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PETITIONER: STATE OF GUJARAT & ORS.

       Vs.

RESPONDENT: AMBALAL HAIDERBHAI ETC.

DATE OF JUDGMENT14/04/1976

BENCH: SINGH, JASWANT BENCH: SINGH, JASWANT RAY, A.N. (CJ) BEG, M. HAMEEDULLAH

CITATION:  1976 AIR 2002            1976 SCR   33  1976 SCC  (3) 495  CITATOR INFO :  RF         1978 SC 515  (7)

ACT:      Land Acquisition  (Companies) Rules  1963-Enquiry under R. 4  whether compliance  with principles of natural justice required.

HEADNOTE:      The appellant  initiated  proceedings  under  the  Land Acquisition Act,  1894,  for  acquiring  the  lands  of  the respondents  for  the  Sardarnagar  Co-operative  Industrial Society Ltd., in order to establish an industrial estate for small scale industries. A notification was issued under s. 4 of the Act after following the provisions of Part VII of the Act, and  in due course the final notification under s. 6 of the Act  was issued.  The respondents  challenged  both  the notifications before  the High  Court, under Art. 226 of the Constitution on  the ground  that at the enquiry held by the Special Land  Acquisition Officer, Baroda, under R. 4 of the Land Acquisition  (Companies) Rules  1963, they had not been heard in  accordance with the principles of natural justice. The High  Court allowed the writ petitions. The question for decision before  this Court  was whether  the enquiry  under Rule  4  requires  compliance  with  the  rules  of  natural justice.      Dismissing the appeals, the Court, ^      HELD: In  conducting the enquiry, the Collector has, in the interest  of fair  play, to  observe the  principles  of natural justice  by affording  the persons interested in the land a reasonable opportunity of being heard and of adducing material before  the Collector  to refute the allegations of the company. [37 C-D]      State of Gujarat and Anr. v. Patel Chaturbhai Narsibhai JUDGMENT:      Suresh Koshy  George v.  The University  of Kerala  and Ors. [1969]  1 SCR  317 and A. K. Kraipak & Ors. v. Union of India and Ors. [1970]1 SCR 457 referred to.

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&      CIVIL APPELLATE  JURISDICTION :  Civil Appeals Nos. 967 to 969 of 1971.      Appeals by  Special Leave  from the  Judgment and Order dated April 17/18, 1970 of the Gujarat High Court in Special Civil Applications Nos. 116,, 1621 and 1622 of 1967.      D. V.  Patel, M.  C. Bhandare,  M. N.  Shroff  for  the Appellants in all the appeals.      1. N. Shroff for Respondents Rr. 1 and 2 in 967 and R 1 in CAs. 968-969.      P. H.  Parekh and Miss Manju Jetley for Respondent 3 in 967, R. 2 in 968, 969. 34      The Judgment of the Court was delivered by      JASWANT SINGH,  J.-These three  appeals Nos. 967 to 969 of 1971  by special  leave which  are directed  against  the common judgment  of the  High Court  of Gujarat  dated April 17/18, 1970  in Special  Civil Application Nos. 116 of 1967, 1621 of 1967 and 1622 of 1967 arise thus:      Proceedings  under  the  Land  Acquisition  Act,  1894, (hereinafter referred  to as  ’the Act’)  for acquisition of certain lands  in  villages  Sayajipuri,  Bapow  and  Savad, District  Baroda,   Taluka  Baroda  were  initiated  by  the Government of  Gujarat at  the instance  of Sardarnagar  Co- operative Industrial  Society Limited  registered under  the Gujarat  Co-operative   Societies  Act   1961   (hereinafter referred  to   as  ’the   Company’)  for   the  purpose   of establishing  an   industrial   estate   for   small   scale industries.  The   acquisition  being   for  the  Company  a notification was  issued under  section 4 of the Act on July 2, 1964  after following  the provisions  of Part VII of the Act. An  agreement under  section 41  of the Act between the State Government  and the  Company was entered into on April 2, 1965  and was  published on  October 15,  1966. The final notification under  section 6  of  the  Act  was  issued  on October 18,  1966. The owners of the aforesaid lands who are contesting  respondents   herein  challenged  the  aforesaid notifications issued  under section  4 and  6 of  the Act by filing petitions  under Article  226 of  the Constitution of India inter  alia on  the ground  that the provisions of the Rule 4  of the  Land  Acquisition  (Companies)  Rules,  1963 (hereinafter referred to as ’the Rules’) made by the Central Government in exercise of the powers conferred under section 55 of  the Act,  which by  virtue of  Rule 1(2) of the Rules apply to  acquisition of  land for  all companies under Part VII of  the Act, have not been complied with particularly as they had  not been  given a  right to be heard in accordance with the  principles of  natural justice at the enquiry held by Special Land Acquisition Officer, Baroda, appellant No. 2 herein. The  plea raised  by the owners of land found favour with the  High Court  which allowed  the petitions set aside the notification  under section  6 of  the Act, and issued a mandamus  commanding   appellant  No.   2  to  complete  the statutory enquiry  under Rule  4 of  the Rules in accordance with the principle of natural justice.      The short  but important  question which  we are called upon to decide in these appeals is whether the enquiry under Rule 4  of the  Rules requires  compliance with the rules of natural justice.      As observed by this Court in Suresh Koshy George v. The University of  Kerala &  Ors.(1) and  reiterated  in  A.  K. Kraipak &  Ors. v. Union of India & Ors.(2) rules of natural justice are not rules embodied 35 always expressly in a statute or in rules framed thereunder.

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They may  be implied  from the  nature of  the  duty  to  be performed under  a statute.  What particular rule of natural justice should be implied and what its content should be for a given  case must depend to a great extent on the facts and circumstances of  that case, the frame-work of the law under which the  enquiry is  held, and the constitution and nature of duties  of the  Tribunal or the body of persons appointed for  that   purpose.  Let   us,  therefore,  advert  to  the provisions of  Rule  4  of  the  Rules  which  requires  the appropriate  Government  to  be  satisfied  with  regard  to certain matters  before initiating  acquisition proceedings. The rule is in these terms :-           "4. Appropriate  Government to  be satisfied  with      regard to certain matters before initiating acquisition      proceedings.-      (1) Whenever  a Company  makes an  application  to  the      appropriate Government  for acquisition  of  any  land,      that Government  shall direct the Collector to submit a      report to it on the following matters, namely:-           (i)  that the  Company has made its best endeavour                to find  out lands  in the  locality suitable                for the purpose of the acquisition;           (ii) that the  Company  has  made  all  reasonable                efforts to get such lands by negotiation with                the persons  interested therein on payment of                reasonable  price   and  such   efforts  have                failed;           (iii)that the  land proposed  to  be  acquired  is                suitable for the purpose;           (iv) that the area of land proposed to be acquired                is not excessive;           (v)  that the  Company is in a position to utilise                the land expeditously; and           (vi) where the  land proposed  to be  acquired  is                good agricultural  land, that  no alternative                suitable site  can be  found so  as to  avoid                acquisition of that land.           (2)  The Collector shall, after giving the company      a reasonable  opportunity to make any representation in      this behalf,  hold an enquiry into the matters referred      to in  sub-rule (1)  and while  holding such enquiry he      shall,-           (i)  in any  case where  the land  proposed to  be                acquired is  agricultural land,  consult  the                Senior Agricultural  Officer of  the district                whether or not such land is good agricultural                land; 36           (ii) determine, having regard to the provisions of                sections  23   and  24   of  the   Act,   the                approximate amount  of compensation likely to                be payable  in respect  of the land which, in                the  opinion  of  the  Collector,  should  be                acquired for the Company; and           (ii) ascertain  whether   the  Company  offered  a                reasonable price  (not being  less  than  the                compensation so  determined), to  the persons                interested  in   the  land   proposed  to  be                acquired.           Explanation.-For the  purpose of  this rule  "good      agricultural land"  means any  land which,  considering      the level  of  agricultural  production  and  the  crop      pattern of  the area  in which  it is  situated, is  of      average or  above average  productivity and  includes a      garden or grove land.

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         (3) As  soon as  may be  after holding the enquiry      under sub-rule (2), the Collector shall submit a report      to the  appropriate Government  and a  copy of the same      shall be forward by that Government to the Committee.           (4)  No   declaration  shall   be  made   by   the      appropriate Government  under  section  6  of  the  Act      unless-           (i)   the appropriate Government has consulted the                Committee  and   has  considered  the  report                submitted under  this rule and the report, if                any, submitted  under section  5A of the Act;                and           (ii) the agreement under section 41 of the Act has                been executed by the Company".      To sum  up, sub-rule  (1)  of  the  above  quoted  rule requires the  appropriate Government to which an application is made  by a  Company for acquisition of land to direct the Collector to submit a report on six matters set out therein.      Sub-rule (2)  of the  said rule  re-emphasizes what  is contained in  sub-rule (1)  by making  it obligatory for the Collector to hold an enquiry into six matters referred to in sub-rule (1).  It also makes it obligatory for the Collector while  holding   the  enquiry  (1)  to  consult  the  Senior Agricultural Officer  of the  District in  case the  land is agricultural land,  (2) to  determine the approximate amount of compensation  likely to be payable in respect of the land in question  keeping in  view the  provisions of sections 23 and 24  of the  Act and (3) to ascertain whether the Company offered a  reasonable price  (which is  not  less  than  the compensation so determined) to the persons interested in the land which is proposed to be acquired.      A conjoint  reading of  sub-rules (1) and (2) leaves no room for  doubt that  the enquiry by the Collector, which is meant inter alia to 37 find out  whether all  reasonable efforts  have been made by the Company  to get  the land  by negotiation  on payment of reasonable price and such efforts have not fructified and to determine the  approximate amount  of compensation likely to be payable  in respect  of the  land  keeping  in  view  the provisions of  sections 23  and 24  of the  Act, is of vital importance to the persons interested in the land.      Sub-rule (3)  of the  rule requires  the  Collector  to submit his  report to the concerned Government which in turn is required  before making  a declaration under section 6 of the Act  to consider  that report  as well as the report, if any, submitted  by it  under section  5A of  the  Act  after ascertaining the  view of  the Committee  constituted  under Rule 3  of the  Rules in  regard to  the Collector’s  report under Rule 4 of the Rules.      Although the  above mentioned  rule is silent regarding the mode  and method  of the  enquiry  to  be  held  by  the Collector  and   the  report   of  the  Collector  is  of  a recommendatory  character,  yet  regard  being  had  to  the legislative  history  and  purpose  of  the  rule,  and  the mischief sought  to be  prevented, we  have no hesitation in holding that,  in conducting the enquiry, the Collector has, in the  interest of  fair play, to observe the principles of natural justice  by affording  the persons interested in the land a reasonable opportunity of being heard and of adducing material before  the Collector  to refute the allegations of the Company. The concept of natural justice which as evident from the  observations made in A. K. Kraipak’s case (supra), has undergone  a great  deal of  change in recent years. The dividing line  between an  administrative and quasi-judicial

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function is often blurred.      Our view  is reinforced  by the  following illuminating observations made  by the  learned Chief Justice in State of Gujarat & Anr. v. Patel Chaturbhai Narsibhai & Ors.(1)           "The contention  of the  State  that  the  enquiry      under rule  4 is  administrative and  that the owner of      the land  is not entitled to be given an opportunity to      be heard  at the  enquiry cannot  be accepted for these      reasons. The  enquiry  under  rule  4  shows  that  the      Collector is  to submit  a report  among other  matters      that the Company has made all reasonable efforts to get      such lands  by negotiation  with the persons interested      therein on payment of reasonable price and such efforts      have failed.  The persons  interested therein  are  the      owners of  the land  which is  proposed to be acquired.      The company  at such  an enquiry  has to  show that the      company made  negotiations with the owners of the land.      The owners  of the  land are, therefore, entitled to be      heard at  such an enquiry for the purpose of proving or      disproving the reasonable efforts of the company to get      such land  by negotiation.  The contention on behalf of      the State  that the  owners of  the land  will  get  an      opportunity when  an enquiry  is made under section 5-A      of the  Act is  equally unsound.  Section 17 of the Act      provides that the appropriate Government may 38      direct that  the provisions  of section  5-A shall  not      apply, and  if it  does so  direct a declaration may be      made under  section 6 at any time after the publication      of  the  notification  under  section  4  of  the  Act.      Therefore, the  enquiry under  section 5A  may  not  be      held."      For the  foregoing reasons, the question is answered in the affirmative  and the  appeals are dismissed. The parties are left to bear and pay their own costs in these appeals. M.R.                                      Appeals dismissed. 39