REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICITION

CIVIL APPEAL NO.  8431          OF 2010 (Arising out of SLP (C) No.9924 of 2007)

Amarjit Singh & Ors. …Appellants

Versus

State of Punjab & Ors. …Respondents

WITH  

CIVIL APPEAL NO.      8432               OF 2010 (Arising out of SLP (C) No.9926 of 2007)

Mewa Singh & Ors. …Appellants

Versus

State of Punjab & Ors. …Respondents

J U D G M E N T

T.S. THAKUR, J.

Leave granted.

These  two  appeals  by  special  leave  raise  common  

questions of law and shall stand disposed of by this common  

judgment. The appeals arise out of two separate orders both  

dated 26.9.2006 passed by the High Court  of Punjab and  

Haryana whereby C.W.Ps.  Nos.9060 of  2005 and 9083 of  

2005  filed  by  the  appellants  have  been  dismissed.  The  

petitioners had in those petitions challenged the validity of a  

Notification dated 23.1.2004 issued under Section 4 of the  

Land  Acquisition  Act  and  a  declaration  dated  18.1.2005  

issued  under  Section  6  thereof.  Constitutional  validity  of  

Section 23(1) of the Land Acquisition Act, 1894 and Punjab  

New Capital (Periphery) Control Act, 1952 was also assailed  

by them on several grounds which failed to find favour with  

the  High  Court  who  upheld  not  only  the  constitutional  

validity of the impugned enactments but also the notification  

issued under the Land Acquisition Act.  The present appeals  

assail the correctness of the view taken by the High Court.

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The facts giving rise to the controversy have been set  

out at length by the High Court in the lead judgment under  

challenge delivered in C.W.P. No. 9060 of 2005. The same  

need not, therefore, be set out again except to the extent it  

is absolutely necessary to do so. Suffice it to say that the  

writ  petitioners-appellants  before  us  are  expropriated  

owners of different parcels of  land situate in Village Chilla,  

Tehsil  Mohali,  District  Ropar,  in  the  State  of  Punjab  an  

upcoming township  situate  on the outskirts  of  the  city  of  

Chandigarh, which has over the years seen rapid growth as  

a  residential  and  urban  estate.  In  the  first  phase  of  the  

expansion of the township sectors 53 to 75 were taken up  

for  development  under  the  provisions  of  Punjab  Urban  

Estate (Development and Regulation) Act, 1964 and Punjab  

Housing Development Board Act, 1972; and the land needed  

for these sectors acquired under the Land Acquisition Act,  

1894.

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In due course the Government started the process of  

acquisition of land for sectors 76 to 80 also with a view to  

extending further the urban estate of Mohali. A large extent  

of  1274  acres  of  land  was  notified  for  acquisition  in  this  

phase  of  extension  and  development.  The  respondents  

assert that while a majority of the land owners did not find  

fault with the proceedings, some of the owners representing  

around  10%  of  the  total  area  notified  for  acquisition,  

questioned  the  same,  in  writ  petitions  filed  before  the  

Punjab and Haryana High Court.  One of the grounds urged  

in the said petitions was that unless and until a master plan,  

a  regional  plan  or  a  town  planning  scheme was  finalized  

under  the  Punjab  Regional  and  Town  Planning  and  

Development  Act,  1995  no  acquisition  of  land  could  be  

undertaken  by  the  Government  or  its  agencies.  Interim  

orders staying the acquisition proceedings were also issued  

by the High Court in the said petitions apart from orders by  

which  dispossession  of  the  petitioner-owners  was  stayed.  

These orders created serious hurdles for the implementation  

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of the 2nd phase of the development and extension of Mohali  

township.  The  government  was  of  the  view  that  legal  

impediments in the acquisition of a small percentage of the  

total area could not be allowed to adversely affect the entire  

plan  which  was  meant  to  meet  the  urgent  housing  

requirements  of  the  people  of  Punjab.  The  Government  

therefore  invoked its  powers  under  Section  178(2)  of  the  

Punjab Regional and Town Planning and Development Act,  

1995 and exempted the areas falling under sectors 76 to 80  

from the provisions  of  Section 14 and those contained in  

Chapters VIII, IX and XII of the said Act.  

The  exemption  notification  referred  to  above  was  

challenged by the aggrieved owners in CWP No.29 of 2004  

Jasmer Singh  v. State of  Punjab and Anr. which was  

dismissed  by  a  Division  Bench  of  the  High  Court  on  26th  

September, 2007. The High Court held that the exercise of  

powers vested with the Government under Section 178(2) of  

the Act was neither mala fide nor otherwise vitiated by any  

illegality.  The High Court noted that Mohali was an existing  

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township  and  its  development  and  expansion  had  been  

planned  much  before  the  promulgation  of  the  1995  Act,  

which  development  could  be  carried  out  by,  if  necessary  

exempting the area required for such development from the  

provision of the said Act. Exercise of the power of exemption  

under Section 178 (2) of the 1995 Act was therefore held to  

be perfectly justified.  The correctness of the view taken by  

the High Court was challenged by the writ petitioners before  

this Court but unsuccessfully.   

Acquisition proceedings for development of sectors 81,  

88  and  89  which  comprised  the  third  phase  of  the  

development  were  then  initiated  by  the  Collector,  Land  

Acquisition, Mohali. While 417.39 acres of land was acquired  

in sector 81, an area of 688.89 acres of land was acquired in  

sectors 88 and 89. A declaration under Section 6 in relation  

to the said extent of land was also issued on 18.1.2005.  To  

ensure  that  the  acquisition  process  is  free  from  any  

impediments  the  Government  once  again  invoked  the  

provisions  of  Section  178(2)  of  the  Punjab  Regional  and  

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Town Planning and Development Act, 1995 in regard to the  

land notified for development of sectors 81, 88 and 89. A  

notification dated 10th February, 2004 issued in that regard  

exempted  the  land  falling  in  the  said  sectors  from  the  

provisions  of  Section  14 and those  contained in  Chapters  

VIII, X and XII of the said Act.  

Aggrieved by the acquisition proceedings the appellants  

filed writ petitions No. 9060 of 2005 and CWP No. 9083 of  

2005  in  the  High  Court  challenging  the  preliminary  

Notification and the declaration issued under Sections 4 and  

6 of  the Land Acquisition  Act,  apart  from challenging the  

vires  of  Section  23(1)  thereof.   The  writ  petitions  also  

assailed  the  constitutional  validity  of  Punjab  New  Capital  

(Periphery)  Control  Act,  1952.  By  the  lead  judgment  

impugned  in  these  appeals  the  High  Court  repelled  the  

challenge mounted by the writ petitioners and declared that  

the  notifications  under  challenge  did  not  suffer  from any  

illegality  whatsoever.  It  also  upheld  the  constitutional  

validity  of  the  provisions  of  the  Punjab  New  Capital  

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(Periphery) Control Act, 1952 and Section 23(1) of the Land  

Acquisition Act. Hence the present appeals.  

We may before proceeding any further refer to a few  

more facts which have a bearing on the controversy in these  

appeals.  The extent of land that remains the subject matter  

of these appeals after withdrawal by three of the appellants  

in C.A. No. 9924/2007 is limited to just about 20 acres of  

land  out  of  a  total  extent  of  417.39  acres  notified  for  

acquisition in Sector 81.  The respondents have on affidavit  

stated that owners of nearly 96% of the total area acquired  

by  them  have  already  received  the  compensation  

determined in their favour.  The affidavit further states that  

compensation payable to those who continue to pursue their  

challenge  to  the  acquisition  in  these  appeals  has  been  

determined  at  Rs.5.96  crores  +  6.43  crores  totaling  to  

Rs.12.39 crores.

The other aspect that is noteworthy is that out of the  

total extent of 417.39 acres acquired in Sector 81 an extent  

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of  363.89  acres,  stands  allotted  by  the  respondents  to  

different institutions for them to set up their establishments  

in  what  is  described  as  “Knowledge  City”  in  the State  of  

Punjab. The affidavits filed by the respondents state that an  

area  measuring  160  acres  (approx.)  has  been  

allotted/earmarked in favour of Indian Institute of Science,  

Education  and  Research  (IISER)  under  the  Ministry  of  

Human Resources Development, Government of India, New  

Delhi.  Similarly an area measuring 35 acres (approx.) has  

been allotted to Institute of Nano Science and Technology  

(INST) under the Ministry of Science and Technology, Govt.  

of India, New Delhi.  An area measuring 35 acres has been  

allotted  to  National  Agro  Bio  Technology  Institute  (NABI)  

under  the  Department  of  Science  & Technology,  Govt.  of  

India,  New  Delhi.  For  Bio-Processing  Unit  under  the  

Department  of  Science & Technology,  Govt.  of  Punjab an  

area measuring 15 acres has been set apart/allotted, while a  

large  area  measuring  83.89  acres  has  been  

earmarked/allotted  to  Bio-Technology  Park  under  the  

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Department  of  Science  &  Technology,  Govt.  of  Punjab.  

Similarly an area measuring 70 acres has been allotted to  

Indian School of Business under the Department of Higher  

Education, Govt. of Punjab.

Appearing for the appellants Mr. Gupta learned senior  

counsel made a three-fold submission before us.  Firstly, he  

contended that acquisition of land in terms of the impugned  

notifications  was  illegal  in  as  much  as  the  provisions  of  

Punjab Regional and Town Planning and Development Act,  

1995 had not  been complied with before issuing the said  

notifications.  He argued that although a notification under  

Section 56(5) of the Act is stated to have been issued on 6th  

March,  2001  the  same  was  not  sufficient  to  validate  the  

acquisition in as much as the notification in question was  

itself  invalid  having  been  issued  without  following  the  

procedure  prescribed  under  Section  56(5)  and  without  

affording  any opportunity  to  the land owners  to  file  their  

objections.  

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Secondly, he contended that the notification dated 10th  

February,  2004  issued  under  Section  178  (2)  of  the  Act  

whereby  the  area  falling  in  Sectors  81,  88  and  89  was  

exempt from the provisions of Section 14 and Chapters VIII,  

X and XII was also illegal and unsustainable.  He contended  

that the reasons underlying the said notification were not  

germane to the exercise of powers reserved in favour of the  

Govt. by the said provisions. Mr. Gupta urged that the State  

could not exempt an area from the provisions of the Act on  

the ground that the ‘prospective allottees’ would face undue  

hardship or that the procedure prescribed under the 1995  

Act was cumbersome and time-consuming.  

It  was lastly  contended by Mr.  Gupta that  the lands  

acquired from the ownership  of  the appellants  were  their  

only  source  of  livelihood.  Compulsory  acquisition  thereof  

without any provision for rehabilitation of the expropriated  

owners  was  not  only  constitutionally  impermissible  but  

unfair and unreasonable,  argued the learned counsel.   He  

submitted  that  realizing  the  hardships  which  the  ousted  

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owners face in case agricultural lands are acquired without  

an  adequate  provision  for  their  rehabilitation  the  

Government  has  formulated  what  is  called  ‘Land  Pooling  

Scheme’  and  circulated  the  same  under  Revenue  and  

Rehabilitation  Department’s  letter  dated  5th September,  

2008.  He  urged  that  though  the  said  scheme  was  made  

operative  only  prospectively,  the  benefit  thereof  could  be  

extended  to  the  appellants  also  to  reduce  the  hardships  

which they would face without adequate measures for their  

rehabilitation. It was contended that a large area of nearly  

57 acres was available with the respondents even at present  

and  which  could  be  utilized  for  the  rehabilitation  of  the  

appellants  by allotting  commercial  sites  in  their  favour  to  

enable them to eke out their livelihood.  

On behalf of the respondents it was contended by Mr.  

Gopal  Subramaniam,  that  the  High  Court  was  justified  in  

dismissing the writ petition filed by the appellants.  There  

was, according to him, no illegality in the notification issued  

under the Land Acquisition Act nor was any such point raised  

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before the Writ Court or before this Court for that matter. It  

was submitted that the notification under Section 56(5) of  

the  Act  had  been  issued  after  following  the  prescribed  

procedure  which  included  consideration  of  the  objections  

received from different quarters to the declaration of Mohali  

as  a  ‘Local  Planning  Area’.  He  urged  that  the  

petitioner/appellants had not assailed the validity of the said  

notification  and  cannot  now  be  allowed  to  do  so  at  this  

belated stage. So also the validity of the notification issued  

under  Section  178(2)  of  the  Act  aforementioned  was  not  

challenged in the writ petition filed by the appellants. Any  

attempt to challenge the validity of the said notification at  

this stage was, therefore, futile.

The absence of a challenge apart from the notification  

did  not,  according  to  Mr.  Subramaniam,  even  otherwise  

suffer  from  any  legal  infirmity.  The  Government  having  

applied its mind to the question of exemption of the area  

from the provisions  of  the 1995 Act  was fully  justified  in  

issuing the exemption notification for good and valid reasons  

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enumerated therein.  A similar notification issued in regard  

to  sectors  76  to  80  was  on  analogous  grounds  assailed  

before the High Court by the landholders in Jasmer Singh  

v. State of Punjab.  The challenge was repelled by the High  

Court and even this Court in a further appeal. The appellants  

cannot,  therefore, find fault with the notification issued in  

regard to the adjacent sectors 81, 88 and 89 which gives  

analogous reasons for exemption to what has already been  

held to be both relevant and adequate, in Jasmer Singh’s  

case.   

As  regards  the  question  of  rehabilitation  of  the  

expropriated land owners, Mr. Subramaniam, submitted that  

rehabilitation  was not a recognized right  either  under the  

Constitution or under the provisions of the Land Acquisition  

Act.  Any beneficial measures taken by the Government are,  

therefore,  guided  only  by  humanitarian  considerations  of  

fairness and equity towards the land owners.  The benefit of  

such measures is however subject to the satisfaction of all  

such conditions as may be stipulated by the Government in  

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regard thereto.   The policy  relied  upon by the appellants  

being only prospective cannot be made retrospective by a  

judicial order to cover acquisitions that have since long been  

finalized.  Mr.  Subramaniam  contended  that  although  the  

appellants/owners  have  been  adequately  compensated  for  

the  land  acquired  from  their  ownership  by  paying  them  

handsome compensation,  yet  the  State  would not  oppose  

any  direction  for  a  reference  to  the  Civil  Court  for  

determination of reasonable compensation to the appellants,  

if  they  are  otherwise  dissatisfied  with  the  amount  

determined in their favour.     

The following questions fall for our determination:

(1) Whether  the  exemption  of  the  land  under  

acquisition  from  the  provisions  of  Section  14  and  

Chapters VIII,  X and XII of  the Punjab Regional  and  

Town Planning and Development Act, 1995 in terms of  

notification  dated  10th February,  2004  issued  under  

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Section 178(2) of the said Act suffers from any legal  

infirmity?      

(2) If  the  answer  to  question  No.1  be  in  the  

affirmative whether the acquisition under challenge is  

rendered bad for non-compliance with the provisions of  

the Act aforementioned; and  

(3) Whether  the  absence  of  any  rehabilitation  

measures  renders  the  acquisition  in  question  legally  

bad.  If not, whether the ‘Land Pooling Scheme’ can be  

made applicable to the acquisition of the land acquired  

from the appellants.   

We shall deal with the questions ad seriatim.    

Re: Question No.1  

We may before dealing with this question on its merits,  

point out that notification dated 10th February, 2004 granting  

exemption was never challenged in the writ petitions filed by  

the appellants.  There is no foundation laid in the petitions  

by the appellants for them to contend that the exemption  

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notification was vitiated either because of lack of authority  

or misdirection by the Government in exercise of its power  

under Section 178(2) of the Town Planning & Development  

Act  1995.  The High Court  has noticed this  aspect in the  

following paragraph of its judgment:

“Still further, since the factual situation  with regard to the issuance of the notification  under section 178 of the 1995 Act granting  exemption from the application of provisions  of the 1995 Act is admitted by the petitioners  it  is  not  open  to  them  to  challenge  the  acquisition  on  the  ground  that  there  is  violation  of  the  1995  Act,  without  at  least  laying challenge to the notification granting  exemption.”                                        

In the light of the above we find it difficult to appreciate  

how  the  issue  regarding  the  validity  of  the  exemption  

granted  by  the  Government  could  be  raised  by  the  writ  

petitioners before the High Court or argued impromptu by  

the appellants before us.  Any attempt to raise the question  

regarding  validity  of  the  exemption  notification  must  

therefore  fail  on  that  ground  alone.  Since,  however,  Mr.  

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Gupta  took  great  pains  to  make  his  submissions  on  the  

subject we may as well deal with the same.

Section 178 of Punjab Regional and Town Planning and  

Development Act, 1995 deals with exemptions and may be  

extracted:

“Section 178:

EXEMPTION :- (1) Nothing in this Act shall  apply to the operational constructions.

(2) Where the State Government is of the  opinion  that  operation  of  any  of  the  provisions  of  this  Act  causes  any  undue  hardship or circumstances exist which render  it expedient so to do, it may, subject to such  terms and conditions as it  may impose,  by  general  or  special  order,  exempt  class  or  persons  or  areas  from  all  or  any  of  the  provisions of the Act.”    

A plain reading of sub-section (2) above would show  

that  the  State  Government  is  empowered to  exempt  any  

class of persons or areas from all or any of the provisions of  

the  Act  in  cases  where  in  the  opinion  of  the  State  

Government  the  operation  of  any  such  provisions  would  

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either cause undue hardship or the grant of exemption is  

otherwise  expedient.  According  to  the  respondents  the  

power to exempt was in the present case exercised by the  

Government not only because it was expedient to do so, but  

also  because  it  was  necessary  to  avoid  hardship  to  the  

allottees.  The  notification  sets  out  the  circumstances  in  

which  the exercise  of  power was found necessary  by the  

Government. It states that SAS Nagar (Mohali) was planned  

to include sectors 53 to 81 long before the coming into force  

of the Punjab Regional and Town Planning and Development  

Act,  1995.   Sectors  53 to 75 were developed in the first  

phase after acquiring the land required for the same under  

the Land Acquisition Act.  This was followed by acquisition of  

land  for  sectors  76  to  80  which  further  extended  the  

township to meet the ever increasing housing needs of the  

people of Punjab.   

The  exemption  notification  then  refers  to  a  decision  

taken in a meeting held on 25th August, 1995 whereunder  

the existing township was to be further extended by addition  

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of a few more sectors. Sectors 80, 81, 88 and 89 were in  

pursuance  of  the  said  decision  taken up for  development  

after  obtaining  approval  of  the  competent  authority.  A  

preliminary  Notification  under  Section  4  of  the  Land  

Acquisition Act proposed an area of 417.39 acres in sector  

81 and 688.89 acres in sectors 88 and 89 for acquisition.  

The  exemption  notification  goes  on  to  state  that  

acquisition  of  land  for  sectors  76  to  80  started  by  the  

Government  was challenged by the landowners  mainly  on  

the  ground  that  the  provisions  of  the  Town  Planning  &  

Development Act, 1995 were not complied with. The High  

Court of Punjab and Haryana had in these petitions stayed  

the dispossession of the owners while granting liberty to the  

respondents to proceed with the matter subject to the final  

orders  of  the  Court.  The  notification  finally  makes  a  

reference to the fact that Mohali has recorded the highest  

rate of growth of population of Class I cities giving rise to  

considerable  increase  in  the  demand for  housing,  in  turn  

giving rise to haphazard development in the area if planned  

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development of the sectors in question is not immediately  

taken  up  and  plots  made  available  to  the  allottees.  The  

Government was, in the above backdrop, of the opinion that  

it was expedient to exempt the areas falling in sectors 81,  

88  and  89  from  the  operation  of  Section  14  and  those  

contained in Chapters VIII, X and XII of Punjab Regional and  

Town Planning and Development Act, 1995.  It was also of  

the  opinion  that  the  prospective  allottees  would  suffer  

hardship in case the Government does not grant exemption  

to the areas falling in the above sectors from the provisions  

referred to above.

The  operative  portion  of  the  exemption  notification  

reads:

“In  exercise  of  the  powers  conferred  upon  the State Government under Section 178(2)  of  the  Punjab  Regional  and  Town  Planning  and Development Act, 1995 and keeping in  view  larger  public  interest  and  planned  development  of  the  area,  the  State  Government  hereby  exempts  the  areas  falling  under  Sector  81,  88  and  89  being  developed as expansion of existing township  of SAS Nagar (Mohali) from the operation of  

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provisions of Section 14 and consequently of  the uncomplied provisions in Chapter VIII, X  and XII, i.e. Section 56 to 60, 70 to 78 and  91 to 138 of the Punjab Regional and Town  Planning and Development Act, 1995.”

None of the circumstances referred to above is, in our  

opinion,  irrelevant  or  extraneous  to  the  exercise  of  the  

power of exemption vested in the Government under Section  

178(2) of the Act.  What is significant is that Mohali  was  

identified for planned development by addition of sectors 53  

to 81 even before the Punjab Regional and Town Planning  

and Development Act, 1995 came into force. The proposed  

development was to be carried out under the provisions of  

Punjab  Urban  Estate  (Development  and  Regulation)  Act,  

1964 and Punjab Housing Development Board Act, 1972. It  

is true that initially the plan was limited to the addition of  

sectors  53  to  81  but  the  third  phase  with  which  we  are  

concerned  comprised  not  only  development  of  sector  81  

which  was  a  part  of  the  original  plan  but  also  included  

sectors 88 and 89.

2

It is also evident from the notification that compliance  

with  the  provisions  of  the  Punjab  Regional  and  Town  

Planning  and  Development  Act,  1995  was  found  to  be  

impracticable primarily because of the tremendous pressure  

on land in and around Mohali for housing purposes especially  

because  the  township  has  witnessed  phenomenal  growth  

over the years. The notification in our opinion rightly stated  

that  if  immediate  steps  were  not  taken  to  develop  the  

outskirts  of  the  township  it  would  lead  to  large  scale  

unplanned and haphazard mushrooming of housing colonies  

and  commercial  establishments  in  the  area.  Delay  in  the  

finalization of the outline Master Plan, comprehensive master  

plan and a town planning scheme thus had the potential of  

frustrating the very purpose underlying the legislation that is  

aimed at better planning, regulation, development and use  

of land in the planning areas. The Government was in that  

view well within its power to evaluate the options available  

to  it,  making  a  choice  and  taking  appropriate  action  to  

prevent any such disorganized and haphazard development.  

2

In as much as the Government did so and decided to invoke  

its powers under Section 178(2) of the Act, it committed no  

illegality.  On the contrary,  the Government  has by taking  

timely action prevented a situation where the area around  

the  township  of  Mohali  would  have  on  account  of  

tremendous  pressure  for  conversion  of  land  to  non-

agricultural use developed into a large slum as is the bane of  

many other cities in the country where statutory authorities  

charged  with  duties  of  urban  development  have  failed  to  

keep  pace  with  the  housing  needs  of  the  populace.  It  is  

noteworthy  that  the  Government  had  prevented  such  

haphazard and unplanned development even in sectors 76  

to 80 by exempting the land falling in the said sectors from  

the operation of the provisions of the Punjab Regional and  

Town  Planning  and  Development  Act,  1995.  The  said  

exemption was assailed by the land owners but upheld not  

only by the High Court but even by this Court in appeal.  

That,  the  power  of  exemption  could  be  exercised  in  

2

situations  similar  to  the  one  in  hand  thus  stands  amply  

established.   

The  contention  of  Mr.  Gupta  that  just  because  the  

formulation  of  master  plans  and  town  planning  schemes  

takes time cannot be a good ground for the Government to  

grant  exemption  from  the  operation  of  the  statutory  

provisions  may  be  unexceptionable  for  the  law  must  be  

allowed to take its course howsoever cumbersome and time-

consuming  the  process  may  be.  But  it  is  not  the  

cumbersome and time-consuming process alone that has led  

to the issue of the exemption notification. It was a realistic  

assessment of the ground realities requiring urgent action  

that made adherence to the letter of law impracticable. The  

Government  was  of  the  opinion  that  failure  to  take  

immediate action for developing these sectors will  lead to  

unplanned and haphazard construction activities in the area.  

It was the cumulative effect of all the circumstances referred  

to in the notification that led to the issue of the exemption  

notification.

2

We need to remember that Section 178(2) empowers  

the Government to grant exemption from the operation of  

the Act  on the twin grounds of  hardship and expediency.  

For the Government to exercise its power of exemption on  

the  ground  of  expediency  two  requirements  must  be  

satisfied  viz.  (i)  that  circumstances  exist  which  render  it  

expedient  to  grant  the  exemption  &  (ii)  the  Government  

upon  a  consideration  of  those  circumstances  forms  an  

opinion that it is expedient to do so.  The latter requirement  

is  more  in  the  nature  of  a  subjective  satisfaction  of  the  

Government  while  the  former  is  dependant  on  objective  

consideration of the circumstances that are germane. Once  

the  existence  of  circumstances  that  are  relevant  to  the  

exercise of the power of exemption are found to exist the  

formation  of  the  opinion  by  the  Government  about  the  

expediency of granting an exemption is a matter on which  

the Court would be slow to interfere unless the decision is  

shown  to  be  a  colourable  exercise  or  vitiated  by  any  

extraneous  motive  or  consideration.  The  term  ‘expedient’  

2

appearing in Section 178 of the Act has not been defined.  

Black’s  Law  Dictionary,  however,  assigns  the  expression  

‘expedient’ the following meaning:

“Appropriate and suitable to the end in view  -Whatever  is  suitable  and  appropriate  in  reasons for the accomplishment of a specified  object.”

The term ‘expedient’ has fallen for interpretation before  

this  Court  in  several  cases.  In  the  State  of  Gujarat v.  

Jamnadas G. Pabri and Ors. (1975) 1 SCC 138 this Court  

was  interpreting  the  provisions  of  Section  303A  of  the  

Panchayats  Act  as  amended  by  Gujarat  Panchayats  

(Amendment)  Act  8  of  1974.   The question  was whether  

satisfaction of the State Government as to the expediency of  

holding elections for the reconstitution of a Panchayat was  

amenable to judicial  review.  Sarkaria J.  speaking for the  

Court observed:   

“……An  analysis  of  Section  303-A(1)  would  show that before a declaration referred to in  that  sub-section  can  be  made,  two  requirements must be fulfilled: (1) existence  

2

of  a  situation  by reason of  disturbances  in  the whole or any part of the State; (2) the  satisfaction  of  the  State  Government  relatable  to such a  situation,  that  it  is  not  expedient to  hold  elections  for  the  reconstitution of a Panchayat on the expiry of  its term. The first requirement is an objective  fact and the second is an opinion or inference  drawn from that fact. The first requirement,  if  disputed,  must  be established objectively  as a condition precedent to the exercise of  the  power.  The  second  is  a  matter  of  subjective  satisfaction  of  the  Government  and  is  not  justiciable.  Once  a  reasonable  nexus  between  such  satisfaction  and  the  facts  constituting  the  first  requirement  is  shown,  the  exercise  of  the  power  by  the  Government,  not  being  colourable  or  motivated  by  extraneous  considerations,  is  not open to judicial review. Thus the question  that could be objectively  considered by the  Court in this case was: Did a situation arising  out  of  disturbances  exist  in  the  State  of  Gujarat  on  the  date  of  the  impugned  notification?”

Dealing with the word ‘expedient’ appearing in Section  

303A this Court observed:

“…….Again, the word “expedient” used in this  provision, has several shades of meaning. In  one  dictionary  sense,  “expedient”  (adj.)  means “apt and suitable to the end in view”,  “practical  and  efficient”;  “politic”;  “profitable”;  “advisable”,  “fit,  proper  and  suitable to the circumstances of the case”. In  another  shade,  it  means  a  device  “characterised  by  mere  utility  rather  than  principle,  conducive  to  special  advantage  rather than to what is universally right” (see  Webster’s New International Dictionary).”

2

The Court declared that Section 303A had been designed to  

enable  the  Government  to  get  over  a  difficult  situation  

surcharged with dangerous potentialities, and that the Court  

must  construe  the  aforesaid  phrases  in  keeping  with  the  

context and object of the provision in their widest amplitude.  

In Balbir Singh v. State of Haryana (2000) 5 SCC 82  

this  Court  had  another  opportunity  to  interpret  the  term  

‘expedient’  appearing  in  Section  4  of  the  Probation  of  

Offenders Act, 1958. The Court held that the word is to be  

interpreted keeping in view the context and the object of the  

provisions in widest amplitude, and that while dealing with  

the question of grant of probation under the Act a duty was  

cast on the Court to take into account the circumstances of  

the case including the nature of the offence and form an  

opinion  whether  it  is  suitable  and  appropriate  for  

accomplishing a specified  object  that  the offender  can be  

released on probation of good conduct.

2

Power of exemption reserved in favour of Government  

under Section 178 of the Town Planning and Development  

Act, 1995 is also intended to relieve hardship arising from  

the  operation  of  the  Act.   It  is  intended  to  enable  the  

Government to deal with situations in which circumstances  

independent of the question of hardship render it expedient  

to do so by granting exemption.  A liberal construction has,  

therefore,  to  be  placed  upon  the  provisions  of  Section  

178(2)  so that  exercise  of  power for  good and bona fide  

reasons is not defeated.                  

In the totality of the above circumstances we answer  

question No.1 in the negative. We need to remember that  

nearly  96% of the landowners  have already accepted the  

compensation  and  either  accepted  the  acquisition  

proceedings or given up the challenge to the validity thereof.  

So  also  the  fact  that  allotments  in  favour  of  different  

institutions have already been made cannot be ignored nor  

can a prestigious project like the one at hand be scuttled at  

this stage.   

3

Re: Question No.2  

In the light of what we have said while dealing with  

question no.1 above, we consider it unnecessary to discuss  

in detail the merits of the contentions urged by the learned  

counsel for the parties in regard to this question.  We say so  

because once the exemption granted by the Government to  

the  land  falling  in  sectors  81,  88  and  89  is  upheld  the  

question of striking down the land acquisition proceedings  

on the ground that the provisions of the 1995 Act were not  

complied with does not survive.  It is important to note that  

the  validity  of  the  acquisition  proceedings  have  not  been  

challenged on any ground that may have been available to  

the  appellants  by  reference  to  the  Land  Acquisition  Act.  

Neither before the High Court nor before us was it argued  

that  the  provisions  of  the  Land  Acquisition  Act  were  not  

followed  in  letter  and  spirit,  while  acquiring  the  land  in  

question.  All  that  Mr.  Gupta argued was that  the case at  

hand was covered by the decision of this Court in  Sanjeet  

Singh’s case (supra). We have carefully gone through that  

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decision  but  find  the  same  to  be  clearly  distinguishable.  

That  was  a  case  where  the  Government  had  issued  

notifications under Section 4 of the Land Acquisition Act for  

the  public  purpose  of  setting  up  of  a  new  township  of  

Anandgarh. Several writ petitions filed before the High Court  

challenged the said notifications alleging that the same had  

been  issued  in  violation  of  Punjab  Regional  and  Town  

Planning and Development Act, 1995. One of the arguments  

that was urged was that the site for setting up of a new  

town had to be first selected by the Board constituted under  

the Act aforementioned and since no such selection process  

had  been undertaken  by the  Board  the  entire  process  of  

acquisition  was  vitiated.  The  High  Court  accepted  that  

contention  and  quashed  the  notifications  holding  that  the  

selection of the site itself not being in accordance with the  

1995 Act, acquisition based on any such selection was not  

legally permissible. In an appeal filed by the State of Punjab  

before this Court the question whether the site for a new  

township could be selected by the Government  or  by the  

3

Town Planning Authority was debated at length. This Court  

affirmed the view taken by the High Court and observed:

“In the instant case the provisions of Section  56  were  completely  ignored  and  without  declaring the planning area by notification in  the Official Gazette, and without following the  procedure laid down therein.  In the instant  case, the State never called upon the Board  to  select  a  site,  and  instead  a  New  Town  Planning  and  Development  Authority  was  constituted under Section 31 of the Act which  arrogated to itself the powers and functions  of  the  Board  to  select  a  site  and  make  a  recommendation  to  the  State  Government,  and  later  moved  the  Government  for  acquisition  of  land under Section 42 of  the  Act.   All  these  actions  were  in  complete  breach  of  the  mandatory  provisions  of  Section 56 of the Act, and therefore void.

Hence it is held that the declaration of  the planning area, a site for a new town, was  never  validly  made  by  the  competent  authority  after  following  the  prescribed  procedure  and,  therefore,  there  was  in  law  no validly selected site for a new town, nor a  validly declared planning area. Consequently,  there  was  no  justification  for  acquisition  of  land  to  set  up  a  new  town.  The  public  purpose stated in the impugned notifications  was  non-existent  in  view  of  the  fact  that  there was no planning area validly declared  by  the  competent  authority  for  the  development of which any land was required.  Section 42 which provided for acquisition of  land  under  the  provisions  of  the  Land  Acquisition  Act  could  not,  therefore,  be  invoked.”  

3

The facts in the present case are totally different.  In  

the case at hand we are not dealing with the establishment  

of new city or township. We are also not dealing with a case  

where a request for acquisition of land is made by the Town  

Planning Authority under Section 42 of the Act. We are on  

the contrary  dealing  with  a  case where  the  acquisition  is  

being made on the basis of an expansion plan formulated  

before the 1995 Act came into force.   

That  apart,  unlike  the  case  of  Sanjeet  Singh’s the  

land  under  acquisition  in  these  cases  is  covered  by  a  

notification  under  Section  56(5)  of  the  1995  Act,  which  

declares SAS Nagar (Mohali) as a local planning area. The  

relevant part of the notification is in the following words:  

“Punjab Government Punjab Regional and Town Planning and  

Development Board  

NOTIFICATION Dated 06.03.2000

No.12/2/2000-4MU. 1/732 For the organized  development of  Sahibzada Ajit  Singh Nagar  (SAS Nagar) by formulation of a Master Plan,  

3

the Punjab Regional and Town Planning and  Development Board had under Section 56(1)  of  Punjab  Regional  and Town Planning  and  Development  Act,  1995  issued  notification  no.  6/21/95-4mu-1/3030  dated  01.07.1996  alongwith  Drawing  no.  DTP  (SAS  Nagar)  1148/96 dated 07.04.1996 for the proposed  declaration  of  the  dame  as  a  Notified  planning area.

As per the above notice published under  Section  56(4)  of  the  Punjab  Regional  and  Town Planning and Development Act, 1995,  objections and suggestions from any person,  State  government  or  any  department  of  Central Government or local authority, or any  other  representative  of  any  other  organization on the same.  Written objectins  or suggestions could be raised on any part of  the  notification  for  declaring  local  planning  area,  within  60  days  from  the  date  of  publication of the Notification on any aspect  of  the  matter  to  the  Member/Secy.  Punjab  Regional  and  Town  Planning  and  Development Board, SCO 63-64, Sector 17- C, Chandigarh.

In the meeting of Committee dated 16th  

October, 1998 which had been constituted for  the scrutiny of objections and suggestions so  received  to  the  above  Notification,  were  analyzed and considered.  It was felt by the  Committee  that  all  the  objections  and  suggestions were frivolous and as such they  should  be  rejected.   Accordingly  the  Committee  recommend  to  Regional  Town  Planning  and  Development  Board  that  the  Board  may  reject  the  suggestions  and  

3

objections which has been raised and declare  the  same  as  a  local  planning  area  under  Section 56(5) of Act.

The Punjab Regional and Town Planning  and Development Board in its Meeting held  on  15th November,  1999  at  Chandigarh  approved  the  recommendation  Committee  after considering the same.  The Board also  rejected  the  objections  and  suggestions  received relating to the declaration of Local  Planning Area, SAS Nagar.  The Board under  Section  56(5)(a)  and  (b)  of  the  above  Act  also granted approval for the declaration of  the same as a local planning area as also the  name it local planning area SAS Nagar.

The Punjab Regional and Town Planning  and Development  Board in accordance with  the  above  mentioned  decision  declares  the  local planning area SAS Nagar under Section  56(a)&(b)  in  consonance  with  Punjab  Regional  and  Town  Planning  and  Development Act 1995.  It shall be named as  Local  Planning  Area  SAS  Nagar.   The  boundaries  of  the  local  planning  are  as  under.”  

It is manifest that the above gave a sufficient basis for  

the Government to initiate proceedings for the acquisition of  

land needed for the proper expansion of the township.  

A feeble attempt was made by learned counsel for the  

appellants  to assail  the validity  of  the notification.  It  was  

3

submitted that the same had been issued without notice to  

the  landowners  and  others  to  file  their  objections.  We,  

however,  see  no  merit  in  that  contention  either.  It  is  

noteworthy that the notification in question was not assailed  

before  the  High  Court  in  the  writ  petitions  filed  by  the  

appellants.  It  is  not,  therefore,  open  to  the  petitioner  to  

argue that the notification suffered from any illegality.  No  

factual foundation having been laid in the writ petition we  

have  no  hesitation  in  rejecting  the  contention  that  

notification  was  issued  without  following  the  procedure  

prescribed  for  the  purpose  and  without  considering  the  

objections received from different quarters. We may recall  

that  in  Jasmer  Singh’ case  (supra)  the  High  Court  had  

distinguished acquisitions for a new town from those meant  

for the extension of the existing township of Mohali and held  

that Sanjeet Singh’s case (supra) had no application to the  

later case.  That view was affirmed by this Court in appeal  

and the acquisition for extension of Mohali upheld.      

3

Question  no.2  is  also,  in  the  light  of  the  above,  

answered in the negative.

Re: Question No 3.  

Article 300-A of the Constitution rests on the doctrine  

of  eminent  domain  and  guarantees  a  constitutional  right  

against deprivation of property save by authority of law. It  

mandates that to be valid the deprivation of property must  

be by authority of law. That such deprivation in the present  

case is by the authority of law was not disputed, for it is  

common ground that the property owned by the appellants  

has been acquired in terms of  the provisions of  the Land  

Acquisition  Act,  1894  which  is  a  validly  enacted  piece  of  

legislation.  It  is  also not in dispute that the provisions of  

Land Acquisition Act invoked by the State for the acquisition  

under  challenge  provides  for  payment  of  compensation  

equivalent  to the market value of  the property as on the  

date of the preliminary notification apart from other benefits  

like solatium for the compulsory nature of the acquisition,  

additional compensation and interest etc. The sum total of  

3

all  these  amounts  undoubtedly  constitutes  a  reasonable  

compensation for the land acquired from the expropriated  

owners.  Neither  Article  300-A  of  the  Constitution  nor  the  

Land Acquisition Act make any measures for rehabilitation of  

the  expropriated  owners  a  condition  precedent  for  

compulsory acquisition of land. In the absence of any such  

obligation arising either  under Article 300-A or under any  

other statutory provision, rehabilitation of the owners cannot  

be treated as an essential requirement for a valid acquisition  

of property. We must, in fairness to Mr. Gupta mention that  

he did not suggest that rehabilitation of the oustees was an  

essential part of any process of compulsory acquisition so as  

to render iilegal any acquisition that is not accompanied by  

such measure.  He did not pitch his case that high and in our  

opinion  rightly  so.  The  decisions  of  this  Court  in  New  

Reviera Coop Housing Society and Anr. v. Special Land  

Acquisition  Officer  and  Ors.  1996  (1)  SCC  731  and  

Chameli Singh and Ors. v. State of U.P. and Anr. 1996  

(2) SCC 549 have repelled the contention that rehabilitation  

3

of  the  property  owners  is  a  part  of  the  right  to  life  

guaranteed  under  Article  21  of  the  Constitution  so  as  to  

render any compulsory acquisition for public purpose bad for  

want of any such measures. In New Reviera’s case (supra)  

this  Court  held  that  if  the  State  comes  forward  with  a  

proposal to provide alternative sites to the owners, the Court  

can give effect to any such proposal by issuing appropriate  

directions in that behalf. But a provision for alternative sites  

cannot be made a condition precedent for every acquisition  

of  land.  In  Chameli  Singh’s  case (supra)  also the Court  

held  that  acquisitions  are  made  in  exercise  of  power  of  

eminent domain for public purpose, and that individual right  

of ownership over land must yield place to the larger public  

good.  That  acquisition  in  accordance  with  the  procedure  

sanctioned by law is a valid exercise of power vested in the  

State  hence  cannot  be  taken  to  deprive  the  right  to  

livelihood  especially  when  compensation  is  paid  for  the  

acquired  land  at  the  rates  prevailing  on  the  date  of  

publication of the preliminary notification. There is thus no  

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gainsaying that rehabilitation is not an essential requirement  

of  law for  any  compulsory  acquisition  nor  can  acquisition  

made  for  a  public  purpose  and  in  accordance  with  the  

procedure  established  by  law  upon  payment  of  

compensation that is fair and reasonable be assailed on the  

ground  that  any  such  acquisition  violates  the  right  to  

livelihood of the owners who may be dependant on the land  

being acquired from them.  

What  Mr.  Gupta  contended  was  that  the  State  

Government  had  formulated  a  Land  Pooling  Scheme  for  

rehabilitation  of  the  oustees,  benefit  whereof  could  be  

extended  to  the  appellants.  He  urged  that  the  policy  

formulated  by  the  State  was  in  consonance  with  the  

observations made by this Court in Bondu Ramaswamy v.  

Bangalore Development  Authority  and  Others where  

this  Court  had  clearly  recognized  the  need  for  taking  

corrective  measures  to  reduce  the  hardship  which  the  

landowners suffer on account of absence of any ameliorative  

schemes. He urged that while the scheme already framed  

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substantially conforms to what this Court has suggested in  

the  above  judgment,  the  same  is  prospective  in  its  

operation.   This  Court  could,  argued the learned counsel,  

make the scheme applicable to the appellants specially when  

the  respondents  are  in  a  position  to  give  redress  to  the  

appellants  by allotting  residential  and commercial  sites  in  

other sectors developed in and around Mohali.

In  Bondu  Ramaswamy’s  case  relied  upon  by  Mr.  

Gupta  this  Court  noted  the  frequent  complaints  and  

grievances  made  in  regard  to  the  prevailing  system  of  

acquisition governed by the Land Acquisition Act, 1894. One  

of  the  areas  in  which  this  Court  noticed  dissatisfaction  

among the landowners is the absence of any rehabilitatory  

measures.  This  Court  noted  that  several  avenues  for  

providing rehabilitation and economic security to landowners  

were available such as provision for employment, allotment  

of  alternative  lands,  housing  and  safe  opportunities  for  

investment  of  compensation  amount  to  generate  stable  

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income. The acquisitions were for that purpose classified by  

this Court into the following three categories:

(i) Acquisitions for the benefit of the general public or  in national interest.  This will include acquisitions  for  roads,  bridges,  water supply projects,  power  projects,  defence  establishments,  residential  colonies  for  rehabilitation  of  victims  of  natural  calamities.

(ii) Acquisitions  for  economic  development  and  industrial growth.  This will include acquisitions for  Industrial  Layouts/Zones,  corporations  owned  or  controlled  by  the  State,  expansion  of  existing  industries, and setting up Special Economic Zones.

(iii) Acquisitions  for  planned  development  of  urban  areas.  This will include acquisitions for formation  of  residential  layouts  and  construction  of  apartment blocks,  for allotment to urban middle  class and urban poor, rural poor etc.       

The Court observed that in order to ensure a smooth  

and litigation-free acquisition, beneficial to all concerned it  

was  necessary  to  evolve  tailor-made  schemes  to  make  

acquisitions more acceptable to the landowners. This Court  

observed:

“In  the  preceding  para,  we  have  touched  upon matters that may be considered to be  in the realm of government policy.  We have  referred to them as acquisition of lands affect  

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the vital  rights  of  farmers and give rise  to  considerable  litigations and agitations.   Our  suggestions and observations are intended to  draw  attention  of  the  government  and  development  authorities  to  some  probable  solutions  to  the  vexed  problems associated  with land acquisition, existence of which can  neither  be  denied  nor  disputed,  and  to  alleviate the hardships of the land owners.  It  may  be  possible  for  the  government  and  development  authorities  to  come  up  with  better solutions.  There is also a need for the  Law Commission and the Parliament to revisit  the Land Acquisition Act, 1894 which is more  than a century old. There is also a need to  remind  Development  Authorities  that  they  exist to serve the people and not vice versa.  We  have  come  across  development  authorities  which  resort  to   ‘developmental  activities’  by  acquiring  lands  and  forming  layouts,  not  with  the  goal  of  achieving  planned  development  or  provide  plots  at  reasonable costs in well formed layouts, but  to  provide  work  to  their  employees  and  generate funds for payment of salaries.  Any  development scheme should be to benefit the  society  and  improve  the  city,  and  not  to  benefit the development authority. Be that as  it may.”

To the credit of the State of Punjab we must say that it  

has  formulated  a  Land  Pooling  Scheme  which  is  owner-

friendly and provides greater incentives for the owners to  

readily give up their lands whenever the same are needed  

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for a public purpose. Difficulty, however, arises on account  

of the fact that the scheme formulated and circulated by the  

Government in terms of its letter dated 5th September, 2008  

is only prospective in its operation. The scheme envisages a  

kind  of  public-private  partnership  in  the  development  of  

areas involving acquisition of large extents of land. Not only  

that  in  order  that  the  scheme  works  effectively  the  

authorities for whom acquisition is being made will have to  

take a broader initiative at the appropriate stage to make  

provision for allocation to the owners of what is due to them  

under  the  scheme.  This  can  be  done  only  when  an  

acquisition is tailored according to the scheme.  The scheme  

cannot  be  introduced  after  the  acquisition  and  even  

allotment  process  is  over.  A  mechanical  extension  of  the  

scheme to acquisitions that have since become final cannot  

help.   Any  such  attempt  would  be  a  potential  recipe  for  

considerable  confusion  and  resultant  litigation.  In  the  

completed acquisitions no provision regarding allocation to  

be made to the owners has been made. It is also not, in our  

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opinion, feasible at this point of time to super impose the  

Land Pooling Scheme on the acquisition under challenge and  

make a provision for allocation to the owners in the sectors  

that are under development or those that have already been  

developed. The extent of area available in other sectors for  

such  allotment  and  allocation  is  itself  a  matter  regarding  

which there is no material before us. That apart even when  

the number of appellants before us is limited, any direction  

for rehabilitation based on a retrospective operation of the  

scheme would deprive owners of the benefit of such scheme  

only  on  account  of  their  acceptance  of  the  acquisition  

proceedings.   Last  but  not  the  least  is  the  fact  that  the  

observations  made  in  Bondu  Ramaswamy’s case  

regarding  the  desirability  of  providing  for  rehabilitatory  

measures, may not strict  sense apply in the present case  

where the acquisition in question has been made for setting  

up a knowledge city in sector 81 of SAS Nagar (Mohali) in  

public and indeed national interest. The argument that this  

Court could confine the benefit of retrospective application of  

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the  scheme  to  the  appellants  only  has  not  for  all  these  

reasons appealed to us.

Mr. Gopal Subramaniam, however, fairly submitted that  

the  State  Government  would  have  no  objection  to  the  

appellants before us being relegated to a reference to the  

Civil  Court  for  determination  of  the  compensation  due  to  

them since others who have not challenged the acquisition  

have secured such references.  He urged that although no  

applications  have  been  made  by  the  appellants  seeking  

reference to the Civil  Court  for  determination  of  this  just  

compensation due to them, and although the time period  

within which such applications could be made has expired  

the respondent would have no objection to the petitioners  

being permitted to make such applications and direct that on  

such  applications  being  made  the  Collector  shall  make  a  

reference  to  the  Civil  Court  for  determination  of  the  

compensation payable to the owners. That is, in our opinion,  

a reasonable offer which would ensure that the applicants do  

not  suffer  on  account  of  the  pending  litigation,  or  their  

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failure  to  make  applications  within  the  time  available  to  

them.

In  the  result  while  we  answer  question  No.3  in  the  

negative and consequently dismiss these appeals, we direct  

that if the appellants make applications under Section 18 of  

the  Land  Acquisition  Act  for  reference  of  their  claims  for  

higher  compensation  before  the  concerned  Collector  Land  

Acquisition  within  a  period  of  six  weeks  from  today  the  

Collector shall make a reference to the competent Civil Court  

for  determination  of  the  compensation  payable  to  the  

appellants.  The  Reference  Court  shall  on  receipt  of  the  

reference expedite the disposal of the same. No costs.

                                                        ………………………

……J.                                                       (R.V.  

RAVEENDRAN)

……………………………J. (R.M. LODHA)

……………………………J.

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(T.S. THAKUR) New Delhi September 29, 2010

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