Reportable  

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2934 OF 2010 [Arising out of SLP (C) No.31132 of 2008]

Mysore Urban Development … Appellant  Authority by its Commissioner

Vs.

Veer Kumar Jain & ORS. … Respondents  

O R D E R

R. V. Raveendran J.,  

Leave granted. Heard the parties.  

2. On  15.3.1990,  a  preliminary  Notification  under  section  17  of  the  

Karnataka  Urban  Development  Authorities  Act,  1987  (‘KUDA  Act’  for  

short)  was  issued  by  the  Mysore  Urban  Development  Authority  -  the  

appellant herein (‘MUDA’ for short), proposing to acquire certain lands for  

development of Kuvempunagar residential layout and formation of a double  

Road.  This  was  followed  by  a  final  declaration  dated  24.5.1991  under  

Section 19(1) of the KUDA Act by the state government stating that it had

granted sanction of the scheme and that the land proposed to be acquired by  

MUDA for the purposes of the scheme is required for a public purpose. The  

said final declaration was challenged and quashed by the High Court with  

liberty to proceed afresh from the stage of consideration of representations.  

After considering the representations, a fresh final declaration was issued on  

4.10.1999.  In  pursuance  of  it,  an  Award  was  made  on  16.10.2000  and  

possession of the lands was taken on 8th/9th December 2000. A notification  

dated 14.12.2000 was issued under section 16(2) of the Land Acquisition  

Act, 1894 (‘LA Act’ for short) confirming that possession of the lands had  

been taken over. In view of the above, MUDA claims that the acquired lands  

vested in the government and later in MUDA.

3. Acting on the applications of some land owners, the state government  

issued a notification dated 15.9.2001 under section 19(7) of the KUDA Act  

read with section 48(1) of LA Act dropping the acquisition proceedings, in  

regard to 17 acres 21 guntas of the lands described therein.  Immediately  

thereafter, on 28.9.2001, the land owners sold the de-notified lands to the  

first respondent. When MUDA came to know about the de-notification, it  

represented to the government that the lands could not have been de-notified  

as  the  lands  had  vested  in  it,  on  possession  being  taken.  It  was  also  

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submitted that the acquired lands could not be de-notified without hearing it.  

In  view  of  it,  the  state  government  issued  another  notification  

dated 22.7.2002 under  section 21 of  the Karnataka General  Clauses  Act,  

withdrawing the notification dated 15.9.2001.  

4. In this background, the first respondent, purchaser of the de-notified  

lands  from  the  previous  land  owners  filed  a  writ  petition  (WP  

No.30425/2002)  before  the  Karnataka  High  Court,  challenging  the  

notification dated 22.7.2002 on the ground that the owners of the lands were  

not heard before withdrawing the notification dated 15.9.2001. It was also  

contended that once a notification was issued under section 48(1) of LA Act,  

it  could  not  be  withdrawn  under  any  circumstances  and  Section  21  of  

General Clauses Act does not empower such withdrawal. A learned Single  

Judge, by judgment dated 28.8.2007, allowed the writ petition filed by the  

first  respondent.  He held  that  when a  notification  under  section  48(1)  is  

issued, a valuable right relating to property was acquired by the land owner  

in  regard  to  the  de-notified  land,  and  therefore,  a  notification  under  

Section 48(1) of LA Act cannot be withdrawn without hearing the concerned  

land owner.  The learned Single Judge therefore quashing the cancellation  

notification dated 22.7.2002, but reserved liberty to the state government to  

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consider the request of MUDA to withdraw the notification dated 15.9.2001,  

after hearing the then land owners and their transferee (the first respondent).  

Feeling aggrieved,  MUDA filed a writ  appeal  which was dismissed by a  

Division Bench of the High Court on 14.12.2007. The said order is under  

challenge in this appeal by special leave.  

5. The  question  for  consideration  is  whether  the  order  of  withdrawal  

dated 22.7.2002 is valid; and what would be the appropriate relief on the  

facts and circumstances.  

6. We may refer  to  the  relevant  provisions  of  the  KUDA Act  before  

dealing with the contentions. Sub-section (1) to (3) of Section 17 provides  

for issue of a preliminary notification in regard to proposed acquisition and  

Section 19(1) to (3) relate to issue of a final declaration. Section 36 deals  

with  provisions  applicable  to  acquisition  of  land  otherwise  than  by  

agreement and is extracted below :  

“36. Provisions applicable to the acquisition of land other-wise than by  agreement.- (1) The Acquisition of land under this Act otherwise than by  agreement within or without the urban area shall be regulated by the provi- sions, so far as they are applicable, of the Land Acquisition Act, 1894.  

(2) For the purpose of sub-section (2) of section 50 of the Land Acquisi- tion Act, 1894, the Authority shall be deemed to be the local authority  concerned.  

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(3) After the land vests in the Government under section 16 of the Land  Acquisition Act, 1894, the Deputy Commissioner shall, upon payment of  the cost of the acquisition, and upon the Authority agreeing to pay any  further cost which may be incurred on account of the acquisition, transfer  the  land  to  the  Authority,  and  the  land  shall  thereupon  vest  in  the  Authority”.

We may also refer to the relevant portions of Section 16 of LA Act (as  

amended in Karnataka) and section 48 of LA Act :

“16. Power to take possession: (1) When the Dy. Commissioner  has made an award under Section 11, he may take possession of the  land, which shall thereupon vest absolutely in the Government, free  from all encumbrances.

(2) The fact of such taking possession may be notified by Deputy  Commissioner in the Official Gazette; and such notification shall be  evidence of such fact”.

“48. Completion of acquisition not compulsory, but compensation  to be awarded when not completed – (1) Except in the case provided  for in  section 36,  the Government shall  be at  liberty  to withdraw  from the acquisition of any land of which possession has not been  taken”.   x x x x x  

 7. The appellant urged the following contentions:  

(i) Section  16(1)  of  the  LA  Act  provides  that  when  the  Deputy  

Commissioner takes possession of the land after making an award it shall  

vest absolutely in the government free from encumbrances. Sub-section (2)  

of section 16 provides that publication of a notification confirming the fact  

of  taking  of  possession  shall  be  evidence  of  such  fact.  In  this  case,  the  

Deputy Commissioner took possession of the acquired lands, and thereafter,  

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a notification under section 16(2) of the LA Act was issued on 9.12.2000  

and that the said notification is evidence of the fact of taking possession.  

Once  the  possession  is  taken,  the  state  government  had  no  power  or  

authority  to  issue  a  notification  under  section  48(1)  of  the  LA Act  and  

therefore, the order dated 15.9.2001 is void and non est and reviving such a  

notification would amount to perpetuation of illegality.  

(ii) MUDA, the acquiring authority,  for whose benefit  the land was  

acquired,  was  not  heard  before  issuing  the   notification  dated  15.9.2001  

under  section  48(1)  of  the  LA  Act.  The  said  notification  was  therefore  

rightly withdrawn by a notification dated 22.7.2002. If the notification dated  

22.7.2002  is  quashed,  it  would  bring  back  to  life,  the  notification  dated  

15.9.2001 issued under Section 48(1) of LA Act which was  per se illegal  

and void, and that is impermissible.    

(iii) Where  the  government,  after  issuing  an  order,  finds  that  it  is  

inherently defective or void, it can withdraw the same and then reconsider  

the issue as per law, and in such a situation, the question of violation of  

principles of natural justice would not arise.  

8. On the other hand, the first respondent submitted that a notification  

withdrawing an earlier notification under section 48 (dated 22.7.2002) could  

not have been issued without hearing the land owners in whose favour a  

right in property had accrued by issue of a notification under Section 48(1)  

of LA Act.

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9. We may first refer to the relevant principles in regard to withdrawal  

from acquisition under Section 48(1) of the LA Act :  

(i) Sub-Section (1) of section 48 clearly provides that the Government  

will  have liberty to withdraw from the acquisition of any land,  of which  

possession has not been taken. Therefore, the power under Section 48(1) of  

the LA Act could only be exercised before the possession of the acquired  

lands is taken. Once possession of the land is taken by the government, the  

land  vests  in  the  government  and  the  power  of  the  government  under  

Section 48(1) of the LA Act to withdraw acquisition in regard to such land  

would cease to exist.

(ii) Where possession of the acquired land has not been taken, the power  

and discretion under Section 48(1) of the LA Act can be exercised by the  

state government, but only in a fair and non-arbitrary manner. Consequently,  

no  order  under  Section  48(1)  of  the  LA  Act  can  be  passed  by  the  

government,  without  hearing  the  local  authority  for  whose  benefit  the  

acquisition is made, particularly when the preliminary notification has been  

issued by such local authority, and the final declaration states that the lands  

are  acquired  for  such  authority  for  a  public  purpose.  (Vide:  Amarnath  

Ashram Trust Society v. Government of UP - 1998 (1) SCC 591, Larsen &  

Toubro Ltd. v. State of Gujarat - 1998 (4) SCC 387 and State Government   

Houseless Harijan Employees Association vs. State of Karnataka - 2001 (1)  

SCC 610).  

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10. There is no dispute that the land owners were not heard before issuing  

the  cancellation  notification  dated  22.7.2002.  Therefore,  the  order  

dated 22.7.2002 is illegal being opposed to principles of natural justice. In  

such a case,  usually  the cancellation of  de-notification,  being opposed to  

principles of natural justice, would be set aside and the Government would  

be  directed  to  reconsider  the  matter  after  giving  due  opportunity  to  the  

affected parties (land owners whose lands were withdrawn from acquisition)  

to have their say in the matter. But then we face a dilemma. If the order  

dated 22.7.2002 is quashed as being violative of the principles of natural  

justice, it will result in the revival of the order dated 15.9.2001 which also  

suffers  from  the  same  vice,  as  that  was  also  made  in  violation  of  the  

principles  of  natural  justice,  without  hearing  the  affected  party,  that  is,  

MUDA.

11. The learned counsel for the first respondent contends that while he  

challenged the order dated 22.7.2002, MUDA did not challenge the order  

dated 15.9.2001 and therefore the validity of the order dated 22.7.2002 alone  

arises for consideration and not the validity of the order dated 15.9.2001.  

This contention is not tenable because of two reasons. Firstly, MUDA in fact  

protested against the order dated 15.9.2001, before the state government and  

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the state government accepted the contentions of MUDA and withdrew the  

order dated 15.9.2001. As the state government granted it the relief, there  

was no need or occasion for MUDA to challenge the order dated 15.9.2001  

in a court of law. Secondly as of now, the order dated 15.9.2001 is not in  

existence.  Incidental  to  the  question  whether  the  order  dated  22.7.2002  

should be quashed, it is necessary to decide whether this court should by so  

quashing, revive an order dated 15.9.2001 which also suffers from the same  

vice of being in violation of principles of natural justice, or should quash  

that order also.   

12. We are  of  the  view that  the  order  dated  22.7.2002 is  inextricably  

linked with the validity of the order dated 15.9.2001 which was withdrawn  

by the order dated 22.7.2002. The principles that is pressed into service by  

the first respondent to challenge the order dated 22.7.2002 is available with  

equal force to hold that the order dated 15.9.1991 is also void. In fact the  

very argument which is urged by the first respondent in the writ petition to  

challenge  the  order  dated  22.7.2002,  was  urged  by  MUDA  before  the  

Government, in addition to pointing out the inherent illegality of the order  

dated 15.9.2001, to withdraw the notification dated 15.9.2001. Accepting the  

said contentions and finding that the order dated 15.9.2001 was liable to be  

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set  aside  as  being  in  violation  of  principle  of  natural  justice,  the  state  

government withdrew the notification dated 15.9.2001. It is another matter  

that in so doing, it did not hear the affected party namely the land owner. If  

the first respondent should succeed because the land owner was not heard  

before issuing the notification dated 22.7.2002, on the same reasoning the  

notification dated 15.9.2001 should also be quashed as the same could not  

have been issued without hearing the MUDA.

13. We may refer to some of the decisions of this court having a bearing  

on the issue. In S.L. Kapoor v. Jagmohan and Ors.  [1980 (4) SCC 379] this  

court rather rigidly and sternly observed:-

“In our view the principles of natural justice know of no exclusionary rule  dependent on whether it would have made any difference if natural justice  had  been  observed.  The  non-observance  of  natural  justice  is  itself  prejudice to any man and proof of prejudice independently of proof of  denial of natural justice is unnecessary. It will come from a person who  has  denied  justice  that  the  person  who  has  been  denied  justice  is  not  prejudiced.”

In State Bank of Patiala v. S.K. Sharma [1996 (3) SCC 364] this court stated  

that  the aforesaid observation should be understood in the context  of the  

facts  of  that  case  and in  the  light  of  the  subsequent  Constitution  Bench  

judgment  in  Managing  Director,  ECIL,  Hyderabad  vs.  B.  Karunakar  

[1993 (4) SCC 727] and C.B. Gautam v. Union of India [1993 (1) SCC 78].  

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This Court observed:-

“The decisions cited above make one thing clear, viz., principles of natural  justice cannot be reduced to any hard and fast formulae. As said in Russell   v.  Duke  of  Norfolk –  1949  (1)  All  ER 109,  way back  in  1949,  these  principles cannot be put in a straight-jacket. Their applicability depends  upon  the  context  and  the  facts  and  circumstances  of  each  case.  (See  Mahender Singh Gill  v.  Chief  Election Commissioner  –  1978 (1)  SCC  405).  The objective is to ensure a fair hearing, a fair deal, to the person  whose rights are going to be affected.

While applying the rule of audi alteram partem (the primary principle of  natural justice) the Court/Tribunal/Authority must always bear in mind the  ultimate and over-riding objective underlying the said rule, viz., to ensure  a fair hearing and to ensure that there is no failure of justice. It  is this  objective  which  should  guide  them  in  applying  the  rule  to  varying  situations that arises before them.”

Ensuring that there is no failure of justice is as important as ensuring that  

there is a fair hearing before an adverse order is made. This Court in Roshan  

Deen v. Preeti Lal - 2002 (1) SCC 100; this court held:

“Time and again this Court has reminded that the power conferred on the  High Court under Article 226 and 227 of the Constitution is to advance  justice and not to thwart it. (vide State of Uttar Pradesh vs. District Judge,   Unnao & Ors. (1984) 2 SCC 673). The very purpose of such constitutional  powers being conferred on the High Courts is that no man should be sub- jected to injustice by violating the law. The look out of the High Court is,  therefore, not merely to pick out any error of law through an academic an- gle but to see whether injustice has resulted on account of any erroneous  interpretation of law. If justice became the byproduct of an erroneous view  of law the High Court is not expected to erase such justice in the name of  correcting the error of law.

14. We  have  already  noticed  above  that  the  order  dated  22.7.2002  is  

inextricably linked to order dated 15.9.2001 which was invalid for the same  

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reasons as the order dated 22.7.2002. Further, the order dated 22.7.2002 was  

passed to set right the violation of principles of natural justice in making the  

order  dated  15.9.2001.  It  is  possible  for  us  to  hold  that  the  order  dated  

22.7.2002  did  not  call  for  interference  in  exercise  of  power  of  judicial  

review,  as  it  merely  cancelled  an  earlier  invalid  order  which  was  made  

without  hearing  MUDA. But  that  may  prejudice  the  landowners  as  they  

would have no forum to put forth their request for de-notification. We are of  

the  view  that  the  relief  should  be  moulded  appropriately  so  that  the  

landowners  should also  have an opportunity  to  put  forth  their  grievance.  

Interests of justice would be served if both the notifications dated 22.7.2002  

and 15.9.2001 are set aside and the state government is directed to consider  

the request of the land owners for withdrawal from acquisition afresh after  

giving due hearing to the land owners (and also the first respondent) and  

MUDA and then decide the matter in accordance with law.  

15. In view of the above, we allow this appeal and modify the orders of  

the High Court. Both the notifications dated 22.7.2002 and 15.9.2001 are  

quashed  and  the  state  government  is  directed  to  hear  the  request  of  the  

landowners for de-notification afresh. It will be open to the landowners to  

place such material as is available to them to show that the possession was  

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not taken in regard to lands in question, and thereby rebut the presumption  

raised  in  view  of  Section  16(2)  of  LA  Act;  and  then  establish  that  

circumstances  warrant  de-notification.  On the  other  hand,  it  will  be  also  

open to MUDA also to establish that possession was in fact taken and that  

power  under  section  48(1)  could  not  therefore  be  exercised.  The  state  

government  shall  hear  both  the  parties  and  pass  appropriate  orders  in  

accordance with law within four months. Status quo will be maintained in  

regard to lands in question by the parties till then.  

       ____________________J.       ( R.V. RAVEENDRAN )

  ____________________J.  ( R.M. LODHA )

New Delhi;             April 1, 2010.

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