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CASE NO.: Appeal (civil)  2086-2087 of 2004

PETITIONER: The Vyalikaval House Building Co-Op.Society by its Secretary

RESPONDENT: V.Chandrappa & Ors

DATE OF JUDGMENT: 02/02/2007

BENCH: G.P. Mathur & A.K. Mathur

JUDGMENT:

J U D G M E N T  

A.K. MATHUR, J.

               These appeals are directed against the order passed  by the Division Bench of the Karnataka High Court at  Bangalore in Writ Appeal No.2294 of 1999 dated 17.1.2000  whereby  the Division Bench of the High Court has set aside  the order dated 11.11.1998 in Writ Petition No.30622 of 1998  passed by learned Single Judge for the reasons mentioned in  Writ Appeal No.2188 of 1998 disposed of by the Division  Bench of the High Court on 17.1.2000  and the order dated  22.3.2002 passed by the Division Bench in the Review Petition  No.156 of 2000 in W.A.No.2294 of 1999.

               This case has a chequered history, therefore, in  order to deal with it, it will be necessary to refer to certain  facts.  A notification was issued on 22.12.1984 under Section  4 of the Land Acquisition Act, 1894 (hereinafter to be referred  to as ’the Act’)  for acquiring 176 acres and 5 guntas of land in  Nagavara village of Bangalore North  Taluk. Declaration under  Section 6 of the Act was issued on 21.2.1986 and the award  was passed on the basis of the aforesaid notification on  16.11.1987.  It was alleged that  the possession of the land  was taken on different dates up to the year 1992.  It was  alleged that possession of 31 acres and 21 guntas of land  including an area  measuring 1 acre and 25 guntas situated in  Survey No.78/4  of Nagavara  village  was taken on 6.8.1988.  Aggrieved against the aforesaid notification and the award  private petitioners filed writ petition assailing the validity  thereof on variety of grounds. It was alleged that this land  measuring 8 acres and 2 guntas  was owned jointly by a family  comprising 5 brothers, namely; Pattadi Haumanthappa,  Pattadi Venkateshappa, Pattadi Nannappa, Pattadi  Lakshmaiah and Pattadi Nagappa, all deceased and survived  by their legal heirs, who filed the writ petition. The main  grievance of these petitioners was that this notification was   very adversely commented by the Karnataka High Court in the  case of Narayana Reddy. V. State of Karnataka [ ILR 1991 Kar.  2248]  and the decision of the  Division Bench of the  Karnataka High Court in Writ Appeal Nos.2336-2343 of 1997   and connected matters which were disposed of on 5.3.1998. In  that judgment it was held that the whole acquisition  proceedings  stand vitiated on account of fraud, the appellant  Society was also found to be not bonafide housing society,  therefore, on the basis  of the same reasoning the present  notification was also challenged and it was urged that the  impugned notification also suffered from same vice of mala

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fide,  therefore, it should be quashed.  It was alleged that the  delay in approaching the Court was irrelevant since the  validity of the same notification in which other lands were  acquired along with the  present land has been found to be  void.  

               This writ petition was contested by the appellant- society as respondent  and it was alleged that it was  hopelessly barred by time being delayed by 14 years and it  was also submitted that  the writ petitioners had participated  in the inquiry under section 5A of the Act and have also  received substantial amount from the appellant-society  pursuant to the agreement executed in their favour.  Learned  Single Judge dismissed the writ petition on the ground of  being hopelessly barred by time and the writ petitioners  participated in the proceedings therefore they have acquiesced  in the matter. Aggrieved against this order passed by learned  Single Judge, a writ appeal was filed by the respondents which  came to be allowed by the Division Bench for the reasons  mentioned in another writ appeal decided by the same  Division Bench headed by the Chief Justice of the High Court  on 17.1.2000.   In that writ appeal the Division Bench held  that the entire acquisition on behalf of the appellant-society  was actuated with fraud  as held in Narayana Reddy v. State  of Karnataka [ILR 1991 Kar.2248].  In that case it was held as  follows :

               "  As seen from the findings of  G.V.K.Rao Inquiry Report, in respect of five  respondent societies and the report of the Joint  Registrar in respect of Vualikaval House  Building Co-operative Society, these Societies  had indulged in enrolling large number of  members illegally inclusive of ineligible  members and had also indulged in enrolling  large number of bogus members. The only  inference that is possible from this is that the  office bearers of the societies had entered into  unholy alliance with the respective agents for  the purpose of making money, as submitted for  the petitioners otherwise,  there is no reason as  to why such an Agreement should have been  brought about by the office bearers of the  Society and the agents. Unless  these persons  had the intention of making huge profits as  alleged by the petitioners, they would not have  indulged  in enrolment of ineligible and bogus  members. The circumstance that without  considering all these relevant materials the  Government had accorded its approval,  is  sufficient to hold that the agents had prevailed  upon the Government to take a decision to  acquire the lands without going into all those  relevant facts. The irresistible inference flowing  from the facts and circumstances of these cases  is, whereas  the poser conferred under the Land  Acquisition Act is for acquiring lands for  carrying out housing scheme by a housing  society, in each of the cases the acquisition of  lands is not for a bona fide housing  scheme  but is substantially for the purpose of enabling  the concerned office bearers of respondent-  societies and their agents to indulge in sale of  sites in the guise of allotment of sites to the  Members/ Associate members of the society to

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make money as alleged by the petitioners and  therefore it is a clear case of colourable exercise  of power.  Thus the decision of the Government  to acquire the lands suffers from legal mala  fides and therefore the impugned Notifications  are liable to be struck down."

In view of aforesaid observation, their Lordships of  Division Bench held that since  the acquisition was colourale  exercise  of the power, therefore, delay cannot be a good  ground to dismiss the writ petition.   The said judgment of the  Division Bench of the High Court of Karnataka was affirmed  by this Court  in Special Leave Petition Nos.(c)..CC 525-532 of  1999 and Special Leave Petition Nos.(c) ..CC 504-522  of 1999  decided on  14.7.1999 and it was held that the appellant- society is a bogus house building  society and accordingly, the  order passed by the learned Single Judge was set aside by  Division Bench.  Against the order of the Division Bench  passed in Writ Appeal No.2294 of 1999 a review petition was  filed which was dismissed on 22.3.2002.  Hence both these  appeals.

               Learned counsel for the appellant urged before us   that the view taken by the Division Bench of the High Court is  not correct as the Division Bench should not have condoned  the inordinate delay  of 14 years  and secondly, learned  counsel further submitted that the respondents herein being  the beneficiary had entered into an agreement of sale and had  accepted the whole amount not to file objections under Section  5A of the Act for acquiring the aforesaid land.  Learned  counsel for the appellant has emphasized that the Division  Bench has gone wrong  in setting aside the order of the  learned Single Judge as the learned Single Judge has  discussed the factual controversy in greater detail.

               As against this, learned counsel for the respondents  submitted that there was not one  judgment but there are  number of judgments in which such acquisition of land has  been set aside. Learned counsel for the respondents invited  our attention to two decisions of this Court  in the case of   H.M.T. House Building Co-operative Society v. Syed Khader &  Ors. [ (1995) 2 SCC 677] and  H.M.T. House Building Co- operative Society v. M.Venkatswamappa & Ors. etc. etc.   [(1995) 3 SCC 128] in which similar societies filed  Special  Leave Petitions  and this Court affirmed the order of the  Karnataka High Court  and held that the whole exercise of  acquiring the land by various societies  including the present  appellant-society was actuated with mala fide and quashed  all  acquisitions.  In this connection, a reference may be made to  H.M.T.House Building Co-operative Soceity’s case (supra)  wherein the similar question was raised by the Co-operative  Society like the appellant herein and in that context their  Lordships  framed the question in paragraph 18 of the  judgment which heads as follows :

               " 18.   Now the question which is to be  answered is as to whether in view of the  definition of "public purpose"  introduced by the  aforesaid Amending Act 68 of 1984 in Section  3(f)(vi), is it open to the appropriate Government  to acquire land for cooperative society for  housing scheme without making proper enquiry  about the members of the society and without  putting such housing cooperative society to  term in respect of nature of construction, the

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area to be allotted to the members and  restrictions on transfer thereof ?"

This question was answered by their Lordships in paragraphs  21 & 22 which reads  thus:                 " \005That is why the framers of the Act  have required the appropriate Government to  grant prior approval of any housing scheme  presented by  any cooperative society before the  lands are acquired treating  such requirement  and acquisition for public purpose.  It is  incumbent on the part of the appropriate  Government  while granting approval to  examine different aspects of the matter so that   it may serve the public interest and not the  interest of few who can as well afford to acquire  such lands by negotiation in open market.  According to us, the State Government has not  granted the prior approval in terms of Section  3(f)(vi) of the Act to the housing scheme in  question. The power under Section 4(1) and 6(1)  of the Act has been exercised for extraneous  consideration and at the instance of the  persons who had no role in the decision-making  process \026 whether the acquisition of the lands  in question shall be for a public purpose. This  itself is enough to vitiate the whole acquisition  proceeding and render the same invalid."

22.     In the present case there has been  contravention of Section 3(f) (vi) of the Act  inasmuch as there was no prior approval of the  State Government as required by the said  section before steps for acquisition of the lands  were taken. The report of Shri G.K.V.Rao points  out as to how the appellant-Society admitted  large number of persons as members who  cannot be held to be genuine members, the sole  object being to transfer the lands acquired for  "public purpose", to outsiders as part of  commercial venture, undertaken by the office- bearer of the appellant-Society. We are in  agreement wit the finding of the High Court that  the statutory notifications issued under  Sections 4(1) and  6(1) of the Act have been  issued due to the role played by M/s.  S.R.Constructions, Respondent No.11. On the  materials on record, the High Court was  justified in coming to the conclusion that the  proceedings for acquisition of the lands had not  been initiated  because the State Government  was satisfied about the existence of the public  purpose but at the instance of agent who had  collected more than a crore of rupees for getting  the lands acquired by the State Government."

Similarly, in H.M.T.House Building Cooperative Society   ((1995) 3 SCC 128] in which the present appellant was one of  the societies, which challenged the order of the  Division  Bench of the High Court of Karnataka, their Lordships  dismissed the Special Leave Petition following the judgment in  H.M.T. House Building Cooperative Society (supra).  In  paragraph 3 of the judgment while dealing with the facts of  this society their Lordships observed that this society had  advertised inviting persons who want to have mansions in the

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city of Bangalore and had also given the names and addresses   of  the representative at Dubai. It was held that on the basis of  the aforesaid material the High Court has rightly come to the  conclusion that  the society itself was not bona fide  house  building society and accordingly, the order passed by the High  Court setting aside the acquisition of the land was upheld by  this Court and the SLP was dismissed. Paragraph 3 reads as  follows :         "  3.   Lands on basis of the notifications  issued under Sections 4(1) and 6(1) of the Land  Acquisition Act, had been acquired for the  petitioner-House Building Society, treating the  said acquisition to be for a public purpose. No  order of the State Government as required by  Section 3(f)(vi) granting prior approval for  acquisition of the lands in question for the  housing scheme of the petitioner-society has  been produced. The petitioner-Society had also  entered into an agreement with the contractor  more or less on the same terms and conditions  as was in the case of HMT House Building  Cooperative Society, assuring that the lands in  question shall be acquired on basis of the  notification issued by the State Government  under Sections 4(1) and 6(1) of the Act. The  High Court in its impugned judgment has given  details of the allegations made against the  petitioner-Society regarding collection of huge  amounts from different applicants for site who  were not even members of the Society and how  the Society had entered  into an agreement with  agents, who with their influence have got the  lands acquired. The High Court has also  referred to an advertisement issued by the  petitioner-Society inviting persons who want to  have mansions in the city of Bangalore. It also  gave the name and address of a representative  at Dubai. On basis of the aforesaid materials,  the High Court has come to the conclusion that  the society itself was not a bona fide House  Building Society. The High Court has also  recorded a finding that the notifications under  Sections 4(1) and 6(1) of the Act had been  issued at the instance of the agents  appointed  by the petitioner-Society, to whom huge  amounts had been paid for influencing the  Government to issue the aforesaid notifications.  Mr. Ramaswamy, appearing for the petitioner- Society purported to distinguish this case on  facts from the case of HMT House Building  Cooperative Society. But according to us, the  facts of the present case are similar to the case  of HMT House Building Cooperative Society and  there is no scope to interfere with  the order of  the High Court, quashing the notifications  under Sections 4(1) and 6(1). Accordingly, the  special leave petitions filed  on behalf of the  petitioner-Society are dismissed. No costs."

Learned counsel for the respondents has also invited our  attention that same notification was set aside by the High  Court and the said order of the High Court was also upheld by  this Court  by dismissing the S.L.P.(c) No.6196 of 1998 on  7.4.1998 and S.L.P.(c) ..CC 495-a498 of 1999 on 14.7.1999

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concerning the very same appellant society.   In this  background, when the acquisition has been found to be totally  mala fide and not for bona fide purpose, the ground of delay   and acquiescence in the present case has no substance.  Learned counsel for the appellant tried to persuade us that as  the amount in question has been accepted by the respondents,  it is not open for them now to wriggle out from that agreement.   It may be that the appellant  might have tried to settle out the  acquisition  but when the whole acquisition emanates from the  aforesaid tainted notification any settlement on the basis of  that notification cannot be validated. The fact remains that  when the basic notification under which the present land is  sought to be acquired stood vitiated then whatever money   that the appellant has paid, is at its own risk.  Once the  notification goes no benefit  could be derived by the appellant.  We are satisfied that issue of notification  was mala fide and it  was not for public purpose, as has been observed by this  Court, nothing turns on the question of delay and  acquiescence.  Learned Counsel for respondents raised  other  pleas  like  decree for partition was granted among brothers &  they  were not made parties, we are not going into those   questions when we are  satisfied  that when  acquisition stand  vitiated on account of  mala fide,  nothing remains further.                  

In the light of the discussions made above, the view  taken by the Division Bench of the High Court of Karnataka in  the impugned judgment is correct and we uphold the same  and dismiss both the appeals. No order as to costs.