Holding

The release order is non est for violating Article 14, but it does not nullify the entire Section 4 notification; compensation is payable as per the 1974 valuation with additional equitable interest for delay.

Summary

The State of Bihar issued a Section 4 notification on 19 August 1974 to acquire 1,034.94 acres in Village Digha for a housing scheme, following the procedural steps under the Land Acquisition Act, 1894. On 24 May 1980, a 4.03‑acre parcel belonging to the influential Pandey families was released under Section 48 without any legal justification, prompting writ petitions alleging violation of Article 14. The Supreme Court held that the release order was non est and violative of the equality clause, but it did not invalidate the entire Section 4 notification, only the released portion. Compensation was to be based on the valuation at the time of the 1974 notification, with an additional equitable interest of 7.5% per annum for two years to address the delay in possession. The Court partially allowed the appeals and petitions, setting aside the release order, confirming the validity of the original acquisition, and awarding the equitable compensation.

Issues considered

The release of land under Section 48 of the Land Acquisition Act, 1894, violates Article 14 of the Constitution.
Whether the release of a portion of land invalidates the entire Section 4 acquisition notification.
The appropriate basis for compensation: valuation at the date of notification versus date of actual possession.
Whether the Supreme Court can award equitable compensation for delay in possession.

Legislation cited

Land Acquisition Act, 1894s. 4, s. 48, s. 6, s. 7, s. 9

Subjects

Land acquisitionArticle 14EqualitySection 48 releaseCompensationEquitable compensationDelay in possessionPublic purpose

Judgment

Si19

CHANDRA BANS! SINGH AND ORS. ETC .
• v.

STATE OF BIHAR AND ORS. ETC.

August 22, 1984 "B'

[S. MURTAZA FAZAL ALI, A. VARADARAJAN AND SABYASACHI
MUKHARJi, JJ.]

Constitution of India, 1950-Article 14-Proceedings under Section 4
of the Land Acquisition Act, 1894 taken. On 19.8.74 seeking to acquire land
•. for Housing Board but on 24.5.80 a small portion of land of a particular c
influential family wa~ exempted from the acqulsttton-Whether the release
of the said land is in violation of Artfcle 14 of th1 Constitution arzd whether the
entire acquisition Proceedi'ngs would be vitiated by the said Act of release-
Compensatlon payable should be based, whether at the prevailing market value
on the data of Sectiotr 4 Notification or on the date of actual take over of n
possession-Supreme Court being a Court of equity as well. it can award
compensation for t'ie delay in actual turnover. D

Respondent State issued a Notification under Section 4 of the Land
Acquisition Act. 1894 seeking to acquire 1034.94 acres of land in Village
Digha for the purpose of construction of houses by the Bihar State Hou'iing
Board and the price or compensation for the acquired land was to be paid.
by the Hou~iog Board and not by the State from its own funds. In July E
1977, the State Ministry of Revenue and Industry, after issuinJ Notifica-
tions under Sections 6, 7 and 9 and after considering tbe claims and
objections confiirmed the acquisition. On 24.5.1980 a portion of the
land comprising 4.03 acres belonging to some influentiJ.I persons (Pandey
families) was released without there being any legal or constitutional
justifiCation for the same. This release was challenged by way of Writ
Petitions in the Bihar High Court, out of which the Present Civil Appeals. F
• and Special Leave Petitions have arisen and by filling fresh Writ Petitions
in the Court.

Allowing the appeals aod the petitions in part, the Court

• HELD : 1. The order of release passed by the Goveroment under
Section 48 of the Land Acquisition Act, 1894 was non est, as being viola- G
tive of Article 14 of the Constitution. The release of laod in favour of
Pandey families was a pure and simple act of favouritism without there
being any legal or constitutional justification for the same. [583G-H, 584G]
•
2. The entire Notification issued under Section 4 on 19th August,
1974 would be deemed to be valid and Ibo land released to the Pandey H
•
••
580 SUPREME COURT REPORT [1985) l s.c.R.

A families would form part of tho acquisition as it did on 19.8.74. The
release being separate and subsequent act of the Collector could not
invalidate the entire Notification but would only invalidate the portion
released. Lila Ram etc. v. Union of India and Ors.[1976] I SCR 941
distinguished. [SSSC·D, E-F)

3 : 1 The contention that compensation should be paid according to
B the value of land prevailing on the date of actual take over of possessi9n,
since the price of land bad appreciated substantiallyJ is not correct under the
law for two reasons, namely; (i) thrrt it is not the fault of the Collector ..
,for causing the delay in taking over the pos'lession because the matter was
pursued both in the Courts and before the Government and the proceedings
bad to be stayed, as a result of which Collector was pr'Cvented from taking
possession or giving his award, although all proceedings had taken place;
(J
and (ii) The landowners being in continuous possession of the land bad
enjoyed the usufruct of the same, particularly the lands happened to be
mostly mango orchards and they must have derived large benefits by selling
them in the market. [S86G-H, S87A-B)

3 : 2 However, the appellants have undoubtedly a case for pay..
D ment of some additional compensation in equity which relief cannot be
denied by the Supreme court which is not only a Court of law but a Court
of equity as well. Apart from the compensation which may be awarded
by the Collector or enhanced by tho Judge or a High Court the appellants
should get an equitable compensation in the form of interest calculated at
the rate of seven and a half percent per annum for two years on the value
of land owned by each land owner. Thus equitable compensation bas
E been awarded in the special facts of the case appeal, if any, under the Act '
on tho amount of compensation payable. [587C-E]

CivIL APPELLATE JURISDICTION : Civil Appeal Nos. 9973 to
9977 of 1983
Al

Appeals by Special leave from the Judgment and Order dated
F the 31st January, 1983 of the Patna High Court in C.W.J.C. Nos.
2170, 3435, 3879, 3436 and 3561 of 1982.
WITH
Special Leave Petition (Civil) No. 3098 of 1983

From the Judgment and Order dated the 3 !st January, 1983 of
G the Patna High Court in C.W.J.C. No. 3556 of 1982.
AND
Special Leave Petition (Civil) No. 4428 of 1983

From the Judgment and Order dated the 31st January, 1983 of •
the Patna High Court in C. W.J.C. No. 2104 of 1982.
AND
"
c. B. SINGH v. BIHAR (Fazal All, J.) 581

Writ Petition (Civil) Nos. 13306-21, 13346 of 1983 and 13229 A
of 1934 and 1324-42 of 1984.

Under article 32 of the Constitution of India .
•
ADVOCATES FOR THE APPELLANTS:
B
R. p. Bhatt and A. K Srivastava in CA. 9973/83 .
• A.K. Sen and M. P. Jha in CA. No. 9974/83.

D. P. Singh and B. B. Singh in CA. No .. 9975/83.
c
Y. S. Chitale, L. R. Singh and Gopal Singh for the Appellants .

• ADVOCATE FOR THI?. PETITIONER IN SLP NO. 4428 OF 1983.

S. S. Jauhar and S. N. Misra
D
ADVOCATES FOR RESPONDENTS:

F. S. Narlman, Ram Balak Mahto, Advocate General, B. P;
Singh and Ranjit Kuinar'.in CA. 9973/83.

L. N. Singh, K. P. Verma, Advocate General and Jaya E
Narayan

R. P: Singh (In WP. Nos. 13306·21 and 13346)

K. P. Verma, Advocate General and R. p: Singh in SLP. No.
4288 of 1983. F

.. The Judgment of the Court was delivered by

FAZAL ALI, J. Sometimes while taking a pragmatic and progres·
sive action under a statute in the general public interest, which is
doubtless a step in the right direction, the Government succumbs to
, internal or external pressures by a citizen or group of citizens so as
G
to show special favour to them which destroys the laudable object of
the nature of the action. Such a course is adopted to help a few
chosen friends at the cost of the people in general and furstrates the

. • very object of the meaningful State action. Furthermore, the State
action brings it into direct collision with Art, 14 of the Col\stitution
of India.
582 SUPREME COURT REPORTS (1985] 1 S.C.R.

A 'Fhe present case seems to us to be a concrete illustration of the
State action taken under the land Acquisition Act, J894 (for short,
to be referred to as the 'Act'). What happened here is that while
the Government of Bihar acquired a. vast tract of laud for construe·
tion of houses and allotment to the people belonging to the low and •
middle income groups but chose to exsmpt certain persons from the
B statutory action on purely unreasonable and illusory grounds. For-
tunately, the chosen class comprised a very small number of persons
whose lands consisted of a small proportion of the total acquired ,
land.

c This now brings us to the consideration of the important facts
of the case. A notification under s. 4 of the Act was issued by the
Government of Bihar on 19.8.14 seeking to acquire 1034.94 acres of
land in village Digha for the purpose of con•truction of houses by •
the Bihar State Hoasing Board wherein it was mentioned that the
price or compensation for the acquired land was to be paid by the
D Housing Board and not by the State from its own funds. By virtue
of the said notification objections were called and on 12.2.76 all the
objeGtions were disposed of. A declaration under s. 6 of the Act
was issued which was published on 21J.~.7ti. On 25.3.76 the publica·
tion was received by the Department and notices were issued under
s. 7 of the Act for filing claims. On 14.4.76 notification under s. 9
of the Act was issued. On 19.5.76 as mamy as 500 objections were
E filed. So far so good. Unfortunately, thereafter on 8.11. 76 a represen-
tation was made by Mr. Ram Avtar Shastri, Member of Parliament
....
for withdrawing the acquisition proceedings, which was disposed of'
and dismissed in December,1976. ...
F After this, rate report was prepared which was accepted by the
Collector who gave his final estimate and sent the same to the .
Government in January, 1977. According to the estimate, a sum of
Rs. 8.30 crores was to be disbursed to the various owners whose
lands were sought to be acquired. While the matter was nearing
completion preparations for the 1977 general elections were made
G as a result of wlllich the entire matter was deferred and put into cold·
storage. On 24.5.80, which is a crucial date as it appears to b• the
subject matter of the present appeals and writ petitions, a portion of
land comprising 4.03 acres belonging to some influential persons,
viz., Badri Sahu, R.S. Pandey and his relations (hereinafter referred •
to as 'Pandey families') was released. It is not clear what were the
fl considerations which led the Government to single out Pandey
c. B. SiNGH v. BiHAR (Fazal Ali, J.) 583

families for favourable treatment. Sometime in July, 1977 the State A
Ministry of Revenue and Industry confirmed the acquisition.
Ultimately, on 12.12.77 in order to smoothen the way for the acquisi-
tion of the lands in question, the Central Government exempted
purely agricultural lands from acquisition under the Urban Land
Ceiling Act.
B
In the year 1978, a representation was made by Mr. Thakur
Prasad who took over as the new Minister of Industries after the
general elections, about the acquisition to the Chief Minister who
stayed further proceedings in the matter. In the mean-time, a writ
petition was filed in the High Court which was ultimately withdrawn
by the petitioners and the stay was vacated by the Government c
sometime in·carly 1980. In May, 1981 another writ petition was filed
in the High Court mainly challenging the release of lands on 24.5.80
in favour of Pandey families on the ground that the said release was
violative of Art. 14 and therefore the entire notification was bad
and without jurisdiction.
D
In January, 1982, the amount of com.oensation was deposited
by the State Housing Board with the Treasury which was followed
by an Award given in respect of the acquired lands on I. 2 .83. The
totality of the facts and the dates stated above clearly show that the
delay in finalising the compensation by the Collector w_as due to
unforseen circumstances and the appellants, therefore, cannot be E
beard to complain of the same because, as already indicated, this
was due to stay orders passed by the Government and the courts on
several representations.

It is rather unfortunate that while the acquisition of land for
a sound purpose was taken and necessary steps complied with, the
F
acquisition fell into a rough weather raising serious controversies
• between the parties in dispute, putting forward various claims and
objections, as a result of which the said housing scheme was delayed
by more than 5-6 years. Indeed, if the Government would have
been wiser and more alert by the time possession was taken. the
• object of building houses by the Housing Board of the State could G
have been accomplished long before.

The sheet anchor oftbe arguments of the appellants in civil appeal
No. 9973 of 1983, wbich is by special leave, was that the entire acquisi-
• tion proce7dings and the orders passed by the Collector acquiring the
land became non est as they were violative of Art. I 4 of the Constitu-
tion, It was conteqded tqat there was no justifiQation for t]je H
584 SUPREME COURT REPORTS [1985) l s.c.R.
A Government to have released a portion of the land, viz., 4.03 acres.
However small fraction of the 'main land, it was merely to favour a
particular set of individuals, viz., Pandey families, who are alleged
to have exercised very great influence on the Government of the time
and that was done only to help one single body of persons without
any reasonable classification or nexus to the object of the Notifica-
•
B tion. The release of land belonging to Pandey families was supported
by the Government on the ground that as they had put up large
buildings with boundary walls in the entire area covered by 4.03
acres, it would have boen rather difficult for the Government to
demolish the said constructions thereon. In order to repel this argu-
ment, unimpeachable materials were produced before us to show
that the plea of huge buildings or houses situated on the land of
c Pandey families was a complete hoax or a false pretext in order to
enable the Collector to withdraw the acquisition of this particular
land. On examining the materials, which have not been denied by
the Pandey families, we find that the contentions of the appellants
are sound and must prevail. We have been shown photographs of
D the lands of Pandey families, which appear at page 120 of the Paper- •
book, which shows that there are no huge buildings or houses but
only small hutments, perhaps used for keeping a tubewell to water
the fields. The plot in question is No. 3114 which belongs to Pandey
families. On page 121 there is another photograph which shows
small hut-in the plot owned by the Pandey families. On the other
hand, amongst the lands acquired and not withdrawn from acquisi-
tion is a plot owned by one Deo Narain Singh, on which stands a
two-storeyed structure which also is meant for the purpose of
keeping cattle or watchman to look after the field. Even so, if the
plea of Pandey families was to be accepted then there was a much
superior claim of Deo Narain Singh for release of his land also.

.,.. Neither the photographs referred to above nor the fact that no
structure except the one shown in the photogroph which had been
built by ihe Pandey families, has been disputed before us. It was,
therefore, rightly argued by counsel for the appellants in Civil Appeal
No. 9973/83 that the release of land in favour of the Pandey families
.G
' was a pure and simple act of favouritism without there being any
legal or constitutional justification for the same. The State also was
not in a position either to rebut or support the release of the lands
in question. We might also mention that although notice had been
iss!led and served on the Pandey families yet they did not appear in •
this Coi>rt to support thoir claim. Hence, there does not appear to
ff l:>e any serioqs dispute between the parties that the order of release
c. B. SINGH v. BillAR (Fazal Ali, J.) SSS
passed by the Government under s. 48 of the Act was non est as A
be;ng violative of Art. 14 of the Constitution.

The matter does not rest here but the counsel for the appellants
• further submitted before this Court to declare the entire acquisition
•,
, of lands as unconstitutional even though a very small fraction of it
was hit by the mischief of Art. 14. It was submitted that the entire B

•• tract of lands was acquired by one notification and once it is found
that even an infinitesimal part of it was unconstitutional, the entire
notification would have to be struck down. In case at the time of
acquisition the lands belonging to the Pandey families were left out
on some special grounds in public interest, then doubtless the
c
appellants' argument would be unanswerable. This, however, does
not appear to have. happened in this case, as indicated above. Where-
• as section 4 notification was issued on 19.8.74, the release came on
24.5.80, that is to say about six years after. Hence, all that would
happen is that the release is here by declared to be bad and non est
as a result of which the entire notification issued under s. 4 on 19.8.74 D
would be deemed to be ~alid and. the land released to the Pandey
families would form part of the acquisition as it did on 19.8.74.

Perhaps, the appellants wanted to persuade this Court to strike
down the entire notification so that when a fresh notification is issued
they may be able to get a higher comprnsation in view of the sudden E
spurt and rise in the;price of land and other commodities in between
the period when the acquisition was made and when the actual
possession was taken. For the reasons that we have given above we
are unable to uphold this process of reasoning. The release being a
separate and subsequent act of the Collector, could not invalidate the F
entire notification but would only invalidate the portion released,
with the result that the original notificatiod wonld be restored to its
• position as it stood on 19.8.74 .

Reliance was placed by the counsel for the State on a decision
of this Court in the case of Lila Ram etc. v. Union of India & Ors.,(1 ) G
• etc. This case is clearly distinguishable from the present one because
the argument in that case proceeded on the footing that as huge areas
of land had been freezed there was no public purpose in acquiring
the land and hence the acquisition was bad. While rejecting the
contention Khanna, J., speaking for the Court observed thus ;-

( ll [1976) 1 SCR 341.
H
586 SUPREME COURT REPORTS (1985] I S.C.R,
A "It is significant that the land covered by the notification
is not a· small plot but a huge area covering thousands of
acres. In such cases it is difficult to insist upon greater
precision for specifying the public purpose because it is
quite possible that various plots covered by the notification '
may have to be utilised for different purposes set out in the
8
Interim General Plan. No objection was also taken by the
appellant before the authorities concerned that the public
purpose mentioned in the notification was not specific
enough and as such he was not able to file effective objec-
tions against the proposed acqui>ition."
c
The case cited above has no application to the facts of the
present case because it was never argued before the High Court that
the acquisition was without any public purpose. It is, however, •
contended by both the parties that if at the time when the section 4
notification was issned an invidious distinction without any reasonable
D classification would have been made between the land acquired and
the land of Pandey families so as to form an integral part of the •
entire acquisition, the entire notification would have been struck
down. Here, we find that the release of land in favour of Pandey
families came after three years of the initial notification and there-
fore it cannot invalidate the section 4 notification in its entirety. All
E that would happen is that the released portion would be deemed to
be non est and in the eye of law the section 4 notification would be
deemed to be a notification for the entire lands acquired, including
the lands of Pandey families.

In view of our decision on the aforesaid points, it is not neces- ...
F sary for us to dilate further on this question .

The other question' raised by the counsel for the appellants
was that there was sufficient delay between the date of the section 4 •
notification and taking over possession of the lands during which
period the price of land had appreciated substantially and, therefore,
the compensation should be paid according to the value of the land
G prevailing on the date of actual taking over of possession. This argu- •
ment also is without substance for the following reasons :-

(I) that it is not the fault of the Collector for causing the
delay in taking over the po.session because the matter
was pursued both in the courts and before the Govern-
-·
u ment and the proceedings had to be stayed, as a result
c. ii. SiNGH v. BIHAR (Fazaf Ab, j,) SS'7
of which Collector was prevented from taking posses- A
sion or giving his award, although all other proceedings
had taken place .
•
(2) The landowners being in contin~ous possession of the
land had enjoyed the usufruct of the same, particularly
the lands happened to be mostly mango orchards and B
they must have derived large benefits by selling them
in the market.

On an analysis of the various steps taken by the parties and
others in the taking of possession, there is undoubtedly a delay of
about ll; years and for the purpose of calculation, and convenience c
• when rounded off, the delay may be taken to be of two years. So
far as this delay is concerned, the appellant; have undoubtedly a case
for payment of some additional compensation in equity though not
under law and as this Court is not only a court of law but a court of
equity as well, it will be impossible for us to deny this relief to the
appellants. After taking into consideration the various shades and D
aspects of the case we are clearly of the opinion that apart from the
compensation which may be awarded by the Collector or enhanced
by the Judge or a higher Court, the appellants should get an equitable
compensation in the form of interest calculated at the rate of 7t per
cent per annum for two years on the value of land owned by each
E
landowner. This equitable compensation has been awarded in the
special facts of this case and will not be the subject matter of appeal,
if any, under the Act on the amount of compensation.
>

As the points involved in these appeals and writ petitions are
the same we decided to dispose them of by one common judgment. F
For the reasons given above, the appeals the special leave and
the writ petitions are disposed of accordingly but without any order
as to costs.

/ .
S.R. Appeals and Petitions partly allowed.