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PETITIONER: SPECIAL LAND ACQUISITION OFFICER, BOMBAY, AND OTHERS.

       Vs.

RESPONDENT: GODREJ AND BOYCE

DATE OF JUDGMENT27/10/1987

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. VENKATARAMIAH, E.S. (J)

CITATION:  1987 AIR 2421            1988 SCR  (1) 590  1988 SCC  (1)  50        JT 1987 (4)   218  1987 SCALE  (2)851

ACT:      Land  Acquisition   Act-Power  of   the  Government  to withdraw proceedings  for acquisition of lands under section 48 after issue of notification under section 4 thereof.

HEADNOTE: %      The State  Government, by a notification dated November 6, 1961, issued under section 4 of the Land Acquisition Act, notified for  acquisition lands belonging to the respondent. This was  followed by a declaration dated November 18, 1965, under section 6 of the Act, and the notices calling upon the respondent to  put its claims for compensation in respect of the lands  sought to  be acquired.  Thereafter,  no  further action was  taken in this behalf. In the meantime, the lands in question  were encroached  upon  by  a  large  number  of trespassers  who   put  up  slums  thereon.  The  respondent repeatedly asked  the State  Government  to  take  steps  to remove the  encroachments and  expedite the  making  of  the award and  payment of  the compensation  but no  action  was taken by  the Government.  The respondent  thereupon filed a Writ Petition  in the  High Court  for a  writ of  mandamus, directing the  State Government  to  make  the  award  under section 11  of the  Act, and  take possession  of the  lands after payment of the compensation to the respondent.      On March 25, 1981, the State Government passed an order under section  48 of  the Act,  withdrawing the lands of the respondent  from   acquisition,  and   the  respondent  was, accordingly,  informed  of  that  decision.  The  respondent thereupon  amended   its  writ  petition  to  challenge  the withdrawal order above-said as mala fide and to pray for the quashing of  the same.  The writ  petition was  allowed by a Single Judge of the High Court and his decision was affirmed by a Division Bench of the High Court. Aggrieved, the State- Government appealed  to this  Court, against the decision of the High Court.      Allowing the appeal, the Court, ^      HELD: The  High Court  erred in striking down the order under section  48 of the Land Acquisition Act and compelling the State

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591 Government to acquire the lands of the respondent. Under the scheme of  the Act, neither the notification under section 4 nor the  declaration under  section 6  nor the  notice under section 9  is sufficient to divest the original owner of, or other person  interested in, the land of his rights therein. Section 16 makes it clear beyond doubt that the title to the land vests  in the  Government only when possession is taken by the  Government, and  till that  point of  time, the land continues to  be with the original owner and he is also free (except where there is specific legislation to the contrary) to deal  with the  land just  as he  likes. So  long as  the possession  is   not  taken   over,  the   mere  fact  of  a notification issued  under section  4 or  a declaration made under section  6, does not divest the owner of his rights in the land  to take  care  of  it  and  confer  on  the  State Government  any  right  whatsoever  to  interfere  with  the ownership of  the land  or safeguard  the interests  of  the owner. Section  48 gives  liberty to the State Government to withdraw from  the  acquisition  at  any  stage  before  the possession of  the land  is taken by it. By such withdrawal, 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 compensated therefor under s. 48(2).  As held in Trustees of Bai Smarth Jain Shvetamber Murtipujak Ganodhaya  Trust and Ors. v. State of Gujarat and another, AIR 1981 Gujarat 107, the State can be permitted to exercise its power of withdrawal unilaterally. Having regard to the  scheme of  the Act,  it is  difficult to see why the State Government  should at  all be  compelled to  give  any cogent reasons  for its  decision not  to go  ahead with the acquisition of  any land, as was the view of the High Court. It is  well settled  in the field of specific performance of contracts that  no person  will be  compelled to acquire any land, as  a breach  of a  contract can always be compensated for by  damages. That is also the principle of section 48(2) of the Act. [594D-H; 595A-D]      Even assuming  that a withdrawal order under section 48 should be  backed by  reasons and should be bonafide, in the present case,  the order  is not vitiated in any manner. The Government had  intended to  acquire  vacant  land  for  the construction of  houses, but  his land  had been over-run by slum dwellers to such an extent that it was not possible for the  Government   to  effectuate  the  intended  purpose  of acquisition. The  Government cannot be compelled to go ahead with the  acquisition. Where  slum dwellers on a large scale occupy pieces  of land,  social and human problems of such a magnitude  arise,   that  it  is  virtually  impossible  for municipalities, and  no mean task for the Government, to get the lands vacated, and in view of these genuine difficulties if  the  Government  is  reluctant  to  go  ahead  with  the acquisition, it can hardly 592 be blamed.  The Court  sees no  justification to  direct the Government to  embark upon  such a  venture to  acquire  the land. Section  24 of  the acts  lays down  the rule that the State will, generally speaking, pay for the land only in the condition in  which it  was on  the  date  of  issue  f  the notification under  sec. 4,  and that  subsequent changes on the land will not be taken into account in the determination of the  compensation. The fact that the Government exercised the power  of withdrawal  after the writ petition was filed, does  not   spell  mala   fides,  once,   the  existence  of circumstances,  which   justified  the   decision   of   the

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Government to withdraw, is acknowledged. Far from a decision to withdraw  in such  a case being considered mala fide, the Government would  have been acting mala fide if, despite the clear knowledge  that the  land could  not be  used for  its purpose, it  had decided  to go  ahead with the acquisition. The State  Government  has  definitely  acted  in  the  best interests of the public and public revenues and its decision could not be faulted. [595D-F, H; 596B; F-H]      Appeal allowed.  Orders impugned  of the High Court set aside. n Rules issued by the High Court discharged. [597G]      M/s. Majas Land Development Corpn. and another v. State of Maharashtra and others, AIR 1983 Bombay 188, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2622 of 1987      From the  Judgment and  order  dated  6.8.1985  of  the Bombay High Court in Appeal No. 139 of 1984.      V.S. Desai and A.S. Bhasme for the Appellants.      G.L. Sanghi, D. Chandrachud and Ms. Rainu Walia for the Respondents.      The Judgment of the Court was delivered by      RANGANATHAN, J. The question raised in this appeal is a somewhat unusual one. The State Government wants to withdraw proceedings for  acquisition of  lands initiated by it under the Land  Acquisition Act  (hereinafter referred  to as ’the Act’) by exercising its power under section 48 but the owner of the  land is  insisting that  the  Government  should  be directed to  go ahead  with the  acquisition, taken over the lands and pay him compensation. The reasons for this some- 593 what unusual request will become apparent a little later.      By a  notification dated  6th  November,  1961,  issued under section  4 of  the Act, certain lands belonging to the respondent company were notified for acquisition in order to accommodate  housing  schemes  of  the  Maharashtra  Housing Board. This  was followed  up, on  18th November, 1965, by a declaration under section 6 of the Act and, on 15th January, 1966, by  notices calling upon the respondent to put forward its claims  of compensation in respect of the land sought to be acquired.  Thereafter, however,  no  further  proceedings were taken.  In the  meantime it appears that the lands were encroached upon  by a large number of trespassers who put up slums thereon. The respondent repeatedly requested the State Government to  take steps to remove the encroachments and to expedite the making of the award and payment of compensation but these  requests went  unheeded. The respondent thereupon filed Miscellaneous  Petition No.  1803/78 in the High Court of Bombay  praying, inter  alia,  for  a  Writ  of  Mandamus directing the  State Government  to  make  the  award  under section 11  of the  Act and  to take possession of the lands after payment of due compensation to the respondent.      On 25th March, 1981, the State Government passed orders withdrawing the  lands of  the respondent  from  acquisition under section  48 of the Act. The respondent was informed of this decision  on the 20th of October, 1981 and an affidavit to this  effect was also filed in the High Court in reply to the Writ  Petition. Thereupon the respondent company amended its Writ  Petition, challenged  the withdrawal order as mala fide and  included a prayer for quashing the decision of the State Government to withdraw its lands from the acquisition. This Writ  Petition was allowed by a learned Single Judge of the High Court on 9.11.83 and his decision was affirmed by a

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Division Bench on 6th August, 1985. The State Government has preferred this appeal.      The contention  of the respondent before the High Court was that  the  State  Government  had  acted  mala  fide  in invoking the  power of withdrawal permitted by section 48 in the facts  and circumstances  of the  present case.  It  was contended that  the purpose  for which  the lands  had  been sought to  be acquired  continued to  subsist and  that, all along, in  the correspondence  between the parties the State Government had  given no  indication that  the lands were no longer needed  by it for that purpose. It was urged that the order under section 48 had been passed, after the respondent company filed  a writ petition, solely with a view to defeat the relief claimed by the Company in the writ 594 petition and  render the  same infructuous. It was submitted that the  A respondent  had not  been able  to take steps to remove the  encroachments because  of the  pendency  of  the proceedings for  acquisition inasmuch as under section 24 of the Act  any expenditure  incurred by  the company  in  this regard could  not be  taken into  account in determining the compensation due  to the respondent. It was pointed out that while the  company was  helpless in defending itself against the encroachments,  the State had ample powers, while taking possession of  the  lands  to  remove  the  trespassers  and enforce the  surrender of  the lands  to the Government both under the  Land Acquisition  Act and  the  Maharashtra  Land Revenue Code.  It was  urged that the long delay of about 20 years in  taking the step of withdrawal showed mala fides on the part  of the  Government. A grievance was also made that no show  cause notice  had  been  given  to  the  respondent company  before  the  withdrawal  order  was  passed.  These contentions (except  the last  one which was left open) were accepted by the High Court.      We are of opinion that the High Court erred in striking down  the  order  under  s.  48  and  compelling  the  State Government to acquire the lands of the respondent. Under the scheme of  the Act, neither the notification under section 4 nor the  declaration under  section 6  nor the  notice under section 9  is sufficient to divest the original owner of, or other person  interested in, the land of his rights therein. Section 16 makes it clear beyond doubt that the title to the land vests  in the  Government only when possession is taken by the  Government.  Till  that  point  of  time,  the  land continues to  be with the original owner and he is also free (except where there is specific legislation to the contrary) to deal  with the  land just as he likes, although it may be that  on   account  of   the  pendency  of  proceedings  for acquisition intending purchasers may be chary of coming near the land.  So long as possession is not taken over, the mere fact of a notification under section 4 nor declaration under section 6  having been made does not divest the owner of his rights in  respect of the land or relieve him of the duty to take care  of the land and protect it against encroachments. Again, such  a notification  does not  either confer  on the State Govt.  any right  to interfere  with the  ownership or other rights  in the land or impose on it any duty to remove encroachments therefrom  or in  any other way safe-guard the interests of  the original  owner of the land. It is in view of  this   position,  that   the  owner’s  interests  remain unaffected until  possession is taken, that section 48 gives a liberty  to the  State Government  to  withdraw  from  the acquisition at any stage before possession is taken. By such withdrawal no  irreparable prejudice  is caused to the owner of the land, and if at all he has suffered any damage in cor

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595 quence of  the acquisition  proceedings or incurred costs in relation thereto,  he will  be compensated therefor under s. 48(2). In  this view  of the matter, it does not matter even if there  is lapse of considerable time between the original notification and  the withdrawal under section 48 as held in Trustees  of   Bai   Smarth   Jain   Shvetambar   Murtipujak Gyanodhyaya  Trust  and  others  v.  State  of  Gujarat  and another., AIR  1981 Gujarat  107. It  also follows  that the State can  be permitted  to exercise its power of withdrawal unilaterally and  no requirement  that the owner of the land should be  given an  opportunity of being heard before doing so should be read into the provision.      The High  Court has  taken the  view that a decision of withdrawal from  acquisition must  be backed  by reasons and cannot be arbitrary or whimsical. We may observe that having regard to  the scheme  of the  Act as discussed above, it is difficult to  see why  the State Government should at all be compelled to  give any  cogent reasons for a decision not to go ahead with its proposal to acquire a piece of land. It is well  settled  in  the  field  of  specific  performance  of contracts that  no person  will be  compelled to  acquire  a piece of land as any breach of a contract to purchase it can always be  compensated for  by damages.  That  is  also  the principle of  section 48(2).  But this  consideration apart, and even  assuming that  a withdrawal order under section 48 should be  backed by reasons and should be bona fide, we are of the  opinion that  in the  present case  the order is not vitiated in  any manner.  The  Government  had  intended  to acquire a  vast piece  of vacant  land for  construction  of houses by  the State  Housing Board.  But this land had been over-run by  slum dwellers  to such an extent that it was no longer  possible   for  the  Government  to  effectuate  the intended  purpose   af   acquisition.   The   High   Court’s observations that  "the respondents have not stated in their affidavit that  the lands in question are unsuitable for the purpose in  question" and  that "the  purpose  continues  to exist" lose  all meaning in the face of the finding recorded by the High Court itself at another place that "the lands of the petitioners  today are  fully occupied  by  unauthorised hutments which  have come  up on  these lands, rendering the lands worthless."  The basic  question is really whether the Government can be held responsible for this state of affairs and can be compelled to go ahead with the acquisition though its purpose  could not  be achieved. We have already pointed out that  the State  can-not be  held  responsible  for  the occupation of  the land  by trespassers.  It is true that if the Government  decides to go ahead with the acquisition and to take  possession of  the land,  it has  powers  to  evict trespassers and  to, secure  possession of the land but, for this reason alone, they cannot be compelled to go ahead with the acquisition. In the conditions presently 596 prevailing in  major metropolitan cities, such eviction, for the Government,  poses more  serious difficulties  than to a private person  like the respondent company and it is common experience  that,  far  from  removing  such  encroachments, Government   and    municipalities   are    constrained   to "regularise" them  and provide  them with civic necessities, Enactments like the Slums Act and the Urban Land Ceiling and Regulation Act have further complicated the situation. Where slum dwellers on a large scale occupy pieces of land, social and human  problems of  such  magnitude  arise  that  it  is virtually impossible  for municipalities,  and no  mean task even for  the Government,  to get  the lands vacated. If the

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Government is  reluctant to go ahead with the acquisition in view of these genuine difficulties, it can hardly be blamed. We see  no justification to direct the Government to acquire the land  and embark  on such  a venture. We are also of the opinion that  the fact  that the  Government  exercised  the power of  withdrawal after  the writ petition was filed does not spell  mala fides,  once the existence of circumstances, which, in our opinion, justified the Governments decision to withdraw, is acknowledged.      The High  Court, in this context, has referred to s. 24 of the Act and pointed out that the respondent company could not afford  to take  steps for  the  eviction  of  the  slum dwellers as  it might incur in this behalf will not be taken into account  in determining  the compensation payable to it under the Act. This is not strictly correct for under s. 24, it was  open to the respondent company to have incurred such expenditure with  the sanction  of the Collector and claimed reimbursement but  the respondent  company did  not seek the sanction of  the Collector  in this regard. That apart, this clause of  s. 24  is only  a provision  laying down the rule that the  State will,  generally speaking,  pay for the land only in  the condition in which it was on the date of the s. 4 notification  and that subsequent changes on the land will not be  taken into  account  in  the  determination  of  the compensation. It  cannot follow from this provision that the State should  be compelled to take over the land because the owner of  the land  will need  to take care of it at his own cost until  it vests  in the Government. Far from a decision to  withdraw  in  such  cases  as  the  present  one,  being considered to  be mala  fide, it  could be perhaps said with greater truth  that the  Government would  have been  acting mala fide  if, despite  the clear  knowledge that  the  land could not  any longer  be used  for the purpose for which it had  been   acquired,  it  decided  to  go  ahead  with  the acquisition. We  are emphatically of the view that the State Government has  acted in best interests of the public and of public revenues and its decision cannot be faulted. 597      Before we  conclude we  may  point  out  that  somewhat similar questions  came up for the decision of this Court in an appeal  preferred by  the State  of Maharashtra,  from an order of  the Bombay  High Court reported as M/s. Majas Land Development Corpn.  & another  v. State  of Maharashtra  and others, AIR  1983 Bombay  188. The  special  leave  petition preferred by  the State  against the order of the High Court to a like effect was set aside by this Court, vide its order of August  1983, in  Civil  Appeal  No.  6086  of  1983,  by pointing out  that it  is open  to the  State Government  to release  the  lands  from  acquisition  and  that  the  Land Acquisition officer  cannot be  compelled to make the award. It was,  however, pointed  out that  the Government  will be liable to  pay compensation  to the  claimants under section 48(2) of the Land Acquisition Act. In the affidavit filed by the appellants  before the  High Court  in the  present case they have  already called  upon the  respondent  company  to furnish  details   of  claims,   if   any,   regarding   the compensation claimed  under section  48. It  is open  to the respondent company  to  pursue  this  claim  and  the  State Government will dispose of the same in accordance with law.      We are  therefore of  the opinion that the order passed by the  State Government  under section  48 should be upheld and the release of the lands from acquisition sustained.      Learned counsel  for the  respondent company  contended that at  the time  the land  was  initially  acquired  under section 4  there had  been a  proposal that  the  Government

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should grant  in favour  of the company some land contiguous to S.  No. 40,  Hissas Nos.  2 & 3, in exchange for the land sought to  be acquired  and that  the appellants  should  be directed to give or sell some land to the petitioner. We are unable to  follow  how  any  such  proposal,  even  if  made originally,  could   survive  in  view  of  the  acquisition proceedings having  been dropped.  However,  we  express  no opinion in  this regard  and leave  it to the company, if so advised, to pursue the matter with the Government.      For the  reasons discussed  above, the  civil appeal is allowed and the orders of the High Court dated 9.11.1983 and 6.8.1985 are  set aside.  The Rule  issued by the High Court stands discharged.  However, in  the  circumstances  of  the case, we make no order as to costs. S.L.                                         Appeal allowed. 598