IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.4070 OF 2010 (Arising out of SLP(C) No. 21385 of 2009)

N. Rajanna and others …Appellant(s)  

Versus

State of Karnataka and others …Respondent(s)

With CIVIL APPEAL NO.4071 OF 2010

(Arising out of SLP(C) No. 22394 of 2009)

J U D G M E N T

G.S. Singhvi, J.  

1. Leave granted.

2. Whether the Division Bench of the High Court of Karnataka could  

modify order dated 13.2.2009 passed by the learned Single Judge in Writ  

Petition No. 15348/2008 without issuing notice and giving opportunity of  

hearing to the appellants, who claim to have right over the land sought to  

be acquired by the State Government on behalf of respondent No.3 and

who  were  represented  before  the  learned  Single  Judge  through  an  

advocate is the question which arises for consideration in these appeals  

filed against order dated 17.4.2009 passed by the Division Bench in Writ  

Appeal No. 1295/2009.

3. Respondent No.3 filed an application under the Karnataka Industries  

(Facilitation) Act, 2002 (for short, `the Facilitation Act’) for approval of its  

proposed  project  which  included  Tourist  Complex,  Commercial  Space,  

Financial  Hub,  Research  and  Development  Facility  with  Residential  

Condominium,  Service  Apartments  and  Medical  City  to  be  set  up  in  

Chalamakunte  village,  Chikkajala  Hobli,  Bangalore  North  Taluk  on  land  

measuring 500 Acres.  On coming to know of the application made by  

respondent No.3 for acquisition of land for its project, the appellants and  

others filed objections dated 30th May, 2007 by asserting that their claim  

for  grant  of  occupancy rights  over  a  portion  of  the land sought  to be  

acquired was pending before the competent authority, which is required to  

decide the matter in compliance of the direction given by the High Court in  

Writ Petition Nos. 33954 and 41207 of 1982.   

4. The project of respondent No.3 was considered in 10th, 13th and 15th  

meetings of the State High Level Clearance Committee (for short,  `the  

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Committee’).  After seeking some clarifications from respondent No.3, the  

Committee recommended approval of the project.  The State Government  

accepted the recommendations of the Committee and issued order dated  

18.11.2008  for  approval  of  the  project  of  respondent  No.3  subject  to  

certain  conditions.   While  making  recommendations  in  favour  of  

respondent No.3, the Committee took note of letter dated 28.4.2008 sent  

by Principal Secretary to Government, Revenue Department, wherein he  

made a mention of the pendency of case for grant of occupancy right.  

This is evinced from the following extract of order dated 18.11.2008:

“The  Principal  Secretary  to  Government,  Revenue  Department,  vide letter  dated 28.4.2008 has informed that,  the lands in Sy. No. 1 to 104 of Chalamanakunte village is Jodi  Inam and there is a case pending before Land Tribunal on  grant of occupancy rights.  In this regard, the Committee felt  that if the occupancy rights are confirmed, the occupants will  get  the compensation.   Otherwise,  the cost  of  lands to be  determined by SLAO have to be remitted to the Government,  as such there is no hindrance for acquisition, however it was  felt that the consent of revenue department is necessary in  this regard.”

5. After 8 days, the State Government revised its decision and issued  

order dated 26.11.2008 for withdrawal of the approval accorded to the  

project of respondent No.3 on the ground of pendency of the case before  

the competent authority.  This action of the State Government was ratified  

by the Committee in its meeting held on 28.1.2009.

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6. Respondent No.3 challenged order dated 26.11.2008 in Writ Petition  

No. 15348/2008 by contending that under the Facilitation Act, the State  

Government does not have the power to review the approval accorded to  

its project.  Another plea taken by respondent No.3 was that the action of  

the State Government is vitiated due to violation of the rules of natural  

justice.

7. During  the pendency of  the  writ  petition,  the appellants  filed an  

application dated 13.1.2009 for their impleadment as party by asserting  

that they have direct interest in the property sought to be acquired for the  

project of respondent No.3.  On their part, respondent Nos. 1 and 2 filed  

objections to contest the writ petition.

8. After hearing learned counsel for the parties and Shri B.M. Shyam  

Prasad, who had appeared on behalf of the appellants, the learned Single  

Judge passed order dated 13.2.2009 whereby he partly allowed the writ  

petition.   He rejected  the  plea  taken  by  respondent  Nos.1  and 2  that  

approval to the project of respondent No.3 did not create a right in its  

favour and held that the minimum expected of the State Government was  

to hear the writ  petitioner before withdrawing the approval.   However,  

instead  of  quashing  order  dated  26.11.2008,  the  learned  Single  Judge  

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directed the State Government to hear respondent No.3 and pass fresh  

order.   Paragraph 8 and operative  portion  of  the order  passed by the  

learned Single Judge read as under:

“8. In that view of the matter, the impugned order cannot  be sustained.  But at the same time, it is not necessary to  quash  the  impugned  annexure.   When a  project  has  been  approved by the State in accordance with law, if they want to  withdraw it, it is always open to them to do so after hearing  the  person  to  whom  such  an  approval  is  granted  and  thereafter take a decision in accordance with law so that the  aggrieved person will have the satisfaction of putting forth his  case.  In that view of the matter, I pass the following:

O  R  D  E  R

1. Writ Petition is allowed in part.

2. Annexure-A  shall  be  treated  only  as  a  show  cause  notice  issued  by  the  State  High  Level  Clearance  Committee to the petitioner asking him to show cause  why the approval of his project accorded on 18.11.2008  should not be recalled or withdrawn.

3. It is open to the petitioner to contend and raise all such  defences which are available to him in law.

4. The authorities shall  after  hearing the petitioner  pass  appropriate orders in accordance with law.

5. It  is  submitted  that  the  owners  of  the  lands  have  already objected to the grant of land and are before the  authorities  and therefore,  it  would be appropriate  for  the authorities also to hear the owners of the land, if,  the said land is meant to be given to the petitioner.

6. All contentions urged in this petition by all the parties  are  kept  open  to  be  decided  by  the  appropriate  authorities.

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7. Consequent to Annexure-A, all the orders passed by the  Government  or  by  the  High  Level  Committee  has  no  value in the eye of law and are unenforceable.

8. IA for impleading is ordered to be filed.

9. No costs.”

9. Respondent No.3 did not feel satisfied with the directions given by  

the learned Single Judge and challenged the order passed by him in Writ  

Appeal No. 1295/2009.  By the impugned judgment, the Division Bench  

allowed the writ appeal, quashed order dated 26.11.2008 and directed the  

State Government to proceed on the basis of approval granted by it on  

18.11.2008.

10. Shri  P.S.  Patwalia,  learned  senior  counsel  appearing  for  the  

appellants argued that the impugned judgment is liable to be set aside  

because  the  Division  Bench  of  the  High  Court  disposed  of  the  appeal  

without complying with the basics of the natural justice, inasmuch as no  

notice or opportunity of hearing was given to his clients.  Learned counsel  

emphasized that the appellants have direct and substantial interest in the  

land sought to be acquired for the project of respondent No.3 because  

their claim for grant of occupancy rights is pending before the competent  

authority and argued that the Division Bench committed serious error by  

directing implementation of the project of respondent No.3 without issuing  

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notice  to  the  appellants.    Shri  Patwalia  submitted  that  the  so-called  

consent given by one of the claimants of occupancy rights, namely, Shri H.  

Kempiah  cannot  be  made  basis  for  depriving  the  appellants  of  their  

legitimate right to be heard and oppose the acquisition of land ignoring  

that in terms of the direction given by the High Court in Writ Petition Nos.  

33954 and 41207/1982, the competent authority is yet to decide the issue  

relating to grant of occupancy rights. Ms. Anitha Shenoy, learned counsel  

for  the  State  of  Karnataka  not  only  supported  Shri  Patwalia,  but  also  

justified the Government’s decision to withdraw the approval accorded to  

the project of respondent No.3 by arguing that the decision contained in  

order  dated  18.11.2008  was  vitiated  due  to  non  consideration  of  the  

relevant  factors  including  the  pendency  of  case  relating  to  occupancy  

rights.  Dr. Abhishek Manu Singhvi, learned senior counsel appearing for  

respondent No.3, pointed out that the impleadment application filed by the  

appellants  had  not  been  allowed  by  the  learned  Single  Judge  and  

submitted that the factual statement contained in paragraphs 5 and 13.11  

of the impugned judgment suggesting that the learned Single Judge had  

already impleaded the appellants as parties to the writ petition does not  

appear to be correct.  He then submitted that the appellants do not have  

any locus to be heard in the proceedings instituted by respondent No.3  

against the Government’s decision to withdraw the approval to its project  

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because the competent authority is yet to decide their claim for occupancy  

rights.  The last submission of the learned senior counsel is that even if  

this Court comes to the conclusion that the Division Bench ought to have  

heard  the  appellants,  the  impugned  judgment  may  not  be  disturbed  

because, in the event of grant of occupancy rights to the appellants, they  

will get a maximum of 103 Acres land and for that his client is prepared to  

pay the prevailing market value so that the implementation of the project  

may not be delayed.

11. We have considered the respective submissions.  In our view, the  

impugned judgment is liable to be set aside only on the ground that the  

procedure adopted by the Division Bench in deciding the appeal preferred  

by respondent No.3 was contrary to one of the well recognized facets of  

natural justice i.e.,  audi alterm partem.  A careful scrutiny of the records  

reveal that while considering the project of respondent No.3 and approving  

the same, the Committee and the State Government were alive to the fact  

that the issue relating to grant of occupancy rights in respect of the land  

comprised  in  survey  Nos.1  to  104  of  Village  Chalamakunte  is  pending  

adjudication before the competent authority.  It is also not in dispute that  

even  before  consideration  of  the  project  of  respondent  No.3  by  the  

Committee,  the appellants had filed objections dated 30.5.2007 against  

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proposed acquisition of the land.  They had also filed an application under  

Order  1  Rule  10  CPC  for  being  impleaded  as  parties  to  Writ  Petition  

No.15348/2008.  Although, it is not clear from the order of the learned  

Single Judge whether the application filed by the appellants was allowed,  

but this much is evident that their advocate Shri B.M. Shyamprasad was  

heard along with other learned counsel.  This appears to be the reason  

why in paragraph 5 of the operative portion of the order passed by him,  

the learned Single Judge made it clear that land owners must be heard  

before  their  land  is  acquired.   The  Division  Bench  of  the  High  Court  

proceeded on the premise that the application filed by the appellants for  

their impledment as parties was allowed by the learned Single Judge.  This  

is clearly reflected in paragraphs 5 and 13.11 of the impugned judgment.  

Therefore,  the  Division  Bench  should  have  afforded  an  opportunity  of  

hearing  to  the  appellants  before  deciding  the  appeal  preferred  by  

respondent No.3 and directing the State Government to act in accordance  

with approval accorded vide order dated 18.11.2008.  In any case, once  

the  learned  Single  Judge  had  heard  the  counsel  representing  the  

appellants  and  the  Division  Bench  found  that  their  application  for  

impleadment had been allowed, the minimum which the Division Bench  

ought to have done was to issue notice to the appellants and given them  

an opportunity to contest the appeal.   

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12. Although, the issue relating to grant of  occupancy right  over the  

land comprised in survey Nos.1 to 104 of Village Chalamakunte is yet to be  

decided by the competent authority, it cannot be said that the appellants  

do not have the locus to be heard in the proceedings which may result in  

acquisition of the land.  If ultimately the competent authority accepts the  

claim of the appellants for grant of occupancy rights and in the meanwhile  

the land is utilized by respondent No.3, the determination made by the  

competent authority will become illusory for them.   

13. The submission of the learned counsel for respondent No.3 that his  

client is prepared to pay market value of the land to the appellants subject  

to their claim being finally adjudicated by the competent authority in the  

proceedings  relating  to  grant  of  occupancy  rights  cannot  be  accepted  

because the learned counsel for the appellants emphasized that his client  

would like to contest the very approval of the project of respondent No.3  

and support the decision taken by the Government to withdraw the same.

14. In the result, the appeals are allowed.  The impugned judgment is  

set aside and the matter is remitted to the High Court for deciding the  

appeal of respondent No.3 afresh after giving opportunity of hearing to the  

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parties.  Keeping in view the nature of the case, we request the High Court  

to dispose of the appeal as early as possible but latest within two months  

from the date of receipt/production of copy of this order.

…………………………….…J. [G.S. Singhvi]

………………………………..J. [Asok Kumar Ganguly]

New Delhi May 04, 2010

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