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PETITIONER: GENERAL GOVT. SERVANTS CO-OPERATIVE HOUSING SOCIETY LTD.,AGR

       Vs.

RESPONDENT: WAHAB UDDIN & ORS. ETC. ETC.

DATE OF JUDGMENT02/03/1981

BENCH: ISLAM, BAHARUL (J) BENCH: ISLAM, BAHARUL (J) PATHAK, R.S. REDDY, O. CHINNAPPA (J)

CITATION:  1981 AIR  866            1981 SCR  (3)  46  1981 SCC  (2) 352        1981 SCALE  (1)630  CITATOR INFO :  D          1985 SC 736  (20)

ACT:      Land Acquisition Act-Sections 4, 5A and 6-Land acquired for a  company-Part VII of the Act, if attracted-Requirement of rule  4 of  Land Acquisition  (Companies)  Rules  1963-If mandatory-"Person interested"-Meaning of.

HEADNOTE:      The land in dispute originally belonged to a person who had migrated  to Pakistan. After acquiring the lessee rights in the  land under  section  12  of  the  Displaced  Persons (Compensation and  Rehabilitation)  Act,  1954  the  Central Government  sold   these  rights   by  auction.   The  first respondent purchased  a plot  of land and a sale certificate was issued  to him.  The respondent,  however could  not get possession of the land as a result of litigation resorted to by the person in possession of the land. In the meantime the State Government  filed a  suit  against  the  Custodian  of Evacuee Property  and the auction purchasers for possession; but the suit and later appeal were dismissed.      Before the respondent obtained possession of the land a notification under section 4 of the Land Acquisition Act was issued seeking  to acquire  the  land  for  construction  of residential houses for the members of the appellant society. Having had  no knowledge  of the notification the respondent did not file any objection under section 5A. After the issue of notification  under section  6  of  the  Act  proceedings relating to determination of compensation for the lands were started. A notice was served on the respondent under section 9(3) of  the Act  calling upon  him to  prefer his claim for compensation.      Allowing the respondent’s petition impugning the action of the  Government  the  High  Court  held  that  the  State Government could  acquire the land only after complying with the provisions  of Chapter  VII of  the  Act  and  the  Land Acquisition (Companies) Rules, 1963 and this not having been done there  was a breach of the principle of natural justice and that  secondly the  respondent was a "person interested" within the meaning of section 3(b) of the Act.      On the  question whether  the respondent  was a ’person

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interested’  and   whether  the  notification  issued  under section 6 was valid. ^      HELD: The  expression "person interested" is defined in section 3(b)  as including  all persons claiming an interest in compensation to be made on account of acquisition of land under the Act. That the first respondent had interest in the land   in   question   is   warranted   by   the   following circumstances: (i) a sale certificate had been issued to him after he  purchased the  land  in  auction  sale;  (ii)  the Collector knew  that he  had purchased  the land  for he had himself filed a suit for ejectment against him from the land and that  the suit was dismissed and the appeal against that order was  also dismissed;  (iii) the  Collector called upon the respondent to prefer his claim under section 9(3) of the Act which showed that 47 the Collector  had admitted  the first respondent’s interest in the  land; and  (iv) before  the High Court the Collector had not  denied  the  respondent’s  right  to  compensation. Therefore, the  first respondent  was a  "person interested" within the meaning of section 3(b). [50 F-H]      2. The notification under section 6 is invalid for non- compliance with rule 4 of the Rules. [54 G]      The appellant society is a "company" within the meaning of section  3(e) of  the Act. When the land was acquired for the purpose  of a  company, Part VII of the Act is attracted and the provisions of that Chapter have to be followed. Rule 4 is  mandatory and  unless the  directions enjoined by this rule are  complied with  the notification  under  section  6 would be  invalid. Its  compliance precedes the notification under section  4 as  well as  compliance of section 6 of the Act. [51 F-G]      In the  instant case  on receipt  of the  notice  under section 9(3)  the respondent  objected to the acquisition on the grounds  that the  land or  lessee  rights  having  been acquired by  the Central  Government under the provisions of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 could not be acquired by the State Government, and that the mandatory  procedure for acquisition of land for private companies had  not been followed. No inquiry report had been submitted by  the Collector.  The report submitted was under section 5A  and not under rule 4. There had therefore been a failure of justice. [54 C-F]      3.  The   appellant’s   contention   that   the   first respondent’s claim  was barred  by limitation under sections 45(f) and 180 of the Tenancy Act, has no force because there is no  evidence to show that the requirements of the section have been satisfied. That apart, this is a mixed question of fact and  law requiring  investigation into  facts. Since it had not  been taken  before the  High Court but sought to be urged for the first time in this Court, it cannot be allowed to be  urged in an appeal by special leave under Article 136 of the Constitution. [50 C-D]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2085 of 1978 and 7-8 of 1979.      Appeals by  special leave  from the  Judgment and Order dated 18.5.1977  of the  Allahabad High Court in C.M.W. Nos. 5061/73, 5063/73 and 5080/73.      G.C. Lal, D.B. Vohra and O.P. Tewari for the Appellants in all the Appeals.

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    Probir Mitra  for R.1  in CAs. 2085/78, 8/79 and RR 1-2 in CA 7/79.      G.N. Dixit,  and Sobha  Dikshit for  RR. 2  to 4  in CA 2085/78 RR 2-4 in CA 8/79 and RR 3&5 in CA 7/79.      E.C. Aggarwala for R.4 in CA 7/79 and R. 3 in CA 8/79.      The Judgment of the Court was delivered by      BAHARUL ISLAM,  J. The  above appeals arise out of land acquisition proceedings  and involve  similar  questions  of fact and the same 48 question of  law.  This  common  judgment,  therefore,  will dispose of  all the  three appeals. It will be sufficient if we refer  to the  material facts of Civil Appeal No. 2085 of 1978 only.      2. The  land involved,  belonged to one Imam Khan as an occupancy tenant. Before the partition of India, he migrated to  Pakistan,  whereafter  his  rights  in  the  lands  were declared evacuee  property. Subsequently,  in pursuance of a notification  issued  under  Section  12  of  the  Displaced Persons (Compensation  and Rehabilitation)  Act,  1954,  the Central Government  acquired the  lessee rights. As a result of the  notification, these  rights vested  in  the  Central Government  free   from  all   encumbrances.   The   Central Government thereafter  sold  these  rights  by  auctions  in August/September 1962. The first Respondent purchased a plot of land  for a  sum of  Rs. 21,700.  He deposited the entire amount with  the Managing Officer, Evacuee Property, Agra. A sale certificate was issued to him on September 12, 1962.      3. It appears that one Ramlal Lamba was in the possessi on of  the land  in question.  He was  asked by the Managing Officer, Evacuee  Property, to  vacate the land, and deliver possession to  the first  respondent. Instead  of delivering possession of  the land to the first respondent Lamba, filed a Writ Petition under Article 226 of the Constitution in the Punjab High  Court at Delhi. The Writ Petition was dismissed on 4.12.69. He then filed an appeal which was also dismissed on 2.2.70.  He then filed a suit in the Court of the Munsiff Agra,  for   restraining  the   Managing  Officer,   Evacuee Property, from interfering in his possession. Thus the first respondent could not get possession of the land.      4.  After   the  auction  sale,  the  State  of  U.  P. (Respondent No.  2 herein) filed a suit under Section 171 of U. P.  Tenancy Act,  1939 (hereinafter  ’the  Tenancy  Act’) against the  Custodian of the Evacuee Property, and the four auction  purchasers  including  the  first  respondent,  for possession.  This   suit  was  dismissed  by  the  Assistant Collector, Ist  Class, on  24.3.69 on the ground that it was not  maintainable.  An  appeal  was  filed.  This  was  also dismissed on  24.10.70. Thus  before  the  petitioner  could obtain  possession  of  the  land,  the  Collector  of  Agra (Respondent No.3 herein) issued a notification under Section 4 of  the Land  Acquisition Act  (hereinafter ’the  Act’) on March 1,  1970, notifying  that the  plots in  dispute  (and several other  plots) were  intended to  be acquired  by the State Government  for construction of residential houses for the members  of the  General Servants  Co-operative  Housing Society Ltd., Agra, the appellant 49 before us.  The first  respondent did not have any knowledge or information  of the  said notification under Section 4 of the Act  and so  he did  not, as  he  could  not,  file  any objection under  section 5A  of the  Act.  The  notification under section 4 was followed by a notification under section 6 of  the Act  on May 4, 1973. After the said notifications, proceedings relating  to determination  of compensation  for

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the  lands  were  started.  In  that  connection  the  first Respondent was  served with  a notice  under section 9(3) of the  Act,   calling  upon   him  to  prefer  his  claim  for compensation.   Thereupon   the   first   Respondent   filed objections, but  before the  objections were  disposed of he filed a  writ petition  before the  High Court of Allahabad. The High Court allowed the writ petition and struck down the notification dated 5th May 1973, under Section 6 of the Act. The High  Court held that as the acquisition was made by the State Government  for the benefit of a Co-operative Society, it could  do so  only after complying with the provisions of Chapter VII of the Act, and the Land Acquisition (Companies) Rules, 1963  (hereinafter called  ’the rules’),  but as  the State Government  did not  do so,  there was a breach of the principle of  natural justice. Repelling the argument of the appellant to the contrary, the High Court also held that the first  respondent  was  a  ’person  interested’  within  the meaning of section 3 (b) of the Act.      5. Respondents  No. 2,  3 and  4 who are co-respondents appearing through  Mr. Dikshit  before us have supported the case of the appellant.      6. The  first question for determination is whether the first respondent  is not  a ’person  interested’ within  the meaning of  section 3(b)  of the L.A. Act and as such he had no locus  standi to  file the  writ petition before the High Court, as contended by the appellant.      Section 3  (b) of  the Act  is in  the following  terms (material portions only):      "3. In this Act, unless there is something repugnant in the subject or context:-      (a)..............      (b) the  expression "person  interested"  includes  all      persons claiming an interest in compensation to be made      on account  of the  acquisition of land under this Act;      and a  person shall  be deemed to be interested in land      if he is interested in an easement affecting the land." 50      In support  of the  argument the  appellant  refers  to section 45  (f) and  section 180  of the  Tenancy Act, 1939. Clause (f)  of section  45 provides that the interest of the tenant shall  be extinguished  where  the  tenant  has  been deprived of  possession and  his right to recover possession is barred  by limitation.  The limitation  provided is for a period of twelve years, for a suit for ejectment of a person occupying the land without title and for damages-if the land is contiguous  to any  other land  lawfully occupied by such other person-(a)  if such person has, at the commencement of the Tenancy  Act, occupied the land for more than six years, the period runs from the time the land holders first knew of the unauthorised occupation. In any other case the period of limitation is six years. This point which has been urged for the first  time before  us is  a mixed  question of fact and law. It  does not  appear to have been taken before the High Court.  A   mixed  question   of  law   and   fact   needing investigation into  facts cannot  be allowed to be urged for the first  time in an appeal by special leave under Art. 136 of the Constitution.      It is true that admittedly the first respondent was out of possession  at the relevant time but there is no evidence before us  to show  whether or  not the land in question was contiguous to  any other  land occupied by the person who is in possession  and that  his possession  had been lawful. We are therefore  not in a position to accept the submission of the appellant  that the  first respondent’s claim was barred by limitation.  On the  contrary  there  is  ample  evidence

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before us  to show that the first respondent had interest in the land  in question.  We come  to this conclusion from the following circumstances:      (I) A  sale certificate  had been  issued to  the first respondent after  the purchase  of the  land in auction sale held in  1962; (2)  the Collector, Agra, knew that the first respondent had  purchased the  land in  auction, for  he had himself filed a suit for ejectment from the land in question under section  171 of  the Tenancy  Act  against  the  first respondent, and that the suit was dismissed by the Assistant Collector  Ist  Class,  on  24th  March,  1969;  the  appeal preferred against  the said order had also been dismissed by the Commissioner  on the  27th of  October,  1970;  (3)  the Collector issued  notice under  section 9  (3)  of  the  Act calling upon  the first  respondent to  prefer his claim, if any for  compensation of the land acquired. (This amounts to an admission  of the first respondent’s interest in the land by the  Collector) and  (4) that  in the  counter  affidavit filed by  the Collector,  in reply to the affidavit filed by the first respondent before the High Court 51 the claim  of the  petitioner to  get compensation  for  the rights acquired  by the  Government was  not denied  by  the appellant. We  therefore agree  with the High Court that the first  respondent  was  a  ’person  interested’  within  the meaning of clause (b) of section 3 of the Act.      7. The  next point urged before us by the appellants is that the  first respondent in fact filed objection which was inquired into  and he  was given  an  opportunity  of  being heard. The  High Court,  therefore, it is contended, was not right in holding that there was a breach of the principle of natural justice. In our opinion, the real question, as urged by the  first respondent,  is not whether there has been any violation of  any principle  of natural  justice but whether Rule 4 of the Rules has been complied with by the Collector. Sub-section (1)  of Section  4  of  the  Act  provides  that whenever it  appears to the appropriate Government that land in any  locality is needed or is likely to be needed for any public purpose  a  notification  to  that  effect  shall  be published in  the official  gazette and  that he  shall also cause a  public notice  of the substance of the notification to be given at convenient places in the said locality.      Section  5A   of  the  Act  provides  that  any  person interested in  any land  which has  been notified under sub- section (1)  of section  4, as  being needed or likely to be needed for  a public  purpose or  for a  Company may, within thirty  days   (twenty-one  days   according  to   the  U.P. amendment) after the issue of the notification object to the acquisition of  the land  or of  any land in the locality as the case  may  be.  Under  section  3  (e),  the  expression ’Company’, inter  alia, includes  a society registered under the  Societies  Registration  Act,  1860  and  a  registered society within  the meaning  of the  Co-operative  Societies Act, 1912  or any other law relating to co-operative society for the  time being in force in any State. The appellant-The General Govt.  Servants Co-operative  Housing Society  Ltd., Agra, is  a Company.  The appellant has not contended to the contrary. It is also not disputed that when land is acquired for the  purpose of  a company,  Part  VII  of  the  Act  is attracted and  the provisions  of that  chapter have  to  be followed.      Rule 4 of the Rules which is material and falls for our interpretation runs thus:           "4. Appropriate  Government to  be satisfied  with      regard to certain matters before initiating acquisition

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    proceedings.-  (1)   Whenever  a   Company   makes   an      application to the appro- 52      priate Government  for acquisition  of any  land,  that      Government shall  direct  the  Collector  to  submit  a      report to it on the following matters, namely:-      (i)  that the  Company has  made its  best endeavour to           find out  lands in  the locality  suitable for the           purpose of the acquisition;      (ii) that the  Company has  made all reasonable efforts           to get  such lands by negotiation with the persons           interested therein  on payment of reasonable price           and such efforts have failed;     (iii)  that the land proposed to be acquired is suitable           for the purpose;      (iv) that the  area of  land proposed to be acquired is           not excessive;      (v)  that the  Company is in a position to utilise land           expeditiously; and      (vi) where the  land proposed  to be  acquired is  good           agricultural land,  that no  alternative  suitable           site can  be found  so as  to avoid acquisition of           that land.           (2) The  Collector shall, after giving the Company      a reasonable  opportunity to make any representation in      this behalf,  hold an enquiry into the matters referred      to in  sub-rule (1)  and while  holding such enquiry he      shall,-      (i)  in any case where the land proposed to be acquired           is   agricultural   land,   consult   the   Senior           Agricultural Officer  of the  district whether  or           not such land is good agricultural land ;      (ii) determine, having  regard  to  the  provisions  of           sections 23  and 24  of the  Act, the  approximate           amount of  compensation likely  to be  payable  in           respect of  the land  which in  the opinion of the           Collector, should  be acquired  for the  Company ;           and     (iii) ascertain whether the Company offered a reasonable           price (not  being less  than the  compensation  so           determined), to the persons interested in the land           proposed to be acquired.      Explanation  :-For  the  purpose  of  this  rule  "good      agricultural land"  means any  land which,  considering      the level  of  agricultural  production  and  the  crop      pattern of the area in which 53      it  is   situated,  is  of  average  or  above  average      productivity and includes a garden or grove land.           (3) As  soon as  may be  after holding the enquiry      under sub-rule (2), the Collector shall submit a report      to the  appropriate Government  and a  copy of the same      shall be forwarded by that Government to the Committee.           (4)  No   declaration  shall   be  made   by   the      appropriate Government  under  section  6  of  the  Act      unless-      (i)   the  appropriate  Government  has  consulted  the           Committee and  has considered the report submitted           under this  rule and  the report, if any submitted           under section 5A of the Act; and      (ii) the agreement under section 41 of the Act has been           executed by the Company.’      Sub-rule (1)  requires the  Government  to  direct  the Collector to submit a report to it on the matters enumerated in clauses  (i) to (vi) of the sub-rule (1) which is for the

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benefit of  the Company. The purpose is to avoid acquisition of land  not suitable for a Company. Clause (ii) of sub-rule (1) requires  that the  Company has  to make  all reasonable efforts to  get such  lands by  negotiation with  the person interested therein  on payment of reasonable prices and that such efforts  have failed.  The purpose of clause (ii) seems to be  to avoid unnecessary land acquisition proceedings and payment of  exorbitant prices. The purpose of clauses (iii), (iv) and  (v) is  obvious. The  purpose of clause (vi) is to avoid acquisition  of good  agricultural  land,  when  other alternative land  is available for the purpose. Subrule 2 of rule 4 requires the Collector to give reasonable opportunity to the  Company so  that the  Collector may  hold an inquiry into the matters referred in sub-rule (1). The Collector has to comply  with Clauses  (i), (ii)  and (iii)  of sub-rule 2 during the  course of  the inquiry  under sub-rule  (1). The Collector under  sub-rule 3  then has  to send a copy of his report of  the inquiry  to the  appropriate Government and a copy of  the report has to be forwarded by the Government to the Land  Acquisition Committee constituted under Rule 3 for the purpose  of  advising  the  Government  in  relation  to acquisition of  land under  Part VII of the Act, the duty of the Committee  being to advise the Government on all matters relating to or arising out of acquisition of land under Part VII of  the Act  (Sub-rule (5)  of Rule  3). No  declaration shall be made by the 54 appropriate Government under section 6 of the Act unless the Committee has  been consulted  by  the  Government  and  has considered the  report  submitted  by  the  Collector  under section 5A  of the  Act. In  addition, under  clause (ii) of sub-rule (4)  of rule  4, the  Company  has  to  execute  an agreement  under   section  41   of  the   Act.  The   above consideration shows that rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by rule 4 are  complied with,  the notification under section 6 will be invalid.  A consideration  of rule  4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.      8. In  the instant  case, as  stated earlier, the first respondent on  receipt of  the notice  under section 9(3) of the   Act    submitted   a    representation.   After    the representation, a  brief written  note of  the arguments was also  supplied   (Annexure  6).   The   first   respondent’s objections, inter  alia against  the acquisition of the land were: (1)  that the land being that of the Government cannot be legally  acquired ;  (2) that  the land  or lessee rights having been  once acquired  by the  Central Government under the provisions  of the  Displaced Persons  (Compensation and Rehabilitation) Act,  1954, it  cannot be  acquired  by  the State Government  ; and  (3) that  the proceedings  for  the acquisition of  the land  for the  appellant were illegal as the mandatory  procedure for acquisition of land for private companies has  not been  followed. It was also stated in the representation that no efforts to purchase the rights of the first respondent  by  negotiation  were  made.  The  inquiry report submitted  by Collector does not show that he applied his mind  to the provisions of rule 4 as stated above, or to the objections of the first respondent. In fact there was no report under  rule 4.  The report that was submitted was one under section 5A of the Act. We have examined this aspect of the matter  to see that although the enquiry was belated and not in  accordance with  law, there  has been  no failure of justice. In  our opinion  there has been failure of justice. Agreeing with  the finding  of the  High Court, although for

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different reasons,  we  hold  that  the  notification  under section 6  is invalid  for non-compliance  of rule  4 of the Rules. As a result we dismiss the appeals with costs. P.B.R.                                    Appeals dismissed. 55