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CASE NO.:

Appeal (civil) 5015 1999

PETITIONER:

STATE GOVT. HOUSELESS HARIJAN EMPLOYEES ASSOCIATION

Vs.

RESPONDENT:

STATE OF KARNATAKA & ORS.

DATE OF JUDGMENT: 11/12/2000

BENCH:

Ruma Pal, A.P.Misra

JUDGMENT:

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J U D G M E N T

RUMA PAL, J.

The question to be decided in this appeal relates to

the rights of the beneficiary of an acquisition under the@@

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Land Acquisition Act (hereinafter referred to as the Act)@@

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to resist withdrawal of acquisition proceedings. In the

course of the arguments before us, we were of the view that

the original records pertaining to this case should be

produced. This was directed on 14th September 2000. The

entire records have admittedly not been produced by the

State Government. We have been informed by the learned

counsel appearing on behalf of the State that one of the

files pertaining to the case has been destroyed on 3rd

February, 2000. On the basis of the records we have found

that the appellant is a Society registered under the

Karnataka Societies Registration Act, 1961. It has 360

members all of whom are State Government Employees belonging

to the Schedule Castes of Adidravida and Adikarnataka. It

wanted to provide house sites for its members all of whom

are houseless. In 1983, the appellant approached the

Government to acquire 15 acres of land at Maralur village.

The land belonged to respondents Nos. 5 to 7 herein. By a

letter dated 10.1.1983 the Planning Authority wrote to the

Assistant Commissioner, Tumkur stating that a resolution had

been passed to issue no objection certificate for

suitability of the land for house sites in favour of the

appellant. It further said that the land was earmarked

partly for residential and partly for open place in the

draft lay out plan of Tumkur. On 16.7.1984 a letter was

written by the Assistant Commissioner to the appellant in

which the appellant had been asked to furnish the following

particulars: 1. The lists of members of the Association

who are siteless and houseless. 2. The financial soundness

of the Association by way of the shares collected. The

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amount deposited in the Bank etc.; 3. The audit report for

the previous three years; 4. Whether the area proposed for

acquisition is treated as residential in the plan i.e.

outline development plan, or comprehensive development plan,

prepared by the Town Planning Department or not; 5.

Whether the layout plan proposed by the association fits in

the comprehensive plan of the city area, 6. Whether the

proposed area is in excess/less as compared to the demand

based on the number of eligible members.

On 17.8.1984 the particulars as required by the

Assistant Commissioner were furnished including a copy of

the lay out plan. According to the appellant, the State

Government required the appellant to make a deposit towards

the cost of acquisition. The appellant deposited the

required amount in 1984. According to the appellant, the

State Government granted prior approval to the acquisition

by letter dated 7th September 1986. A notification under

Section 4 (1) of the Act was published on 6th August 1987.

On 9th July 1987, the appellant was called upon to deposit a

further sum towards the cost of acquisition by the Land

Acquisition Officer. This amount was also deposited. The

records were then forwarded by the Assistant Commissioner,

Tumkur under cover of a letter dated 19.11.1987 to the

Revenue Commissioner and Secretary to Government, Revenue

Department. These were returned with the direction that the

recommendation of the District Level Committee should be

submitted. According to the appellant, on 13th May 1988 it

wrote to the Assistant Commissioner, Tumkur Sub-Division

giving particulars of the housing scheme and again enclosing

a proposed lay out plan. A letter dated 30.5.1988 was

written by the appellant to the Divisional Commissioner,

Tumkur requesting for expedition in which it was stated

the Association has already formed 361 sites as per the

draft plan measuring East to West and North to South 30ft.x

40 ft. respectively apart from road and park in 15 acres of

land acquired at SY No.49 as per the Government Order No.

RD/45/AQT/83 dated 27.3.1987. The District Level Committee

held a meeting on 17.6.1988. The minutes of the meeting

show that before recommending the appellants case all the

aspects were considered and in particular : An extent of

80 x 210 Sq. feet has been left for public amenities as per

the site plan, which is enclosed in the file. The Town

Planning Authority has pointed that 10% of the land should

be left for public amenities. The Society has agreed to

this.

At its meeting held on 28.7.1988 the State Level

Committee recommended the acquisition of the land in favour

of the appellant for providing house sites to its members.

On 10th August 1988, the State Government passed an order

directing the authorities to issue the final notification

under Section 6 (1) of the Act. As the statutory period

provided under Section 6(1-A) (which has been inserted by

way of amendment in the State of Karnataka) had already

expired, a fresh Notification under Section 4 (1) of the Act

was directed to be issued. Prior to the issuance of the

Notification, a detailed note was prepared by the Deputy

Secretary, Revenue Department which was forwarded to the

Secretary. On 1.2.90, the Secretary referred to his note

and proposed, We may give clearance in favour of the

Association. For approval. This was approved by the Chief

Secretary and placed before the Minister for Revenue who in

turn approved the note on 12th February 1990. On 14th

February, 1990 the Secretary, Revenue Department wrote to

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the Deputy Commissioner, Tumkur District: Sub: In the

matter of acquisition of 15 Acres of land in Survey No. 49

of Maralur Village, Tumkur Kasaba, for housing sites in

favour of Houseless Harijan-Girian Government Employees

Association.

Ref: 1. Your office letter No. LAW/CR/130/88-89,

dated 17.10.1989.

2. Your letter No. LAW/CR/18/88- 89, dated

26.10.1989: 5.12.1989.

After considering in great detail, the proposal

contained in your letter and requisition of Houseless

Government Servants Association, Tumkur and all other

aspects, the State Government has decided to commence afresh

the land acquisition proceedings. Therefore, I am directed

to request you to take steps for issue of notification under

Section 4(1) of the Land Acquisition Act.

A second notification under Section 4(1) of the Act

was issued on 27.2.90 proposing to acquire the land for

public purpose for the benefit of the appellant for housing

its members. Again the Government did not publish the

declaration under Section 6 of the Act within the time

prescribed. A letter was written on 15.3.1991 by the

Secretary, Revenue Department addressed to the Deputy

Commissioner. The unofficial translation of the letter

reads: Sub: Allotment of 15 Acres of Land in Survey No.49

in the Village Maralooru, Tumkur Disrtrict to Landless

Scheduled Castes State Government Employees Union (Regd.)

Reg.

Inviting attention to your letter No.LQCR- 72-90-91

dated 20th November, 1990 on the above subject, it is

brought to your notice that while keeping in mind the fact

that the matter of acquisition of these lands has been

dropped on earlier two occasions after the initiation of the

land acquisition proceedings, on examination of the

objections of the land owners, again the matter of

acquisition of land for being allotted to landless Scheduled

Castes State Government Employees Union has been minutely

examined in consultation with the Law Department. According

to the opinion of the Law Department the acquisition of land

in favour of the impugned Union is for a public cause. In

view of this it has been decided by the Government to

acquire 15 acres of land of Survey No. 49 in Maralooru

Village, Tumkur District/(Kasha) in favour of the Landless

Scheduled Caste State Government Employees Union, Tumkur.

Thererore, I am directed to convey the approval of the

Government to initiate action for issue of notification

under Column 4(1) for acquisition of the above mentioned

land in favour of the above mentioned Union.

A third notification under Section 4(1) was

accordingly published on 22.7.1991. This was challenged by

respondents 5 to 7 before the High Court (Writ Petition No.

21438 of 1991). It was contended that the appellant was not

duly registered under the Karnataka Societies Registration

Act, 1960 and, therefore, it was not lawful to acquire the

land for it. No interim order was passed and the

acquisition proceedings continued. The respondent owners

filed objections to the acquisition. All the objections

including the objection relating to the non-registerability

of the appellant under the Karnataka Society Registration

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Act were rejected. According to the noting on the file

dated 23.11.1991 the land owner can question the validity

of the registration of the Association on the housing

activities, before the appropriate authority and not before

this authority. Therefore, this objection is not tenable.

The rejection of the owner- respondents objection under

Section 5-A were affirmed on 3.12.1991 in the report

prepared by Deputy Secretary to Government, Revenue

Department which was approved both by the Minister of

Revenue as well as the Law Minister. Directions were

accordingly issued to proceed under Section 6(1) (a) of the

Act on 12.3.1992. The final Notification under Section 6 of

the Act was published on 15th May 1992 declaring that the

acquisition was for the public purpose of allotment of house

sites to the members of the appellant. On 7th September

1992, the Land Acquisition Officer made the Award under

Section 9 of the Act, issued a notice dated 15th September

1992 and directed the appellant to deposit the balance

amount representing the difference between the amounts

already deposited by the appellant and the amount of the

Award. The balance amount of Rs.7,36,231/- was deposited on

19th November 1992. A further sum of Rs.65,926/- was also

deposited on 4th January 1993 by the appellant pursuant to

the directions of the Land Acquisition Officer. The total

amount deposited by the appellant towards the cost of

acquisition is Rs.19,01,915/. The Award was approved by the

Divisional Commissioner by his O.M. dated 26th May 1993.

The approval records that an inquiry was held by the Deputy

Commissioner and Assistant Commissioner regarding the

members of the Society and that the authorities were

satisfied that the appellant-Association consisted of SC/ST

members. According to the orders of the Divisional

Commissioner, possession of the acquired land was to be

handed over to the appellant in accordance with law. At

this stage, a letter was written by the Department of

Revenue to the Land Acquisition Officer directing him not to

hand over possession of the land to the appellant until

further orders. According to the appellant-Society, the

Governments volte-face was because S.Shafiq Ahmed, the

local M.L.A.( respondent No. 2) had objected to the

finalisation of the land acquisition proceedings in favour

of the appellant. It is alleged that the respondent No.2

had sent his objections not only to the Divisional

Commissioner but also to the Revenue Minister. The Minister

instructed the Revenue Commission to stop the land

acquisition proceedings which in turn passed on the

instruction to the Secretary to the Revenue Department of

the State Secretariat as a consequence whereof the letter

dated 5th July 1993 was written. On 6th July 1993, the

respondents 5,6 and 7 withdrew Writ Petition No. 21438/91.

The appellant filed a writ petition challenging the legality

of the letter dated 5th July 1993. Although an interim

order had been granted not to take further action pursuant

to the letter, in the office note dated 25.6.93, the

Minister of Revenue has recorded, In view of the opinion

offered by the Law Deptt., it is not permissible to acquire

land on behalf of the Govt. Houseless employees Association

registered under Sec. 3 of the Karnataka Societies

Registration Act. Hence withdrawal notification u/s 48(1)

of the LA Act may be issued. And on 2nd August 1993, the

Government issued a Notification under Section 48(1) of the

Act withdrawing the acquisition. This was published in the

Official Gazette on 5th August 1993. The appellant amended

the writ application by seeking quashing of the Notification

dated 2nd August 1993. A second writ petition was also

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filed by the appellant for the same reliefs. However both

writ petitions were dismissed. It is not necessary for us

to consider the order dismissing the second petition.

Suffice it to say that by virtue of an order passed by this

Court, the appellant was permitted to proceed with the first

writ petition filed by it on 9th July 1993. The writ

petition was dismissed by the Single Judge holding that

there was no approval to the acquisition under Section

3(f)(iv) of the Act and that the letter dated 7th September

1986 relied upon by the appellant in this connection did not

amount to such approval. It was also held that malafides

had not been established, as respondent No. 2 had filed

statement of objections denying all such allegations and

that the appellant had not produced any material to

establish that the release from the acquisition was at the

instance of the second respondent in collusion with the land

owners. The Single Judge also held that the Government had

the absolute power to withdraw from the acquisition since

possession had not been handed over to the appellant. The

appellants appeal was given short shrift by the Division

Bench of the High Court. It was said that no reasons were

required to be given by the Government when it withdrew the

acquisition proceedings in the absence of any pleadings with

respect to malafides. It was also said that the decision of

this Court in Special Land Acquisition Officer, Bombay V.

Godrej & Boyce 1988 (1) SCR 590 which had been relied upon

by the appellant did not apply as this Court had, according

to the High Court, held that reasons were required to be

given by the Government for withdrawing from the acquisition

only in connection with acquisition proceedings initiated

under Part VIII of the Act and not in cases where the

proceedings had been initiated under Part II. Before

concluding the narration of facts, we note that according to

the appellant, during the pendency of these proceedings,

respondents 5, 6 and 7 sold the land to the respondents 8 to

34. The respondents 5,6 and 7 have denied this. We do not

propose to go into this dispute. The arguments have been

wide ranging and the parties have submitted written notes of

their arguments. But the basic grievance of the appellant

is that the order withdrawing the acquisition under Section

48(1) of the Act was passed without any notice or hearing

the appellant. According to the appellant, the right of the

beneficiary to be heard has been recognized by the decision

of this Court in Larsen & Toubro Ltd. v. State of Gujarat

and Others 1998 (4) SCC 387. According to the respondents,

the decision in Larsen & Toubro Ltd. is limited to the case

of a company for which land had been acquired after

formalities under Part VII of the Act had been completed.

It was submitted that the principles of natural justice

should not be extended to withdrawal of an acquisition for

public purpose. This Court has consistently held that the

requirements of natural justice will be read into statutory

provisions unless excluded expressly or by necessary

implication. In the case of Union of India V. Col. J.N.

Sinha 1970 (2) SCC 458, this Court said: . It is true@@

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that if a statutory provision can be read consistently with

the principles of natural justice, the courts should do so

because it must be presumed that the Legislatures and the

statutory authorities intend to act in accordance with the

principles of natural justice. But if on the other hand a

statutory provision either specifically or by necessary

implication excludes the application of any or all the

principles of natural justice then the court cannot ignore

the mandate of the Legislature or the statutory authority

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and read into the concerned provision the principles of

natural justice.

The Constitution Bench in Olga Tellis V. Bombay

Municipal Corporation 1985 (3) SCC 545 placed the onus to

prove the exclusion of the rules of natural justice by way

of exception and not as a general rule on the person who

asserted it. The ordinary rule which regulates all

procedure is that persons who are likely to be affected by

the proposed action must be afforded an opportunity of being

heard as to why that action should not be taken. The

hearing may be given individually or collectively, depending

upon the facts of each situation. A departure from this

fundamental rule of natural justice may be presumed to have

been intended by the Legislature only in circumstances which

warrant it. Such circumstances must be shown to exist, when

so required, the burden being upon those who affirm their

existence.

Both these views were affirmed by the Constitution

Bench in C.B. Gautam V. Union of India 1993 (1) SCC 78.

Admittedly, the ap pellant was given no opportunity of

being heard before the decision was taken by the respondent-

Section authorities to withdraw the acquisition in exercise

of 48 (1) of the Act. Section 48 (1) of the Act provides:

48. Completion of acquisition not compulsory, but

compensation to be awarded when not completed. (1) Except

in the case provided for in Section 36, the Government shall

be at liberty to withdraw from the acquisition of any land

of which possession has not been taken.

The section does not in terms exclude the principles

of natural justice. However, the section has been construed

to exclude the owners right to be heard before the

acquisition is withdrawn. This is because the owners

grievances are redressable under Section 48 (2). No

irreparable prejudice is caused to the owner of the land

and, if at all the owner has suffered any damage in

consequence of the acquisition proceedings or incurred costs

in relation thereto, he will be paid compensation thereof

under Section 48 (2) of the Act. [See: Amar Nath Ashram

Trust Society V. Governor of U.P 1988 1 SCC 591 at p. 596]

. [See: also Special Land Acquisition Collector v. Godrej

Boyce : 1988 1 SCR 590]. But as far as the beneficiary of

the acquisition is concerned there is no similar statutory

provision. In contrast with the owners position the

beneficiary of the acquisition may by withdrawal from the

acquisition suffer substantial loss without redress

particularly when it may have deposited compensation money

towards the cost of the acquisition and the steps for

acquisition under the Act have substantially been proceeded

with. An opportunity of being heard may allow the

beneficiary not only to counter the basis for withdrawal,

but also, if the circumstances permitted, to cure any defect

or shortcoming and fill any lacuna. No reason has been put

forward by the respondents to exclude the application of the

principle of natural justice to Section 48 (1) of the Act.

The decision in Larsen & Toubro which relied upon an earlier

decision in Amarnath Ashram Trust Society and Another V.

Governor of U.P. and Others (supra) to hold that a

beneficiary has a right to be heard before a notification

under Section 48 (1) is issued, does not appear to be

limited to acquisition for companies under Part VII of the

Act as is contended by the respondents although the

acquisition in that case had been made for a company for the

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purpose of setting up a housing colony. Both cases have

also drawn a distinction between the rights of an owner and

the beneficiary of the acquisition to object to withdrawal

from the acquisition for the reasons noted earlier.. It may

be noted that as in the case of the company, under Section 3

(f)(vi) the prior approval to the acquisition is required if

an acquisition is made for the purpose of providing land for

carrying out, inter-alia, any housing scheme sponsored by a

Society registered under the Society Registration Act, 1860.

This approval must be made after adequate enquiry. Again

the issuance of the Notification under Section 4 is followed

by filing and hearing of objections under Section 5 -A by

the Collector. With the publication of declaration under

Section 6, the Collector is to take steps for holding an

inquiry under Section 9 after giving notice to all the

persons interested. After completing the inquiry under

Section 11, the Collector is required to pass an Award with

the approval of the State government giving (i) the true

area of the land; (ii) the compensation which in his

opinion should be allowed for the land; and

(iii) the apportionment of the said compensation among

all the persons known or believed to be interested in the

land, of whom, or of whose claims, he has information,

whether or not they have respectively appeared before him.

All these steps had been taken in the Appellants case

. As said in Larsen & Toubro: After having done all this,

the State Government cannot unilaterally and without notice

to the company withdraw from acquisition. Opportunity has

to be given to the company to show cause against the

proposed action of the State Government to withdraw from

acquisition.

A distinction may perhaps be drawn with beneficiaries

who do not bear the cost of acquisition as the appellant has

done in this case. But in the circumstances of this case,

the State Government could not have withdrawn from the

acquisition without hearing the appellant. This finding is

sufficient to decide the appeal in favour of the appellant.

In any event the decision to withdraw the acquisition under

Section 48(1) is justiciable. This Court in Amarnaths case

said: . the decision of the Government to withdraw from

acquisition was based upon a misconception of the correct

legal position. Such a decision has to be regarded as

arbitrary and not bona fide. Particularly in a case where

as a result of a decision taken by the Government the other

party is likely to be prejudicially affected, the Government

has to exercise its power bona fide and not arbitrarily.

Even though Section 48 of the Act confers upon the State

wide discretion it does not permit it to act in an arbitrary

manner. Though the State cannot be compelled to acquire

land compulsorily for a company its decision to withdraw

from acquisition can be challenged on the ground that power

has been exercised mala fide or in an arbitrary manner.

Therefore, we cannot accept the submission of the learned

counsel for the State that the discretion of the State

Government in this behalf is absolute and not justiciable at

all.

These observations were noted with approval in Larsen@@

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& Toubro.(supra) In the notification under Section 48(1)@@

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impugned in this appeal no reason whatsoever has been given

for withdrawal of the acquisition. All that said is: In

exercise of the powers conferred by Sub-section (1) of

Section 48 of the Land Acquisition Act, 1984, (Central act 1

of 1894) as amended by Karnataka Act No. 17 of 1961, the

Government of Karnataka hereby withdraw from the acquisition

of the Land specified below in the schedule in respect of

which a Notification No. RD:177:AQT:91 dated 15th May 1992

issued under Section 6 of the Land Acquisition Act was

published in Karnataka Gazette dated 21st May 1992 and 3rd

September 1992 as required for public purpose, namely for

formation and distribution to the Members of Houseless

Harijans Employees Association [R] Tumkur. In the affidavit

affirmed on behalf of respondents, 1,3 and 4 on 3rd December@@

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1998 it is said that the decision to withdraw was taken on@@

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the basis of the opinion of the Law Department. The Law

Department had opined that the acquisition had been sought

to be made for a public purpose in terms of Section 3 (f)

(vi) of the Act, which required the housing scheme to be

sponsored by any society registered under the Societies

Registration Act. According to the Law Department, a

society could be registered only in respect of the objects

specified in clauses (a) to (g) of Section 3 of the

Karnataka Society Registration Act. None of the objects

mentioned in the Memorandum of Association of the appellant

fell within these clauses of Section 3 of the State act. In

the result, the acquisition of land on behalf of the

Society in question for the purpose of forming layouts and

distribution of sites to its members (which are not

contemplated under Section 3 of the K.S.R. Act) is not

permissible. Section 3(f) of the Act defines the

expressions public purposes as including, inter-alia:

(vi) the provision of land for carrying out any educational,

housing, health or slum clearance scheme sponsored by

Government or by any authority established by Government for

carrying out any such scheme, or, with the prior approval of

the appropriate Government, by a local authority, or a

society registered under the Societies Registration Act,

1860, or under any corresponding law for the time being in

force in a State, or a co-operative society within the

meaning of any law relating to co-operative societies for

the time being in force in any State;

but does not include acquisition of land for

Companies.

In order therefore that an acquisition may be for a

public purpose within the meaning of sub-section 3(f)(vi) as

far as the case before us is concerned, the acquisition (1)

should have been done with the prior approval of the

appropriate Government; (2) must have provided for land for

any housing scheme and (3) the housing scheme should have

been sponsored by a Society registered under the Societies

Registration Act, 1860 or any other corresponding law in the

State. Of these three requirements, according to the Law

Department, the third requirement was lacking. The opinion

of the Law Department and consequently the basis of the

impugned order are unacceptable for several reasons.

Admittedly the appellant is registered under the Karnataka

Societies Registration Act. What appears to be the

contention of the respondents is that the appellant could

not have been registered under the State Act. It is

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nobodys case that the registration of the appellant has in

fact been withdrawn or cancelled under the Karnataka Act.

Section 3 of the Karnataka Act specifies the Societies to

which the Karnataka Act applies. The Societies must be

formed for any one or more of the seven objects mentioned.

The last two objects mentioned in the Karnataka Act are in

fact included in the Memorandum of Association of the

appellant as being two of the aims and objects of the

appellant. The opinion of the Law Department that none of

the objects of the Appellant were within the objects

specified in Section 3 was factually incorrect. It has not

been shown that if some of the objects with which a Society

is established are invalid and others are valid, the

registration of the Society is ipso facto vitiated. On the

contrary, it appears from the records that on petitions

being filed for cancellation of the appellants

registration, by letter dated 23rd March 1991, the District

Registrar did not cancel the registration but said,

Therefore, it is hereby endorsed that the objects which are

in accordance with Section 3 of the said Act are valid and

remained (sic) not valid. Thus, it cannot be asserted with

any certainty that the appellant could not have been and

cannot continue to be registered under the Karnataka Act.

It is to be noted that under Section 8 (2) of the Karnataka

Act, a society may be registered only after the Registrar is

satisfied that all the requirements of the Act and the rules

made thereunder have been complied with. One cannot assume,

that the appellants case did not come within Section 3 (f)

(vi) of the Act. It is therefore unnecessary to determine

whether there is a conflict between Section 3 (f)(vi) of the

Act and Section 3 of the Karnataka Act nor do we propose to

decide which of the two would prevail under Article 254 of

the Constitution. Indeed the learned Single Judge found no

impediment in an acquisition for the appellant despite

Section 3 of the Karnataka Act when he said: all the

members of the Society belong to the weaker section of the

society and they do not have residential sites to have a

roof over their head. When such being the case it is

appropriate for the State Government to take steps to

acquire lands having got deposited substantial amount

towards the cost of acquisition with a view to acquire

certain extent of land to provide residential sites to the

members of the society. Therefore, in the event if the

petitioner society come forward with a scheme and submit the

same to the State Government, the State Government may take

necessary steps to initiate acquisition proceedings after

sanctioning the prior approval provided if the

petitioner-society does not withdraw the amount so deposited

by it for the purpose of acquisition of the land.

In fact neither the Single Judge nor the Division

Bench of the High Court appear to have accepted this reason

as ground for withdrawing the acquisition. Furthermore,

this very objection had been considered at every level and

rejected on 14th November 1991 after which the Notification

under Section 6 was issued and published declaring that the

land was required for a public purpose. Once this was done,

under sub-Section (3) of Section 6, the said declaration was

conclusive evidence that the land is needed for a public

purpose... The stage for questioning the public

purpose aspect of the acquisition is over and cannot be

reopened by the State nor can the respondents/owners raise

this issue without challenging the Notification under

Section 6. They had challenged it under Art. 226 but then

withdrew their writ petition. In this context it may be

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noted that the appellants allegation that the sudden

volte-face of the State Government was by reason of the

pressure brought by respondent No. 2 appears to have some

substance. Although the respondent No. 2, both before the

High Court and before us, denied his involvement in the

matter, the records reveal that at least by letter dated

30th December 1991, the respondent No. 2 had written to the

Revenue Department espousing the cause of respondent owners

seeking withdrawal of the acquisition. The basis on which

the learned Single Judge dismissed the appellants writ

petition was that there was no approval of the appropriate

Government to the acquisition, namely, the absence of the

third factor noted above. This was not the ground on which

withdrawal from the acquisition had been made and it was not

open to the State Government to justify its decision on any

other ground. As held by this Court in Mohinder Singh Gill

and Another v. The Chief Election Commissioner, New Delhi

and Others 1978 (1) SCC 405 at p. 417: ..when a

statutory functionary makes an order based on certain

grounds, its validity must be judged by the reasons so

mentioned and cannot be supplemented by fresh reasons in the

shape of affidavit or otherwise. Otherwise, an order bad in

the beginning may, by the time it comes to Court on account

of a challenge, get validated by additional grounds later

brought out.

Besides, what had been stated in the affidavit of the

State- respondents is the petitioner society has not

submitted any housing scheme and as such there could not

have been prior approval from the Government. In other

words, the fact of prior approval has not been denied. What

is said is because no housing scheme had been submitted by

the appellant there could not have been prior approval.

No finding was however given by the Single Judge on this.

All that was said was: The learned Govt. Advocate

submitted that in the instant case there is no scheme

submitted by the society and there is no such approval of

the State Government. If that is so, the entire acquisition

proceedings initiated treating it as a public purpose itself

is vitiated.

The Division Bench did not at all address itself to

this aspect of the matter. In the absence of any finding on

the existence of the scheme, the submission of the State

Government regarding prior approval should have been

rejected. In fact it appears from the records a housing

scheme had been submitted by the appellant. Apart from the

lay out plan, the number, the sizes and positions of the

plots, the user, the number of allottees, the basis of

allotment, the finances for the purposes, the particulars of

the membership had all been submitted by the appellant. The

organisational set up to administer the scheme was indicated

in its Memorandum of Association, which also ensures that

the land would be utilised for the purposes for which it was

being acquired. The clearance of the Town Planning

Authority had been obtained. The particulars were verified

and found satisfactory in all respects by the authorities.

Nothing more could be asked for from the propounder of a

housing scheme. The respondents then submitted that the

letter dated 15th March, 1991 did not amount to a prior

approval because ( i ) it did not indicate that the scheme

was approved (ii) it was not in accordance with Art. 166 of

the Constitution and (iii ) the Government could not rely on

material collected by it before the first notification under

Section 4(1) of the Act was issued. No form of the prior

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approval required under Section 3(f)(vi) of the Act has been

specified in the Act itself. What the section in terms

requires is the prior approval to the acquisition for the

purpose specified. This was expressly given. That the

letter dated 15.3.91 was issued by the Government is not in

dispute. The lack of compliance with Article 166 did not

render it a nullity. As held by the Constitution Bench of

this Court in 1964 (6) SCR 368: it is, therefore,

settled law that provisions of Art.166 of the Constitution

are only directory and not mandatory in character and, if

they are not complied with, it can be established as a

question of fact that the impugned order was issued in fact

by the State Government or the Governor... [See also

Dattatreya v. The State of Bombay (1952 SCR 612) Major E.G.

Barsay v. State of Bombay: AIR (1961) SC 1762]

No doubt, in Gulabra v. State of Gujarat 1996 (2) SCC

26, it was held that a decision of Revenue Minister was not

an order of the Government because of non compliance with

Article 166. But in that case there was a conflict between

the Revenue Department and the Urban Development & Urban

Housing Department whether proceedings under S. 4(1) of the

Act were to be dropped or not. The Revenue Minister was of

the view that it should be dropped. The Urban Development

Department disputed this. The Rules of Business framed by

the State under Art. 166(3) specifically provided that in

such a controversy , the matter was to be submitted to the

Chief Minister for placing before the Cabinet. This was not

done nor was the order of the Revenue Minister communicated

to the appropriate authority. The Revenue Ministers

decision which was noted on the file was sought to be

enforced by the owners. This was negatived by the Court.

The decision is factually distinguishable and cannot be

construed as upsetting the settled law as noted in

Chitralekhas case. The approval in this case was a

culmination of a lengthy exercise which started in 1983 with

two prior abortive attempts to complete the acquisition.

This is evident from the language of the letter dated

15.3.1991 itself. The genuineness of the need of the

appellant has not been doubted even by the High Court,

unlike the case of HMT House Building Cooperative Society v.

Syed Khader & Ors. (1995)2 SCC 677 where it was found that

the Government had acted at the instance of a middleman and

the acquisition was sought for the ultimate commercial

utilization of the land. But, the respondents contend, the

materials on which the appellant sought to rely to show that

the prior approval in 1991 was granted after being satisfied

about the housing scheme, were submitted prior to the

earlier notifications under Section 4(1). According to the

respondents, with the dropping of the earlier notifications,

the entire proceedings on the basis of which they were

issued became non est. They have cited State of Gujarat V.

Patel Chaturbhai Narsibhai 1975 1 SCC 583 in support of this

submission. The owner- respondents further submission was

that the acquisition was commenced under Part VII and that

the material gathered may have been relevant for an

acquisition under Part VII but could not be relied upon for

proceedings under Part II. These are not pleas which were

taken by the respondents at any stage. Both issues raise@@

JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ

mixed questions of law and fact. As far as questions of@@

JJJJJJJJJJJJJJJJJJJJJJJJJJJJ

fact are involved we cannot entertain them and as principles

of law both submissions are untenable. Patel Chaturbhai

Nasirbhai (supra) cited by the respondents dealt with

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acquisition for a company in accordance with Part VII of the

Act and the Land Acquisition (Companies) Rules, 1963. Part

VII of the Act contains sections relevant to the acquisition

of land for Companies, namely, Section 38-A to Section 44-B.

Section 39 provides that the procedure commencing with the

declaration under Section 6 and terminating with the

distribution of compensation and possession of the land

would not put into force to acquire land for any company

under Part-VII without: (i) the previous consent of the

appropriate Government, and

(ii) execution of an agreement between the company and

the appropriate Government under Section 41.

It is only after both the requirements are satisfied

that further steps in the acquisition of land for the

company can be taken. In Patel Chaturbhai Narsibhai and

Others(supra) the first notification under Section 4 of the

Act was issued on 4th March 1961. After an inquiry was

held, the State Government gave its consent. On 22nd August

1961 an agreement was entered into between the State

Government and the Company. On 9th July 1965, the Land

Acquisition (Gujarat Unification and Amendment) Act, 1965

came into force amending Section 39 of the Act. The

Notification dated 4th March 1961 was cancelled on 28th

September 1965. The next day a fresh notification under

Section 4 was issued. The dispute before this Court was

whether the conditions for the issuance of the second

Notification had been satisfied. Admittedly, a second

agreement was entered into between the Company and the State

Government after the second Notification under Section 4 (1)

on 13th January 1969 i.e. subsequent to the second

Notification. The State Government sought to rely upon the

earlier agreement dated 22nd August 1961. This was

negatived. It was said: The enquiry pursuant to the

notifications in the year 1961 and previous to the fresh

notifications in 1965 is of no effect in law for two

principal reasons. First, the 1961 notification was

cancelled, and, therefore, all steps taken thereunder became

ineffective. Second, the enquiry under Rule 4 in 1961 was

held without giving opportunity to the land owner

respondent, and, therefore, the enquiry is invalid in law.

To begin with as far as the case before us is

concerned there is no basis for the submission that the

acquisition was originally commenced under Part VII. The

first Notification is not on record. The State has given no

reason for destruction of the file when the matter was

pending for consideration before this Court. However, after

the publication of the first notification under Section 4(1)

on 6th August 1987 the respondents-owners had objected. The

objections included a submission that the Society is not a

registered Society. The second objection was that the

acquisition was not for a public purpose. In dealing with

these objections by letter dated 12th /19th November 1987

written by the Assistant Commissioner, Tumkur to the Revenue

Commissioner it was affirmed that the appellant was

registered and the purpose of acquisition is housing. As

such the proposed acquisition falls under Section 3(e)(vi)

read with Section 3 (e) (vii). Presumably the Assistant

Commissioner meant Section 3 (f) (vi) and 3(f) (vii). The

respondents then relied upon a letter dated 27th March 1987

sent by the Under Secretary, Revenue Department to the

Special Deputy Commissioner, Tumkur District, Tumkur which

reads as follows: While returning the records, I am

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directed to convey the approval of Government to initiate

acquisition proceedings under Karnataka Land Acquisition

(Company) Rules to acquire an extent of 15-00 acres of land

in S.No.49 of Maralur village, Tumkur taluk in favour of

State Government Employees Association, Tumkur.

Whatever may be said in the internal correspondence,

there is no evidence that the matter was proceeded with

under Part VII at all. After the first notification under

Section 4(1) was issued by letter dated 16th April 1988 sent

by the Under Secretary to the Deputy Commissioner, Tumkur,

it was stated: While enclosing the records received from

the Assistant Commissioner, Tumkur under his letter cited

above, I am directed to request you to send the

recommendation of the District Level Committee constituted

in G.O.No. RD 193 AQW 185, dated 20.1.1986, keeping in view

the guidelines issued in Circular of even number dated

23.4.1986, including the existent of land to be acquired to

provide house sites to its members.

It was pursuant to this directive that enquiries were

held and the District and State Level committees enquired

into and verified the appellants case before recommending

it. The material was relevant not only to the question of

public purpose under Section 4 but could also form the basis

of an approval under Section 3 (f)(vi). It is not disputed

that the material was considered when the second and the

third notifications under Section 4(1) were issued and both

these Notifications clearly state that the acquisition was

being made for a public purpose and not under Part VII of

the Act. Therefore, even if the acquisition was originally

commenced under Part-VII it was continued under Part II. A

converse situation occurred in Amarnath Ashram Trust Society

(supra), where although the notification under Section 4 (1)

was issued for a public purpose, the declaration under

Section 6 showed that it was under Part VII. The

declaration clearly referred to the inquiry made under Rule

4 of the Land Acquisition (Companies) Rules, 1963 and the

agreement entered into between the appellant-Society and the

State. Moreover, it was not pleaded by the State before the

High Court that the acquisition was for a public purpose and

not under Chapter VII of the Act. Therefore, it was held

that it was not open to the counsel for the state to raise a

contention which was contrary to the case pleaded before the

High Court. In this case the earlier notifications were not

cancelled nor is there any question of any agreement under

Section 41 being superseded by another. No further steps

could be taken on the earlier notifications only because of

administrative delay which crossed the period of limitation

provided under Section 6(1)(A). While the proceedings under

Section 4 (1) may come to an end as a matter of law, it does

not mean that the material on the basis of which the earlier

Notification was issued ceased to exist as a matter of fact.

Section 4 (1) read with Section 3 (f) (vi) of the Act

indicates that there are two separate functions to be

performed by the State Government. Under Section 4 (1) it

must prima facie come to the conclusion that the land

proposed to be acquired is required for a public purpose and

under Section 3 (f)(vi), such tentative conclusion must be

coupled with specific approval to acquire the land for the

purposes specified for the benefit of the registered society

or co- operative society, as the case may be. The Act does

not specify the material on which either the tentative

conclusion to Section 4 (1) or approval under Section

3(f)(vi) are to be based. In M/s Fomento Resorts and Hotels

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Ltd. V. Gustavo Ranato DA Cruz Pinto and Others 1985 (2)

SCC 152 it was held that the view of the Government that

land is needed either for public purpose or for a company

may be based either on independent enquiry or from reports

and information received by the government or even from an

application by the company concerned. The same sources may

provide information for granting prior approval under

Section 3(f) (vi). There is no prohibition on the State

Government acting on the basis of material already on record

provided the material is sufficient, relevant and genuine.

The material in this case although collected prior to the

issuance of the second Notification was all these and

according to the letter of approval, the matter was

minutely examined by the State Government in consultation

with the Law Department before granting the approval for the

third and final notification in 1991. The final submission

of the owner respondents was that the present acquisition

was in fact being made under Part VII and that none of the

provisions in Part-VII had been followed. The third

Notification ex facie states that it was issued for public

purposes under Part II of the Act. The finding of the

learned Single Judge also was: it is clear that the

acquisition proceedings are initiated under Part II of the

Act and not under Part VII of the Act. Furthermore, the

only stumbling-block raised by the respondent-owners all

along was the issue of the applicability of Section 3

(f)(vi) only because the acquisition was under Part II. It

was commenced and continued as such. The respondents

argument that the procedure followed was a hybrid procedure

of Part II and Part VII, therefore, is erroneous. From all

this, the ultimate position which emerges is that the

acquisition in favour of the appellant was properly

initiated by publication of the Notification under Section 4

(1) and by the declaration issued under Section 6. The

withdrawal of the acquisition under Section 48 (1) was

vitiated not only because the appellant was not heard but

also because the reason for withdrawal was wrong. The High

Court erred in dismissing the appellants writ petition.

The decision of the High Court is accordingly set aside.

The impugned Notification under Section 48(1) is quashed and

the appeal is allowed with costs.