REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   5509      OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 2239 OF 2006 Sooraram Pratap Reddy & Ors. … Appellants

Versus

District Collector, Ranga Reddy Distt. & Ors. … Respondents

WITH CIVIL APPEAL NO.     5510    OF 2008

ARISING OUT OF SPECIAL LEAVE PETITION (C) NO. 1135 OF 2006

SURARAM KRISHNA REDDY & ANR. … APPELLANTS

VERSUS

DISTT. COLLECTOR, RANGAREDDY DISTT. & ORS. … RESPONDENTS

CIVIL APPEAL NO.     5511    OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 3387 OF 2006 V. KRISHNA PRASAD … APPELLANT

VERSUS

DISTT. COLLECTOR, LAND ACQUISITION & ORS. … RESPONDENTS

CIVIL APPEAL NO.   5512      OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 2902 OF 2006 A.L. SADANAND … APPELLANT

VERSUS

GOVT. OF A.P. & ORS. … RESPONDENTS

CIVIL APPEAL NO.     5513    OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 3388 OF 2006 MALLA REDDY & ORS. … APPELLANTS

VERSUS

GOVT. OF A.P. & ORS. … RESPONDENTS

CIVIL APPEAL NO.   5514      OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 3389 OF 2006 BANDARI PENTAIAH & ORS. … APPELLANTS

VERSUS

GOVT. OF A.P. & ORS. … RESPONDENTS

CIVIL APPEAL NO.   5515      OF 2008 ARISING OUT OF

SPECIAL LEAVE PETITION (C) NO. 3390 OF 2006 BANDARU PENTAIAH & ORS. … APPELLANTS

VERSUS

DISTRICT COLLECTOR & ORS. … RESPONDENTS

J U D G M E N T

2

C.K. THAKKER, J. 1. Leave granted.

2. All  these  appeals  are  filed  by  the

appellants  being  aggrieved  and  dissatisfied

with the judgment and order passed by the High

Court  of  Andhra  Pradesh  in  various  Letters

Patent Appeals as also in Writ Petitions.  By

the said orders, the High Court rejected the

prayer  of  the  appellants  for  quashing

proceedings  under  the  Land  Acquisition  Act,

1894 (hereinafter referred to as ‘the Act’) for

acquisition  of land  being illegal,  unlawful,

mala fide and in colourable exercise of power

by the State.

Factual background 3. To appreciate the controversy in the

present appeals, it is appropriate to refer to

the facts in the first matter i.e. Civil Appeal

arising  out  of  SLP(C)  No.  2239  of  2006

(Sooraram  Pratap  Reddy  &  Ors.  v.  Deputy

3

Collector, Ranga Reddy & Ors.).   It was the

case of the appellants before the High Court

that the Government of Andhra Pradesh sought to

acquire a large chunk of land in the name of

‘public purpose’ for the purported development

of  ‘Financial District  and Allied  Projects’.

According  to  the  appellants,  the  action  has

been taken in colourable exercise of power and

in total violation of the Land Acqusition Act,

1894 as well as several other statutes in force

in the State of Andhra Pradesh; such as, Andhra

Pradesh  Urban  Area  Development  Act,  1975;

Zoning  Regulations;  Environment  (Protection)

Act,  1986;  Water  (Prevention  and  Control  of

Pollution) Act, 1974 etc. The action has been

taken, alleged the appellants, with mala fide

intention  and  oblique  motive  to  transfer

valuable land of small farmers to a foreign

company and few selected persons with vested

interest.

4. A notification under Section 4 of the

Act  was  published  in  the  State  Government

4

Gazette on July 17, 2002.  The said action was

challenged and the validity of notification was

questioned in a writ petition in the High Court

of Andhra Pradesh.  The High Court dismissed

the petition following an earlier decision in

Writ Petition No. 21712 of 2002 by observing

that the writ petition involved similar issues.

The High Court, however, directed that ‘urgency

clause’ sought to be invoked by the Government

under  Section  17  of  the  Act  was  illegal,

unlawful  and  unwarranted.  That  part  of  the

notification was, therefore, set aside and the

Authorities were directed to proceed to hear

objections of the owners/interested persons by

following  procedure  under  Section  5A  of  the

Act.  According to the appellants, the High

Court was wholly wrong in dismissing the writ

petition  relying  on  the  judgment  in  Writ

Petition No. 21712 of 2002 since in that case,

the Court has considered only one issue; viz.

the  acquisition  was  or  was  not  for  public

purpose as the beneficiary was Andhra Pradesh

5

Industrial  Infrastructure  Corporation  Limited

(‘APIIC’ for short).  Really, the property has

been given in bounty to a foreign Company which

was  not  lawful.   The  High  Court  failed  to

consider  and  decide  several  important  and

crucial issues raised by the small landowners.

5. Being aggrieved by the order passed in

the  writ  petition,  the  appellants  preferred

Writ  Appeal  which  was  also  dismissed.   The

appellants  have,  therefore,  approached  this

Court by filing the present appeal.  Initially,

notice  was  issued.  Several  matters  raising

similar issues were also filed and all were

ordered to be placed for hearing together.

6. We have heard learned counsel for the

parties.

Submissions of appellants 7. The learned counsel for the appellants

contended that the High Court was wholly wrong

in  dismissing  writ-petitions  as  also  writ

appeals.   According  to  the  appellants,  land

6

acquisition proceedings were clearly unlawful,

illegal,  mala  fide  and  violative  of  the

fundamental rights of the appellants. They were

taken in colourable exercise of power by the

authorities.  The  appellants  are  small  land-

holders and their only livelihood was dependant

on  land  attempted  to  be  acquired  by  the

respondents.   According  to  the  appellants,

there was no ‘public purpose’ as defined in the

Act  and  the  land  is  acquired  for  a  private

foreign  company.  The  acquisition  was,

therefore,  bad  in  law  and  for  a  collateral

purpose. It was also submitted that even if it

is assumed for the sake of argument that the

land could be acquired for a public purpose by

a  private  Company,  the  procedure  for

acquisition of land by a private company under

Part VII of the Act ought to have been followed

and not the procedure under Part II providing

for  acquisition  of  land  by  the  State

Authorities.  It was urged that in the era of

globalization, if a foreign company wanted to

7

establish  its  business,  it  was  required  to

follow  the  prescribed  procedure  and  parties

must be left to settle their deal by entering

into mutual agreement for sale and purchase of

properties. In other words, according to the

appellants, power of ‘eminent domain’ has no

application to such cases. The provisions of

the Act must be strictly construed and judicial

scrutiny in such matters i.e. in the matters of

acquisition  of  land  by  the  State  or  its

instrumentality  for a  private party,  namely,

for use and occupation of land by a foreign

company should be very strict. It was further

submitted  that proceedings  were totally  mala

fide which was clear from the fact that huge

land owned and possessed by influential persons

such  as,  Smt.  Vijay  Nirmala,  a  well-known

actress and other persons in public life had

been  excluded.   Thus,  rich  landlords  and

politically  patronage  persons  have  been

excluded  from  acquisition  of  land  and

appellants and other persons who were small or

8

marginal  farmers  earning  their  bread  were

deprived of their property.  Malicious action

on the part of the State Authorities was also

clear from the fact that though the land was

sought to be acquired for industrial policy of

the Government, initially, ‘urgency clause’ was

applied and Section 17 was pressed in service.

It was because of the High Court’s intervention

that urgency clause was quashed and authorities

were directed to take action in accordance with

law and only thereafter notices were issued and

procedure  under  Section  5A  of  the  Act  was

followed.   On  all  these  grounds,  it  was

submitted  that  proceedings  are  liable  to  be

quashed.

Submissions of respondents 8. The  learned  counsel  for  the

respondents, on the other hand, supported the

orders  passed  by  the  High  Courts.  They

submitted that the land was acquired under the

Act  for  ‘public  purpose’  after  following

9

procedure  laid  down  in  the  Act  and  the

acquisition was legal, lawful and in consonance

with law and no interference is called for by

this  Court  under  Article  136  of  the

Constitution.

9. Affidavits  were  filed  by  the

contesting respondents.  So far as the State

Authorities are concerned, a counter-affidavit

was  filed  by  Special  Deputy  Collector,  Land

Acquisition  (Industries), Hyderabad.   In  the

said affidavit, it was,  inter alia, contended

that appellants were not small land-holders or

marginal farmers.  Most of them have converted

agricultural lands unauthorizedly into housing

plots  and  sold  them  to  various  builders/

developers/property  dealers/estate  agents  and

they were not cultivating the land.  No doubt,

there  were  certain  small  land-owners/farmers

also. But, it was contended by the State, that

because  of  industrial  policy  of  the  State

Government, a decision was taken to construct

‘Information  Technology  Park’,  under  the

1

Information Technology and Hardware Industrial

Policy 2005-10 and for the said purpose land

was sought to be acquired under the provisions

of  the  Act.   Proceedings  were,  therefore,

initiated  and  necessary  notification  was

issued.   There  was  no  illegality  in  the

procedure  contemplated  under  the  Act  for

acquisition  of  land.  APIIC  is  an

instrumentality of State which was to pay the

entire amount of compensation and such action

could not be said to be illegal or contrary to

law.  It was, therefore, submitted that the

appeals are liable to be dismissed.

10. APIIC  in its affidavit filed by the

General Manager (Law), contended that it was

wholly owned undertaking of the Government of

State of Andhra Pradesh and has been developing

infrastructural  projects  in  the  State  to

facilitate socio-economic progress.  According

to  the  deponent,  large  extent  of  Government

land  in  various  villages  of  Ranga  Reddy

District  in  the  periphery  of  Hyderabad  were

1

handed  over  to  the  Corporation  for  the

development of special projects like Software

Lay  Out,  Indian  School  of  Business,  Indian

Institute  of  Information  Technology,  Hitech

City,  National Games  Village, Sports  Stadia,

Integrated  International  Convention  Centre,

Golf Course, Financial District, etc.  Some of

the  projects  have  already  taken  shape  and

others are in various stages of development. It

was submitted that time was a critical factor

for implementation of those projects. In view

of development of these special projects, the

respondent-Corporation  would  be  improving

facilities in the round-about areas. It was for

fulfillment  of  this  industrial  policy  and

completion  of  several  projects  that

notifications under the Act were issued by the

State.  The  High  Court  was  satisfied  about

public purpose and hence rejected the ground

put forward by land-owners that acquisition was

not for public purpose. According to the High

Court, however, the procedure laid down in the

1

Act  was  required  to  be  followed  by  issuing

notices  under  Section  5A  and  urgency  clause

under Section 17 of the Act could not have been

invoked. In several cases, awards were made and

possession of the land was also taken over.  In

some other cases, award is not passed and the

land is still in the possession of the land-

owners.  That,  however,  does  not  mean  that

proceedings  under  the  Act  were  illegal  or

unlawful.   

11. According to APIIC, the Government of

Andhra  Pradesh  introduced  Tourism  Department

which  established a  transparent framework  of

enabling private sector and tourism sector in

the  State.   The  State  had  undertaken  such

projects  under  the  name  and  style  of

“Establishment of Hyderabad as a Business-cum-

Liaison  Destination”  with  a  goal  of

transforming  into  world  class  business

destination,  to  be  the  leader  in  knowledge

sector.  Pursuant to such project, Integrated

Convention  Centre  Complex  (ICCC)  is  being

1

developed by the State Government on the basis

of “Public Private Partnership” (PPP) format.

Under  the  said  project,  International

Convention Centre and business hotel adjoining

Hi-tech  Business  Centre  were  already

established.   Similarly,  International  Golf

Champion Course with multiuse development was

sought to be set up.

12. The  Government  of  Andhra  Pradesh

designated  APIIC  as  Nodal  Agency  for

development  of  Integrated  Project.   Emaar

Properties,  PJSC,  Dubai  was  selected  in

international  competitive  bidding  for

implementation of the project.  The Government

issued  orders  approving  structure  and

implementation of the project.  A collaboration

agreement was entered into between APIIC and

Emaar  Properties,  Dubai  to  implement  the

project.   APIIC  was  having  26%  share  while

Emaar Properties is having 74% share capital.

Joint Venture companies were incorporated with

the  Registrar  of  Companies,  Andhra  Pradesh,

1

Hyderabad with registered office at Hyderabad

for taking different components of integrated

project.   Several  projects  are  about  to  be

over.  Some projects are going on and some are

to  be  undertaken.   Total  cost  according  to

APIIC excluding operating and financial course

of the integrated project is more than Rs.550

crores. It was submitted that considering the

project in its entirety, the High Court was

wholly right and fully justified in dismissing

the petition and not interfering with the land

acquisition proceedings.

13. Emaar  had  also  filed  an  affidavit

through  General  Manager,  denying  allegations

and controverting averments made by the writ-

petitioners contending that the petitions are

misconceived  and  ill-founded  and  the

petitioners were not entitled to any relief.

It  was  stated  that  the  Special  Deputy

Collector,  Land Acquisition  in its  affidavit

has rightly stated that land-owners were not

small  farmers,  small  owners/marginal  farmers

1

but they have illegally converted agricultural

land into non-agricultural land and have sold/

transferred/ allotted to builders/ developers/

real estate owners of properties.  Acquisition

was for industrial policy of State and APIIC

was  the  Nodal  Agency  which  was  an

‘instrumentality’ of the ‘State’. The amount of

compensation  was  to  be  paid  by  APIIC  and

acquisition  was  under  power  of  ‘eminent

domain’. Acquisition is not for foreign company

or private party and the High Court was right

in not insisting for following procedure laid

down in Part VII of the Act as the case is

covered by procedure prescribed in Part II of

the Act.  Public purpose was precise, perfect

and  lawful  and  the  land  was  acquired  in

consonance with the procedure laid down in the

Act.  It was only with a view to delay the

proceedings that petitions were filed by the

petitioners  which  has  resulted  in  gross

injustice  to  Emaar  which  has  made  large

investments.

1

14. According  to  Emaar,  the  City  of

Hyderabad  was  sought  to  be  transformed  into

Business-cum-Liaison  Destination  as  envisaged

by  the  Government  and  public  and  private

sectors’  participation  investment  had  been

thought proper through Integrated Project under

Industrial  Policy  of  the  State  2005-10.

Through  APIIC,  the  State  undertook  the

Integrated Project for establishing Hyderabad

into  world  class  business  destination  and  a

leader in the knowledge sector.  Such project

would indeed develop the State which would be

in the larger interest of general public.  It

would enhance the value of Hyderabad into a

Tourist-cum-Business  Destination  for  domestic

as well as international travellers.  It was,

therefore, submitted that the land acquisition

proceedings were in consonance with the law and

no case has been made out for interference with

such proceedings and the appeals are liable to

be dismissed.

Notifications

1

15. As already noted earlier, proceedings

had been initiated by the authorities in 2002.

A notification under Section 4 of the Act was

issued by the State Government on July 10, 2002

which was published in the Government Gazette

on July 17, 2002.  The said notification read

as under;

THE ANDHRA PRADESH GAZETTE EXTRAORDINARY

PUBLISHED BY AUTHORITY

R.R. No. 25 HYDERABAD WEDNESDAY  17TH JULY 2002 No.G1/7180/2000 Dated  :  10-07- 2002

FORM – 2 A

DRAFT NOTIFICATION UNDER SECTION 4 OF 1894 AS AMENDED BY ACT XXXVIII OF 1923

1

Whereas  it  appears  to the Government of Andhra Pradesh  that  the  land specified  in  the Schedule  below  and situated  at  Nanakram Guda  Village, Serilingampally  Mandal, Ranga Reddy District is needed  for  Public purpose,  to  wit  for Development  of  New Projects by APIIC Ltd., notice to that effect as hereby given to all whom it  may  concern  in accordance  with  the provisions of section 4 (1)  of  the  Land Acquisition  Act,  1  of 1894, as amended by the Land  Acquisition Amendment  made  by  the Land  

Acquisition  Act  XXXIII of  1923,  and  the Governor  of  Andhra Pradesh  hereby authorized  Spl.  Deputy Collector,  LA  (Ind), Hyderabad, and his staff and workmen to exercise the powers conferred by section 4(2) of the Act. Under sub-section (4) of Section 17 of the Act, the  Governor  of  Andhra Pradesh directs that in view of the urgency of the case, the provisions of  Section  5-A  of  the Act, shall not apply to this case.

SCHEDULE

. . . . . .  . . .

16. It  is  thus  clear  that  the  land  was

proposed to be acquired for a public purpose,

viz. for development of new projects by APIIC.

It is also apparent that urgency clause under

Section 17 of the Act was applied and inquiry

under Section 5-A was dispensed with.

1

17. A notification under Section 6 of the

Act was also issued on the same day which was

published in the Government Gazette on July 18,

2002. The said notification read as under;

THE ANDHRA PRADESH GAZETTE EXTRAORDINARY

PUBLISHED BY AUTHORITY

R.R. No. 26 HYDERABAD      Thursday 18th July 2002 No.G1/7180/2000 Dated  :  10-07- 2002

FORM – 5-A DRAFT DECLARATION UNDER SECTION 6 OF THE LA ACT

Under  Sec.  (6)  of  the Land  Acquisition  Act, the  Governor  of  Andhra Pradesh  hereby  declares that the land specified below  and  measuring Ac.80-35 gts/acre be the same  a  little  more  or less  is  needed  for public purpose, wit for Development  of  New Projects  by  APIIC Limited.  Under Sections 3 and 7 of the same Act, the  Special  Deputy Collector,  L.A.  (Ind.), Hyderabad,  is  appointed to perform the functions of  Collector  under  the Act and directed to take

Order  for  the acquisition of the land under Sub-Section (1)(2) of  Section  17  of  the Act,  the  Governor  of Andhra  Pradesh  further directs  that  the possession  of  the  said land may be taken on the expiry of 15 days from the  date  of  the publication  of  the notice  mentioned  in section 9(1) of the Act. A  plan  of  the  land  is kept  in  the  Special Deputy  Collector,  L.A. (Ind),  Hyderabad,  and may be inspected at any time  during  the  office hours.

SCHEDULE

. . . . . .  . . .

2

Writ Petitions in High Court 18. The  validity  of  notifications  under

Sections 4 and 6 of the Act was challenged by

some of the land owners by filing Writ Petition

No. 21712 of 2002 in the High Court of Andhra

Pradesh  at  Hyderabad.   The  learned  Single

Judge, vide a judgment and order dated April

25, 2003 partly allowed the petition.  He held

that in view of counter-affidavit filed by the

authorities,  it  could  not  be  said  that  the

acquisition  was  illegal  or  unlawful  and,

therefore, was not sustainable. Acquisition of

land  was  in  exercise  of  power  of  eminent

domain and was intended for public purpose, to

wit, for development of New Projects by APIIC

Ltd.  The  acquisition  was  to  enable  the

activities  of  APIIC,  which  was  an

instrumentality of State operating in the area

of industrial infrastructure. The purposes of

APIIC were demonstrably public purposes.  It

2

was also held that the claim of the petitioners

as being small farmers was not well-founded as

no agricultural operations were being pursued

by them as asserted by the authorities in the

counter-affidavit which was not denied.  The

availability of alternative land as pleaded by

the petitioners was also not correct since the

lands  available  were  not  contiguous  to  the

existing developed areas and hence could not be

said to be ‘alternative’.

19. The  Court,  however,  held  that

invocation of urgency clause under Section 17

of  the  Act  and  dispensing  with  enquiry  as

contemplated by Section 5-A of the Act was not

legal. Section 5-A of the Act is a salutary

provision which enables the persons whose land

is proposed to be acquired to urge all grounds

that  may  be  available  against  the  proposed

acquisition at the enquiry. Unless real urgency

is  demonstrated, dispensing  with the  enquiry

and invocation of urgency clause was irrational

and arbitrary exercise of power by the State.

2

By such process, an enquiry under Section 5-A

of  the  Act  cannot  be  jettisoned  on  jejune

grounds  of  irrational  and  unsubstantiated

urgency.   Since  no  such  urgency  could  be

demonstrated by the State, the action to the

extent of dispensing with the enquiry was held

to be bad.  The petition was, therefore, partly

allowed  directing  the  authorities  to  issue

notice to the landowners under Section 5-A of

the  Act  and  to  take  further  proceedings  in

accordance with law.

20. The Court finally stated;

“However,  it  is  clarified  that  the notice under section 4(1) of the Act is not interfered with”.

21. Other  petitions  filed  by  other  land

owners were also partly allowed relying upon

the  decision  in  Writ  Petition  No.  21712  of

2002.

Writ appeals 22. Being aggrieved by the orders passed

by the learned Single Judge, Writ Appeals were

2

instituted by both landowners as also by APIIC.

The Division Bench dismissed all the appeals

holding that the land was needed for public

purpose and the acquisition could not be said

to be contrary to law.  Similarly, the learned

single Judge was also right in coming to the

conclusion  that  on  the  facts  and  in  the

circumstances of the case, urgency clause could

not have been applied under Section 17 of the

Act and enquiry could not have been dispensed

with under Section 5-A of the Act.

23. The Division Bench stated;

“The  Financial  District  is  a  unique project  being  developed  by  the Corporation  wherein  the  reputed financial  institutions  like  Banks, Insurance etc., set up their offices to  serve  the  needs  of  the  trade, commerce and industry. The Corporation has  already  allotted  land  in  the Financial  District  for  Insurance Regulatory  and  Development  Authority of India (IRDA) and also to SBH Staff Training  Academy etc.  It is stated that in order to ensure compactness of the Financial District, the lands in question  are  under  acquisition  for public purpose and to utilize them for new  projects  being  developed  by  the Corporation.

2

The lands in question were identified and  notified  for  acquisition  after examining the matter carefully.  The lands in question are essential so as to ensure compactness of the Financial District  Project  being  developed  by the  Corporation.  It is stated that there  is  no  prohibition  to  acquire lands belonging to small farmers under the  due  process  of  law,  if  it  is inevitable.  The  allegation  of  the appellants that there are vast extents of  Government  lands  in  the  nearby villages and that there is absolutely no  reason  to  acquire  private  patta lands is denied.  The Government lands situated  in  the  adjoining  villages would  not  facilitate  compactness  of the  Financial  District  Project  being developed  by  the  Corporation.  It  is stated that the lands in question are under  acquisition  following  the  due process of law for utilizing the same for  public  purpose,  i.e.  development of  Financial  District  Project  and other  projects  being  development  by the  Corporation.   The  development works for the proposed works would be taken  up  as  soon  as  the  lands  are acquired  under  the  Land  Acquisition Act”.

24. In  pursuance of the order passed by

the learned single Judge and confirmed by the

Division Bench of the High Court, enquiry under

Section 5-A of the Act had been held.  Notices

were  issued  to  the  land  owners  and  persons

2

interested,  objections  were  invited,  hearing

was  afforded  and  finally  notification  under

Section 6 was issued on April 26, 2005 which

was published on the next day, i.e. April 27,

2005  in  the  Government  Gazette.  The  said

notification reads thus;

THE ANDHRA PRADESH GAZETTE

EXTRAORDINARY

PUBLISHED BY AUTHORITY

R.R. No. 85 HYDERABAD     WEDNESDAY 27th April 2005

No.G1/7180/2000 Dated  :  26-04-

2005

FORM – 5-A

DRAFT DECLARATION UNDER SECTION 6 OF THE LAND ACQUISITION ACT

2

Under Sec. (6) of the Land Acquisition  Act,  the Government of Andhra Pradesh hereby  declares  that  the land specified below in the schedule below and measuring acres (80-35) acres, be the little  more  or  less  is needed  for  public  purpose, wit  for  DEVELOPMENT  OF  NEW PROJECT  by  APIIC  Limited, under  Sections  3  and  7  of the  same  Act,  THE  SPECIAL DEPUTY  COLLECTOR,  LAND ACQUISITION(INDUSTRIES), Hyderabad,  is  appointed  to perform  the  functions  of Collector, under the Act and directed  to  take  order  for the acquisition of the said lands.   Under  sub-section (1) (2) of Section 17 of the Act,  the  Government  of Andhra  Pradesh  further directs, that the possession of  the  said  lands  may  be taken on the expiry of (15) days  from  the  date  of  the publication  of  the  notice mentioned in section 9(1) of the Act,  a plan of the land is kept in the office of the SPECIAL     DEPUTY

COLLECTOR,Land  acquisition (industries),  Hyderabad, and may be inspected at any time  during  the  office hours.      NOTICE is hereby given under section 9(1) & 10 and 9(3)  &  10  of  the  Land Acquisition  Act,  that  the State  Government  proposed to  acquire  the  lands mentioned  in  the  schedule. All  persons  interested  in the lands are requested to appear  in  person  or  by authorized  agent,  before the  on  SPECIAL  DEPUTY COLLECTOR, LAND ACQUISITION (INDUSTRIES),  Hyderabad, SNEHA  SILVER  JUBILEE BHAVAN,  Collectorate premises,  LAKDIKAPUL, HYDERABAD  on  21.05.2005  at 11-00 AM.

SCHEDULE

. . . . . .  . . .

25. The  said  notification  thereafter  was

challenged by the land owners in the High Court

of Andhra Pradesh in the present proceedings.

As already observed earlier, the petitions were

2

dismissed and hence the property owners have

challenged the said decision in this Court.

Statutory provisions 26. Before we deal with the contentions of

the parties, it is appropriate if we examine

the relevant provisions of the Land Acquisition

Act, 1894. As the Preamble states, the Act has

been enacted for the purpose of enabling the

State to acquire land for public purposes as

also for Companies. Section 3 defines various

expressions.  The  expression  ‘Company’  is

defined  in  clause  (e)  to  mean  a  Company  as

defined in the Companies Act, 1956 (other than

a  Government  Company).  Clause  (ee)  defines

‘appropriate  Government’.  Clause  (f)  defines

‘public purpose’. The definition is  inclusive

in nature and includes purposes mentioned in

sub-clauses (i) to (viii).  

27. Part II (Sections 4 to 17) relates to

‘acquisition’. Section 4 confers power on the

appropriate  Government  to  issue  preliminary

2

notification for acquisition of land needed or

likely to be needed for any public purpose or

for a Company. The proceedings for acquisition

thus begin with issuance of notification under

Section 4 which reads as under;

4.  Publication  of  preliminary notification  and  powers  of  officers thereupon—

(1)  Whenever  it  appears  to  the appropriate  Government  that  land  in any locality is needed or is likely to be  needed for any public purpose or for a company a notification to that effect  shall  be  published  in  the Official  Gazette and  in  two  daily newspapers  circulating  in  that locality of which at least one shall be  in the regional language and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality the last of the dates of such  publication  and  the  giving  of such public notice, being hereinafter referred to as the date of publication of the notification.

(2) Thereupon it shall be lawful for any  officer,  either,  generally  or specially  authorised  by  such Government in this behalf, and for his servants  and  workmen,  to  enter  upon and survey and take levels of any land in such locality;

2

to dig or bore in the sub-soil;

to  do  all  other  acts  necessary  to ascertain whether the land is adapted for such purpose;

to set out the boundaries of the land proposed to be taken and the intended line of the work (if any) proposed to be made thereon;

to  mark  such  levels,  boundaries  and line  by  placing  marks  and  cutting trenches,

and, where otherwise the survey cannot be completed and the levels taken and the boundaries and line marked, to cut down and clear away any part of any standing crop, fence or jungle:

Provided  that  no  person  shall  enter into any building or upon any enclosed court  or  garden  attached  to  a dwelling-house  (unless  with  the consent  of  the  occupier  thereof) without  previously  giving  such occupier at least seven days' notice in writing of his intention to do so.

28. Section  5A  as  inserted  by  the  Land

Acquisition (Amendment) Act, 1923 (Act 38 of

1923) provides for hearing of objections. It

enacts that any person interested in any land

3

which has been notified under Section 4 of the

Act as being needed or likely to be needed for

a public purpose or for a company may, within

thirty days from the date of the publication of

the notification, object to the acquisition of

the land. Such objections can be made to the

Collector  in  writing.  The  Collector  should

grant  the  objector  an  opportunity  of  being

heard in person or by any person authorised by

him in that behalf or by pleader and should,

after hearing all objections and after making

such  further  inquiry,  if  any,  as  he  thinks

necessary, either make a report in respect of

the land which has been notified under Section

4 (1), or make different reports in respect of

different  parcels  of  such  land,  to  the

appropriate  Government,  containing  his

recommendations  on  the  objections,  together

with the record of the proceedings held by him,

for  the  decision  of  that  Government.  The

section also declares that the decision of the

3

Appropriate Government on the objections shall

be ‘final’.

29. Section 6 relates to “declaration that

land is required for a public purpose”. The

said section is material and may be quoted in

extenso.

6. Declaration that land is required for a public purpose.-

(1) Subject to the provisions of Part VII of this Act, when the Appropriate Government  is  satisfied  after considering the report, if any, made under  section  5A,  sub-section  (2), that any particular land is needed for a public purpose, or for a company, a declaration  shall  be  made  to  that effect  under  the  signature  of  a Secretary  to  such  Government  or  of some  officer  duly  authorised  to certify  its  orders  an  different declarations may be made from time to time in respect of different parcels of  any  land  covered  by  the  same notification  under  section  4,  sub- section  (1),  irrespective  of  whether one report or different reports has or have  been  made  (wherever  required) under section 5-A, sub-section (2):

Provided  that  no  declaration  in respect of any particular land covered

3

by  a  notification  under  section  4, sub-section (1),—

(i)  published  after  the  commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967 but before the  commencement  of  the  Land Acquisition  (Amendment)  Act,  1984 shall  be  made  after  the  expiry  of three  years  from  the  date  of  the publication of the notification; or

(ii) published after the commencement of  the  Land  Acquisition  (Amendment) Act,  1984,  shall  be  made  after  the expiry of one year from the date of the publication of the notification:

Provided  further  that  no  such declaration shall be made unless the 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.

Explanation 1.-In computing any of the periods  referred  to  in  the  first proviso, the period during which any action  or proceeding to be taken in pursuance  of  the  notification  issued under Section 4, sub-section (1), is stayed by an order of a Court shall be excluded.

Explanation 2.-Where the compensation to be awarded for such property is to be  paid  out  of  the  funds  of  a corporation owned or controlled by the State,  such  compensation  shall  be

3

deemed to be compensation paid out of public revenues.

(2)  Every  declaration  shall  be published in the Official Gazette, and in two daily newspapers circulating in the  locality  in  which  the  land  is situate of which at least one shall be in  the  regional  language,  and  the Collector shall cause public notice of the substance of such declaration to be given at convenient places in the said locality (the last of the date of such  publication  and  the  giving  of such public notice, being hereinafter referred to as the date of publication of  the  declaration),  and  such declaration  shall  state  the  district or other territorial division in which the land is situate, the purpose for which  it  is  needed,  its  approximate area, and where a plan shall have been made of the land, the place where such plan may be inspected.

(3)  The  said  declaration  shall  be conclusive evidence that the land is needed for a public purpose or for a Company,  as  the  case  may  be;  and, after  making  such  declaration  the Appropriate Government may acquire the land in manner hereinafter appearing.

 (emphasis supplied)

3

30. Once the declaration under Section 6

has been made, it shall be conclusive evidence

that the land is needed for a public purpose.

31. Section  9  requires  the  Collector  to

issue notice to the person interested stating

that the Government intends to take possession

of the land, and that claims to compensation

for all interests in such land may be made to

him.  It  also  enumerates  particulars  to  be

mentioned in the notice.

32. Section  11  enjoins  the  Collector  to

proceed to enquire into the objections (if any)

which any person interested had filed pursuant

to the notice and the value of the land at the

date  of  the  publication  of  the  notification

under  section  4(1),  and   to  make  an  award.

Section 11A prescribes period within which such

award shall be made by the Collector. Section

12  declares  award  of  Collector  to  be  final

subject to the provisions of the Act. Section

3

16 empowers Collector after he has made the

award under section 11 to take possession of

the land which shall thereupon vest absolutely

in the Government, free from all encumbrances.

Section 17 deals with cases of urgency.

33. Part III (Sections 18 to 28A) provides

for  reference  to  Court  and  procedure  to  be

followed. Part IV (Sections 29 to 30) deals

with  apportionment  of  compensation.  Part  V

(Sections  31  to  34)  relates  to  payment  of

compensation.  Part  VI  (Sections  35  to  37)

permits temporary occupation of land.

34. Part  VII  (Sections  38  to  44B)  is

another important part dealing with acquisition

of land for Companies. Sections 39 provides for

previous consent of appropriate Government and

execution  of agreement  for such  acquisition.

Section 40 declares that no such consent can be

given  unless  the  appropriate  Government  is

satisfied either on the report of the Collector

3

under  Section  5A(2),  or  upon  an  enquiry

conducted in the manner laid down in Section 40

as  to  purpose  of  acquisition.  Section  41

provides for agreement between the Company and

appropriate  Government  in  respect  of  the

matters specified therein. Section 42 requires

publication of agreement in Official Gazette.

Section  44A  imposes  a  restriction  on  the

Company for which any land is acquired under

Part  VII  to  transfer  the  land  or  any  part

thereof  by  sale,  mortgage,  lease,  gift  or

otherwise except with the previous sanction of

the  appropriate  Government.  Section  44B

likewise  prohibits acquisition  of land  under

Part  VII  except  for  purposes  specified  in

Section 40 for private Companies.

35. Part  VIII (Sections 45 to 55) deals

with miscellaneous matters.

Eminent domain 36. ‘Eminent domain’ may be defined as the

right or power of a sovereign State to take

3

private  property  for  public  use  without  the

owner’s  consent  upon  the  payment  of  just

compensation.  It  means  nothing  more  or  less

than an inherent political right, founded on a

common necessity and interest of appropriating

the  property  of  individual  members  of  the

community to the great necessities and common

good  of  the  whole  society.  It  embraces  all

cases where, by the authority of the State and

for  the  public  good,  the  property  of  an

individual is taken without his consent to be

devoted to some particular use, by the State

itself, by a Corporation, public or private or

by  a private citizen for the welfare of the

public [American Jurisprudence, 2d, Volume 26,

pp.  638-39,  para  1;  Corpus  Juris  Secundum,

Volume 29, p. 776, para 1; Words & Phrases,

Permanent Edition, Volume 14, pp. 468-70].

37. ‘Eminent  domain’  is  thus  inherent

power  of  a  governmental  entity  to  take

privately owned property, especially land and

convert it to public use, subject to reasonable

3

compensation for the taking [vide P. Ramanatha

Aiyar’s Advanced Law Lexicon, Volume 2, page

1575].

38. The term ‘eminent domain’ is said to

have originated by Grotius, legal scholar of

the seventeenth century. He believed that the

State possessed the power to take or destroy

property for the benefit of the social unit,

but he believed that when the State so acted,

it  was  obligated  to  compensate  the  injured

property owner for his losses.

39. In his well known work ‘De Jure, Belli

et Pacis’, the learned author proclaimed; “The property of subject is under the eminent domain of the State, so that the State or he who acts for it may use,  alienate  and  even  destroy  such property,  not  only  in  the  case  of extreme  necessity,  in  which  even private person have a right over the property of other, but for the ends of public  utility,  to  which  ends  those who  founded  civil  society  must  be supposed  to  have  the  intended  the private ends should give way”.

40. Blackstone too believed that State had

no general power to take private property of

3

land-owners,  except  on  the  payment  of  a

reasonable price. The right of the State or the

sovereign  to  its  or  his  own  property  is

absolute while that of the subject or citizen

to his property is only paramount. The citizen

holds his property subject always to the right

of  the  sovereign  to  take  it  for  a  public

purpose. The power of eminent domain is merely

a means to an end; viz. larger public interest.

41. The power of eminent domain does not

depend for its existence on a specific grant.

It is inherent and exists in every sovereign

State without any recognition thereof in the

Constitution or in any statute. It is founded

on  the  law  of  necessity.  The  power  is

inalienable. No Legislature can bind itself or

its successors not to exercise this power when

public  necessity  demands  it.  Nor  it  can  be

abridged  or  restricted  by  agreement  or

contract.

42. Nichols in his classic book ‘Eminent

Domain’ defines  it  (eminent  domain)  as  “the

4

power of sovereign to take property for public

use without the owner’s consent”. 43. Another constitutional expert (Cooley)

in  his  treatise  on  the  ‘Constitutional

Limitations’, states; “More  accurately,  it  is  the rightful  authority  which  must rest  in  every  sovereignty  to control and regulate those rights of a public nature which pertain to its citizens in common and to appropriate  and  control individual  property  for  the public  benefit,  as  the  public safety, convenience or necessity may demand”.

44. Willis  in  his  well  known  work

‘Constitutional Law’ discusses two view points

as to exercise of power of eminent domain. The

older and stricter view was that unless the

property was dedicated for user by the public

at large or a considerable section thereof, it

would  not  be  for  public  use  or  for  public

purpose.  The  modern  and  more  liberal  view,

however,  is  that  it  is  not  an  essential

condition  of  public  use  that  the  property

4

should be transferred to public ownership or

for public user and it is sufficient that the

public derives advantage from the scheme.

45. In  Fallbrook  Irrigation  District  v.

Bradley, (1896) 164 U.S. 112 : 41 Law Ed. 369,

an  Act  of  California  provided  for  the

acquisition of lands whenever 50 land-owners or

a majority of them in a particular locality

required it for construction of a watercourse,

the object of the legislation being to enable

dry lands to be brought under wet cultivation.

The validity of the Act was challenged on the

ground that the acquisition would only benefit

particular  land  owners  who  could  take  water

from the channel and the public as such had no

direct interest in the matter and consequently

there was no public user. The contention was

right if narrow view was to be accepted but was

not  well-founded  if  liberal  view  was  to  be

adopted.

4

46. Rejecting  the  contention,  the  Court

observed;

"To  irrigate  and  thus  bring  into possible  cultivation  these  large masses  of  otherwise  worthless  lands would seem to be a public purpose and a  matter  of  public  interest,  not confined to the land-owners, or even to  anyone section of the State. The fact  that  the  use  of  the  water  is limited  to  the  land-owner  is  not, therefore, a fatal objection to this legislation. It is not essential that the  entire  community,  or  even  any considerable  portion  thereof,  should directly  enjoy  or  participate  in  an improvement in order to constitute a public use.....It is not necessary, in order that the use should be public that  every  resident  in  the  district should have the right to the use of the water."       (emphasis supplied)

47. The  above  statement  of  law  was

reiterated in subsequent cases. In  Rindge Co.

v. Los Angles County, (1923) 262 US 700 : 67

Law Ed 1186, the Court observed that "it is not

essential that the entire community or even a

considerable portion should directly enjoy or

4

participate  in  an  improvement  in  order  to

constitute a public use."

48. In New York City Housing Authority v.

Muller, 270 NYP 333: 105 ALR 905, certain lands

were acquired in pursuance of a governmental

project  for  clearing  slums  and  providing

housing  accommodation  to  persons  with  low

income.  The  validity  of  the  acquisition  was

questioned  on  the  ground  that  the  use  was

private  and  not  public.  The  Court,  however,

rejected the contention and stated;  

"Over many years and in a multitude of cases the courts have vainly attempted to define comprehensively the concept of a public use; and to formulate a universal  test  even  though  it  were possible,  would  in  an  inevitably changing  world  be  unwise  if  not futile".....  and  holding  that  those purposes were for the benefit of the public  the court went on to observe "It is also said that since the taking is to provide apartments' to be rented to  a class designated as persons of low income or to be leased or sold to limited dividend corporations the use is  private  and  not  public.  This objection  disregards  the  primary purpose of the legislation.  Use of a

4

proposed  structure,  facility  or service  by  everybody  and  anybody  is one of the abandoned, universal tests of a public use."

 (emphasis supplied)

49. In Muray v. La Guardia, 291 NY 320, a

Town  Corporation  was  formed  for  acquiring

certain  lands.  It  was  financed  by  the

Metropolitan Insurance Company which held all

the stocks of the Corporation. The owners of

the  lands  contended  that  the  scheme  was  to

benefit only few individuals and the Insurance

Company  which  was  a  private  Corporation  and

there was no public use in the project. The

Court, however, rejected the argument.  

50. Dealing with the contention that there

was no public use in the project because the

Insurance  Company  was  benefited,  the  Court

observed:

"Nor do we find merit in the related argument  that  unconstitutionality results  from  the  fact  that  in  the present case the statute permits the city to exercise the power of "Eminent

4

domain" to accomplish a project from which  'Metropolitan'  a  private corporation  may  ultimately  reap  a profit.  If  upon  completion  of  the project the public good is enhanced it does not matter that private interests may be benefited." (emphasis supplied)

51. In  Samuel  Berman  v.  Andrew  Parker,

(1954) 348 US 26 : 99 L Ed 27 : 75 S Ct 98,

owners instituted an action of condemnation of

their property under the District of Columbia

Redevelopment Act, 1945.  Plans were approved

and the Planning Commission certified them to

the agency for execution. The agency undertook

the exercise of redevelopment of the area. It

was  contended  by  the  land  owners  that  the

project  was  not  public  project  and  their

property could not be acquired.

52. Rejecting  the  contention,  the  Court

observed  that  it  does  not  sit  to  determine

whether a particular housing project is or is

not  desirable.  The  concept  of  the  public

welfare is broad and inclusive. The values it

represents are spiritual as well as physical,

4

aesthetic as well as monetary. It is within the

power of the Legislature to determine that the

community should be beautiful as also healthy,

spacious as also clean, well-balanced as also

carefully  patrolled. According  to the  Court,

the Congress and its authorized agencies have

made determinations that take into account a

wide variety of values and it was not for the

Court to reappraise them. “If those who govern

the  District  of  Columbia  decide  that  the

Nation's Capital should be beautiful as well

as  sanitary,  there  is  nothing  in  the  Fifth

Amendment that stands in the way.”  (emphasis

supplied)

53. Dealing with the contention that the

project was undertaken by one businessman for

the benefit of another businessman, the Court

observed;

“The  public  end  may  be  as  well  or better  served  through  an  agency  of private  enterprise  than  through  a

4

department  of  government—or  so  the Congress might conclude. We cannot say that  public  ownership  is  the  sole method  of  promoting  the  public purposes  of  community  redevelopment projects.  What  we  have  said  also disposes of any contention concerning the fact that certain property owners in  the  area  may  be  permitted  to repurchase  their  properties  for redevelopment  in  harmony  with  the overall  plan.  That,  too,  is  a legitimate  means  which  Congress  and its  agencies  may  adopt,  if  they choose”.    (emphasis supplied)

54. In  Hawaii  Housing  Authority  v.

Midkiff, 467 US 229 : 81 L Ed 2d 186 : 104 S Ct

2321, the Court held that, no doubt there is a

role  for  Courts  to  play  in  reviewing  a

Legislature's  judgment of  what constitutes  a

public use, even when the eminent domain power

is equated with the police power. But the Court

in  Berman made  clear  that  it  is  "extremely

narrow".  The  Court  emphasized  that  any

departure  from this  judicial restraint  would

result in courts deciding on what is and what

is not a governmental function and in their

invalidating legislation on the basis of their

4

view on that question. And the Court would not

substitute  its  judgment  for  a  Legislature's

judgment as to what constitutes a public use

"unless the use be palpably without reasonable

foundation."

55. Recently, in  Susette Kelo v. City of

New London, (2005) 545 US 469 : 125 S Ct 2655 :

162 L Ed 439, the land owners challenged the

city’s exercise of eminent domain power on the

ground  that  it  was  not  for  public  use.  The

project in question was a community project for

economic  revitalization  of  the  City  of  New

London for which the land was acquired.

56. It  was  submitted  by  the  learned

counsel for the respondents that the facts in

Kelo were similar to the facts of the present

case.  For that the counsel relied upon the

Integrated Development Project.  Dealing with

the project, the Court stated;

4

“The Fort Trumbull area is situated on a peninsula that juts into the Thames River.   The  area  comprises approximately  115  privately  owned properties, as well as the 32 acres of land  formerly  occupied  by  the  naval facility  (Trumbull  State  Park  now occupies  18  of  those  32  acres). Parcel  1  is  designated  for  a waterfront  conference  hotel  at  the center of a ‘Small urban village” that will include restaurants and shopping. This parcel will also have marinas for both recreational and commercial uses. A  pedestrian  “riverwalk”  will originate here and continue down the coast, connecting the waterfront areas of the development.  Parcel 2 will be the  site  of  approximately  80  new residences  organized  into  an  urban neighbourhood  and  linked  by  public walkway  to  the  remainder  of  the development, including the state park. This  parcel  also  includes  space reserved  for a new U.S. Coast Guard Museum.   Parcel 3, which is located immediately  north  of  the  Pfizer facility, will contain at least 90,000 square  feet  of  research  and development office space.  Parcel 4A is a 2.4-acre site that will be used either to support the adjacent state park, by providing parking or retail services for visitors, or to support the  nearby  marina.   Parcel  4B  will include a renovated marina, as well as the  final  stretch  of  the  riverwalk. Parcels 5, 6 and 7 will provide land for office and retail space, parking, and water-dependent commercial uses.”

57. The Court also stated;

5

“Two polar propositions are perfectly clear. On the one hand, it has long been accepted that the sovereign may not  take  the  property  of  A for  the sole  purpose  of  transferring  it  to another private party B, even though A is  paid  just  compensation.  On  the other hand, it is equally clear that a State may transfer property from one private  party  to  another  if  future ‘use by the public’ is the purpose of the taking; the condemnation of land for  a  railroad  with  common-carrier duties is a familiar example”.

58. The Court noted the contention of the

petitioners  that  ‘using  eminent  domain for

economic  development  impermissibly  blurs  the

boundary between public and private takings’.

It  also  conceded  that  quite  simply,  the

government’s pursuit of a public purpose might

benefit  individual  private  parties.   But

rejected the argument by stating—

“When the Legislature’s purpose is legitimate  and  its  means  are  not irrational, our cases make clear that empirical debates over the wisdom of other  kinds  of  socio-economic legislation are not to be carried out in the Federal Courts.”

5

59. The Court reiterated; “The public end

may  be  as  well  or  better  served  through  an

agency  of  private  enterprise  than  through  a

department of government – or so the Congress

might  conclude.   We  cannot  say  that  public

ownership is the sole method of promoting the

public  purposes  of  community  redevelopment

projects”. (emphasis supplied)

60. The  above  principles  have  been

accepted and applied in India also. Immediately

after the Constitution came into force, this

Court had an occasion to consider the power of

eminent  domain in  the  leading  case  of

Charanjit Lal Chowdhury v. Union of India &

Ors., (1950) 1 SCR 869.

61. Referring to the doctrine of  eminent

domain in American Legal system, Mukherjea, J.

(as His Lordship then was) stated;

5

“It  is  a  right  inherent  in  every sovereign  to  take  and  appropriate private  property  belonging  to individual  citizens  for  public  use. This  right,  which  is  described  as eminent  domain in  American  law,  is like  the  power  of  taxation,  an offspring of political necessity, and it  is  supposed  to  be  based  upon  an implied reservation by Government that private  property  acquired  by  its citizens under its protection may be taken or its use controlled for public benefit irrespective of the wishes of the owner”.

62. In  Deputy  Commissioner  &  Collector,

Kamrup & Ors. v. Durganath Sarma, (1968) 1 SCR

561; drawing distinction between police power

and  power  of  eminent  domain,  this  Court

observed;

“In the exercise of its eminent domain power, the State may take any property from the owner and may appropriate it for  public  purposes.  The  police  and eminent domain powers are essentially distinct. Under the police power many restrictions  may  be  imposed  and  the property may even be destroyed without compensation  being  given,  whereas under the power of eminent domain, the property may be appropriated to public use on payment of compensation only”.

5

63. In  Coffee Board, Karnataka, Bangalore

v. Commissioner of Commercial Taxes, Karnataka

& Ors., (1988) 3 SCC 263, referring to American

authorities,  Mukharji,  J.   (as  His  Lordship

then was) stated;

“It  is  trite  knowledge  that  eminent domain  is  an  essential  attribute  of sovereignty  of  every  state  and authorities  are  universal  in  support of the definition of eminent domain as the  power  of  the  sovereign  to  take property  for  public  use  without  the owner's  consent  upon  making  just compensation”.

64. In  Scindia Employees' Union v.  State

of Maharashtra & Ors., (1996) 10 SCC 150, this

Court observed;  

“The  very  object  of  compulsory acquisition  is  in  exercise  of  the power of eminent domain by the State against the wishes or willingness of the owner or person interested in the land. Therefore, so long as the public purpose subsists the exercise of the power  of  eminent  domain  cannot  be questioned. Publication of declaration under Section 6 is conclusive evidence of  public  purpose.  In  view  of  the finding  that  it  is  a  question  of

5

expansion  of  dockyard  for  defence purpose, it is a public purpose”.  

65. In  Sharda  Devi  v.  State  of  Bihar  &

Anr., (2003) 3 SCC 128, this Court said; “The  power  to  acquire  by  State  the land owned by its subjects hails from the right of eminent domain vesting in the  State  which  is  essentially  an attribute  of  sovereign  power  of  the State. So long as the public purpose subsists the exercise of the power by the State to acquire the land of its subjects without regard to the wishes or willingness of the owner or person interested  in  the  land  cannot  be questioned”.  

Public Purpose

66. There  is  no  dispute  that  an

appropriate Government may acquire land for any

‘public  purpose’.  The  expression  ‘public

purpose’ is defined in clause (f) of Section 3

of  the  Act.  As  already  noted  earlier,  the

definition  is  inclusive in  nature  and  reads

thus:

(f)  The  expression  "public  purpose" includes-

5

(i) the provision of village-sites or the extension, planned development or improvement of existing village-sites;

(ii) the provision of land for town or rural planning;

(iii)  the  provision  of  land  for planned  development  of  land  from public  funds  in  pursuance  of  any scheme  or  policy  of  Government  and subsequent  disposal  thereof  in  whole or  in  part  by  lease,  assignment  or outright  sale  with  the  object  of securing  further  development  as planned;

(iv)  the  provision  of  land  for  a corporation owned or controlled by the State;

(v)  the  provision  of  land  for residential  purposes  to  the  poor  or landless  or  to  persons  residing  in areas affected by natural calamities, or to persons is placed or affected by reason  of  the  implementation  of  any scheme  undertaken  by  Government,  any local authority or a corporation owned or controlled by the State;

(vi)  the  provision  of  land  for carrying out any educational, housing, health  or  slum  clearance  scheme sponsored  by  Government,  or  by  any authority  established  by  Government for carrying out any such scheme, or, with  the  prior  approval  of  the appropriate  Government,  by  a  local authority,  or  a  society  registered

5

under the Societies Registration Act, 1860  (21  of  1860),  or  under  any corresponding law for the time being in force in a State, or a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State;

(vii)  the provision of land for any other scheme of development sponsored by  Government  or,  with  the  prior approval  of  the  appropriate Government, by a local authority;

(viii) the provision of any premises or  building  for  locating  a  public office,

—but does not include acquisition of land for companies;

(emphasis supplied)

67. The  expression  (‘public  purpose’)  is

of  very  wide  amplitude.  It  is  merely

illustrative and not exhaustive. The inclusive

definition  does  not  restrict  its  ambit  and

scope. Really, the expression is incapable of

precise and comprehensive definition. And it is

neither desirable nor advisable to attempt to

define it. It is used in a generic sense of

5

including any purpose wherein even a fraction

of the community may be interested or by which

it may be benefited.

68. We  may  also  refer  to  few  decisions

wherein  the  expression  came  up  for

consideration of Courts.

69. Before  about  a  century,  in  Hamabai

Framjee Petit v. Secretary of State, (1911) 13

Bom LR 1097, certain lands were sought to be

acquired for erecting buildings for the use of

Government Officials. The action was challenged

in  the  High  Court  of  Judicature  at  Bombay

contending  that  the  purpose  of  acquisition

could not be said to be ‘public purpose’.

70. Negativing the arguments and upholding

the acquisition, Batchelor, J. observed;

"General  definitions  are,  I  think, rather  to  be  avoided  where  the avoidance is possible, and I make no

5

attempt to define precisely the extent of the phrase 'public purpose' in the lease; it is enough to say that, in my opinion, the phrase, whatever else it may mean, must include a purpose, that is,  an  object  or  aim,  in  which  the general interest of the community, as opposed to the particular interest of individuals,  is directly and vitally concerned".        (emphasis supplied)

71. The aggrieved appellant approached the

Privy Council. The Council in  Hamabai Framjee

Petit v. Secretary of State, (1914) 42 IA 44 :

AIR 1914 PC 20 approved the above observations

of  Batchelor,  J.  Speaking  for  the  Judicial

Committee, Lord Dunedin stated;

“All  that  remains  is  to  determine whether the purpose here is a purpose in which the general interest of the community  is  concerned.  Prima  facie the  Government  are  good  judges  of that.  They  are  not  absolute  judges. They cannot say: ‘Sic volo sic jubeo’ but at least a Court would not easily hold them to be wrong. But here, so far from holding them to be wrong, the whole of the learned Judges, who are thoroughly  conversant  with  the conditions  of  Indian  life,  say  that they are satisfied that the scheme is one  which  will  redound  to  public

5

benefit by helping the Government to maintain  the  efficiency  of  its servants. From such a conclusion their Lordships would be slow to differ, and upon  its  own  statement  it  commends itself to their judgment”.

     (emphasis supplied)

72. In Veeraraghavachartar v. Secretary of

State, (1926) 49 Mad 237 : AIR 1925 Mad 837,

certain vacant sites were acquired for enabling

Panchamas to build houses. It was argued that

this was not a public purpose as the benefits

of  the  acquisition  were  to  go  only  to  few

individuals. The contention was rejected by the

Court  observing  that  it  is  not  possible  to

define what a public purpose is. There can be

no doubt that provision of house sites for poor

people is a public purpose for it benefits a

large  class  of  people  and  not  one  or  two

individuals.

73. In State of Bihar v. Kameshwar Singh,

1952  SCR  889,  a  Constitution  Bench  of  this

6

Court was examining vires of certain provisions

of the Bihar Land Reforms Act, 1950 and other

State laws in the context of Article 31 of the

Constitution  (as  then  stood).  The

constitutional validity was challenged on the

ground  that  the  Act  failed  to  provide  for

compensation  and  there  was  lack  of  public

purpose.

74. The  Court,  however,  negatived  the

contention. As to ‘public purpose’, Mahajan, J.

(as His Lordship then was), observed;

“The  expression  ‘public  purpose’  is not  capable  of  a  precise  definition and has not a rigid meaning. It can only  be  defined  by  a  process  of judicial  inclusion  and  exclusion.  In other  words,  the  definition  of  the expression  is  elastic  and  takes  its colour  from the statute in which it occurs, the concept varying with the time  and  state  of  society  and  its needs.  The point to be determined in each case is whether the acquisition is  in  the  general  interest  of  the community  as  distinguished  from  the private interest of an individual”.

 (emphasis supplied)

6

75. In the concurring judgment, S.R. Das,

J. (as His Lordship then was) stated;

"From what I have stated so far, it follows  that  whatever  furthers  the general interests of the community as opposed to the particular interest of the individual must be regarded as a public purpose. With the onward march of civilisation our notions as to the scope of the general interest of the community  are  fast  changing  and widening with the result that our old and  narrower  notions  as  to  the sanctity  of  the  private  interest  of the individual can no longer stem the forward flowing tide of time and must necessarily  give  way  to  the  broader notions of the general interest of the community.  The  emphasis  is unmistakably  shifting  from  the individual  to  the  community.  This modern  trend  in  the  social  and political philosophy is well reflected and  given  expression  to  in  our Constitution."

 (emphasis supplied)

76. In  State  of  Bombay  v.  Ali  Gulshan,

(1955) 2 SCR 867, a Constitution Bench of this

Court  considered  vires of  the  Bombay  Land

Requisition  Act,  1948  (Act  23  of  1948).

Interpreting provisions of the Constitution and

Schedule  VII  thereof,  the  Court  held  that

6

requisition of property by the Government of

Bombay for accommodation of Foreign Consulate

could be said to be ‘public purpose’. It was

held that every State purpose or Union purpose

is  a  public  purpose  but  there  may  be

acquisition or requisition which is neither for

the State nor for the Union and yet it may be

for   a  ‘public  purpose’;  for  instance,

acquisition  for  construction  of  hospital  or

educational institution by a private individual

or institution.

77. In State of Bombay v. R.S. Nanji, 1956

SCR  18,  land  was  requisitioned  for

accommodating  employees  of  Road  Transport

Corporation. It was contended that there was no

‘public  purpose’  and  hence  the  action  was

illegal. Referring to Hamabai,  Ali Gulshan and

State of Bombay v. Bhanji Munji, (1955) 1 SCR

777,  the  Constitution  Bench  stated  that  the

expression ‘public purpose’ must be decided in

6

each case examining closely all the facts and

circumstances of the case.

78. On the facts of the case, it was held

that a break down in the organization of the

Corporation, leading to dislocation of the road

transport  system  would  create  a  chaotic

condition to the detriment of the interest of

the community. Providing living accommodation

for its employees is a statutory activity of

the Corporation and it is essential for the

Corporation  to provide  such accommodation  in

order to ensure an efficient working of the

road transport system and it must, therefore,

be held to be ‘public purpose’.

79. In  the  leading  case  of  Somawanti

(Smt.)  &  Ors.,  v.  State  of  Punjab  &  Ors.,

(1963) 2 SCR 774, certain lands were acquired

by the Government for public purpose, viz. for

setting up a factory for manufacturing various

ranges  of  refrigeration  compressors  and

6

ancillary  equipments.  It  was  contended  that

acquisition was not for ‘public purpose’ and

hence it was unlawful.

80. Interpreting  inclusive  definition  of

‘public  purpose’  in  the  Act,  Mudholkar,  J.

stated;

“This is an inclusive definition and a compendious  one  and  therefore,  does not  assist  us  very  much  in ascertaining  the  ambit  of  the expression  'public  purpose'.  Broadly speaking  the  expression  'public purpose'  would,  however,  include  a purpose in which the general interest of  the community, as opposed to the particular interest of individuals, is directly and vitally concerned”.

81. It  was  also  observed  that  ‘public

purpose’ is bound to vary with the times and

the prevailing conditions in a given locality

and, therefore, it would not be a practical

proposition  even  to  attempt  a  comprehensive

definition of it. It is because of this that

the Legislature has left it to the Government

6

to say what is a public purpose and also to

declare the need of a given land for a public

purpose.

82. In  Arnold  Rodricks v.  State  of

Maharashtra, (1966) 3 SCR 885, this Court held

that the phrase 'public purpose' has no static

connotation, which is fixed for all times. It

is also not possible to lay down a definition

of what public purpose is, as the concept of

public purpose may change from time to time.

It,  however,  involves  in  it  an  element  of

general interest of the community which should

be regarded as a public purpose.

83. In  Bhim Singhji v. Union of India &

Ors.,  (1981) 1 SCC 166, this Court held that

the concept of public purpose implies  that

acquisition or requisition of property is in

the interest of general public and the purpose

for which such acquisition or requisition is

6

made  directly  and  vitally  subserves  public

interest.

84. Recently,  in  Daulat  Singh  Surana  v.

First Land Acquisition Collector, (2007) 1 SCC

641,  land  was  sought  to  be  acquired  for

construction of office of Deputy Commissioner

of Police (Security Control). It was contended

that there was no element of public purpose and

hence  the  acquisition  was  not  in  accordance

with law.

85. Negativing  the  contention  and

upholding the acquisition, the Court held that

the  expression  ‘public  purpose’  includes  a

public purpose in which greatest interest of

the  community  as  opposed  to  a  particular

interest  of  an  individual  is  directly

concerned.  The  concept  is  not  static  but

changes  with  the  passage  of  time.  Power  of

eminent domain can, therefore, be exercised by

the State in public interest.

6

86. A ‘public purpose’ is thus wider than

a ‘public necessity’. Purpose is more pervasive

than urgency. That which one sets before him to

accomplish,  an  end,  intention,  aim,  object,

plan  or  project,  is  purpose.  A  need  or

necessity,  on  the  other  hand,  is  urgent,

unavoidable,  compulsive.  “Public  purpose

should  be  liberally  construed,  not  whittled

down by logomachy”. (emphasis supplied)

87. In  State  of  Karnataka  &  Anr.  v.

Ranganatha  Reddy  &  Anr.,  (1977)  4  SCC  471;

Krishna Iyer, J. stated;

“There  may  be  many  processes  of satisfying  a  public  purpose.  A  wide range of choices may exist. The State may walk into the open market and buy the items, movable and immovable, to fulfill the public purpose; or it may compulsorily acquire from some private person's possession and ownership the articles  needed  to  meet  the  public purpose;  it  may  requisition,  instead of  resorting  to  acquisition;  it  may take  on  loan  or  on  hire  or  itself manufacture  or  produce.  All  these steps are various alternative means to meet the public purpose. The State may

6

need  chalk or cheese, pins, pens or planes,  boats,  buses  or  buildings, carts, cars, or eating houses or any other of the innumerable items to run a welfare-oriented administration or a public  corporation  or  answer  a community requirement. If the purpose is  for  servicing  the  public,  as governmental purposes ordinarily are, then  everything  desiderated  for subserving  such  public  purpose  falls under the broad and expanding rubric. The  nexus  between  the  taking  of property  and  the  public  purpose springs necessarily into existence if the former is capable of answering the latter.  On  the  other  hand,  if  the purpose  is  a  private  or  non-public one, the mere fact that the hand that acquires or requires is Government or a  public  corporation,  does  not  make the  purpose  automatically  a  public purpose. Let us illustrate. If a fleet of cars is desired for conveyance of public  officers,  the  purpose  is  a public one. If the same fleet of cars is sought for fulfilling the tourist appetite of friends and relations of the  same  public  officers,  it  is  a private purpose. If bread is 'seized' for feeding a starving section of the community, it is a public purpose that is  met  but,  if  the  same  bread  is desired  for the private dinner of a political maharajah who may pro tern fill a public office, it is a private purpose.  Of  course,  the  thing  taken must be capable of serving the object of the taking. If you want to run bus transport you cannot take buffaloes”.

 (emphasis supplied)

6

88. As  observed by Bhagwati, J. (as His

Lordship  then  was)  in  National  Textile

Workers’ Union & Ors. v. P.R. Ramakrishnan &

Ors.,  (1983)  1  SCC  228,  the  law  must  adapt

itself  with  the  changing  socio-economic

context.

89. His Lordship said;

“We cannot allow the dead hand of the past  to  stifle  the  growth  of  the living  present.  Law  cannot  stand still;  it  must  change  with  the changing  social  concepts  and  values. If  the  bark  that  protects  the  tree fails to grow and expand alongwith the tree, it will either choke the tree or if it is a living, tree, it will shed that bark and grow a new living bark for  itself.  Similarly,  if  the  law fails  to  respond  to  the  needs  of changing society, then either it will stifle the growth of the society and choke its progress or if the society is vigorous enough, it will cast away the law which stands in the way of its growth.  Law must therefore constantly be on the move adopting itself to the fast  changing  society  and  not  lag behind”.   (emphasis supplied)

7

90. Finally, we may refer to Tenth Report

of the Law Commission of India on “The Law of

Acquisition and Requisitioning of Land” wherein

the Law Commission considering the meaning of

‘public purpose’ under the Act, stated;

“37. (a)Public purpose.—Public purpose is not defined in the Act. There is only  an  inclusive  definition  which relates to village sites in districts. In  other  respects,  there  is  no indication in the Act of any test for determining  whether  a  purpose  is  a public purpose or not. A large number of suggestions have been received by us urging that we should clearly and exhaustively  define  the  term  ‘public purpose’. In an ever changing world, the  connotation  of  the  expression ‘public  purpose’  must  necessarily change.  If  a  precise  definition  is enacted,  it  would  become  rigid  and leave  no room for alteration in the light  of  changing  circumstances.  It would leave no room for the courts to adjust the meaning of the expression according to the needs of the times”.

 (emphasis supplied)

91. Referring  to  leading  authorities  on

‘eminent  domain’  and  ‘public  purpose’,  the

Commission observed; “It is, in our view, neither possible nor expedient to attempt an exhaustive

7

definition  of  public  purposes.  The only  guiding  rule  for  the determination of its meaning is that the  proposed  acquisition  or requisition should tend to promote the welfare of the community as distinct from  the  benefit  conferred  upon  an individual.  The  mere  fact  that  the immediate  use  is  to  benefit  a particular  individual  would  not prevent  the  purpose  being  a  public one, if in the result it is conducive to the welfare of the community. The question is exhaustively discussed in Thambiran  Padayachi  v.  State  of Madras,  AIR  1952  Mad  756,  by Venatarama  Aiyar,  J.  All  that  can, therefore,  be  attempted  in  a legislation of this kind is to provide an  inclusive  definition,  so  as  to endow it with sufficient elasticity to enable  the  courts  to  interpret  the meaning  of  the  expression  ‘public purpose’ according to the needs of the situation,  and this is what we have attempted”.

 (emphasis supplied)

Industrial policy of State

92. Learned  counsel  for  the  respondents

invited  our  attention  to  Industrial  Policy,

2000-05 adopted by the State of Andhra Pradesh.

Reference  was  also  made  to  G.O.  Ms.  No.427

dated  18th December,  2000  under  which  the

Government  decided  to  undertake  Mega

7

Infrastructure Projects in the State to attract

industries in the State and for the overall

development of the State.  The policy laid down

guidelines  for  attracting  and  facilitating

private  investment  in  infrastructure.  It

provided  for  infrastructure  projects

implementation  in  Private-Public  Partnership

(PPP) requiring Government support.  The Policy

envisaged the need for a special legislation

called Infrastructure Development Act (‘IDA’)

supported  by rules,  guidelines and  sectorial

policies. While IDA was to constitute a Special

Infrastructure Promotion Authority (IPA) having

quasi judicial functions, the Task Force was to

undertake executive functions outlined in IDA.

The intention behind the integrated project was

to establish Hyderabad as a major business-cum-

leisure  tourism infrastructure  asset for  the

State.  It  was  also  stated  that  in  the

background  of  ‘World  Tourism  Organisation

Report on the State of Andhra Pradesh in 2000’

and in the light of the ‘Vision 2000 Document’

7

prepared in mid 1990s highlighting the need for

tourism as an important economic driver for the

State, the State Government initiated a Project

Development  exercise  in  2000-01  for  an

international  standard  convention  centre

complex integrated with other components.

93. In pursuance of the above policy, the

Andhra  Pradesh  Infrastructure  Development

Enabling Act, 2001 (Act No. 36 of 2001) has

been enacted.

94. The Preamble of the Act states;

“An  Act  to  provide  for  the  rapid development  of  physical  and  social infrastructure  in  the  State  and attract  private  sector  participation in  the  designing,  financing, construction,  operation  and maintenance of infrastructure projects in  the  State  and  provide  a comprehensive legislation for reducing administrative and  procedural delays, identifying  generic  project  risks, detailing  various  incentives, detailing  the  project  delivery process, procedures for reconciliation of  disputes and also to provide for other ancillary and incidental matters thereto  with  a  view  to  presenting bankable  projects  to  the  private sector  and  improving  level  of infrastructure in the state of Andhra

7

Pradesh  and  for  matters  connected therein or incidental thereto.”

95. Sub-section (iii) of Section 1 enacts

that the Act will apply to all infrastructure

projects  implemented  through  public-private

partnership  in  the  sectors  enumerated  in

Schedule  III  of  the  Act  and  to  such  other

sectors as may be notified by the Government

under  the  Act  from  time  to  time.   Detailed

provisions  have been  made for  infrastructure

project to be undertaken under the Act.

96. It  was,  therefore,  submitted  by  the

learned  counsel  for  the  respondents  that  a

policy  decision  was  taken  by  the  State  to

develop  information  technology  and

telecommunications,  industrial  knowledge,

tourism,  trade,  conventions  and  exhibition

centres, etc. It was also provided that if the

Government land is not available, APIIC would

acquire land for the Project.

97. The  respondents  also  referred  to  a

Memorandum of Understanding (MoU) between APIIC

7

and Emaar Properties.  It was submitted that in

pursuance  of  the  policy  decision  and  MoU,

Integrated Project was to be undertaken by the

respondents which was a ‘public purpose’ under

Sections 4 and 6 of the Act.

98. It  was  contended  by  the  learned

counsel  for  the  respondents  that  a  policy

decision was taken by the State to acquire land

pursuant to ‘industrial policy’ of the State.

It was submitted that as per settled law, it is

open to public authorities to formulate policy,

to change or rechange it and normally a writ

Court will not interfere in such matters.

99. In this connection, our attention has

been  invited  to  several  decisions  of  this

Court. It is, however, not necessary for us to

refer to all the decisions. Normally, a writ

Court  will  not  propel  into  the  unchartered

ocean  of  Governmental  Policy  [vide  Bennett

7

Coleman & Co. v. Union of India, (1972) 2 SCC

788].

100. Recently, in  Dhampur Sugar (Kashipur)

Ltd. v. State of Uttaranchal & Ors., (2007) 8

SCC  418,  one  of  us  (C.K.  Thakker,  J.)

considered the issue in detail and observed;

“In our judgment, it is well-settled that  public  authorities  must  have liberty  and  freedom  in  framing policies. No doubt, the discretion is not absolute, unqualified, unfettered or  uncanalised  and  judiciary  has control over all executive actions. At the  same time, however, it is well- established  that  courts  are  ill- equipped to deal with these matters. In  complex  social,  economic  and commercial matters, decisions have to be  taken  by  governmental  authorities keeping in view several factors, and it  is  not  possible  for  courts  to consider  competing  claims  and conflicting interests and to conclude which way the balance tilts. There are no  objective,  justiciable  or manageable  standards  to  judge  the issues  nor  such  questions  can  be decided on 'a priori' considerations”.

 (emphasis supplied)

7

101. It  is,  therefore,  a  settled

proposition  of  law  that  in  absence  of

illegality or violation of law, a Court of law

will not interfere in policy matters.

Acquisition for Company: Whether public purpose?

102. The  main  contention  of  the  learned

counsel for the appellants in all these cases

is that the land is sought to be acquired by

the  Government  for  a  private  Company.  In

accordance  with  the  provisions  of  the  Act,

therefore,  procedure  laid  down  by  the

Legislature  in  Part  VII  was  required  to  be

followed. According to the counsel, since the

acquisition is not in accordance with Part VII

of the Act, the entire acquisition is vitiated

being contrary to law. It is, therefore, liable

to be quashed and set aside.

103. The  submission  on  behalf  of  the

respondents, on the other hand, is that the

acquisition  is  by  the  State  for  its

instrumentality  i.e.  APIIC.  Such  acquisition

7

was,  therefore,  for  ‘public  purpose’.  The

entire compensation was to be paid by APIIC and

hence  procedure,  which  was  required  to  be

followed, was under Part II and not under Part

VII  as  contended  by  the  writ  petitioners.

Admittedly,  the  said  procedure  has  been

followed and hence it cannot be said that the

acquisition was not in consonance with law. It

was also submitted that in earlier proceedings,

this contention had been expressly raised by

the writ petitioners before the High Court. The

learned Single Judge specifically negatived it

holding that the land was needed for ‘public

purpose’. The said order was confirmed even by

the  Division  Bench.  Hence,  so  far  as

acquisition by the ‘State’ under Part II of the

Act  for  public  purpose  is  concerned,  the

earlier order has attained finality.  The High

Court held that the appropriate Government was

not justified in invoking urgency clause under

Section  17  of  the  Act  and  no  urgency  could

demonstrably be shown to exist, the declaration

7

as to urgency and dispensing with the inquiry

under Section 5-A of the Act was held unlawful.

The State Government was, therefore, directed

to follow procedure under Section 5A of the Act

by  issuing  notice  to  the  land  owners  by

inviting objections and affording opportunity

of being heard to the persons interested in the

land.  The  said  exercise  was  thereafter

undertaken  by  the  authorities  and  final

notification under Section 6 of the Act was

issued which does not call for interference and

the High Court was justified in dismissing the

appeals.

104. Now the term ‘Company’ is defined in

Clause (e) of Section 6 thus:

“(e) the expression ‘Company’ means-

(i) a company as defined in Section 3 of the Companies Act, 1956 (1 of  1956),  other  than  a Government  company  referred  to in clause (cc);

(ii) a society registered under the Societies Registration Act, 1860 (21  of  1860),  or  under  any corresponding law for the time being in force in a State, other

8

than  a society  referred to  in clause (cc);

(iii)  a  co-operative  society  within the meaning of any law relating to co- operative societies for the time being in force in any State, other than a co-operative  society  referred  to  in clause (cc).

105. The  above  definition  makes  it  clear

that  a  ‘company’  is  as  defined  under  the

Companies Act, 1956, or a society registered

under the Societies Registration Act, 1860 or a

cooperative society under any State law.

106. Section  4  of  the  Act  expressly

authorizes the appropriate Government to issue

preliminary  notification  for  acquisition  of

land likely to be needed for any public purpose

or  ‘for  a  company’.  Likewise,  Section  6

declares that when the appropriate Government

is satisfied that a particular land is needed

for  a  public  purpose  or  ‘for  a  company’,  a

declaration shall be made to that effect.  It

is thus clear that appropriate Government may

acquire land if such land is needed for any

8

public purpose or ‘for a company’.  If it is

so, acquisition will be governed by Part II of

the Act and the procedure laid down in the said

Part has to be followed.  Part VII, on the

other hand, deals with acquisition of land for

companies.  In such cases, previous consent of

appropriate  Government  and  execution  of

agreement for transfer of land is necessary and

procedure laid down in that Part is  sine qua

non for the acquisition.

107. Whereas  the  contention  of  the

appellants is that the so-called acquisition is

for a private company and hence it would be

governed by Part VII of the Act, the stand of

the respondents is that it was in pursuance of

industrial policy of the State that land was to

be acquired by APIIC and the entire amount of

compensation was to be paid by APIIC and as

such the acquisition is covered by Part II of

the Act.

8

108. Our attention has been invited by the

learned counsel for both the parties to some of

the decisions on this issue.

109. Babu Barkya Thakur v. State of Bombay

(now Maharashtra) & Ors., (1961) 1 SCR 128 was

probably the  first  leading  decision  of  this

Court  on  the  point.  In  that  case,  a

Notification was issued by the erstwhile State

of Bombay on April 3, 1959 under Section 4 of

the Act wherein it was stated that the lands

specified  in  the  schedule  attached  to  the

Notification were likely to be needed for the

purpose of M/s Mukund Iron & Steel Works Ltd.,

a Company registered under the Indian Companies

Act,  1913.  The  petitioner  lodged  objections

challenging the Notification on the ground that

the  lands  were  not  required  for  ‘public

purpose’ and the proceedings were vexatious and

malicious.  In the  counter-affidavit filed  by

the Special Land Acquisition Officer, it was

denied that the acquisition of the land was not

8

for  the  public  purpose  and  the  proceedings

were, therefore, vitiated.

110. The  Court,  after  referring  the

Preamble  and  the  relevant  provisions  of  the

Act, held that acquisition for Company under

the Act was for a ‘public purpose’ inasmuch as

constructing  dwelling  houses  and  providing

amenities for the benefit of workmen employed

by the Company would serve public purpose.  

111. The Court observed;

“Further, though it may appear on the words of the Act contained in Part II, which contains the operative portions of  the  proceedings  leading  up  to acquisition  by  the  Collector  that acquisition for a Company may or may not  be  for  a  public  purpose,  the provisions of Part VII make it clear that the appropriate Government cannot permit the bringing into operation the effective machinery of the Act unless it is satisfied as aforesaid, namely, that the purpose of acquisition is to enable the Company to erect dwelling houses for workmen employed by it or for  the  provision  of  amenities directly connected with the Company or that  the  land  is  needed  for construction  of  some  work  of  public utility.  These  requirements  indicate that  the  acquisition  for  a  Company also  is  in  substance  for  a  public

8

purpose  inasmuch  as  it  cannot  be seriously contended that constructing dwelling  houses,  and  providing amenities  for  the  benefit  of  the workmen  employed  by  it  and construction  of  some  work  of  public utility  do  not  serve  a  public purpose”.                    (emphasis supplied)

112. In Pandit Jhandulal & Ors. v. State of

Punjab & Ors.,  (1961) 2 SCR 459, the land of

the appellant was sought to be acquired for

construction of houses by members of the Thapar

Industries Co-operative Housing Society Ltd.,

Yamuna  Nagar.  Procedings  were,  therefore,

initiated for acquisition of land under Part II

of the Act. The action was challenged,  inter

alia,  on  the  ground  that  there  was  non-

compliance with the provisions of Part VII of

the Act and the proceedings were liable to be

quashed  as  the  said  procedure  had  not  been

followed. The High Court held that the land was

acquired for a public purpose and there was no

need to comply with the provisions of Part VII,

even though the Company was to pay the entire

8

amount of compensation (which according to this

Court was not factually correct). The aggrieved

land owner approached this Court. 113. According  to  this  Court,  the  main

point for determination was whether or not the

acquisition  proceedings had  been vitiated  by

reason of the admitted fact that there was no

attempt made by the Government to comply with

the  requirement  of  Part  VII  of  the  Act.

Referring to Babu Barkya, this Court held that

the conclusion arrived at by the High Court was

‘entirely  correct’,  though  the  process  of

reasoning  by  which  it  had  reached  the

conclusion  was erroneous.  The Court  observed

that the Act contemplates acquisition for (i) a

public purpose, and (ii) for a Company; thus,

conveying  the  idea  that  acquisition  for  a

Company, is not for a public purpose. It was

also  observed  that  the  purposes  of  public

utility, referred to in Sections 40 and 41 of

the Act were akin to public purpose. Hence,

acquisition  for  a  public  purpose  as  also

8

acquisition  for  a  Company  are  governed  by

considerations  of  public  utility.  But  the

procedure for the two kinds of acquisitions is

different  and  if  it  is  for  a  Company,  then

acquisition has to be effected in accordance

with the procedure laid down in Part VII. 114. Considering  the  ambit  and  scope  of

Sections 6 and 39 to 41 and referring to Babu

Barkya, the Court observed; “There  is no doubt that, as pointed out  in  the  recent  decision  of  this Court,  the  Act  contemplates  for  a public purpose and for a Company, thus conveying  the  idea  that  acquisition for  a  Company  is  not  for  a  public purpose.  It  has  been  held  by  this Court  in  that  decision  that  the purposes  of  public  utility,  referred to in Ss. 40-41 of the Act, are akin to public purpose.  Hence, acquisition for  a  public  purpose  as  also acquisitions  for  a  company  are governed  by  considerations  of  public utility.   But the procedure for the two  kinds  of  acquisitions  is different, in so far as Part VII has made  substantive  provisions  for acquisitions  of  land  for  Companies. Where acquisition is made for a public purpose, the cost of acquisition for payment of compensation has to be paid wholly  or  partly  out  of  Public Revenues, or some fund controlled or

8

managed by a local authority.  On the other  hand,  in  the  case  of  an acquisition  for  a  company,  the compensation  has  to  be  paid  by  the Company.  But, in such a case, there has to be an agreement, under S. 41, for the transfer of the land acquired by  the Government to the Company on payment of the cost of acquisition, as also other matters not material to our present  purpose.   The  agreement contemplated by S.41 is to be entered into  between  the  Company  and  the appropriate Government only after the latter is satisfied about the purpose of  the  proposed  acquisition,  and subject  to  the  condition  precedent that  the  previous  consent  of  the appropriate Government has been given to  the  acquisition.   The  ‘previous consent’  itself  of  the  appropriate Government is made to depend upon the satisfaction  of  that  government  that the purpose of the acquisition was as laid down in S.40.  It is, thus, clear that the provisions of Ss. 39-41 lay down  conditions  precedent  to  the application  of  the  machinery  of  the Land  Acquisition  Act,  if  the acquisition is meant for a company.”

 (emphasis supplied)

115. The Court then dealt with the extent

and applicability of Section 6 of the Act and

stated:

“Section 6 is, in terms, made subject to the provisions of Part VII of the Act. The provisions of Part VII, read

8

with  section  6  of  the  Act,  lead  to this result that the declaration for the  acquisition  for  a  Company  shall not be made unless the compensation to be awarded for the property is to be paid by a company. The declaration for the acquisition for a public purpose, similarly, cannot be made unless the compensation, wholly or partly, is to be  paid  out  of  public  funds. Therefore,  in  the  case  of  an acquisition for a Company simpliciter, the declaration cannot be made without satisfying  the  requirements  of  Part VII.  But,  that  does  not  necessarily mean that an acquisition of a Company for  a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. In other words, the  essential  condition  for acquisition  for  a  public  purpose  is that  the  cost  of  the  acquisition should be borne, wholly or in part, out  of  public  funds.  Hence,  an acquisition for a Company may also be made for a public purpose, within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. If, on the other hand, the acquisition for a Company is to be made at the cost entirely of the Company  itself,  such  an  acquisition comes  under  the  provisions  of  Part VII. As in the present instance, it appears that part at any rate of the compensation  to  be  awarded  for  the acquisition is to come eventually from out  of  public  revenues,  it  must  be held that the acquisition is not for a Company  simpliciter.  It  was  not,

8

therefore, necessary to go through the procedure prescribed by Part VII. We, therefore,  agree  with  the  conclusion of the High Court, though not for the same reasons”.

     (emphasis supplied)

116. Reference was also made to R.L. Arora

(I) v. State of Uttar Pradesh & Ors.,  (1962)

Supp (2) SCR 149. In that case, land was sought

to be acquired by the Defence Department of the

Government  of  India  for  the  construction  of

textile  machinery  parts  factory  by  Lakshmi

Ratan  Engineering  Works  Limited,  Kanpur.

Notifications  were  issued  under  the  Act

applying  ‘urgency’  clause.  Admittedly,  no

procedure laid down under Part VII of the Act

was followed. A writ petition was, therefore,

filed praying for quashing of Notifications and

land acquisition proceedings. The main ground

in support of the petition was that procedure

under Part VII (Sections 38 to 42) of the Act

had not been complied with.  117. Referring  to  the  relevant  provisions

of  the  Act  and  Babu  Barkya  and  Pandit

9

Jhandulal,  Wanchoo, J. (as His Lordship then

was) for the majority stated; “Therefore,  though  the  words  ‘public purpose’ in Sections 4 and 6 have the same meaning, they have to be read in the  restricted  sense  in  accordance with s. 40 when the acquisition is for a company under s. 6. In one case, the Notification under s. 6 will say that the  acquisition  is  for  a  public purpose,  in  the  other  case  the Notification will say that it is for a company. The proviso to s. 6(1) shows that where the acquisition is for a public  purpose, the compensation has to  be  paid  wholly  or  partly  out  of public  revenues  or  some  fund controlled  or  managed  by  a  local authority.  Where  however  the acquisition is either for a company, the compensation would be paid wholly by the company. Though therefore this distinction  is  there  where  the acquisition  is  either  for  a  public purpose or for a company, there is not a  complete  dichotomy  between acquisitions for the two purposes and it cannot be maintained that where the acquisition is primarily for a company it must always be preceded by action under Part VII and compensation must always be paid wholly by the company. A  third  class  of  cases  is  possible where the acquisition may be primarily for a company but it may also be at the same time for a public purpose and the whole or part of compensation may be paid out of public revenues or some fund controlled or managed by a local

9

authority. In such a case though the acquisition  may  look  as  if  it  is primarily  for  a  company  it  will  be covered  by  that  part  of  s.  6  which lays down that acquisition may be made for a public purpose if the whole or part of the compensation is to be paid out  of  the  public  revenues  or  some fund controlled or managed by a local authority. Such was the case in Pandit Jhandu Lal v. State of Punjab. In that case  the  acquisition  was  for  the construction of a labour colony under the  Government  sponsored  housing scheme for the industrial workers of the  Thapar  Industries  Co-operative Housing  Society  Limited  and  part  of the compensation was to be paid out of the public funds. In such a case this Court held that “an acquisition for a company may also be made for a public purpose within the meaning of the Act, if a part or the whole of the cost of acquisition  is  met  by  public  funds” and therefore it was not necessary to go through the procedure prescribed by Part  VII.  It  is  only  where  the acquisition is for a company and its cost  is  to  be  met  entirely  by  the company itself that the provisions of Part VII apply. In the present case it is  not  the  case  of  the  respondents that any part of the compensation is to be paid out of what may be called public  funds.  It  is  not  in  dispute that the entire compensation is to be paid  by the Works and therefore the provision of Part VII would apply to the present case; and it is in this background  that  we  have  to  consider

9

the contention raised on behalf of the appellant”.

 (emphasis supplied)

118. Construing Sections 40 and 41 of the

Act, the majority conceded that it is no doubt

true  that  it  is  for  the  Government  to  be

satisfied  that  the  work  is  likely  to  prove

useful to the public.  It is also true that it

is for the Government to be satisfied that the

terms  in  the  agreement  should  provide  that

public shall be entitled to use the work. That

does not, however, mean that it is Government

which has the right to interpret the words used

in Section 40(1) (b) or clause (5) of Section

41.  It is the Court which has to interpret

what those words mean.  It is only after the

Court has interpreted the words that it is the

Government which has to carry out the object of

Sections 40 and 41 to its satisfaction.

119. The majority declared;

“The  Government  cannot  say  that  Ss.40 and 41 mean this and further say that they are satisfied that the meaning they have  given  to  the  relevant  words  in

9

these sections has been carried out in the terms of the agreement provided by them.  It is for the Court to say what the words in Ss. 40 and 41 mean though it  is  for  the  Government  to  decide whether the work is useful to the public and whether the terms contain provisions for the manner in which the public shall be entitled to use the work.  It is only in  this  latter  part  that  the Government’s  satisfaction  comes  in  and if  the  Government  is  satisfied,  that satisfaction  may  not  be  open  to challenge; but the satisfaction of the Government must be based on the meaning given to the relevant words in Ss. 40 and  41  by  the  Court.   The  Government cannot both give meaning to the words and also say that they are satisfied on the meaning given by them.  The meaning has to be given by the court and it is only  thereafter  that  the  Government’s satisfaction  may  not  be  open  to challenge if they have carried out the meaning given to the relevant words by the Court.”

 (emphasis supplied)

120. Sarkar, J. (as His Lordship then was),

in a dissenting judgment expressed regret in

agreeing  with  the  majority.  His  Lordship

stated:

“I am unable to accept the appellant’s reading  of S. 41(1) (b) as correct. The  words  “such  work  is  likely  to prove  useful to the public” read by themselves seem to me plainly to imply

9

a  work  the  construction  of  which results  in  some  benefit  which  the public  would  enjoy.   They  do  not contemplate only a work which itself can be put by the public to its use. For  example,  a  work  producing electricity for supply to the public is  a  work  which  is  useful  to  the public.  So also a work producing any commodity like say, medicines or cloth would be a work which would be useful to the pubic.  Again, I feel no doubt that  a  radio  broadcasting  station would be work which would be useful to the public. Take another case, namely, a post-graduate college turning out a small  number  of  highly  qualified medical  doctors.   There  can  be  no doubt  that  the  building  for  the college  can  be  said  to  be  a  work useful to the public.  It would be so not  because the public would have a chance of getting training there and a small number of members of the public would  after the training be able to make a good livelihood, but because an institution of this kind is useful to the  public  as  it  turns  out  men  who give  very  useful  service  to  the public.   In  all  the  illustrations given the works would be useful to the public though the public might have no access to the works or any right to use them directly.  I think it would be unduly restricting the meaning of the word ‘useful’ to say that a work is useful to the public only when it can  directly be used by the public. The  words  are  not  “work  which  the public  can  use”,  in  which  case  it might  with  some  justification  have been said that the work must be such

9

as  the  public  could  use.   In  the Shorter  Oxford  Dictionary,  among  the meanings of ‘useful’ appear, ‘”having the qualities to bring about good or advantage”, “helpful in  effecting a purpose”.   I  find  no  reason  not  to apply  these  meanings  to  the  word ‘useful’  in  the  section  that  I  am considering.”      (emphasis supplied)

121. In  R.L. Arora (II) v. State of Uttar

Pradesh & Ors.,  (1964) 6 SCR 784, this Court

held that in view of the amendment made in the

Act, even if the acquisition did not satisfy

conditions  laid  down  under  clause  (a)  and

clause (b) of sub-section (1) of Section 40 of

the Act, it would be valid, if they satisfy

conditions  in  clause  (aa)  introduced  by  the

amendment Act. It was also held that once the

Government decided to acquire land for public

purpose, such acquisition cannot be challenged

on the ground that procedure laid down in Part

VII had not been followed.

122. The  Court, keeping in view the Land

Acquisition (Amendment) Act, 1962 (Act 31 of

1962), held that clause (aa) of sub-section (1)

9

of Section 40 as inserted by Act 31 of 1962 did

not contravene Article 31 (2) or Article 19 (1)

(f)  of  the  Constitution.  Accordingly  the

acquisition was held legal and valid.

123. A special reference may be made to a

decision  of  the  Division  Bench  of  the  High

Court of Gujarat in  Motibhai Vithalbhai Patel

& Anr. V. State of Gujarat & Anr., AIR 1961 Guj

93. In Motibhai, land was sought to be acquired

for a Company, namely, Sarabhai Chemicals for

its  expansion.  It  was  contended  that

acquisition was not for public purpose under

Section 4 of the Act and it was bad in law.

124. Considering the relevant provisions of

the Act as also leading cases on the point, the

Court held that even if the acquisition of land

is for a private concern whose sole aim is to

make profit, the intended acquisition of land

would  materially  help  in  saving  foreign

exchange in which the public is also vitally

9

concerned  in  our  economic  system.  It  can,

therefore, be said to be a public purpose and

would not be bad.

125. The Court stated;

“This is just as well. So diverse and varied  can  he  the  activities, engagements  and  operations  which  may redound to the general benefit of the public  and  in  which  the  general interest of the public can be said to he  really  involved  that  it  is Impossible  to  expect  a  definition exclusive  or  inclusive  which  will aptly meet every particular objective within  the  matrix  of  public  purpose and  not  fail  in  some  circumstances. The  expression  is  of  convenient vagueness  and the court can at best give  temporary  definiteness  but  not definitiveness  to  the  undefined  and shifting boundaries of a field which now  seems  likely  to  raise  some frequent and fighting issues and give rise  to  different  problems  for adjudication”.  

126. It was also observed:

“Public purpose is not a constant. The scope  of  an  expression  which conjugates  general  interest  of  the public  must necessarily depend inter alia on social and economic needs and broad interpretation of the democratic

9

ideal.  It  must  alter  as  social  and economic conditions alter. The social and economic theorist may contend for an extremely wida application of this concept  of  public  purpose  and  over- emphasise the element of the general interest  of  the  public.  The reactionary  on  the  other  hand  may strive for stringent restraints on its shifting  boundaries  and  oppose  any shift  in emphasis. The true rule of the matter would seem to lie midway. The  Court  will  not  attach  too  much weight  to  the  apparent  character  of the  activity  or  agency  but  would prefer  to  lean  in  favour  of  an application  of  the  rule  which  has regard to the substance of the matter and  embraces  activities,  engagements and operations which would serve the common  good  as  being  affected  with public  interest.  The  application  of the  rule  must  rest  on  the  modem economic  system  of  a  welfare  state having  its  own  requirements  and problems. The application of the rule would  not  be  governed  by  right distinctions  nor  would  the  economic principle be allowed to be blurred by the blending of forms and interests”.

 (emphasis supplied)

127. The Court proceeded to state;

“In the field of economic progress and interest of the public the application of the rule would include operations which are more or less indispensable

9

to  the  community.  The  very  lack  of definitiveness  of  the  expression public  purpose,  somewhat  paradoxical though it may seem requires that the field of its coverage must extend to concerns  which are fit to serve the common  welfare.  That  coverage  can include  activities  open  to  the initiative of both private enterprise and public administration for private enterprise  is  certainly  amenable  to public control and can be an efficient instrument of economic benefit”.  

128. Upholding  the  acquisition,  the  Court

concluded;

“It cannot be ignored that Respondent No. 2 Company is a scheduled industry controlled  by  the  provision  of  the Industries Development and Regulation Act, 1951. The price of its products is subject to these controls. We are also  satisfied  that  the  public  is vitally  concerned  in  the  saving  of foreign  exchange  in  our  present economic situation and that this is an aspect of the matter which has to be borne in mind. We are satisfied that the respondents are correct in their submission  that  the  intended acquisition of lands in dispute would materially help in the saving of such exchange. We have to consider together all  the  aspects  of  the  case  which redound to and result in the benefit of the public and on an assessment of all the facts and circumstances of the

1

case and the cumulative effect of the same we are of the opinion that the land in dispute is needed for a public purpose  as  contended  by  the respondents.  We  may  add  that  the Notifications under Sections 4 and 6 are  not  defective  on  any  of  the grounds urged before us on behalf of the petitioner as held by us and the declaration  under  Section  6  is conclusive evidence that the land in dispute  is  needed  for  a  public purpose”.  

129. In Arnod Rodricks, Wanchoo, J. (as His

Lordship  then  was)  stated  that  there  is  no

reason why the State or local authority should

have no power to get further development done

through private agencies by lease, assignment

or sale of acquired land. 130. In Jage Ram & Ors. V. State of Haryana

& Ors. (1971) 1 SCC 671, a Notification under

Section 4 of the Act was issued for acquisition

of land for public purpose, namely, for setting

up of a factory for the manufacture of China-

ware and Porcelain-ware.   Urgency clause under

Section  17  of  the  Act  was  also  applied  by

dispensing with enquiry under Section 5A of the

1

Act.  The action was challenged by the land

owners. 131. Rejecting  the  contention,  upholding

the  acquisition and  following  Somawanti,  the

Court  held  that  so  long  as  it  is  not

established that the acquisition is sought to

be  made  for  some  collateral  purpose,  the

declaration of Government that it is made for a

public  purpose  is  final,  conclusive  and  not

open to challenge. 132. In  Aflatoon  &  Ors.  v.  Lieutenant

Governor of Delhi & Ors. (1975) 4 SCC 285, land

was  sought  to  be  acquired  for  “Planned

Development of Delhi”.  Neither the Master Plan

nor the Zonal Plan was ready.  The question

before  this  Court  was  whether  acquisition

proceedings could have been initiated in the

absence of Master Plan or Zonal Plan.

133. Considering the relevant provisions of

the Delhi Development Act, 1957, the Court held

that the proceedings did not get vitiated in

the absence of such Plan.  The Court observed

1

that  acquisition  generally  precedes

development. If for proper development, land is

sought to be acquired, such action could not be

said to be illegal, unlawful or in colourable

exercise of power.

134. It  was  also  contended  that  the

acquisition was for Company inasmuch as after

acquisition,  the Government  proposed to  hand

over  the  property  or  a  portion  thereof  to

Cooperative  Housing  Societies  and  since

procedure  in  Part  VII  of  the  Act  was  not

followed, the acquisition was not valid.

135. Even the said contention was negatived

by the Court observing that merely because the

Government allotted a portion of the property

to Cooperative Societies, Part VII did not get

attracted and the acquisition could not be held

invalid  [See  also  Ajay  Krishan  Singhal  v.

Union of India, (1996) 10 SCC 721]. 136. In S.S. Darshan v. State of Karnataka

& Ors. (1996) 7 SC 302, land was sought to be

acquired  under  the  Act  for  public  purpose,

1

namely,  for  setting  up  Information

Technological  Park.  Challenging  the

acquisition,  it  was  contended  by  the

petitioners that the acquisition was mala fide

and  in  colourable  exercise  of  power  since

primarily  the  acquisition  was  for  a  Private

Limited Company and not for the State.  

137. The relevant part of the Notification

read thus:

“The lands shown in the annexed index are  required  for  a  public  purpose, that  is,  to  establish  information technological  park  through  Karnataka Industrial Areas Development Board.”

 (emphasis supplied)

138. Emphasizing  the  fact  that  the

acquisition was through Board, this Court ruled

that acquisition was for a public purpose.  The

notification  stated  about  public  purpose  of

establishment  of  information  technological

park through the Board.

139. Considering  various  clauses  in  the

Joint Venture Agreement, the Court held that

1

the cumulative effect of all went to show that

acquisition  was  for  the  public  purpose  of

setting up technological park by Government of

Karnataka  through  Karnataka  Industrial  Areas

Development Board and was, therefore, valid.

140. In  W.B.  Housing  Board  Etc.  v.

Brijendra Prasad Gupta  (1997) 6 SCC 207, land

was  acquired  for  providing  houses  to  poor

people.  The action was challenged, inter alia,

on the ground that the Housing Board was to

earn profit and hence it could not have been

said to be a public purpose.

141. Refuting the contention and upholding

the acquisition, the Court took note of the

fact that it was a matter of common knowledge

that  there  is  acute  shortage  of  housing

accommodation both in rural and urban areas of

the country.  The Court also stated that since

late  the  prices  of  real  estate  have  sky-

rocketed  making  it  beyond  the  reach  of  low

income  and  middle  income  group  of  people.

Hence, the State has a duty to give shelter to

1

homeless people, specially, to the people of

the low income group. If for that purpose it

sought to acquire land, it could not be said

that acquisition was illegal or unlawful.

142. Regarding earning of profit, the Court

stated:

“Simply because there is an element of profit,  it could not make the whole scheme  illegal.   A  private entrepreneur  will  certainly  look  to some profit but to see that the profit motive does not lead to exploitation even of the rich and that the houses are available to the poor people and to middle class people at nominal or affordable  prices,  or  even  on  no- profit-no-loss  basis,  the  Housing Board exercises the necessary control. It  is certainly a public purpose to provide  houses  to  the  community especially to poor people for whom the prices are beyond their means and they would  otherwise  never  be  able  to acquire a house.”

143. The Court concluded:

“The  Court  must  shake  off  its  myth that public purpose is served only if the State or the Housing Board or the joint sector company does not earn any profit.   There cannot be any better authority  that  the  State  or  the statutory corporation to supervise or monitor  the  functions  of  the  joint venture  company.   Courts  will

1

certainly  step  in  if  the  public purpose is sought to be frustrated”.

     (emphasis supplied)

144. Reference  was  also  made  to  Pratibha

Nema & Ors. v. State of Madhya Pradesh & Ors

[2003] 10 SCC 626.  There, a piece of dry land

of the appellants and others was notified for

acquisition  under  Section  4  of  the  Act  for

public  purpose, namely,  for establishment  of

‘Diamond Park’.  The acquisition was challenged

on  the  ground  that  it  was  not  for  public

purpose but was meant only to benefit a Company

and  its  associates,  and  as  such  it  was  in

colourable exercise of power and  ultra vires

the Act.

145. Referring to earlier decisions of this

Court  and  drawing  distinction  between

acquisition  by  State  for  ‘public  purpose’

covered  by  Part  II  and  acquisition  for  a

‘Company’ under Part VII, the Court stated;

1

“Thus  the distinction between public purpose  acquisition  and  Part  VII acquisition has got blurred under the impact  of judicial interpretation of relevant  provisions.  The  main  and perhaps  the deceive distinction lies in  the  fact  whether  cost  of acquisition comes out of public funds wholly or partly. Here again, even a token or nominal contribution by the Government was held to be sufficient compliance with the second proviso to Section  6  as  held  in  a  catena  of decisions. The net result is that by contributing even a trifling sum, the character  and  pattern  of  acquisition could be changed by the Government. In ultimate analysis, what is considered to be an acquisition for facilitating the  setting  up  of  an  industry  in private sector could get imbued with the  character  of  public  purpose acquisition  if  only  the  Government comes forward to sanction the payment of a nominal sum towards compensation. In  the  present  state  of  law,  that seems to be the real position”.

 (emphasis supplied)

146. Reliance was also placed on  State of

Karnataka  &  Anr.  v.  All  India  Manufacturers

Organisation & Ors., (2006) 4 SCC 683. In that

case, the Government of Karnataka undertook a

mega project for developing its transport and

1

communication  system.  A  Memorandum  of

Understanding  was entered  into between  State

Government and a Company for implementation of

the project and lands were acquired. A Public

Interest Litigation (PIL) was filed in the High

Court alleging that the land was not needed for

public purpose and yet excess land was acquired

and had been given to a Company. The action

was,  therefore,  illegal,  unlawful  and  mala

fide.

147. Negativing  the  contention  and

upholding the action, this Court observed that

the  project was  an integrated  infrastructure

development and not merely a highway project.

As  an  integrated  project,  it  required

acquisition  and  transfer  of  lands  even  away

from  the  main  alignment  of  the  road.

Acquisition  of  land  and  giving  it  to  the

Company was, therefore, legal and lawful and

did not suffer from mala fide.

1

148. The  counsel  for  the  appellants

referred  to  Amarnath  Ashram  Trust  Society  &

Anr. v. Governor of U.P. & Ors., (1998) 1 SCC

591.  In  that  case,  land  was  sought  to  be

acquired  for  play  ground  for  students  of

Amarnath Vidya Ashram (public school), Mathura.

Notification under Section 4 of the Act was

issued stating that the land was to be acquired

for ‘public purpose’. The land-owner challenged

the acquisition contending that the land was

acquired  for  a  Society  and  since  procedure

prescribed in Part VII was not followed, the

acquisition was bad in law.

149. Upholding the contention, quashing the

proceedings  and  referring  to  Pandit  Jhandu

Lal, this Court observed;

“It is now well established that if the  cost  of  acquisition  is  borne either  wholly  or  partly  by  the Government,  the  acquisition  can  be said to be for a public purpose within the  meaning  of  the  Act.  But  if  the cost is entirely borne by the company

1

then  it  is  an  acquisition  for  a company under Part VII of the Act.

… … … … … … … … …

Admittedly,  in  the  present  case  the entire  cost of acquisition is to be borne  by  the  appellant  society  and, therefore, it is an acquisition for a company and not for a public purpose. That  is  also  borne  out  by  the notification issued under Section 6 of the  Act which states that “the land mentioned  in  the  schedule  below  is needed for the construction of play- ground for students of Amar Nath Vidya Ashram  (public  school),  Mathura  in district  Mathura  by  the  Amar  Nath Ashram  Trust,  Mathura".  Therefore, simply  because  in  the  notification issued Under Section 4 of the Act it was  stated that the land was needed for  a public purpose, namely, for a play- ground for students of Amar Nath Vidya Ashram (public school), Mathura, it cannot be said that the acquisition is for a public purpose and not under Chapter (Part) VII for the appellant- society  in  view  of  subsequent events and the declaration made Under Section 6”.   (emphasis supplied)

150. Finally,  reference  was  made  to  a

recent  decision  of  this  Court  in  Devinder

Singh & Ors., v. State of Punjab & Ors., (2008)

1 SCC 728. In Devinder Singh, land was sought

1

to be acquired by the State to set up ‘Ganesha

Project’,  a  Company  registered  under  the

Companies  Act,  1956.  The  acquisition  was

challenged on the ground that though land was

sought to be acquired for a Company, procedure

was followed under Part II and not under Part

VII and hence it was bad in law. The record

revealed that the payment of entire amount of

compensation was to be made by the Company. It

was, therefore, incumbent to follow procedure

laid down in Part VII. During the pendency of

the writ petition, however, it was contended by

the  State  that  it  would  be  contributing

Rs.100/- and hence it was covered by Part II

and the acquisition was legal and valid.

151. Observing that the acquisition was for

a Company and not by the State for a ‘public

purpose’,  the  Court  held  that  the  procedure

laid  down  in  Part  VII  was  required  to  be

followed.  Since  it  was  not  done,  the

acquisition was bad in law.

1

152. Negativing  the  contention  that  the

acquisition was by the State, this Court said;

“In this case we may notice that purported  contribution  had  been made only after the writ petitions were filed. Ordinarily, this Court would not have gone into the said question  but  the  agreement provides  for  payment  of  entire compensation by the company. We do not know as to at what stage the State  thought  it  fit  to  meet  a part  of  the  expenses  for acquisition  of  land.  Such  an opinion on the part of the State having  regard  to  the  statutory scheme  should  have  been  formed prior  to  entering  into  the agreement  itself.  The  agreement does not mention about any payment of a part of compensation by the State. We, in absence of any other material on record, must hold that the  State  had  not  formed  any opinion  in  that  behalf  at  least when the agreement was executed. The  wisdom  in  all  probabilities dawned  on  the  officers  of  the State at a later stage”.

                (emphasis supplied)

Satisfaction of Government and Judicial Review

1

153. In our judgment, in deciding whether

acquisition  is  for  ‘public  purpose’  or  not,

prima  facie,  Government  is  the  best  judge.

Normally, in such matters, a writ Court will

not interfere by substituting its judgment for

the judgment of the Government.

154. In  Hamabai, the Judicial Committee of

Privy Council stated;

“All  that  remains  is  to  determine whether the purpose here is a purpose in which the general interest of the community  is  concerned.  Prima  facie the  Government  are  good  judges  of that.  They  are  not  absolute  judges. They cannot say: ‘Sic volo sic jubeo’ but at least a Court would not easily hold them to be wrong”.

   (emphasis supplied)

155. This Court, in  R.S. Nanji,  reiterated

the principle laid down by the Privy Council.

The Constitution Bench observed;

1

“Prima  facie  the  Government  is  the best  judge  as  to  whether  'public purpose'  is  served  by  issuing  a requisition order, but it is not the sole  judge.  The  courts  have  the jurisdiction and it is their duty to determine  the  matter  whenever  a question  is  raised  whether  a requisition order is or is not for a 'public purpose'”.

  (emphasis supplied)

156. In  Somawanti,  this  Court  interpreted

sub-section (3) of Section 6 of the Act and

held that the declaration made under Section 6

of the Act is ‘conclusive evidence’ that the

land is needed for public purpose.

157. It was contended that the declaration

can be made by the Government arbitrarily and

if  such  declaration  is  irrational,

unreasonable, mala fide or de hors the Act, it

should  be  open  to  a  Court  to  decide  the

question.

1

158. Dealing  with  the  submission,  the

majority stated;

“Now whether in a particular case the  purpose  for  which  land  is needed is a public purpose or not is for the State Government to be satisfied  about.  If  the  purpose for  which  the  land  is  being acquired  by  the  State  is  within the legislative competence of the State  the  declaration  of  the Government will be final subject, however,  to  one  exception.  That exception is that if there is a colourable exercise of power the declaration  will  be  open  to challenge at the instance of the aggrieved  party.  The  power committed to the Government by the Act  is  a  limited  power  in  the sense  that  it  can  be  exercised only  where  there  is  a  public purpose,  leaving  aside  for  a moment the purpose of a company. If  it  appears  that  what  the Government is satisfied about is not a public purpose but a private purpose or no purpose at all the action of the Government would be colourable as not being relatable to the power confirmed upon it by the Act and its declaration will be a nullity”.

(emphasis supplied)

1

159. The majority concluded;

“Though we are of the opinion that the courts are not entitled to go behind  the  declaration  of  the Government  to  the  effect  that  a particular purpose for which the land is being acquired is a public purpose we must emphasise that the declaration of the Government must be relatable to a public purpose as distinct from a purely private purpose. If the purpose for which the acquisition is being made is not relatable to a public purpose then  a  question  may  well  arise whether in making the declaration there has been, on the part of the Government  a  fraud  on  the  power conferred upon it by the Act. In other  words  the  question  would then  arise  whether  that declaration  was  merely  a colourable exercise of the power conferred  by  the  Act,  and, therefore, the declaration is open to  challenge  at  the  instance  of the  party  aggrieved.  To  such  a declaration the protection of s. 6 (3)  will  not  extend.  For,  the question  whether  a  particular action was the result of a fraud or  not  is  always  justiciable, provisions  such  as  S.  6(3) notwithstanding”.   

              (emphasis supplied)

1

160. In  Srinivasa  Cooperative  House

Building  Society  Ltd.  v.  Madam  Gurumurthy

Sastry & Ors, (1994) 4 SCC 675, this Court held

that a token contribution from public revenue

cannot  ipso  facto be  treated  as  colourable

exercise of power by the State in acquisition

of land. Each case must furnish its backdrop

whether the action is for public purpose or for

a private purpose.

161. In  Bajirao T. Kote (dead) by LRs. &

Anr. v. State of Maharashtra & Ors., (1995) 2

SCC 442, this Court held that satisfaction of

the  State  Government  regarding  existence  of

public purpose is not open to judicial scrutiny

unless  there  is  mala  fide  or  colourable

exercise of power.

162. The Court stated;

“It  is  primarily  for  the  State Government to decide whether there exists public purpose or not, and it is not for this Court or the High

1

Courts to evaluate the evidence and come to its own conclusion whether or  not  there  is  public  purpose unless  it  comes  to  the  conclusion that it is a mala fide or colourable exercise  of  the  power.  In  other words  the  exercise  of  the  power serves  no  public  purpose  or  it serves a private purpose”.

(emphasis supplied)

163. In Laxman Rao Bapurao Jadhav v. State

of Maharashtra, (1997) 3 SCC 493, this Court

held that it is for the State Government to

decide whether the land is needed or is likely

to be needed for a public purpose and whether

it is suitable or adaptable for the purpose for

which the acquisition was sought. The mere fact

of empowering the authorized officer to inspect

and  find  out  whether  the  land  would  be

adaptable for the public purpose does not take

away  the  power  of  the  Government  to  take  a

decision ultimately.

1

164. We may, however, recall  Daulat Singh

once again at this state. There, referring to

all leading cases and dealing with the ambit

and  scope  of  judicial  review  on  the

satisfaction by the State Government on ‘public

purpose’, this Court stated;

“Public purpose is bound to vary with  times  and  prevailing conditions  in  the  community  or locality  and,  therefore,  the legislature  has  left  it  to  the State (Government) to decide what is  public  purpose  and  also  to declare the need of a given land for the purpose. The legislature has  left  the  discretion  to  the Government  regarding  public purpose.  The  Government  has  the sole  and  absolute  discretion  in the matter”.   (emphasis supplied)

165. It was contended that the italicized

portion quoted above (The Government has the

sole and absolute discretion in the matter) is

not in consonance with settled legal position

or in accord with earlier decisions of this

Court including decisions rendered by various

1

Constitution Benches. We have already referred

to R.S. Nanji wherein before more than half a

century, Constitution Bench of this Court held

that  prima facie, the Government is the best

judge to decide public purpose but  it is not

the sole judge. That was the view of the Privy

Council in  Hamabai. Again, in  Somawanti, the

Constitution  Bench  held  that  in  case  of

colourable  exercise  of  power  by  the  State

Government or fraud on statute, the declaration

under  Section  6  is  open  to  challenge,

notwithstanding  the  ‘finality  clause’  under

sub-section (3) of the said section.

166. We  would  have  indeed  considered  the

contention  of  the  learned  counsel  for  the

appellants  closely  in  the  light  of  earlier

decisions of this Court. We are, however, of

the  view  that  on  the  facts  and  in  the

circumstances  of  the  present  case,  the

Government was right in forming an opinion and

1

reaching a satisfaction as to ‘public purpose’

and in initiating proceedings under Sections 4

and 6 and in invoking Part II of the Act. We,

therefore,  refrain  from  undertaking  further

exercise. In our considered opinion, it is not

necessary for us to enter into larger question

in  view  of  ‘fact  situation’  in  the  instant

case.

Conclusions

167. Applying  the  aforesaid  principles  to

the case on hand, in our considered opinion, it

cannot be said that the proceedings initiated

by the State for acquisition of land under the

Land  Acquisition  Act,  1894  are  illegal,

unlawful,  unwarranted,  mala  fide,  fraud  on

statute  or  have  been  taken  in  colourable

exercise of power.

168. As  already  adverted  to  earlier,  the

State of Andhra Pradesh in the background of

1

‘World Tourism Organization Report’ and ‘Vision

2020  Document’  took  a  policy  decision  for

the  development  of  the  City  of  Hyderabad.

For the said purpose, it decided to establish

an  Integrated  Project  which  would  make

Hyderabad a major Business-cum-Leisure Tourism

Infrastructure  Centre  for  the  State.  The

project  is  both  structurally  as  well  as

financially integrated. It is to be implemented

through  Andhra  Pradesh  Infrastructure  and

Investment Corporation (APIIC) which has taken

all  steps  to  make  Hyderabad  a  world-class

business  destination.  APIIC  is  an

instrumentality of State and works as ‘Nodal

Agency’  developing  the  project  which  would

facilitate socio-economic progress of the State

by  generating  revenues,  weeding  out

unemployment  and  bringing  new  avenues  and

opportunities for public at large. Development

of  infrastructure  is  legal  and  legitimate

‘public  purpose’  for  exercising  power  of

eminent domain.  Simply because a Company has

1

been  chosen  for  fulfillment  of  such  public

purpose does not mean that the larger public

interest  has  been  sacrificed,  ignored  or

disregarded. It will also not make exercise of

power bad, mala fide or for collateral purpose

vitiating the proceedings.

169. In our judgment, the respondents are

right in submitting that in case of integrated

and indivisible project, the project has to be

taken as a whole and must be judged whether it

is in the larger public interest. It cannot be

split into different components and to consider

whether  each  and  every  component  will  serve

public  good.  A  holistic  approach  has  to  be

adopted in such matters. If the project taken

as a whole is an attempt in the direction of

bringing  foreign  exchange,  generating

employment opportunities and securing economic

benefits to the State and the public at large,

it will serve public purpose.

1

170. It is clearly established in this case

that  the  Infrastructure  Development  Project

conceived by the State and executed under the

auspices of its instrumentality (APIIC) is one

covered by the Act. The Joint Venture Mechanism

for  implementing  the  policy,  executing  the

project and achieving lawful public purpose for

realizing the goal of larger public good would

neither  destroy  the  object  nor  vitiate  the

exercise  of  power  of  public  purpose  for

development of infrastructure. The concept of

joint  venture  to  tap  resources  of  private

sector  for  infrastructural  development  for

fulfillment  of  public  purpose  has  been

recognized  in  foreign  countries  as  also  in

India in several decisions of this Court.

171. The entire amount of compensation is

to be paid by State agency (APIIC) which also

works  as  nodal  agency  for  execution  of  the

project.  It  is  primarily  for  the  State  to

decide whether there exists public purpose or

1

not. Undoubtedly, the decision of the State is

not  beyond judicial  scrutiny. In  appropriate

cases, where such power is exercised mala fide

or  for  collateral  purposes  or  the  purported

action  is  de  hors the  Act,  irrational  or

otherwise unreasonable or the so-called purpose

is  ‘no  public  purpose’  at  all  and  fraud  on

statute  is  apparent,  a  writ-court  can

undoubtedly  interfere.  But  except  in  such

cases, the declaration of the Government is not

subject to judicial review. In other words, a

writ  court,  while  exercising  powers  under

Articles 32, 226 or 136 of the Constitution,

cannot  substitute  its  own  judgment  for  the

judgment  of  the  Government  as  to  what

constitutes ‘public purpose’.

172. Taking the facts in their entirety, we

are of the view that the action of the State in

initiating  acquisition  proceedings  for

establishing  and  developing  infrastructure

project  cannot  be  held  contrary  to  law  or

1

objectionable. The High Court was, therefore,

right in dismissing writ petitions as also writ

appeals and we find no infirmity therein. All

the  appeals,  therefore,  are  liable  to  be

dismissed  and  are  accordingly  dismissed,

however, leaving the parties to bear their own

costs.

………………………………………………………J. (C.K. THAKKER)

NEW DELHI, ………………………………………………………J. SEPTEMBER 5, 2008. (D.K. JAIN)

1