithstanding
anything contained in these regulations, the Board
in consultation with the State Government may allot
any plot or area other than those in respect of
which applications are called for under Regulation 7
to any individual or company for the
establishment of an industry or for the provision of
any amenity required in the Industrial area.”
[Emphasis Provided]
38.Under the above regulations, the Board is empowered to
allot any plot or area to any individual or company for
establishment of an industry in consultation with the State
Government. This provision also contemplates acquiring land for
the purpose of allotment to a single company to set up an
48
industry. In the present case, the allotment by the Board is duly
approved by the State Government.
39.In the same context, it would be relevant to refer to a
judgment of this Court in the case of P. Narayanappa Vs. State
of Karnataka reported in (2006) 7 SCC 578, where it upheld the
acquisition of land in favour of a private company under the 1966
Act. Paragraphs 6, 13 and 14 of the said judgment are
reproduced below:
“6. Shri Shanti Bhushan, learned senior counsel for
the appellants, has challenged the impugned
notifications on several grounds and the principal
ground is that the land has been acquired in order to
benefit a company, namely, Vikas Telecom (P) Ltd.
(respondent no.9) who had submitted a project report
for setting up a software technology park which
included an I.T. Training Institute/Engineering
College, Research and Development Centre,
Educational Centre, Commercial and Residential
Buildings and Service Apartments, Convention
Centre, Hotel, Shopping Mall, etc……
…………
13. The provision for acquisition of land under the Act
is contained in Section 28 which is somewhat
different from the provisions contained in Sections 4,
5A and 6 of the Land Acquisition Act. The legislature
in its wisdom thought it proper to make a specific
provision for acquisition of the land in the Act itself
rather than to take recourse to Sections 4 and 6 of the
Land Acquisition Act. A plain reading of sub
section (1) of Section 28 would show that land
can be acquired for the purpose of (i)
development by the Board, or (ii) for any other
purpose in furtherance of the objects of the Act.
Subsection (3) of Section 28 is similar to Section 5A
of the Land Acquisition Act and the final notification
49
is issued under subsection (4) of Section 28. The
necessary precondition for a valid notification
under subsection (4) of Section 28 is that the
State Government should be satisfied that the
land is required for the purpose specified in the
notification issued under subsection (1), viz., for
the purpose of (i) development by the Board, or (ii) for
any other purpose in furtherance of the objects
of the Act. Therefore, in order to judge the validity of
the notification what is to be seen is whether the
acquisition of land is being made for securing the
establishment of industrial areas or to promote the
establishment or orderly development of industries in
such areas. In view of wide definition of the
words "industrial infrastructural facilities" as
contained in Section 2 (7a) of the Act, making of
a technology park, research and development
centre, townships, trade and tourism centres or
making provisions for marketing and banking
which would contribute to the development of
industries will meet the objectives of the Act
and acquisition of land for such a purpose
would be perfectly valid.
14……….Subsection (1) of Section 28 clearly
shows that the land can be acquired for (i)
development by the Board; or (ii) for any other
purpose in furtherance of the objects of the Act.
Under subsection (8) of Section 28, the State
Government is empowered, after it has taken
possession of land, to transfer the same to the Board
for the purpose for which the land has been acquired.
Section 32 empowers the State Government to place
at the disposal of the Board any land vested in it and
the Board is enjoined to deal with the land in
accordance with the regulations made and directions
given by the State Government in this behalf. This
stage when the Board gets the authority to deal with
the land comes at a later stage which is after the
land has been developed by it. An entrepreneur or
a company may give a proposal to the State
Government for setting up an industry or
infrastructural facility and the Government may
thereafter acquire the land and give it to the
Board. It is also possible that after the land has
50
already been acquired and developed by the
Board, it may be allotted to an entrepreneur or
a company for setting up an industry or
infrastructural facility. Therefore, the scheme of
the Act does not show that at the time of acquisition
of the land and issuing a preliminary notification
under Section 28(1) of the Act, the complete details of
the nature of the industry or infrastructural facility
proposed to be set up should also be mentioned. At
that stage what is to be seen is whether the land is
acquired for development by the Board or for any
other purpose in furtherance of the objects of the Act,
as mentioned in subsection (1) of Section 28 of the
Act. In fact, if the contention raised by the learned
senior counsel for the appellants is accepted, it would
mean that even at the stage of preliminary
notification under Section 28(1) of the Act, the nature
of the activity which may be done by some
entrepreneur or a company which may give a
proposal for setting up an industry or infrastructural
facility much after land has been acquired should
also be taken note of and specifically mentioned in
the notification, which is well nigh impossible. While
interpreting the provisions of the Act, the Court should
not only take into consideration the facts of the
present case but should also have in mind all
possible contingencies. Therefore, on a plain
reading of the language used in the Act, it is not
possible to accept the contention of the learned
senior counsel for the appellants that the
impugned notification is vague or cryptic as the
complete details of the project which was
proposed to be established by Vikas Telecom (P)
Ltd. (respondent no.9) were not mentioned and
on account of the aforesaid lacuna, the landowners
were deprived of their right to make a proper
representation or to show cause against the proposed
acquisition.” [Emphasis Provided]
40.Therefore, the view expressed by the Division Bench that
no acquisition could be made for a single company cannot be
sustained.
51
E Acquisition for a nonapplicant (AISL).
41.It is not disputed that AISL (nonapplicant) is fully owned
subsidiary of MSPL (applicant). In effect, AISL is a new Company
promoted by the same promoters. The State Government
examined the request of MSPL and also AISL for modification of
its Government Order dated 22.12.2005. It examined the
bifurcation under various heads. State Government issued
Government Order dated 22.03.2006 splitting the infrastructures
required with further stipulation that all other terms and
conditions mentioned in the Government Order dated 22.12.2005
would apply as it is to both the Companies. The only change
sought by MSPL was the integrated steel plant be set up by AISL
which was its own subsidiary. These are commercial matters and
the State after examining the proposal for change in its wisdom
accepted the same. There was no change in the project, as such,
regarding the finance, employment and other infrastructures. The
objection raised by Mr. Naphade to the aforesaid effect does not
merit consideration.
F. Relevance of Shri Ramtanu judgment:
52
42.The impugned judgment has placed reliance upon the
judgment in the case of Shri Ramtanu (supra) for the proposition
that the acquisition under the 1966 Act was in pari materia to the
Maharashtra Industrial Development Act, 1962 and, therefore,
the acquisition has to be for public purpose only and not for a
private company. At the outset, it may be recorded that validity of
the 1962 Act was being considered in the case of Shri Ramtanu
(supra). In the present litigation, there is no challenge to the
validity of the 1966 Act or the 2002 Act. Further, the object and
purpose of the 1962 Act was for securing the orderly
establishment in industrial areas and industrial State of
industries in the State of Maharashtra whereas the 1966 Act, the
object and preamble was to promote the establishment and
orderly development of industries (in industrial areas). This Court
while dealing with the 1962 Act discussed this aspect in para 21
of Shri Ramtanu (supra), which is reproduced hereunder:
Counsel on behalf of the petitioners contended that
there was procedural discrimination between
the Land Acquisition Act and the Act in the present
case. It was said that there was a special procedure
designed by the Land Acquisition Act for acquisition
of land for the companies whereas in the' present
case the State was acquiring land for companies
without adopting the procedure of, the Land
Acquisition Act. It is to be remembered that the Act in
the present case is a special one having the specific
53
and special pur pose of growth, development and
Organisation of industries in the State of
Maharashtra. The Act has its own procedure and
there is no provision in the Act for acquisition of land
for a company as in the case of Land Acquisition Act.
In the present case, acquisition under the Act is
for the purpose of development of
industrial estates or industrial areas by the
Corporation or any other purpose in furtherance
of the objects of the Act. The policy underlying,
the Act is not acquisition of land for any
company but for the one. and only purpose of
development, Organisation and growth of
industrial estates and industrial areas. The
Act is designed to have a planned industrial
city as opposed to haphazard growth of
industrial areas in all parts of the State. The
Act is intended to prevent ,.growth of industries
in the developed parts of the State. Industries are
therefore to be set up in the developing or, new parts
of the State where new industrial towns will be
brought into existence. The object of, the Act is to
carve out planned areas for industries . On one
side there Will be engineering industries and on the
other there will be chemical industries. There will be
localisation of industries with the result that the
residents and dwellers of towns and cities will not
suffer either from the polluted air or obnoxious.
chemicals of industries or the dense growth of
industries and industrial population, within and near
about the residential areas. The Land Acquisition
Act is a general Act and that is why there is specific
provision for acquisition of land by the, State for
public purpose and acquisition of land by the State
for companies. The present Act on the other hand
is designed the sole purpose of development of
industrial areas and industrial estates and
growth and development of industries within
the State. Industrial undertakings or persons who
are engaged in industries all become entitled to the'
facilities on such industrial growth. Under the Land
Acquisition Act acquisition is at the instance of and
for the benefit of a company whereas under the
present Act acquisition is solely by the State for public
54
purposes. The two acts are dissimilar in situations
and circumstances." [Emphasis Provided]
43.Thus, it is to be noticed that the purpose in 1962 Act was
for establishment of industrial areas whereas in the other statute
i.e 1966 Act, it was for promotion of the establishment and
orderly development of industries. Thus, the reliance by the
Division Bench in the impugned judgment on the case of Shri
Ramtanu (supra) is misplaced.
G. Value judgments of policy views.
44.The Division Bench in the impugned judgment seems to
have been swayed by its own philosophy in due deference to the
principles of statutory interpretation. The statute is to be read in
its plain language. Setting up of industries is part of
development. There has to be a sustainable growth and existence
of all facets and, that is why, laws have been framed, cheques
and balance have been imposed so that development takes place
side by side with the protection and preservation of nature and
environment. Certain extracts from the impugned judgment
wherein the Division Bench had expressed its personal policy
views and value judgments are reproduced hereunder:
55
“Though the word ‘development’ is used, when this word
is examined in an objective manner, in an impassionate
manner, it is nothing but interference with the existing
state of nature and destroying naute !” (P.9091)
“Any industry inevitably creates and causes pollution of
the land, air and water….” (P.91)
“Unfortunately, by and large,….courts have been pro
acquisition and have generally approved or upheld
acquisition proceedings in the name of public interest.”
(P.96)
“When examined on such a touchstone and such tests are
applied, we find that the present acquisition proceedings
cannot stand. The affectation is very adverse and the
benefit if at all is a return because of future development
of any industry with some potential for employment and
may be a little revenue to the State. The affectation to the
livelihood and dignified life of thousands of people which
is not examined even it is not the focal point, it should be
at least be given due attention which it deserved” (P.105)
“…..[A]nd with the history of limited companies being too
wellknown, though the British claim the invention of joint
stock company is the genius of English legal mind when
the concept is examined from the perception as it prevails
in this country and in the society and examine from the
ethos of our society, it is nothing short of deception or
playing fraud.” (P.106)
“A joint stock company is invented only to defraud
creditors.” (P.106107)
“Let us not lose our souls in the name of development by
depriving land holders of their land holdings.” (P.108)
45.A perusal of the above makes it amply clear that the
Division Bench introduced several value judgments and policy
views in order to interpret the provisions of the 1966 Act and the
2002 Act. It is only as a measure of caution that the said aspect
is being taken note of. Such value judgments and policy views are
56
beyond the domain of the Courts. The Courts should refrain itself
from expressing value judgments and policy views in order to
interpret statutes. Statutes are to be read in their plain language
and not otherwise. Reference may be had to the following
decisions:
(i)Regina Vs. Barnet London Borough Council;
(1983) 1 AII ER 226;
(ii)Union of India Vs. Elphinstone Spinning and
Weaving Company Ltd.; (2001) 4 SCC 139 (Para
17)
(iii) D.R. Venkatachalam Vs. Transport
Commissioner; (1977) 2 SCC 273 (Para 29)
(iv) Padma Sundara Rao Vs. State of Tamil Nadu;
(2002) 3 SCC 533 (Para 13);
(v)Harbhajan Singh Vs. Press Council of India;
(2002) 3 SCC 722 (Para 11) and
(vi)Unique Butyle Tube Industries Vs. U.P.
Financial Corporation; (2003) 2 SCC 455 (Para
12).
H. Challenge to acquisition by a minority (10%) of land
owners.
46.It is admitted position that the challenge to the acquisition
of more than a thousand acres was made by a small fraction of
land owners having land less than 10% of the total acquisition.
Compensation for rest of the 90% land acquired had been
57
accepted by their respective land owners. The Division Bench has
quashed the entire acquisition of more than a thousand acres at
the instance of such a small fraction. This aspect has been dealt
with by this Court in the case of Amarjit Singh Vs. State of
Punjab reported in (2010) 10 SCC 43 and Om Prakash Vs.
State of U.P. reported in (1998) 6 SCC 1. The learned Single
Judge had placed reliance on the judgment of Om Prakash
(supra). It is also worthwhile to mention that out of approx 110
acres of land acquires for MSPL, only one land owner possessing
only 4.34 acres of land, had filed the writ appeal before the
Division Bench. Quashing the entire acquisition at the instance
of one land owner having 4.34 acres of land out of total
acquisition for MSPL of 110 acres, would be against the public
policy and public interest. The MSPL alone provides employment
to 292 persons with a substantial investment of Rs.200 crores.
The employment to approximately 300 persons by MSPL is also
alleged to be double of the number of employees as projected in
the proposal. Further, in the case of AISL acquisition of 914 acres
is challenged by a fraction of less than 10% land owners. The
estimated project of AISL is approx Rs.2092 crores and would
employment to at least one thousand persons.
58
47.In view of the above analysis, we are of the view that the
Division Bench committed an error in quashing the acquisition
proceedings. Accordingly, the appeals filed by MSPL, AISL, KIADB
and State of Karnataka are allowed.
48.The judgment of the Division Bench dated 22.03.2012 is
set aside and the writ petitions stand dismissed as ordered by the
learned Single Judge vide judgment dated 17.03.2009.
49.Insofar as the claim of Syed Ahmed is concerned, which is
in respect of similar acquisition for M/S BMM Ispat Ltd. on
similar grounds based upon the judgment of the Division Bench
dated 22.03.2012 impugned in the other appeals, deserves to be
dismissed as we have already set aside the said judgment.
Relevant to state here that Syed Ahmed was owner of 14.35 acres
out of total land measuring 705.99 acres acquired for M/S BMM
Ispat Ltd., which is less than 2%. The appeal of Syed Ahmed is
accordingly dismissed.
50.There shall be no order as to costs.
59
51.Pending application(s), if any, is/are disposed of.
…..……..........................J.
[HEMANT GUPTA]
………….........................J.
[VIKRAM NATH]
NEW DELHI
OCTOBER 11, 2022.
60
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