REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7268 OF 2004

Mohanlal Nanabhai Choksi (Dead) by Lrs. ...Appellant(s)

- Versus -

State of Gujarat & Others  ...Respondent(s)

J U D G M E N T

GANGULY, J.

1. The appellants are the owners of the lands  

bearing Survey Nos. 1587 to 1596, 1597-A-

Part, 1599 to 1601 of Ward No. 4 of Taluka  

Choryasi of the city of Surat in Gujarat.

2. On  22.08.1980,  the  Standing  Committee  of  

the  Surat  Municipal  Corporation  

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(hereinafter  ‘SMC’),  passed  a  resolution  

with a proposal to the State Government,  

under Section 78 of the Bombay Provincial  

Municipal  Corporations  Act,  1949  

(hereinafter  ‘BPMC  Act’),  for  initiating  

land acquisition proceedings under the Land  

Acquisition  Act,  1894,  for  acquiring  the  

abovementioned land of the appellants. The  

said  land,  admeasuring  7168.09  sq.  mts.,  

was to be acquired for the setting up of a  

vegetable market. The said resolution was  

approved and the proposal was sanctioned by  

the State Government on 30.07.1981.

3. On  3.03.1986,  the  first  Development  Plan  

under  the  Gujarat  Town  Planning  &  Urban  

Development  Act,  1976  (hereinafter  the  

‘Development  Act’)  was  under  preparation  

for the Surat Urban Development Authority  

(hereinafter ‘SUDA’). During the pendency  

of  the  said  plan,  the  State  Government  

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sanctioned the abovementioned proposal, and  

therefore  the  land  in  question  was  kept  

reserved for a vegetable market for SMC.  

4. On  9.2.1990,  a  notification  was  issued  

under  Section  4  of  the  Land  Acquisition  

Act, 1894 for acquiring the lands of the  

appellants. The appellants, on 14.3.1990,  

filed their objections under Section 5A of  

the  Land  Acquisition  Act.  However  the  

objections were overruled and then followed  

a notification under Section 6 of the said  

Act on 8.02.1991.  

5. The  appellants,  on  16.3.1991,  filed  a  

special civil application (No. 3435/1991)  

before the Gujarat High Court, challenging  

the notifications under Sections 4 and 6 of  

the Land Acquisition Act.  

6. In  1996-97,  SUDA  started  revising  the  

Development Plan, and in its revision the  

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land  was  shown  as  reserved  for  the  

vegetable market of SMC.

7. On 17.05.2001, a notification was issued by  

the State Government under Section 17 of  

the  Development  Act,  whereunder  it  was  

proposed to   de-reserve the lands that had  

been reserved for the establishment of a  

vegetable market by SMC and place them in  

the residential zone. SMC objected to the  

said  proposal  of  de-reservation  on  

13.07.2001.

8. The  Gujarat  High  Court  by  the  impugned  

judgment  dismissed  the  special  civil  

application (No.3435/1991) on 1.02.2002 and  

allowed the acquisition of the lands of the  

appellants  for  setting  up  a  vegetable  

market.

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9. In the impugned judgment the Hon’ble High  

Court, inter alia, held as follows:

a. A major part of the land in question was open  land, the construction upon it was very old  and hardly 1/10th of the land was occupied by  structures.  

b. The land was required for a public purpose in  terms of Sections 78 of the BPMC Act, and 12  (2)  (b)  read  with  Section  20  of  the  Development Act.

c. The other markets, which the appellants claim  as  very  closeby,  were  actually  quite  far  away. SMC needs to provide a market close to  the people so that they do not have to move  far to purchase their daily necessities. A  vegetable market is required to be near the  people,  especially  in  India,  as  in  India  people buy their fresh vegetables daily.

d. The  notification  dated  17.05.2001  made  it  clear that it was a draft development plan,  and suggestions and objections were invited  from  persons  for  modification  of  the  said  Plan.  Therefore,  the  notification  dated  17.05.2001 was merely a proposal to modify  the  draft  Development  Plan  and  did  not  

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reflect a decision to de-reserve the lands of  the appellants.

e. A reading of Section 63(12) read with Section  66(42) of the BPMC Act made it clear that  there  was  an  obligatory  duty on  SMC  to  construct and maintain a public market, for  which  it  can  take  appropriate  action  as  required under the Act. Further the scheme of  the  Act  clearly  indicated  that  SMC  was  competent to establish a market.

f.The appellants had raised a contention that  SMC had no right to acquire the land and at  most the State Government could acquire land.  The High Court dismissed the said contention  holding  once  a  notification  was  published  under  Section  6  after  complying  with  the  provisions of the Land Acquisition Act, it  was  conclusive  evidence  that  the  land  was  required for a public purpose and the Court  could not go behind the said notification.

g. The appellants were neither agriculturalists  nor  producers  of  agricultural  produce,  nor  dealers  or  office  bearers  of  the  Surat  Agricultural Produce Market Committee, and as  such  they  had  no  right  to  question  the  authority  of  SMC  to  initiate  acquisition  proceedings for a vegetable market.

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h. The 1963 Act applied only to bulk sales and  not  retail  sales.  The  SMC  was  providing  a  market so that the retailers and consumers  have no difficulty in the sale/purchase of  commodities. Retailers were excluded from the  purview  of  the  1963  Act  and  Rules  framed  thereunder. Thus, the SMC could set up the  vegetable market as it was doing the same for  retailers. The 1963 Act had been enforced to  regulate  transactions  between  traders  and  agriculturalists,  in  order  to  prevent  exploitation  of  the  latter  by  the  former.  Thus,  a  market  for  agriculturalists  and  traders  could  only  be  set  up  under  the  provisions of the 1963 Act, but the same did  not and would not apply to retailers dealing  in small quantities. There was nothing in the  1963  act  to  indicate  that  transactions  between  the  ultimate  consumers  and  the  vendors  was  controlled  or  that  the  local  authority was prohibited from setting up a  vegetable market for the same.

10. The appellants on 19.3.1992 filed an SLP  

(No.7559/2002), before this Court raising,  

inter alia, the following main contentions:

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a. SMC, acting under the provisions of the BPMC  Act,  had  no  authority  to  establish  the  vegetable  market  as  there  was  a  later  and  special Act passed by the Gujarat government,  namely  the  Gujarat  Agricultural  Produce  Market Act, 1963 (hereinafter the ‘1963 Act’)  and under 1963 Act a vegetable market could  only  be  established  by  a  Market  Committee  constituted under the 1963 Act.

b. There were markets already established within  a radius of 1 and 1/2 kms, and thus there was  no need to establish a vegetable market. It  was  also  contended  that  there  was  no  mandatory duty on the SMC to establish the  said  market,  and  that  establishing  such  a  market would only lead to traffic problems as  the area was a congested area in the middle  of the city. The appellants also stated that  the area sought to be acquired was occupied  by many tenants with many superstructures on  it.

c. The lands in question had been reserved in  the Final Development Plan of SUDA, but there  was a proposal to de-reserve the said lands  (by notification dated 17.05.2001), and thus  

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the notifications under Sections 4 and 6 of  the Land Acquisition Act would not survive.  

11. On 2.09.2004, the State Government issued a  

notification under Section 17(1)(c) of the  

Development  Act  sanctioning  the  revised  

Development Plan (called the revised Final  

Development Plan). In the said plan, the  

State  Government,  due  to  the  objections  

raised by SMC, did not accept the proposal  

for  de-reservation  of  the  appellants’  

lands. Thus, the reservation of the lands  

for  a  vegetable  market  for  SMC  was  

continued.

12. On 22.04.2002, this Court in the pending  

SLP  stayed  further  steps  regarding  the  

proposed  acquisition  of  land  and  the  

interim  order  of  stay  was  continued  on  

5.11.2004.

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13. This  Court  is  of  the  view  that  among  the  

contentions  which  have  been  raised  by  the  

appellants  herein,  the  one  relating  to  non-

applicability  of  BPMC  Act,  to  initiate  an  

acquisition  by  the  State  for  establishment  of  a  

vegetable market in the context of enactment of a  

later and a special Act, namely, the 1963 Act, is  

of some substance.

14. Admittedly, from the resolution of SMC, it is  

clear that it was relying on Section 78 of the BPMC  

Act for initiating its proposal of acquisition of  

land for the establishment of a vegetable market.  

Section 78 of the BPMC Act runs as under:

“78.  Procedure  when  immovable  property  cannot be acquired by agreement.-  (1)  Whenever  the  Commissioner  is  unable  under section 77 to acquire by agreement  any  immovable  property  or  any  easement  affecting any immovable property vested in  the Corporation or whenever any immovable  property  or  any  easement  affecting  any  immovable  property  vested  in  the  Corporation is required for the purposes  

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of this Act, the State Government may, in  its  discretion,  upon  the  application  of  the Commissioner made with the approval of  the Standing Committee and subject to the  other  provisions  of  this  Act,  order  proceedings to be taken for  acquiring the  same on behalf of the Corporation, as if  such property or easement were land needed  for a public purpose within the meaning of  the  Land  Acquisition  Act,  1894  (1  of  1894).  

(2) Whenever an application is made under  sub-section  (1)  for  the  acquisition  of  land for the purpose of providing a new  street  or  for  widening  or  improving  an  existing street it shall be lawful for the  Commissioner to apply for the acquisition  of  such  additional  land  immediately  adjoining the land to be occupied by such  new  street  or  existing  street  as  is  required for the sites of buildings to be  erected on either side of the street, and  such additional land shall be deemed to be  required for the purposes of this Act.  

(3) The amount of compensation awarded and  all  other  charges  incurred  in  the  acquisition  of  any  such  property  shall,  subject  to  all  other  provisions  of  this  Act, be forthwith paid by the Commissioner  and thereupon the said property shall vest  in the Corporation.”  

15. A perusal of Sub-section(1) of Section 78 shows  

that the State Government may, in its discretion,  

upon  application  of  the  Commissioner,  order  

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proceedings to be taken for acquiring the land in  

question if the SMC needs it for the  purposes of  

this Act. Section 63 of the BPMC Act provides for  

certain categories of matters in respect of which  

SMC is competent to take steps and one such step is  

provided under Section 63(12). Under Sub-section 12  

of Section 63, SMC can take steps for:

“63. (12) the construction or acquisition  and  maintenance  of  public  markets and slaughter-houses and  tunneries and the regulation of  all markets and slaughter-houses  and tunneries;"

16. Section 2(33) of BPMC Act defines a ‘market’.  

The said definition is very broad and is set out  

herein below:

”2. (33) "market"  includes  any  place  where  persons  assembly  for  the  sale of,  or for the purpose of  exposing for sale, live-stock or  food  for  live-stock  or  meat,  fish, fruit, vegetables, animals  intended for human food or any  other  articles  of  human  food  whatsoever  with  or  without  the  consent  of  the  owner  of  such  place,  notwithstanding  that  there  may  be  no  common  regulation  of  the  concourse  of  buyers  and  sellers  and  whether  or not any control is exercised  over  the  business  of  or  the  persons  frequenting  the  market  

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by the owner of the place or any  other person;”  

17. Relying on these provisions of BPMC Act, it has  

been  argued  by  the  learned  counsel  for  the  

appellants  that  a  Municipal  Commissioner  is  

authorized to set up a market within the meaning of  

Section 2(33) of BPMC Act. Such a market is much  

wider than a vegetable market.

18. The  learned  counsel  for  the  appellants  

buttressed the argument by further reference to the  

1963 Act. Referring to the Statement of Objects and  

Reasons of the 1963 Act, learned counsel urged that  

the said 1963 Act has been enacted to consolidate  

and amend the law relating to buying and selling of  

agricultural  produce  and  the  establishment  of  

markets for agricultural produce in the State of  

Gujarat. The Statement of Objects and Reasons of  

the  1963  Act,  in  the  Gujarat  Government  Gazette  

Extraordinary dated March 22, 1963 is as follows:

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“STATEMENT OF OBJECTS AND REASONS. As regards the regulation of sales and  purchases of agricultural produce, there  is in force, in the Bombay area of the  State,  the  Bombay  Agricultural  Produce  Markets Act,  1939, and in the Saurashtra  area  of  the  State,   the  Saurashtra  Agricultural Produce Markets Act, 1955.  There is no corresponding law in force in  the Kutch area of the State.  

2. The aforesaid Bombay Act is on the  statute book for the last 23 years and  during  that  period  it  has  undergone  various changes from time to time to suit  the development and growth of regulated  agricultural produce markets.  

3. Government had appointed a Committee  under  the  Chairmanship  of  Shri  Jashvantlal  Shah,  the  then  Deputy  Minister for Co-operation, to review the  entire position of agricultural produce  markets in the light of the experience  gained in the day-to-day working thereof  and to suggest amendments,  if any, to  the  existing  Law.  Accordingly  the  Committee  has  suggested  various  amendments. In pursuance of the policy of  the State to bring about uniformity in  the laws in force in the State, it is  proposed to consolidate and amend the law  relating to the regulation of buying and  selling  of  agricultural  produce  in  the  whole  of  the  State  Of  Gujarat.   The  present  Bill  seeks  to  achieve  that  object.  The  Bill  mainly  follows  the  Bombay Agricultural Produce Markets Act,  1939  (hereinafter  referred  to  as  "the  existing  Act').  Various  amendments  suggested by the Committee have also been  incorporated in the Bill.”

19. The learned counsel for the appellants further  

urged that the Act of 1963 is a later and a special  

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law for establishment of a market for agricultural  

produce  in  the  State.  The  learned  counsel  also  

referred  to  the  definition  of  ‘agricultural  

produce’  under  Section  2(i)  of  the  1963  Act  and  

argued that vegetables definitely come within the  

definition  of  ‘agricultural  produce’.  He  also  

referred  to  the  definition  of  ‘market’  under  

Section 2(xii) of the 1963 Act to mean ‘a market  

declared or deemed to be declared under the Act’;  

as also to the definition of a ‘market area’ under  

Section 2(xiii), which means ‘any area declared or  

deemed to be declared to be a market area under  

this Act.’

20. Reference was also made to ‘retail sale’ under  

Section  2(xviii)  of  the  1963  Act,  whereunder  

‘retail sale’ means:

”2. (xviii) “retail sale” means a sale  of any agricultural produce  not exceeding such quantity  as a market committee may by  bye-laws determine to be a  retail  sale  in  respect  of  such agricultural produce;”

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21. This Court notes that sale and purchase in the  

market area is controlled under Section 6(1) and  

(2). Section 6(3) carves out an exception in the  

following terms:

”6. (3) Nothing  in  sub-section  (2)  shall apply to the purchase  or  sale  of  any  such  agricultural produce, if its  producer  is  himself  its  seller  and  the  purchaser  purchases  it  for  his  own  private consumption.”  

22. The learned counsel for the appellants, relying  

on these provisions urged that the establishment of  

a vegetable market falls solely and squarely within  

the provisions of the 1963 Act.

23. Under Chapter IX and section 49 of the 1963  

Act, the State Government is authorized to acquire  

any land within a market area if it is needed for  

the purposes of this Act, i.e. the 1963 Act. Such  

acquisition can be made under the provisions of the  

Land  Acquisition  Act,  1894  or  any  other  

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corresponding  law  for  the  time  being  in  force.  

Section 49 (1) and (2) are set out below:

“49. (1) The State Government may acquire  any land within a market area, which in  its opinion is needed for the purposes of  this  Act,  under  the  provisions  of  the  Land Acquisition Act, 1894 or any other  corresponding law, for the time being in  force.  

(2) Such land shall be transferred by the  State Government to the market committee  on payment by the market committee of the  compensation  awarded  under  the  Land  Acquisition  Act,  1894,  or  any  other  corresponding law for the time being in  force and of all other charges incurred  by the State Government on account of the  acquisition,  within  such  period  and  in  such manner as the State Government may,  by  general  or  special  order,  determine  and on such transfer the land shall vest  in the market committee.”

24. The learned counsel for the appellants strongly  

relied  on  Section  63  of  the  1963  Act,  which  

excludes  the  application  of  Bombay  Markets  and  

Fairs Act, 1862 or any other law for the time being  

in force relating to the establishment, maintenance  

and  regulation  of  a  market.  Section  63  runs  as  

under:

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“63.  Nothing  contained  in  the  Bombay  Markets and Fairs Act, 1862, or in any  law for the time being in force relating  to  the  establishment,  maintenance  or  regulation of a market shall apply to any  market  area  or  affect  in  any  way  the  powers  of  a  market  committee  or  the  rights of a holder of a licence granted  under this Act to set up, establish or  continue any place for the purchase or  sale of any agricultural produce notified  under  sub-section  (1)  of  section  6  in  such area.”

25. The main argument of the learned counsel for  

the  appellants  on  the  basis  of  the  aforesaid  

statutory framework is that if the State Government  

wants to acquire any land for the establishment of  

a vegetable market, the State Government must take  

steps under the later and the special Act, which is  

the 1963 Act. In other words, the State Government  

cannot,  in  view  of  specific  later  legislative  

enactment,  i.e.  the  1963  Act  and  Section  63  

thereof,  initiate  acquisition  proceedings  to  

establish  a  vegetable  market  on  the  basis  of  

resolution of SMC under Section 78 of BPMC Act.

26. The learned counsel for the respondents opposed  

the aforesaid contentions and took us through the  18

judgment of the High Court and submitted that the  

1963 Act is meant for the cultivators and traders  

and  is  not  meant  for  common  man.  The  learned  

counsel also relied on various provisions of the  

Gujarat Town Planning and Urban Development Act and  

also urged that in view of sections 63(12) and 78  

of the BPMC Act, the impugned action of SMC, which  

has been affirmed by the High Court, is valid in  

law and this Court may dismiss the special leave  

petition.  

27. After considering the rival submissions of the  

parties,  this  court  is  of  the  opinion  that  the  

contentions raised by the learned counsel for the  

appellants  deserved  serious  consideration  by  the  

High Court.

28. However,  the  High  Court  in  the  impugned  

judgment, with great respect, proceeded on various  

issues  but  has  not  at  all  touched  the  questions  

discussed  above.  In  fact  in  paragraph  18  of  the  

impugned judgment, the High Court refused to answer  19

this question, inter alia, on the ground that the  

appellants  are  neither  agriculturalists  nor  the  

purchasers of agricultural produces as specified in  

the schedule nor dealers in such commodities nor  

office bearers of Surat Agricultural Produce Market  

Committee, nor have any right to make grievance on  

behalf  of  Surat  Agricultural  Produce  Market  

Committee.

29. We are of the considered view that the High  

Court was clearly in error in refusing to deal with  

the aforesaid question on the grounds mentioned in  

paragraph 18.

30. This court is further of the opinion that since  

the property of the appellants is taken away as a  

result  of  the  aforesaid  acquisition  proceedings,  

the appellants are entitled to raise the question  

of non-applicability of the BPMC Act to initiate an  

acquisition  proceedings  for  establishing  a  

vegetable market, in view of the clear provisions  

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of the 1963 Act, which is a special and a later  

Act.

31. The  right  of  property,  may  no  longer  be  a  

fundamental right, but it enjoys the protection of  

Article 300A of the Constitution to the extent that  

there  can  be  no  deprivation  of  property  save  by  

authority of law. Authority of law would obviously  

mean  valid  authority  of  law.  In  a  case  of  

deprivation of property by acquisition, ultimately  

by Land Acquisition Act, 1894, which is a drastic  

and expropriatory piece of legislation, the owners  

of property, the appellants herein, are admittedly  

entitled  to  raise  all  legally  permissible  

objections  to  the  legality  of  an  acquisition  

proceeding.

32. Here  as  the  High  Court  has  proceeded  on  an  

erroneous  approach,  its  judgment  cannot  be  

sustained in as much as the High Court refused  

to examine the validity of the main challenge  

raised by the appellants on a ground of their  21

lack of locus. This approach of the High Court,  

with great respect, goes to the root of the  

issue and makes its judgment very vulnerable.

33. For the reasons aforesaid, this Court cannot  

sustain  the  impugned  judgment  of  the  High  

Court,  which  is  accordingly  set  aside.  The  

matter  is  remitted  to  the  High  Court  for  

decision of the writ petition afresh on the  

questions discussed above and are specifically  

formulated below.  

34. The High Court may deal with all issues but  

specifically the two following questions:

(i) Whether the 1963 Act, a later and a special  

Act  as  compared  to  the  1949  Act  would  

prevail  over  the  1949  Act  or  whether  a  

harmonious construction is possible between  

the  1963  Act  and  the  1949  Act  on  the  

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footing  that  they  seem  to  govern  two  

distinct and separate spheres of markets.  

(ii) The  impugned  acquisition  proceeds  under  

Section 78 of the BPMC Act.  Section 78  

peculiarly uses the term “property vested  

in the corporation”.   A plain reading of  

the term seem to prima facie imply that the  

SMC can only acquire property vested in it  

and not private property.  Thus, High Court  

may decide the scope and extent of the said  

expression in Section 78 of the BPMC Act  

and  determine  issue  of  validity  of  the  

impugned acquisition.  

35. Since considerable time has elapsed, the High  

Court is requested to take steps to hear out  

the writ petition in light of the observations  

made  above,  as  early  as  possible,  but  

definitely within a period of 6 months from the  

date of the production of this order before the  

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High Court. However, the High Court is free to  

decide the questions without being in any way  

inhibited  by  any  observation  made  in  this  

judgment, save and except its finding on two  

issues.  They are (i) the 1963 Act is a later  

and special statute dealing with agricultural  

produce and agricultural market, and (ii) the  

appellants have, in view of the provisions of  

Article 300A and the drastic provision of Land  

Acquisition  Act,  the  locus  to  challenge  the  

acquisition proceeding.   

36. It is, however, made clear that it is open to  

the parties to raise all legally permissible  

contentions before the High Court.  The appeal  

is allowed to the extent indicated above.  

37. No order as to costs.  

.......................J. (G.S. SINGHVI)

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.......................J. New Delhi (ASOK KUMAR GANGULY) October 4, 2010

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