03 February 1964
Supreme Court
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SHYAM BEHARI AND OTHERS Vs STATE OF MADHYA PRADESH AND OTHERS

Bench: GAJENDRAGADKAR, P.B. (CJ),WANCHOO, K.N.,GUPTA, K.C. DAS,SHAH, J.C.,AYYANGAR, N. RAJAGOPALA
Case number: Appeal (civil) 177 of 1962


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PETITIONER: SHYAM BEHARI AND OTHERS

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH AND OTHERS

DATE OF JUDGMENT: 03/02/1964

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. (CJ) GUPTA, K.C. DAS SHAH, J.C. AYYANGAR, N. RAJAGOPALA

CITATION:  1965 AIR  427            1964 SCR  (6) 636  CITATOR INFO :  RF         1965 SC 646  (10)  R          1966 SC1408  (3)  D          1972 SC2290  (4)  F          1980 SC 367  (8,10)

ACT: Land  Acquisition-Whole  compensation  to  be  paid  by  the company  No  declaration  that the land  was  needed  for  a company-Validity--Test-  Land Acquisition Act, (1 of  1894), ss. 4, 6(1).

HEADNOTE: The  Government  issued a notification on December  3,  1960 under s. 6 of the Land Acquisition Act stating that the land described  in the annexure to the notification was  required fora  public  purpose,  namely, for  the  construction  of buildings for godownsand    administrative    office.The appellants challenged the validity of thenotification in the High  Court contending that the notification unders.  6 of  the  Act did not describe the land to be  acquired  with sufficient particularity and that although the  notification mentioned  that the land was required for a public  purpose, in  fact it was required for a company, which  was  entirely different  from Government and was therefore invalid.   Soon after  the  writ petition was filed,  the  State  Government issued  a fresh notification on April 19. 1961 mainly  under s.  17(1) read with s. 17(4) of the Act.   The  notification stated  that it was declared under s. 6 of the Act that  the land  was  required for a public purpose, namely,  "for  the Premier Refractory Factory and work connected therewith." At the time of hearing of the writ petition in the High  Court, it  was  urged  on behalf of the appellants  that  both  the notifications  under s. 6 of the December 3, 1960 and  April 19. 637 1961  were  invalid because the acquisition was  not  for  a public  purpose  as  stated therein; in fact it  was  for  a company  which was entirely different from Government.   The High  Court  dismissed the writ petition and held  that  the

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notifications  under  s. 6 must in substance and in  law  be demed  to  be for acquisition of land for a company  in  the present case. Held:  Where  the ’entire compensation is to be  paid  by  a company.  the  notification  under  s.  6  must  contain   a declaration  that  the  land is needed for  a  company.   No notification  under  s.  6  can be  made  where  the  entire compensation  is to be paid by a company declaring that  the acquisition is for a public purpose, for, such a declaration requires  that either wholly or in part,  compensation  must come  out  of public revenues ,or some  fund  controlled  or managed by a local authority. Pandif  Jhandu Lal v. State of Punjab, [1961] 2 S.C.R.  459, followed. In  the present case, the whole compensation was to be  paid by the company, therefore the notification under s. 6 had to declare  that the land was needed for a company.  There  was nothing  in either of the two notifications of  December  3, 1960 and April 19, 1961 to show that the land was needed for a  company,  therefore  they were invalid  in  view  of  the proviso to s. 6 (1) of the Act and all proceedings following on such notifications would be of no effect under the Act.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 177 of 1962. Appeal  by special leave from the judgment and  order  dated August  8, 1961, of the Madhya Pradesh High Court  in  Misc. Petition No. 81 of 1961. Naunit Lal, for the appellant. I.N. shroff  for respondents Nos. 14. Rajani Patel and 1. N. Shroff, for the Intervener. February  3, 1964.  The Judgment of the Court was  delivered by WANCHOO  J.-This is an appeal by special leave  against  the judgment  of the Madhya Pradesh High Court.  The  appellants filed  a  writ petition in the High  Court  challenging  the validity  of a notification issued under s. 6 ,of  the  Land Acquisition  Act, No. 1 of 1894 (hereinafter referred to  as the  Act), Their case was that they were ,owners of  certain lands  in Chhaparwah.  On July 8, 1960. a  notification  was issued under s. 4 of the Act to the effect that certain land in village Chhaparwah was required for a 638 public purpose, namely, "for the construction of  buildings, for godowns and administrative office".  Thereafter proceed- ings  appear to have been taken under s. 5-A of the Act  and an  inquiry was made by the Collector.  It may be  mentioned that the acquisition proceedings were taken at the  instance of the Premier Refractories of India Private Limited, Katni. which  is a company.  The Collector reported that  the  land was  essential for the company and was needed for  a  public purpose and the objections of the land-owners has no  subst- ance.  He therefore recommended that a declaration under  s. 6  of the Act might be made.  He also reported that a  draft agreement  to  be  executed  between  the  company  and  the Government  as required by s. 41 of the Act was  being  sub- mitted  along  with a draft notification under  s.  6.  This report  was made on October 17, 1960.  On December 3.  1960, the  notification  under s. 6 was issued  stating  that  the State  Government was satisfied that the land  described  in the  annexure to the notification was required for a  public purpose,  namely,  for  the construction  of  buildings  for godowns   and   administrative   office,   and   hence   the

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notification  was  issued.   It  may  be  noticed  that  the notification  under  s.  6 did not say  that  the  land  was required  for a company.  Thereupon the appellants  filed  a writ petition in the High Court on March 20, 1960, and their main contentions were two, namely. (1) that the notification under  s.  6 did not describe the land to be  acquired  with sufficient particularity and was therefore of no effect, and (2)  that  the  notification mentioned  that  the  land  was required  for  a public purpose, though in actual  fact  the land  was  required  for  a  company,  which  was   entirely different  from Government and therefore was invalid.   Soon after  the  writ petition was filed,  the  State  Government issued  a  fresh  notification  on  April  19,  1961.   This notification  was mainly under s. 17 (1) read with s.  17(4) of  the  Act, which provides that in case  of  urgency,  the State  Government may direct the Collector before the  award is  made under certain circumstances to take  possession  of any waste or arable land needed for a public purpose or  for a  company.  Curiously enough this notification stated  that the State Government also directed that the provisions of s. 5-A  would not apply, though as we have already stated,.  an inquiry under s. 5-A had already been made before the  noti- fication of December 3, 1960 was issued.  The notification 639 further  stated that it was declared under s. 6 of  the  Act that  the  land was required for a public  purpose,  namely, "for  the  Premier  Refractory Factory  and  work  connected therewith".   It  appears however that the real  reason  for issuing this notification in this form was to make good  the lacuna  which  appeared in the notification of  December  3, 1960  inasmuch  as  the  property to  be  acquired  was  not specified    with   sufficient   particularity    in    that notification.   It may be noticed that this notification  of April 19, 1961, treating it as a notification under s. 6  as well,  nowhere  specified that the land was required  for  a company;  it  only stated that the land was required  for  a public  purpose, namely, for the Premier Refractory  Factory and work connected therewith. When the matter came to be argued before the High Court, the main  point that was urged was that both  the  notifications under  s.  6  of December 3, 1960 and April  19,  1961  were invalid,  because  +,he  acquisition was not  for  a  public purpose as started therein; in fact the acquisition was  for a company which was entirely different from Government.  The High  Court  apparently  held  that  the  substance  of  the notifications showed that the land was being required for  a public purpose as well as for the purpose of a company.  The High  Court  was  further of the view that  insofar  as  the declaration  spoke of the acquisition of land for  a  public purpose  it was ineffective, as admittedly the  compensation for the property was to be paid wholly by the company and no part of it was to be paid out of public funds.  Even so, the High  Court  held  that  the declaration  must  be  read  in substance  and in law as one for acquisition of land  for  a company,  namely, the Premier Refractories of India  Private Limited.   In  this  view  of the  matter,  the  High  Court dismissed the writ petition. The only question that has been urged before us on behalf of the  appellants  is  that the High Court  was  in  error  in reading the two notifications as in substance amounting to a declaration  that  the  land was  required  for  a  company. Section  6(1)  of the Act requires that  whenever  any  land isneeded   for  a  public  purpose  or  for  a  company,   a declaration shall be made to that effect.Further the proviso to  s.6(1)provides  that no such declaration shall  be  made

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unless the 640 compensation  to be awarded for such property is to be  paid by a company, or wholly or partly out of public revenues  or some fund controlled or managed by a local authority.   This clearly  contemplates  two kinds of  declarations.   In  the first place, a declaration may be made that land is required for a public purpose, in which case in view of the  proviso, the  compensation  to  be awarded for  the  property  to  be acquired  must come wholly or partly out of public  revenues or some fund controlled or managed by a local authority.  No declaration under s. 6 for acquisition of land for a  public purpose  can be made unless either the whole or part of  the compensation for the property to be acquired is to come  out of  public revenues or some fund controlled or managed by  a local   authority;  see  Pandit  Jhandu  Lal  v.  State   of Punjab(1).  In the second place, the declaration under s.  6 may be made that land is needed for a company in which  case the  entire compensation has to be paid by the company.   It is clear therefore that where the entire compensation is  to be  paid  by  a company, the notification under  G.  6  must contain a declaration that the land is needed for a company. No  notification  under s. 6 can be made  where  the  entire compensation  is to be paid by a company declaring that  the acquisition is for a public purpose, for such a  declaration requires  that either wholly or in part,  compensation  must come  out  of  public revenues or some  fund  controlled  or managed by a local authority.  In the present case it is not in  dispute that no part of the compensation is to come  out of  public revenues or some fund controlled or managed by  a local  authority; on the other hand the  whole  compensation was  to be paid by the company.  Therefore the  notification under s. 6 if it was to be valid in the circumstances of the present  case had to declare that the land was needed for  a company.  No valid notification under s. 6 could be made  in the  circumstances of this case declaring that the land  was needed for a public purpose, for no part of compensation was to be paid out of public revenues or some fund controlled or managed  by a local authority.  That is why the  High  Court felt  that  the notification under s. 6 declaring  that  the land was needed for a public purpose (1)  [1961] 2 S.C.R. 359.                             641 would in the circumstances of this case be ineffective.  But the High Court went on to hold that the notifications  under s.  6  must  in substance and in law be  deemed  to  be  for acquisition  of land for a company in the present case.   We are  of  opinion  that  this  view  of  the  High  Court  is incorrect.    There  is  nothing  in  either  of   the   two notifications  dated December 3, 1960 and April 19, 1961  to show   that  the  land  was  needed  for  a  company.    The notification of December 3, 1960 says in so many words  that it  was  required  for a public  purpose,  namely,  for  the construction  of  buildings for godowns  and  administrative office.  No one reading this notification can possibly think that  the  land  was needed for a  company.   Similarly  the notification of April 19, 1961 says that the land was needed for  a  public purpose, namely, for the  Premier  Refractory Factory  and work connected therewith.  Now the company  for which  the  land in this case was in fact  required  is  the Premier Refractories of India Private Limted, Katni.   There is  nothing  in the notification of April 19, 1961  to  show that  the  land  was needed for this company  or  any  other company.   All that the notification of April 19, 1961  says is  that the land was needed for a public purpose,  and  the

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public  purpose  mentioned  there  was  that  the  land  was required  for  the  Premier  Refractory  Factory  and   work connected  therewith.   The  High  Court  thought  that   in substance this purpose showed that the land was required for the company mentioned above.  But we do not see how, because the purpose specified was for the Premier Refractory Factory and  work  connected  therewith, it can  be  said  that  the notification  declared  that  the land was  needed  for  the company.   It is not impossible for the Government or for  a local  body  to own such a factory and  construct  works  in connection therewith.  The mere fact that the public purpose mentioned  was for the Premier Refractory Factory  and  work connected  therewith, therefore, cannot mean that  the  land was  needed for a company; as one reads the notification  of April 19, 1961 one can only come to the conclusion that  the land  was  needed  for a public  purpose,  namely,  for  the construction  of  some  work for a  factory.   There  is  no mention of any company anywhere in this notification and  it cannot necessarily be concluded that the Premier  Refractory Factory was a com- 134-159 S.C.-41 642 pany,  for a "factory" is something very different from a  " company" and may belong to a company or to Government or  to a  local body or even to an individual.  The mere fact  that the public purpose declared in the notification was for  the Premier  Refractory  Factory and  work  connected  therewith cannot therefore lead to the inference that the  acquisition was   for  a  company.   It  follows  that  when   the   two notifications declared that the land was needed for a public purpose  in a case where no part of the compensation was  to come  out  of  public revenues or some  fund  controlled  or managed  by a local authority, they were invalid in view  of the  proviso  to  s.  6(1)  of  the  Act.   All  proceedings following on such notifications would be of no effect  under the Act. We therefore allow the appeal and set aside the order of the High Court and quash the notifications under s. 6 of the Act and  restrain the respondents from taking any steps  towards the acquisition of the land notified thereunder.  As however the  point  on which the appellants have succeeded  was  not specifically  taken  in  the writ petition,  we  direct  the parties to bear their own costs throughout. Appeal allowed.