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PETITIONER: STATE OF GUJARAT & ANR.

       Vs.

RESPONDENT: PATEL CHATURBHAI NARSIBHAI & ORS.

DATE OF JUDGMENT21/01/1975

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) KRISHNAIYER, V.R. GOSWAMI, P.K.

CITATION:  1975 AIR  629            1975 SCR  (3) 284  1975 SCC  (1) 583  CITATOR INFO :  R          1976 SC2002  (9)

ACT: Land  Acquisition  Act,  as  amended  by  Land   Acquisition (Gujarat Unification and Amendment) Act, 1963, Sections  39, 40 and 41 and Land Acquisition (Companies) Rules, 1963, Rule 4--Acquisition  of land for a company--Enquiry by  Collector in  respect  of  application by company  to  Government  for acquisition of, land--Land owner, if entitled to be heard.

HEADNOTE: In 1960, there was a request by the respondent Baroda  Indus Corporation  (the company) to the State for  acquiring  land for expansion of the Industrial Estate of the Company.   The Special  Land  Acquisition  Officer,  Baroda  expressed  the opinion  that the acquisition was necessary as the Land  was adjoining the occupied land of the Company and that was  the only land was an enquiry by the State Government under  Rule 4  of the (Companies) Rules.  The enquiry was held prior  to the notification dated 4 March, 1961. There was an agreement between the State Government and  the Company.  This agreement was after the State Government  had given consent to the acquisition.  The notification under s. 4  was,  however, cancelled on 28 September,  1956.   On  29 September,  1956, there was a fresh notification under s.  4 of  the Act.  Subsequent to that notification there  was  an enquiry under s. 5-A of the Act.  The respondent, viz.,  the owner  of the land filed objections.  There was a report  on 11  December, 1968 on that enquiry under s. 5-A of the,  Act that  the  land sought to be acquired was suitable  for  the company and was not in excess of its requirements. On  January 18, 1969 there was a notification under s. 6  of the Act.  Along with the notification under s. 6 of the  Act an agreement dated 13 January, 1969 between the company  and the State as contemplated in s. 41 of the Act was  published on  18 January, 1969.  The respondent land owner  challenged the  notifications tinder ss. 4 and 6 of the Act.  The  High Court allowed the petition.  This appeal has been  preferred by certificate granted by the High Court. On behalf of the State it was contended that the High  Court was wrong in holding that the notification under s. 6 of the

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Act was bad for these reasons.  The enquiry under r. 4 is an administrative  enquiry  and the owner of the land  if;  not entitled   to  be  heard  in  that  enquiry.    Second   the satisfaction  under  s. 4 of the Act is  subjective  and  is formed  on  the basis of the report pursuant to  an  enquiry conducted  under r. 4. Third, the enquiry under r. 4  is  to determine the bona fides of the Company, and, therefore,  in such  enquiry  the  owner of the land  need  not  be  heard. Fourth,  after the report under r. 4 is made the  Government may or may not issue a notification under s. 4. Fifth, if  a notification under s. 4 is issued the person concerned viz., the  owner of the land will get an opportunity under s,  5-A of  the Act to make objections.  Finally, the enquiry  under r.4 is a preliminary enquiry in exercise of executive power. This  enquiry is for collecting data to form an opinion  for or against the issuing of notification.  In such enquiry for collecting data the question of violating any rights of  the land owner does not arise. Rejecting the contentions and dismissing the appeal, HELD : The enquiry under r. 4 shows that the Collector is to submit  a  report among other matters 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.  The persons  interested therein  are the owners of the land which is proposed to  be acquired.  The Company a,. such an enquiry has to show  that the company made negotiations wit’, The Owners Of the  land. The’ owners of the land are, therefore, entitled to be heard at such an enquiry for the Purpose of proving or  disproving the reasonable efforts of the company to get such 285 land by negotiation.  The contention on behalf of the  State that the owners of the land will got an opportunity when  an enquiry is made under a. 5-A of the Act is equally  unsound. s.  17 of the Act provides that the  appropriate  Government may direct that provisions of s. 5-A shall not apply, and if it  does so direct a declaration may be made under s.  6  at any time after the publication of the notification under  s. 4 of the Act.  Therefore the enquiry under v. 5-A may not be hold. [287 H-288] The nature of objections under rules framed in pursuance  of the  powers  conferred by s. 55 of the Act  shows  that  the matters  which  are to be enquired into under r. 4,  and  in particular,  that the Company made all efforts to  get  such land  by negotiation with the persons interested thereon  on payment  of price and such efforts failed is not one of  the objections which can be preferred in an enquiry under s.  5- A.  It is true that in the present case there was an enquiry under s. 5-A of the Act but the enquiry was also before  the agreement  between the State and the Company under s. 41  of the  Act and without any enquiry under s. 40 of the  Act  to the Government to give its consent.  In view of the  Gujarat Amendment  Act,  1963,  deleting the words  ’either  of  the report  of the Collector under a. 5-A of sub-s. (2)  or"  in sections 40 and 41 of the Act, the enquiry under s. 5-A  is. not an enquiry within the meaning of v. 40 of the Act.  [289 E-G, 289 E-F] R.   L.  Arora v. State of U.P. [1962] 2 Supp.  S.C.R.  149, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1508  of 1971.

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From  the Judgment and Order dated the 30th March  1971,  of the Gujarat High Court in Spl.  C. Appln.  No. 622 of 1969. R.   H. Dhebar and M. N.  Shroff, for the appellants. I.   N. Shroff, for respondent Nos. 1-3. M.   C. Bhandare and Urmila Sirur, for respondent no. 4. The Judgment of the Court was delivered by RAY, C.J. This appeal by certificate raises the question the notifications dated 29 September, 1965 and 18 January,  1969 issued  under  sections  4 and 6 respectively  of  the  Land Acquisition  Act  hereinafter  referred to as  the  Act  are lawful. in  1960  there  was  a request  by  the  respondent  Baroda Industrial Development Corporation   hereinafter referred to as the Company to the State for acquiring land for expansion of  the Industrial Estate of the Company. The  Special  Land Acquisition  Officer, Baroda expressed the opinion that  the acquisition  was  necessary as the land  Was  adjoining  the occupied  land  of the Company and that was  the  only  land available. On 4 March, 1961 there was a notification under section 4 of the Act.  On 22 August, 1961 there was an agreement  between the State Government and the Company in accordance with  the provisions contained in section 41 of the Act. It may be stated here that the decision of this Court in  R. L.  Arora  v.  State  of  U.P.  (1)  was  that  in  case  of acquisition  for  a Company, the Government could  give  its consent  if the acquisition was needed for the  construction of some work which was likely to prove useful to the public. (1) [1962] 2 Supp.  S.C.R. 149. 4--423SCI/75 286 In 1962 Section 40 of the Act was amended to the effect that the Government could not give consent to the acquisition  of land  for a company unless the Government was  satisfied  by holding an enquiry as fully mentioned in the section. In the context of the decision of this Court in Arora’s case (supra) the Central Government in 1963 in exercise of powers conferred  by  section  55 of the Act  made  rules  for  the guidance  of  the  State  Governments  known  as  the   Land Acquisition (Companies) Rules, 1963 hereinafter referred  to as the Companies Acquisition Rules. Rule  4  of the Companies Acquisition  Rules  provides  that whenever  a Company makes an application to the  appropriate Government  for  acquisition of any  land,  that  Government shall direct the Collector to submit a report on the matters mentioned  therein.  Those matters are (1) that the  Company has made its best endeavor to find out lands in the locality suitable  for the purpose of the acquisition; (2)  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; (3)  that the  land  proposed  to  be acquired  is  suitable  for  the purpose; (4) that the area of land, proposed to be  acquired is  not excessive; (5) that the Company is in a position  to utilise  the  land  expeditiously; and (6)  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. Sub-rule  (2) of Rule 4 aforesaid further provides that  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  above.    The Collector  under  sub-rule  (3) of Rule  4  aforesaid  shall submit a report to the appropriate Government.  Sub-rule (4) of  Rule 4 aforesaid provides that no declaration  shall  be

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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 under this Rule  and the report, if any, submitted under Section 5-A of the  Act; and (ii) the agreement under section 41 of the Act has  been executed by the Company. Gujarat Act 20 of 1965 came into effect on 9 July, 1965.  By section  18 of the Gujarat Act called the  Land  Acquisition (Gujarat  Unification and Amendment) Act, section 39 of  the Act  was amended. The result of the amendment of section  39 of  the  Act  is that the provisions of  sections  4  to  37 inclusive  of  the Act cannot be put into force  unless  the previous  consent of the appropriate Government is  obtained and  unless the Company has executed an agreement  mentioned in sections following section 39 of the Act. In  the  present  case there was an  enquiry  by  the  State Government under Rule 4 of the Land Acquisition  (Companies) Rules.  The enquiry was held prior to the notification dated 4  March,  1961 under section 4 of the Act.  On  22  August, 1961 there was an agreement between the State Government and the Company.  This agreement was after the State  Government had given consent to the acquisition.  On 287 4 November, 1961 the notification under section 4 of the Act was  corrected  with  regard to  the  survey  numbers.   The notification  under  section 4 of the Act  dated  4  March/4 November, 1961 was however cancelled on 28 September, 1965. On  29 September, 1965 there was a fresh notification  under section 4 of the Act.  Subsequent to that notification there was   an  enquiry  under  section  5-A  of  the  Act.    The respondent,  viz., the owner of the land  filed  objections. There  was  a report on 11 December, 1968  on  that  enquiry under  section  5-A of the Act that the, land sought  to  be acquired was suitable for the company and was not in  excess of the requirements. On 18 January, 1969 there was a notification under section 6 of the Act.  Along with the notification under section 6  of the  Act  an  agreement dated 13 January  1969  between  the company  and the State as contemplated in section 41 of  the Act was published on 18 January 1969. The respondent land owner challenged the notification  dated 29 September, 1965 under section 4 of the Act as well as the notification  under section 6 of the Act dated  18  January, 1969.   The  High  Court  accepted  the  contention  of  the respondent that the enquiry contemplated under rule 4 of the Land  Acquisition  (Companies)  Rules  had  not  been   held lawfully,  and, therefore, the notification under section  6 of the Act was illegal.  The reason given by the High  Court was  that  the  enquiry under rule,  4  contemplated  giving opportunity  to  the  owner of the land  to  make  effective representation  against the proposed acquisition.  The  High Court held that the enquiry under rule 4 was had because  no opportunity had been given to the owners of the land. On behalf of the State it was contended that the High  Court was  wrong in holding that the notification under section  6 of  the  Act was bad for these reasons.  The  enquiry  under rule  4  is an administrative enquiry and the owner  of  the land  is not entitled to be heard in that enquiry.   Second, the  satisfaction under section 4 of the Act  is  subjective and  is  formed on the basis of the report  pursuant  to  an enquiry  conducted  under rule 4. Third, the  enquiry  under rule  4 is to determine the bona fides of the Company,  and, therefore, in such enquiry the owner of the land need not be heard.   Fourth, after the report under rule 4 is  made  the Government may or may not issue a notification under section

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4.  Fifth, if a notification under section 4 is  issued  the person  concerned  viz, the owner of the land  will  get  an opportunity under section 5-A of the Act to make  objection. Finally,  the enquiry under Rule 4 is a preliminary  enquiry in  exercise  of  executive power.   ’This  enquiry  is  for collecting  data  to  form an opinion  for  or  against  the issuing  of  notification.  In such enquiry  for  collecting data the question of violating any rights of the land  owner does not arise. The contention of the State that the enquiry under rule 4 is administrative  and  that  the  owner of  the  land  is  not entitled  to  be  given an opportunity lo be  heard  at  the enquiry  cannot be accepted for these reasons.  The  enquiry under rule 4 shows that the Collector is to submit a  report among other matters that the Company has made all 288 reasonable efforts to get such lands by negotiation with the persons  interested therein on payment of  reasonable  price and  such  efforts  have  failed.   The  persons  interested therein  are the owners of the land which is proposed to  be acquired.   The Company at such an enquiry has to show  that the  company made negotiations with the owners of the  land. The owners of the land are, therefore, entitled to be  heard at such an enquiry for the purpose of proving or  disproving the  reasonable efforts of the company to get such. land  by negotiation.  The contention on behalf of the State that the owners  of the land will get an opportunity when an  enquiry is  made  under section 5-A of the Act is  equally  unsound. Section  17  of  the  Act  provides  that  the   appropriate Government  may  direct that the provisions of  section  5-A shall not apply, and if it does so direct a declaration  may be made under section 6 at any time after the publication of the notification under section 4 of the Act.  Therefore, the enquiry under section 5-A may not be held. There is another reason why the enquiry under rule 4  should be  in the presence of the owners of the  land,.   Reference may  be  made to the Rules for the guidance of  officers  in dealing with objections under section 5-A of the Act.  These rules  are  made  in exercise of  the  powers  conferred  by section 55 of the Act.  Under these Rules it is stated  that the  objections  are  of  the following  nature  :  (i)  the notified  purpose  is  not genuinely or  properly  a  public purpose;  (ii)  the land notified is not  suitable  for  the purpose  for which it is notified; (iii) the land is not  so well  suited  as other land; (iv) the area proposed  is  ex- cessive;   (v)  the  objectors’  land  has   been   selected maliciously  or  vexatiously;  (vi)  the  acquisition   will destroy  or  impair the amenity of  historical  or  artistic monuments  and  places  of public  resort;  will  take  away important public right of way or other conveniences or  will desecrate religious buildings, graveyard and the like.   The nature  of  objections  under these  rules  shows  that  the matters  which are to be inquired into under rule 4, and  in particular,  that the Company made all efforts to  get  such land  by negotiation with the persons interested thereon  on payment  of price and such efforts failed is not one of  the objections  which  can  he preferred  in  an  enquiry  under section 5-A.  It is true that in the present case there  was an enquiry under section 5-A of the Act but the enquiry  was also before the agreement between the State and the  Company under  section 41 of the Act and without any  enquiry  under section  40 of the Act to enable the Government to give  its consent. The respondent put in the forefront the contention that  the agreement between the Company and the State under section 41

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of  the Act in the present case, dated 13 January, 1969  and published   on  18  January  1969  was  subsequent  to   the notification under section 4 of the Act, dated 29 September, 1965 and therefore the said notification was in violation of the  provisions  contained  in section 39  of  the  Act  and therefore invalid. The  Land  Acquisition (Gujarat Unification  and  Amendment) Act,  1963  which  amended section 39  of  the  Central  Act enacted that the provisions of sections 4 to 37 inclusive of the Act shall not be out in 289 force in order to acquire land for any Company, unless there is  previous consent of the State Government or the  Company shall  have executed the agreement.  On behalf of the  State it  was  said  that the agreement in  the  year  1961  would suffice.   This is only to be stated to be rejected  because the notification under section 4 of the Act was cancelled by the State on 28 September, 1965.  Thereafter fresh  proceed- ings  started.  Further, the agreement in the year 1961  did not  survive,  because  a fresh agreement  was  made  on  18 January, 1969, which was published on 18 January 1969. The  provisions  contained in sections 38 to 41 of  the  Act indicate that the provisions of sections 4 to 37 of the  Act cannot be applied to acquire land for any company unless the State  Government  gives previous consent  thereto  and  the company executes an agreement with the State as mentioned in section  41  of  the Act.  Second, section  40  of  the  Act indicates  that  the State Government  cannot  give  consent unless there is an enquiry as provided in that section.   It is noticeable that any enquiry under section 5-A of the  Act is  not an enquiry within the meaning of section 40  of  the Act.   The  reason is that the Gujarat  Amendment  Act  1963 being  Gujarat Act No. 20 of 1965 deleted the words  "either on the report of the Collector under section 5-A sub-section (2) or" from section 40 of the principal Act.  Similarly, in section  41 of the Act as a result of the Gujarat  Amendment Act  the words "either on the report of the Collector  under section 5-A sub-section (2) or" were deleted.  The effect of the deletion of those words by the Gujarat Amendment Act  is that the enquiry under section 5-A is not an enquiry  within the meaning of section 40 of the Act. In  the present case, the enquiry under rule 4 of  the  Land Acquisition   (Companies)   Rifles  was  held   before   the notifications under sections 4 and 6 of the Act were  issued in the year 1965.  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. The affidavit evidence on behalf of the Government was  that an enquiry was held under section 40 of the Act in the month of  July,  1965 and there was a report on 25  August,  1965. The  enquiry  under section 40 of the Act is equally  of  no avail  for similar reasons why the enquiry under Rule  4  in 1961 is of no effect in law. 290 For these reasons, we, hold that the acquisition proceedings are  vitiated.  There was no compliance with the  provisions of  section  39 of the Act.  There was  no  prior  agreement between   the  State  and  the  Company  before   provisions contained  in  sections 4 to 37 were put  into  force.   The enquiry  under  section 5-A of the Act in the  present  case

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does  not satisfy the provisions contained in rule 4 of  the Companies  Acquisition  Rules.  The owners of the  land  are entitled  to opportunity of being heard in an enquiry  under rule  4  and enquiry under section 40 of the Act.   No  such opportunity was given to the owners. The  appeal, therefore, fails and is dismissed.   The  State ,will pay costs to Respondents No. 1, 2 and 3. V.M.K.                     Appeal dismissed. 291