Supreme Court of India
DEVINDER SINGH AND ORSversusSTATE OF PUNJAB AND ORS
- Citation
- 2007 INSC 1083
- Decided
- 12 October 2007
- Disposal
- Appeal(s) allowed
- Bench
- S B SINHA
Holding
Acquisition of land for a private company where compensation is to be paid by the company falls under Part VII; Rule 4 is mandatory, and its non‑compliance, together with the State’s failure to form a prior opinion, invalidates the acquisition.
Summary
The appellants, owners of agricultural land in Hoshiarpur, Punjab, challenged the State's acquisition of their land for a project of International Tractors Ltd. The State issued a notification under Section 4 and a declaration under Section 6 of the Land Acquisition Act, 1894, entered into an agreement with the company, and later deposited a token Rs.100 towards compensation. The High Court held that the acquisition was for a public purpose, that Part II of the Act applied, and that Rule 4 of the Land Acquisition (Companies) Rules was merely directory. The Supreme Court examined whether acquisition for a private company falls under Part II or Part VII, whether the State had formed a prior opinion on public purpose, and whether Rule 4 is mandatory. It held that when compensation is to be paid by the company, the acquisition must be governed by Part VII, that Rule 4 is imperative and its non‑compliance renders the acquisition void, and that the State had not formed the requisite opinion before the agreement. Consequently, the High Court’s judgment was set aside and the appeals were allowed.
Issues considered
- The applicability of Part II versus Part VII of the Land Acquisition Act, 1894 to land acquisition for a private company.
- Whether Rule 4 of the Land Acquisition (Companies) Rules, 1963 is mandatory or directory and must be complied with before acquisition.
- Whether the State’s token contribution of Rs.100 makes the acquisition a public purpose under Part II.
- Whether the State formed a valid opinion on public purpose prior to executing the agreement with the company.
- Whether a declaration under Section 6 can be treated as conclusive or is subject to judicial review.
Legislation cited
- Companies Act, 1956s. 617
- Land Acquisition Act, 1894s. 3, s. 41, s. 44B, s. 5, s. 6, s. 9
- Land Acquisition (Companies) Rules, 1963s. Rule 4
Subjects
land acquisitionpublic purposePart VIIRule 4expropriatory legislationjurisdictional errorprivate companycompensationstatutory interpretation
Judgment
"
~
)
* ~
~ DEVINDER SINGH AND ORS A
v.
STATE OF PUNJAB AND ORS
OCTOBER 12, 2007
B
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.]
~
y Land Acquisition:
Land Acquisition Act, 1894; Ss. 3, 5, 6 and 41 and Provisions c
under Part II and Part VII ofthe Act/Companies Act, 1956; s. 617/Land
Acquisition (Companies) Rules, 1963; r.4:
Acquisition of land by State for establishing an industry by a
private company-Requirement of-Held: State must form an opinion
ascertaining the purpose of acquisition-And it must also form an D
opinion that the land in question is not an agricultural land-If
acquisition is for public purpose, procedure laid down under Part II
ofthe Act applies, else Part VII ofthe Act would be applicable-Public
purpose not to be assumed-Formation ofopinion must be on the basis
ofmaterial on record and the authority bound to follow the procedure E
strictly-Agreement entered into between landowners and the State
does not mention about payment of compensation or part thereof in
lieu of acquisition-Since, there was no material on record, State
formed an opinion after execution of the agreement ignoring
mandatory requirements ofthe Act-Statutory requirements in terms F
--~ of r. 4 of the Rules imperative in character, thus, calls for strict
compliance-Since there was non-compliance of r. 4, exercise of
jurisdiction by the State Government under Part VII of the Act
erroneous-Hence, impugnedjudgment cannot be sustained, thus set
aside. G
Interpretation of Stat_utes:
....(
Exproprietory Legislature-Construction of
475 H
476 SUPREME COURT REPORTS [2007] 11 S.C.R.
A Land Acquisition Act, 1894-Land acquisition-Purpose-
Procedure under Part II or Part VII-Applicability of
Land Acquisition (Companies) Rules, 1963; Rule 4-Applicability
of
B Words and phrases:
'Company, ' 'Corporation owned by State ', 'public purpose '-
Meaning of in the context of Section 3 of the Land Acquisition Act.
C Appellants were owners of various tracts of agricultural lands
situate in a Village in the State of Punjab where respondent No. 5, a
Company intended to set up a project. It requested the State
Government to acquire lands in question in terms of the provisions of
the Land Acquisition Act, 1894. The State Government issued a
D notification purported be under Section 4 of the Act for acquisition of
the lands in question; a declaration was issued in terms of Section 6 of
the Act and later, an agreement was entered into by and between the
Company and the State. Appellants filed \Vrit petitions questioning the
purported acquisition proceedings. During pendency of the petitions,
notices in terms of Section 9 of the Act were issued and an award was
E
made. Later, a sum of Rs.100/- was deposited by the State as a token
amount for acquisition of the said lands in question. By reason of the
impugned judgment, the High Court held that the acquisition was for a
public purpose; that acquisition of the lands in question was not a
F colourable exercise of power and it was made in terms of the provisions
contained in Part II of the Act and not Part VII thereof, as the State
had also contributed a sum ofRs.100/- for the purpose of acquisition of ~-
lands; that execution ofthe agreement with Respondent No.5-Company
and declaration under Section 6 of the Act although made on the same
G day, the same did not suffer from the vice of non-application of mind;
that since respondent No. 5 was not a private company, statutory
limitations contained in s.44B ofthe Act are not attracted; and that Rule
4 of the Land Acquisition (Companies) Rules, 1963 being directory in >-- _
nature, it was not necessary to comply with it Hence the present appeals.
H Appellant-land owners contended that the High Court erred in
}
DEVINDER SINGH v. STATE 477
... .,,,._
r
opining that the lands in question could be compulsorily acquired for a A
company, other than private company, in accordance with the provisio~
of Part II of the Land Acquisition Act; that in view ofthe insertion ot
clause (viii) ofsub-section (f) in s.3, provision of Part Il were not available
for acquisition ofland for companies; and that action on the part of the
State in entering into the agreement and issuing a declaration undet B
f
s.6 of the Act on the same day was in excess of its power under the Act.
y Respondent No.5-Company submitted that acquisition having been
made for a public purpose, and a part of the expenses having been made
from the public exchequer, provisions of Part VII of the Act were not c
attracted; that principles of natural justice as contained in Section SA
ofthe Act having been complied with, the State was not required to ca~
out any inquiry as envisaged under Rule 4 of the Companies Rules;
that declaration made under Section 6 of the Act in regard to the
existence of public purpose being conclusive in nature, the court cannot D
go beyond the same; and that r.4 ofthe Companies Rules being directory
_..
in nature, strict compliance thereof was not necessary.
Allowing the appeals, the Court
HELD: 1.1. When a request is made by any wing of the State or a E
Government company for acquisition of land for a public purpose,
different procedures are adopted. When; however, an application is filed
for acquisition ofland at the instance of a 'company', the procedures to
be adopted therefor are laid down in Part VII of the Act. Although it
may not be decisive but the conduct of the State as to how it intended to F
-~ deal with such a requisition, is a relevant factor. The action of the State
I
provides for an important condition to consider as to whether the purpose
wherefor a company requests it for acquisition ofland is a public purpose
and/or which could be made at public expenses either as a whole or in
part, wherefor evidently provisions laid down in Part II of.the Act shall G
be resorted to. On the other hand, if the State forms an opinion that the
,..I acquisition ofland at the instance ofthe company may not be for public
purpose or, the expenses to be incurred therefor either in whole or iq.
part shall not be borne by the State, the procedures laid down in Part
VII thereof have to be resorted to. The procedures laid down under Part H
478 SUPREME COURT REPORTS [2007] 11 S.C.R.
A VII of the Act are exhaustive. Rules have been framed prescribing the
mode and manner in which the State should proceed.
[Para 15] [489-E-H; 490-A]
f
J
DEVINDER SINGH v. STATE 479
....
r 2.4. In the instant case, apart from the inquiry conducted by the A
Land Acquisition Committee in terms of the provisions of Part VII of
the Act, admittedly an agreement had also been entered into between
the Company and the' Government, and a satisfaction ofthe Government
in that behalf for acquisition of the piece ofland described therein was
arrived at on the premise that the said work is likely to be useful for the 8
company. [Paras 23 and 24] [494-G-H; 495-A]
f
......-- 3.1. The Government reserved the right ofresumption of the land,
iftime schedule prescribed therein is not adhered to; in which event land
shall vest in the Government. The opinion of the Government in ti.at
behalfis said to be final. [Para 26] [495-C]
c
3.2. It is a well-settled principle oflaw that where an action tak~n
is without jmisdiction, even an order which is conclusive may be subj~t
to judicial review. Jurisdictional errors, as is well-known, are divided in
two broad categories - (i) an order passed which is wholly without D
jurisdiction; and (ii) Although the action is not ultra vires, the
~' jurisdictional error has been committed while exercising jurisdiction.
[Para 29] [495-E-F)
R.L. Arora v. State of UP., [1962] Supp 2 SCR 149 and Smt. E
Somawanti and Ors. v. The State ofPunjab and Ors., AIR (1963) SC 151
: [1963} 2 SCR 774, referred to.
John v. Rees and Ors., [1969] 2 All ER 274, referred to.
3.3. When an order is passed without jurisdiction it amounts to . F
~r colourable exercise of power. Formation of opinion must precede
application of mind. Such application of mind must be on the matelials
brought on records. The materials should be such which are required
to he collected by the authorities entitled therefor. The authorities must
act within the four-corners of the statute. An opinion formed even on G
the basis of an advice by an authority which is not contemplated under
~1 . the statute would render the decision bad in law. A statutory authority
is bound by the procedure laid down in the statute and must act within
the four-corners thereof. [Para 32] [496-H; 497-A-B]
H
.
•
480 SUPREME COURT REPORTS [2007] 11 S.C.R.
A 4.1. In this case, the 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. It is not known as to at what stage
the State thought it tit to meet a part of the expenses for acquisition of
B 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. In absence ofany other material ~
on record, it must be held that the State had not formed any opinion in
c that behalf at least when the agreement was executed.
[Para 35] (498-G-H; 499-A-B]
Jage Ram and Ors. v. The State ofHaryana and Ors., AIR (1971)
SC 1033 :· (1971] 1 SCC 671, referred to.
D 4.2. Satisfaction on the part of the State required to be arrived at
upon formation ofopinion on the basis of materials brought on records
for the purpose of Part II of the Act are different from that ofPart VII. ~
Once the appropriate Government arrives at a decision that the land
sought to be acquired is needed for a public purpose, the court would
E not go behind it, as the same may furnish a valid argument for upholding
an acquisition under Part II. But when an acquisition is made under Part
VII, the conditions precedent therefor as contained in the Companies
Rules must be satisfied. On the face ofrecord, if itcan be shown that
the Government had ignored the mandatory provisions of the Act, the
F acquisition would have to be struck down. [Para 36) [499-C-D)
-1-
Shyam Behari and Ors. v. State ofMadhya Pradesh atid Ors., [1964)
6 SCR 636, referred to.
4.3. Distinction between acquisition under Part II and Part VII of
G the Act are self-evident.· The State was not only obligated tO issue a
notification clearly stating as to whether the acquisition is for a public
purpose or for the company. Section 6 of the Act categorically states ,>. -
so, as would appear from the second proviso appended thereto.
[Para 38] [499-H; 500-A]
H
t DEVINDER SINGH v. STATE 481
'r 4.4. A declaration is to be made either for a public purpose or for A
a company. It cannot be for both. It is furthermore trite that Land
Acquisition Act is an expropriatory legislation.
[Paras 39 and 40] [500-B]
Hindustan Petroleum Corporation Ltd v. Darius Shapur Chenai &
B
t Ors., (2005] 7 SCC 627 and Chairman, Indore Vikas Pradhikaran v. Ml
s. Pure Industrial Cock & Chem. Ltd & Ors., (2007) 8 SCALE 110, relied
·~
on.
4.5. Expropriatory legislation, as is well-known, must be strictly
construed. When the properties of a citizen is being compulsorily ,C
acquired by a State in exercise of its power of Eminent Domain, the
essential ingredients thereof, namely, existence of a public purpose and
payment of compensation are principal requisites therefor. In the case
ofacquisition ofland for a private company, existence ofa public purpose
being not a requisite criteria, other statutory requirements call for strict 0
compliance, being imperative in character. [Para 41] [500-C-D]
~
4.6. Rule 4 ofthe Rules employs the word 'shall' not once but twice.
Ordinarily, it is imperative in character. No reason has been shown
before this Court as to why it should be held to be directory provision E
particularly when the Land Acquisition Act is an expropriatory
legislation. [Para 43] [500-F]
State ofGujarat and Anr. v. Patel Chaturbhai Narsibhai and Ors.,
AIR (1975) SC 629 and General Government Servants Cooperative
Housing Society Ltd, Agra etc. v. Sh Wahab Uddin and Others etc., (1981] F
) -->-- 2 sec 352, held inapplicable.
Mis. Fomento Resorts and Hotels Ltd v. Gustavo Ranato Da Cruz
Pinto and Ors., [1985] 2 SCC 152; Collector (District Magistrate)
Allahabad and Another etc. v. Raja Ram Jaiswal etc., (1985] 3 SCC 1; G
Abdul Husein Tayabali & Ors. v. State ofGujarat & Ors., [1968] 1 SCR
_j 597 and Srinivasa Cooperative House Building Society Ltd v. Madam
Gurumurthy Sast1y and Ors., [1994) 4 SCC 675, referred to.
4. 7. The approach of the High Court is totally erroneous. A
H
482 SUPREME COURT REPORTS (2007] 11 S.C.R.
A provision of a statute is either mandatory or directory. Even if a
provision is directory, the same should be substantially complied with. t:-
It cannot be ignored in its entirety only because the provision is held to '
be directory and not an imperative one. In this case admittedly there
has been no compliance of Rule 4. IfRule 4 has not been complied with,
B the exercise of jurisdiction under Part VII must be held to have been
erroneous. Hence, the impugned judgment cannot be sustained, which
is set aside accordingly. [Paras 53, 54 and 55] [505-C-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4843 of
2007.
c ')
From the Judgment and final Order dated 8.5.2006 of High Court
· of Punjab and Haryana at Chandigarh in Civil Writ Petition No. 5648 of
2004.
WITH
D
C.A. No. 4844 of 2007.
P.N. Lekhi, Jaspreet Rai, Rajan Chaurasia, Rohit Nagpal, Rakesh
Kumar, M.K. Garg, Virender Goswami, Vijayalakshmi Menon and Nitish
Massey for the Appellants.
E
Soli J. Sorabjee, Dhruv Mehta, Harshvardhan Jha, Yashraj Singh
Deora, H.S. Munjral, Ajay Pal, Kulraj Rai, Sunil Roy and D.S. Mahra
for the Respondents.
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted in both the Special Leave ~ _
Petitions.
2. Appellants herein are owners of various tracts of agricultural lands
situate in Village Chak Gujran, Tehsil and District Hoshiarpur in the State
G of Punjab. Respondent No. 5, M/s International Tractors Limited, is a
Company incorporated under the Companies Act, 1956. It intended to
set up a project named 'Ganesha Project'. It requested the State to
acquire lands in question in tenns of the provisions of the Land Acquisition
H
}
DEVINDER SINGH v. STATE [SINHA, J.] 483
Act, 1894 (for short, 'the Act'). A notification was issued by the State A
purported to be under Section 4 of the Act on 15.02.2002, stating:
"Whereas it appears to the Governor of Punjab that Land is
likely to be required to be taken by the Government at the public
expense, for a public purpose namely for setting up of Ganesha
Project, Mis. International Tractors Ltd. at Village Chak Gujran, B
Tehsil & Distt. Hoshiarpur, it is hereby notified that the land in
locality described below is likely to be required for the above
purpose.
This notification is made under the provisions of Section 4 of C:
the Land Acquisition Act, 1894 to all whom it may concern.
In exercise of powers conferred by the aforesaid section, the
Governor of Punjab is pleased to authorize the officers for the time
being engaged in undertaking with their servants and workmen to O
enter upon and survey any land in the locality and do all other acts
required or permitted by that section.
Any person interest who has any objection to the acquisition
of any land in the locality may within thirty days of the publication
of this notification file an objection in writing before the Collector, E
Land Acquisition Department oflndustries & Commerce, Punjab,
17-Bays Building, Chandigarh."
3. Objections having been called for, the appellants herein filed their
objections in terms of Section SA of the Act, inter alia, stating: p
--- r "5. That the proposed acquisition by the Punjab Government is
unconstitutional, uncalled for and against law and fact of the.
case, just in order to cause loss to the objectors and to give
unlawful gain to other party, i.e., the proposed 'Ganesha
Projectors Mis. International Tractor Ltd. G
7. That the acquisition of the proposed land belonging to the
objectors is against the interest of the objectors keeping in view
the policies of the State. The land in question is cultivable fertile H
484 SUPREME COURT REPORTS [2007] 11 S.C.R.
\
A land and the proposed project if any can be shifted some
where else at some barren land as well as in the ingustrial zone
according to Industries Master Plan and in this way, it is in
the interest of the Pollution Control Department.
B
9. That the objectors are cultivating the land for the last over 25
years, it is consolidated at one place where in the objector
has installed electric motors and planted popular trees around
the fields. The objectors do not want that the land in question
c be acquired since it is against their interest and objectors are
dependent on this Acquisition lahd. The Agriculturist/Farmer
is entirely dependent on his land for his livelihoo~. There are
various projects in the name of Escorts Tractors, Mohindra
Tractors, Massy Furgon Tractors and so many other tractors
D companies/industries fulfilling the needs of the public and as
such there is no need at all of the proposed industry to be set
up in the lands of the objectors.
10. That in any way the proposed acquisition is against the rules
of the acquisition and the act itself keeping in view the interest
E of the objectors thus causing wrongful loss to the objectors
and causing wrongful gain to the proposed objectors."
4. Indisputably, a declaration was· issued in terms of Section 6 of
the Act and an agreement was entered into by and between the Company
F and the State on 27.02.2003.
5. Writ petitions were filed by the appellants herein queSt:ioning the
·said purported acquisition proceedings praying, inter alia, for the following
relief:
"(b) Quash the notifications dated 15.02.2002 (Annexure P-2) and
G
27 .02.2003 (Annexure P-5) issued by the respondent No.1
under Sections 4 and 6 of the Land Acquisiii.on Act, 1894,
respectively."
6. During the pendency of the said writ petitions, notices in terms of
H
DEVINDER SINGH v. STATE [SINHA, J.] 485
)'
Section 9 of the Act were issued on 31.05.2004. An award was made A
on 18.02.2005. Allegedly, during the pendency of the said writ petitions,
a sum ofRs.100/- was deposited by the State as a token amount for
acquisition of the said lands in question.
7. By reason of the impugned judgment, the High Court opined :
B
(i) ·The acquisition was for a public purpose in view of the report ,
submitted under the Act, relevant portion whereof is as under:
"';!·"'
"In case of Mis. International Tractors Ltd. the company has
entered into an agreement with a Fresh company named Mis.
Renault Agriculture France for manufacture oflatest technology . c
tractors. Mis. Renault Agriculture France holds 20% equity in the
company. Production of these latest technology tractors will boost ·
export, which will contribute to the general welfare and prosperity
of the whole community.
D
Therefore, in view of the facts and the relevant law as mentioned
above, it is proved beyond doubt that the profits have actually gone
to the general public......"
(ii) Acquisition of the lands in question was not a colourable
exercise of power. E
(lii) Acquisition was made in terms of the provisions contained in
Part II of the Act and not Part VII thereof, as the State had
also contributed a sum of Rs. l 00/- for the purpose of
-
acquisition of lands. F
-·.Y (iv) Execution of the agreement with Respondent No.5-Company
and declaration made under Section 6 of the Act although were
made on the same day, the same did not suffer from the vice
of non-application of mind.
G
(v) Respondent No. 5 being not a private company, statutory
limitations contained in Section 44B of the Act are not
- ---' attracted.
(vi) Rule 4 of the Land Acquisition (Companies) Rules, 1963 (for
short, 'the Companies Rules') being directory in nature, it was H
486 SUPREME COURT REPORTS [2007] 11 S.C.R.
A not necessary to comply with the provisions thereof
8. Mr. P.N. Lekhi, learned Senior Counsel appearing on behalf of
the appellants, in support of these appeals, would, inter alia, submit :
(l) The High Court erred in opining that the lands in question could
B be compulsorily acquired for a company, other than private
company, in accordance with the provisions of Part II of the
Act.
'11"
(ii) In view of the insertion of clause (viii) of sub-section (f) in
Section 3 by Act No. 3 of 1984, provision of Part II were
G not available for acquisition of land for companies.
(Iii) Action on the part of the State in entering into the agreement
and issuing a declaration under Section 6 of the Act on the
same day was in excess of its power under the Act.
D 9. Mr. Soli J. Sorabjee, learned Senior Counsel appearing on behalf
of Respondent No.5, on the other hand, submitted :
(i) Acquisition having been made for a public purpose, and a part
of the expenses having been made from the public exchequer,
E provisions of Part VII of the Act were not attracted.
(ii) Principles of natural justice as contained in Section SA of the
Act having been complied with, the State was not required to
carry out any inquiry as envisaged under Rule 4 of the
Companies Rules. ~
F
(iii) Declaration made under Section 6 of the Act in regard to the
~-
existence of public purpose being conclusive in nature, the
court cannot go beyond the same.
(iv) Rule 4 of the Companies Rules being directory in nature, strict
G compliance thereof was not necessary.
10. The Act was enacted to amend the law for the acquisition of
land for public purposes and for companies. Section 3 of the Act provides >-- ~
for interpretation clauses. Clause (cc) of Section 3 of the Act defined the
expression "corporation owned or controlled by the State" in the following
H
)·
DEVINDER SINGH v. STATE [SINHA, J.] 487
tenns: A
"(cc) the expression "corporation owned or controlled by the State"
means any body corporate established by or under a Central,
Provincial or state Act, and includes a Government company as
defined in Section 617 of the Companies Act, 1956 (I of 19$6),
a society registered under the Societies Registration Act, 1860 (21 B
of 1860), or under any corresponding law for the time being in
force in a State, being a society established or administered by
Government and a co-operative society within the meaning of any
law relating to co-operative societies for the time being in force; in
any State, being a cooperative society in which not less than fi~- C
one per centum of the paid-up share capital is held by the Central
Government, or by any State Government or Governments, or
partly by the Central Government and partly by one or more State
Governments."
D
11. Th~ expression 'company' has been defined under clause (e) of
Section 3 of the Act to mean :
"(i) a company as defined in section 3 of the Companies Act, 1956
(I of 1956), other than a Government company referred to in
E
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 than a society referred to in
clause (cc); F
--Y
(tii) 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))
G
The expression 'Public purpose' has been defined in Section 3(f)
__j of the Act to mean :
"(f) the expression "public purpose" includes -
(i) the provision of village-sites, or the extension, planned H
488 SUPREME COURT REPORTS [2007] 11 S.C.R.
A 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 ot policy of
B 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;
c (v) the provision ofland for residential purposes to the poor or
landless or to persons residing in areas affected by natural
calamities, or to persons displaced or affected by reason of
the implementation of any scheme undertaken by Government,
any local authority or a corporation owned or controlled by
D
the State;
(vi) the provision ofland for carrying out any educational, housing,
health or slum clearance scheme sponsored by Government,
or by any authority established by Government for carrying
E out any such scheme, or, with the prior approval of the
appropriate Government, by a local authority, or 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, or a co-operative society within the meaning
F 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;
G
(viii) the provision of any premises or building for locating a public
office, . >---
but does not include acquisition ofland for companies.;"
H 12. Indisputably, the Land Acquisition Act is an expropriatory
i
t
DEVINDER SINGH v. STATE [SINHA, J.] 489
.... )'
legislation. The State ordinarily can acquire a property in exercise of its A
power of'Eminent Domain' subject to existence of public purpose and
on payment of reasonable compensation in terms of the provisions of the
Act. However, the State has been empowered to acquire land also for
'companies' and for purposes other than public purpose.
B
13. Companies Act, 1956 provides for different types of company.
A Government Company is defined in Section 617 thereof. Respond¢nt
..., No. 5 may be a public limited company, but it is not a Government
Company. When it filed an application requesting the State to acquire the
·"' lands for its purpose evidently an inquiry was caused to be made.
c
14. It its counter affidavit, the State has, inter alia, contended that
Respondent No ..5 is an existing ullit for manufacturing tractors and lands
sought to be acquired are adjoining their factory. The State appointed a
Sub-Committee of Land Acquisition Committee constituted by the State
recommending acquisition of 30 acres of lands. Approval of the State, D
therefor was sought for. 'Ganesha Project' was not a project of the Staie
but one undertaken by Respondent No. 5. Such a project would come
'
within the purview of clause (aa) of Section 40(1) of the Act.
15. When a request is made by any wing of the State or ,a
E
Government company for acquisition ofland for a public purpose, diffe~t
procedures are adopted. Where, however, an application is filed for
acquisition ofland at the instance of a 'company', the procedures to be
adopted therefor are laid down in Part VII of the Act. Although it may
not be decisive but the conduct of the State as to how it intended to deal
F
--Y with such a requisition, is a relevant factor. The action of the State provides
for an important condition to consider as to whether the purpose wherefor
a company requests it for acquisition of land is a public purpose and/o~
which could be made at public expenses either as a whole or in part,
wherefor evidently provisions laid down in Part II shall be resorted to~
G
On the other hand, if the State forms an opinion that the acquisition of
.,....__,( land at the instance of the company may not be for public purpose or,
ther~for the expenses to be incurred therefor either in whole or in part
shall not be borne by the State, the procedures laid down in Part VII
thereof have to be resorted to. The procedures laid down under Part VII
H
/
t
DEVINDER SINGH v. STATE (SINHA, J.] 491
..... "r
lands by negotiation with the persons interested therein on paym~nt A
of reasonable price and such efforts have failed;
(iii) that the land proposed to be acquired is suitable for the pw:pose;
(iv) that the area ofland proposed to be acquired is not excessive;
-
B
(v) that the company is in a position to utilise the land expeditiously;
and
y
(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. c
(2) The Collector shall, after giving the company a reasonable
opportunity, to make any representation in this behalf, hold an
inquiry into the matters referred to in sub-rule (1) and while holding
such enquiry he shall - D
(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;
(ii) determine, having regard to the provisions of Secs. 23 and 24 E
of the Act, the approximate amount of compensation likely to ~e
payable in respect of the land, which, in the opinion of the Collector,
should be acquired for the company; and
(iii) ascertain whether the company offered a reasonable price (not
being less than the compensation so determined), to the persons F
- 'r
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, G
is of average or above average productivity and includes a garden
~- .... or grove land.
(3) As soon as may be after holding the enquiry under sub-rule
(2), the Collector shall submit a report to the Appropriate
H
492 SUPREME COURT REPORTS [2007] 11 S.C.R.
\
A Government and a copy of the same shall be forwarded by the
Government to the Committee.
(4) No declaration shall be made by the Appropriate Government
under Sec. 6 of the Act unless -
B (i) the Appropriate Government has consulted the Committee and
has considered the report submitted under this rule and the report,
if any, submitted under Sec. 5-A of the Act; and
(ii) the agreement under Sec. 41 of the Act has been executed by
c the company."
17. The State is also enjoined with a duty to make an inquiry
wherefor an opportunity of hearing to the company is required to be given.
When the State intends to proceed with the acquisition of land it must
form an opinion that the lands which are going to be acquired are not
D good agricultural lands. The rules by and large lay down a statutory policy
in that behalf and question of ignoring the same by the State does not
anse.
18. We would consider the question as to whether Rule 4
E aforementioned is mandatory or directory or at what stage an inquiry is
required to be made, a little later. But we must record that it is not the
case of the State that Rule 4, despite the fact that acquisition is made in
terms of Part VII of the Act, can be ignored.
F 19. The High Court proceeded on the basis that as the State formed
an opinion that the purpose for which the provisions of the Act were taken
recourse to is a public purpose, the provisions of Part II would apply in
"'-.( -
the instant case. We are not unmindful of the fact that the definition of
'public purpose' as contained in Section 3(f) of the Act is an inclusive
G one. Therefore, the said definition need not be kept confined to the matters
referred to therein. But with a view to ascertain as to what should be a
public purpose, we may notice its dictionary meaning as contained in
Black's Law Dictionary, Fifth Edition which is as under:
"Public purpose: In the law of taxation, eminent domain, etc., this
H is a term of classification to distinguish the objects for which,
DEVINDER SINGH v. STATE [SINHA, J.] 493
.... )'
according to settled usage, the government is to provide, from A
those which, by the like usage, are left to private interest, inclination,
or liberality. The constitutional requirement that the purpose of any
tax, police regulation, or particular exertion of the power of eminent
domain shall be the convenience, safety, or welfare of the entire
community and not the welfare of a specific individual or class of B
persons.
t
-r· The tenn is synonymous with governmental purpose. As employed
to denote the objects for which taxes may be levied, it has no
relation to the urgency of the public need or to the extent of the.
public benefit which is to follow; the essential requisite being that
c
a public service or use shall affect the inhabitants as a community,
and not merely as individuals. A public purposeor public business
has for its objective the promotion of the public health, safety,
morals, general welfare, security, prosperity, and contentment of
D
. all the inhabitants or residents within a given political division, as,
for example, a state, the sovereign powers of which are exercised
to promote such public purpose or public business."
20. General meaning of the word 'public policy' has always been
held to be an unruly horse by this Court. [See Gherulal Parakh v. E
Mahadeodas Maiya and Ors., See AIR (1959) SC 781].
21. Our attention has been drawn to a recent decision of this Court
in Pratibha Nema and Ors. v. State ofMP. and Ors., [2003] 10 SCC
626. Therein, for establishment of a diamond park, 73 .3 hectares of dry F
-Y land was to be acquired. The proposal emanated from the General
Manager of the District Industries Centre. Sanction in principle for
acquisition was given by the Government of Madhya Pradesh; even
Section 17 of the Act was taken recourse to. The State contributed a
token sum of Rs. I00/- towards the cost of acquisition. This Court clearly
G
noticed that where the acquisition is for a company, its cost is to be borne
entirely by the company itself, provisions of Part 7 would apply. But we
- .. ..4.
must hasten to add that the Bench did not have any occasion to consider
the question as to whether the State is entitled to take recourse to the
provisions of both Part II and Part VII of the Act simultaneously. The H
\
494 SUPREME COURT REPORTS [2007] 11 S.C.R.
-'( • •
A Bench furthennore proceeded to consider the requirements to hold that
a public purpose need not be ascertained only from the point of view of
applicability of Part II but also the provisions of Part VII, stating:
"22. Thus the distinction between public purpose acquisition and
Part VII acquisition has got blurred under the impact of judicial
B 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
.
4
~
nominal contribution by the Government was held to be sufficient T
compliance with tl-ie second proviso to Section 6 as held in a catena
c 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 the private
sector could get imbued with the character of public purpose
D acquisition if only the Government comes forward to sanction the
payment of a nominal sum towards compensation. In the present
~
state oflaw, that seems to be the real position."
22. We need not go into the nicety of the question, keeping in view
E the fact that there are binding precedents in that behalf that in a case of
acquisition for a public company, public purpose is not to be assume~
and the point of distinction between acquisition oflands under Part II and
Part VII would be the source of funds to cover the cost of acquisition.
This Court in Pratibha Nema (supra) held :
F " ... In other words, the second proviso to Section 6( 1) is the main
~-
dividing ground for the two types of acquisition ... "
23. The undisputed fact is that apart from the inquiry conducted by
the Land Acquisition,Committee in terms of the provisions of Part VII of
G the Act, admittedly an agreement had also been entered into on
27.02.2003.
24. The agreement in tenns of the provisions referred to above by >- --
the Company and the Government, a satisfaction of the Government in
that behalffor acquisition of the piece ofland described therein was arrived
H
DEVINDER SINGH v. STATE [SINHA, J.] 495
~
... 't
at on the premise that the said work is likely to be useful for the company. A
25. Section 41 of the Act has specifically been mentioned for the
p~ose of entering into the agreement. The terms and conditions of the
agreement envisaged : (i) the company was to pay to the Government of
Punjab the amount of compensation; (ii) it was to deposit all the sums
B
demanded by the Collector in anticipation, which may be necessary
therefor; (iii) only on payment by the company it was to get possession
y'
wherefor also the Government reserved its discretion; (iv) use by the
company of the land only for the purpose for which acquisition was made
was insisted.; (v) provision in regard to time for completion of the project.
c
26-. The Government reserved the right of resumption of the land, if
time schedule prescribed therein is not adhered to; in which event land
shall vest in the Government. The opinion of the Government in that behalf
is said to be final.
D
27. Whether in the aforementioned situation, thf! provisions of Part
-~ II can be said to have been complied with, is the question.
28. Submission of Mr. Sorabjee is that any declaration that the land
has been acquired for public purpose is conclusive.
E
29. We would proceed on the said assumption but it is a well-settled
principle of law that where an action taken is without jurisdiction, even
an order which is conclusive may be subject to judicial review.
Jurisdictional errors, as is well-known, are divided in two broad categories
- (i) an order passed which is wholly without jurisdiction; and (ii) Although F
the action is not ultra vires, the jurisdictional error has been committed
- r while exercising jurisdiction. [See John v. Rees and Ors., (1969) 2 All
ER 274].
I
\
30. In R.L. Arora v. State of UP., [1962] Supp 2 SCR 149, this
Court held: 6
"Then it was urged on behalf of the respondents thats. 6(3) makes
_.J..
the purpose noted in the notification under s. 6(1) not justiciable.
We have not been able to understand how that provision helps the
respondents. All that s. 6(3) says is that the declaration shall be H
SUPREME COURT REPORTS (2007] 11 S.C.R.
-\
496
A conclusive evidence that the land is needed for a public purpose
--'( . '
or for~ company. In this case the.declaration was that the land
was needed for a company and that according. to s. 6(3) is
conclusive evidence that the land is so needed. Now it is not the
case of the appellant that the land was not needed for_ the Works
B in the present case, nor does the appellant say that though the land
was needed for some other purpose, the notification falsely declares
that it was needed for the Works. In the circumstances the
conclusiveness envisaged bys. 6(3) is of no assistance to the solving ""(
of the problem with which we are concerned in the present case."
. c
31. Mr. Sorabjee has strongly relied upon a decision of this Court
in Smt. Somawanti and Ors. v. The State of Punjab and Ors., [AIR
(1963) SC 151 : [1963] 2 SCR 774.
In Somawanti (supra), this Court opined:
D
"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
E
private purpose. Ifthe 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 afraud on the power conferred
upon it by the Act. In other words the question would then arise
F
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
le-
question whether a particular action was the result of a fraud or (
G
not is always justiciable, provisions such ass. 6(3) notwithstanding."
[Emphasis supplied]
32. When an order is passed without jurisdiction it amounts to
H colourable exercise of power. Formation of opinion must precede
)
DEVINDER SINGH v. STATE [SINHA, J.] 497
application of mind. Such application of mind must be on the materials A
brought on records. The materials should be such which are required',to
be collected by the authorities entitled therefor. The authorities must ~ct
within the four-comers of the statute. An opinion fonned even on the basis
of an advice by an authority which is not contemplated under the statute
render the decision bad in law. A statutory authority is bound by the B
procedure laid down in the statute and must act within the four-comers
thereof
33. The effect of contribution of a sum of Rs.100/- by the State
purported to be towards the amount of compensation, may not be C
noticed.
In Somawanti (supra) although this Court while upholding that
contribution of sun1 of Rs. l 00/- as a part of the cost of acquisition may
•• subserve the requirement of law, proceeded to opined :
D
"We would like to add that.the view taken in Senga Naicken's
case [I.L.R. 50 Mad. 308 : AIR ~ 927 Mad. 245] has beeq
followed by the various High Courts;oflndia On the basis of the
correctness of that view the State Governments have been acquiring
private properties all over the country by contributing only token E
a.'tlounts to~ards the cost of acquisition. Titles to many such
properties would be unsettled if we were now to take the view
that 'partly at public expense' means substantially at public expense.
Therefore, on the principle of stare decisis the view taken in Senga
Naicken's case [I.LR. 50 Mad. 308 : AIR 1927 Mad. 245] F
should not be disturbed. We would, however, guard ourselves ,
- 'y
against being understood to say that a token contribution by
the State towards the cost of acquisition will be sufficient ·
compliance with the law in each and every case. Whether such
contribution meets the requirements of the law would depend 'G
upon the facts of every case. Indeed the fact that the State's
contribution is nominal may well indicate, in particular
circumstances that the action of the State was a colourable
exercise ofpower. In our opinion 'part' does not necessarily mean
a substantial part and that it wi,11 be open to the Court in every H
[2007] -11 S.C.R.
\
498 SUPREME COURT REPORTS
-{ .
A case which comes up before it to examine whether the contribution
made by the State satisfies the requirement of the law. In this case
we are satisfied that it satisfies the requirement oflaw. What is next
to be considered is whether the acqilisition was only for a company
because ·the compensation was to come almost entirely out of its
B coffers and, therefore, it was -in reality for a private purpose as ,.
----
opposed to public purpose. In other ·words, the question is whether
there was on the part of the Government a colourable exercise of
power. Elaborating the point it is said that the establishment of a ~
factory for manufacturing refrigeration
\ .
equipment is nothing but an
c ordinary commercial venture and can by no stretch of imagination
fall within the well-accepted meaning of the expression 'public
purpose'; that even if it were t() fall within that expression the factory
is to be established not by the Government, nor by Government
participation but solely by the respondentNo. 6, a public limited J!J
D concern.and that, therefore, the concern could acquire land for such
apUipose only after complying with the provisions of Part VII and .
that the use' of the provisions of s. 6( 1) is merely a colourable device )...
to enable the respondent No. 6 to do something which, under tenns
of s. 6(1 ), could not be done."
E
[Emphasis supplied]
34. Strong reliance has also been placed by the High Court inJage
Ram and Ors. v. The State ofHaryana and Ors., AIR (1971) SC 1033:
[1971] L SCC 671 for the proposition that once the Government had
F contributed any sum towards the cost of the acquisition ofland, it was
not necessary for the Government to proceed under Part VII of the Act ~ --
and, therefore, does not lie in the mouth of State that acquisition was under
Part II.
G 35. 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
.H acquisition ofland. Such an opinion on the part of the State having regard
}
DEVINDER SINGH v. STATE [SINHA, J.] 499
J.
}"
to the statutory scheme should have been fonned prior to entering into A
the agreement itself. The agreement does not mention about any paypient
of a part of compensation by the State. We, in absence of any other
material on record, must hold that the State had not fonned 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. B
36. Satisfaction on the part of the State required to be arrived at
y upon fonnation of opinion on the basis of materials brought on records
for the purpose of Part II of the Act are different from that of Part VIL
Once the appropriate Government arrives at a decision that the land so1:1ght
_ to be acquired is needed for a public purpose, the court would not go
c
behind it, as the same may furnish a valid argument for upholding an
acquisition under Part II. But when an acquisition is made under Part VII,
-.__,;;_
the conditions precedents therefor as contained in the Companies Rules
must be satisfied. On the face of record, if it can be shown that the
D
Government had ignored the mandatory provisions of the Act, 'the
acquisition would have to be struck down.
37. In Shyam Behari and Ors. v. State of Madhya Pradesh and
Ors., [1964] 6 SCR 636, it was held:
E
" .. .In the second place, the declaration under s. 6 may be made
that land is needed for a company in which case the entire
compensation has to be paid by the company. It is clear therefore
that where the entire compensation is to be paid by a compaI)y,
the notification under s.6 must contain a declaration that'the land
F
--- 'r is needed for a company. No notification under s. 6 can be made
where the entire compensation is to be paid by a company declarilig
that the acquisition is for a public purpose, for such a declaration
requires that either wholly or in the part, compensation must come
out of public revenues or some fund controlled or managed by a
G
local authority ... "
___...
38. Distinction between acquisition under Part II and Part VII are
self-evident. The State was not only obligated to issue a notification clearcy
stating as to whether the acquisition is for a public purpose or for the
'H
\
500 SUPREME COURT REPORTS [2007] 11 S.C.R.
A company. Section 6 categorically states so, as would appear from the
second proviso appended thereto.
39. A declaration is to be made either for a public pwpose or for a
company. It cannot be for both.·
B 40. It is furthermore trite that Land Acquisition Act is an
expropriatory legislation. [See Hindustan Petroleum Corporation Ltd
v. Darius Shapur Chenai & Ors., [2005] 7 SCC 627; and Chairman,
Indore Vikas Pradhikaran v. Mis Pure Industrial Cock & Chem. Ltd
& Ors., (2007) 8 SCALE 110]
c
41. Expropriatory legislation, as is well-known, must be strictly
construed. When the properties of a citizen is being compulsorily acquired
by a State in exercise of its power of Eminent Domain, the essential
ingredients thereof, namely, existence of a public purpose and payment
D of compensation are principal requisites therefor. In the case of acquisition
of land for a private company, existence of a public purpose being not a
requisite criteria, other statutory requirements call for strict compliance,
being imperative in character.
42. Another question which arises for our consideration is as to
E whether Rule 4 of the Companies Rules is mandatory or directory in
nature. The High Court held it to be directory.
43. Rule 4 of the Rules employs the word 'shall' not once place
but twice. Ordinarily, it is imperative in character. No reason has been
F shown before us as to why it should be held to be directory provision
particularly when the Land Acquisition Act is an expropriatory legislation. "' -..
44. In State of Gujarat and Anr. v. Patel Chaturbhai Narsibhai
and Ors., AIR (1975) SC 629, this Court held:
G "15. 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
H Company has made all reasonable efforts to get such lands by
}
DEVINDER SINGH v. STATE [SINHA, J.] SOl
negotiation with the persons interested therein on payment of A
_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 B
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 SA of ,
the Act is equally unsound. Section 17 of the Act provides that C
the appropriate Government may direct that the provisions of
Section SA 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 SA may not be held. D
45. In General Government Servants Cooperative Housing
Society Ltd., Agra etc. v. Sh. Wahab Uddin and Others etc., [1981]
2 SCC 3S2, this Court held:
"13. Sub-rule (1) requires the Government to direct the E
Collector to submit a report to it on the matters enumerated in
Clauses (i) to (vi) of the Sub-rule (1) which is for the benefit of
the Company. The purpose is to avoid acquisition of land not
suitable for a Company. Clause (ii) of Sub-rule (1) requires that
the Company has to make all reasonable efforts to get such lands F
by negotiation with the person interested therein on payment of
reasonable prices and that such efforts have failed. The purpose
of Clause (ii) seems to be to avoid unnecessary land acquisition
proceedings and payment of exorbitant prices. The purpose of
Clauses (iii), (iv) and (v) is obvious. The purpose of Clause (vi) is O
to avoid acquisition of good agricultural land, when other alternative
land is available for the purpose. Sub-rule 2 of Rule 4 requires
the Collector to give reasonable opportunity to the Company so
that the Collector may hold an inquiry into the matters referred in
Sub-rule (1 ). The Collector has to comply with Clauses (i), (ii) and H
502 SUPREME COURT REPORTS [2007] 11 S.C.R.
--{ ...
A (iii) of Sub-rule 2 during the course of the inquiry under Sub-rule
(1 ). The Collector under Sub-rule 3 then has to send a copy of
his report of the inquiry to the appropriate Government and a copy
of the report has to be forwarded by the Government to the Land
Acquisition Committee constituted under Rule 3 for the purpose
B of advising the Government in relation to acquisition ofland under
Part VII of the Act, the duty of the Committee being to advise the
Government on all matters relating to or arising out of acquisition
ofland under Part VII of the Act (Sub-rule (5) ofRule_3). No
declaration shall be made by the appropriate Government under
c Section 6 of the Act unless the Committee has been consulted by
... the Government and has considered the report submitted by the
Collector under Section 5A of the Act. In addition, under Clause
(ii) of Sub-rule (4) of Rule 4, the Company has to execute an
agreement under Section 41 of the Act. The above consideration
D shows that Rule 4 is mandatory; its compliance is no idle formality,
unless the directions enjoined by Rule 4 are complied with, the
notification under Section 6 will be invalid. A consideration of Rule
4 also shows that its compliance precedes the notification under
Section 4 as well as compliance of Section 6 of the Act."
E
46. In Mis Fomento Resorts and Hotels Ltd v. Gustavo Ranato
Da Cruz Pinto and Ors.: [1985] 2 SCC 152, a three-Judge Bench of
this Court categorically held :
"17. Reading the Act and the Rules and keeping.in view the
F scheme of the Act, it is apparent, in our opinion, that before the
issuance of Section 4 notification, there is no requirement as such
of compliance with the procedure contemplated by Rule 4 of the
""- --
Rules. We are therefore unable to subscribe to the view that enquiry
by Rule 4 must precede the issuance of notification mder Section
G 4(1) of the Act. Furthermore as indicated before certain matters
which. are required to be done under Rule 4 can not be done
because the officer or the person authorised by him would have ,..____
.no authority unless notification under Section 4 is issued."
.
47. Repelling a contention that the.provisions of Sections 6 to 37
H
)
DEVINDER SINGH v. STATE [SINHA, J.] 503
>
are not required to be complied with in view of Section 39 thereof, it A
was held:
" ... This Section, in our opinion, has no relevance for determining
whether to be a proper acquisition, enquiry contemplated under
Rule 4 must precede issuance of the notification under Section 4
B
of the Act..."
48. The lands in question are recorded as Shahi lands. It is not in
dispute that they are agricultural lands. The Act contemplates that such
lands may not be acquired.
49. We may notice that in Collector (District Magistrate)
c
Allahabad and Another etc. v. Raja Ram Jaiswal etc., [1985] 3 SCC
1 this Court held that such a contention requires an indepth study, stating:
"27. The validity of the impugned notification was also
challenged on the ground that even though the acquisition is for D
the Sarnmelan, a company, the notification was issued without first
complying with the provisions of Rule 4 of the Land Acquisition'
(Companies) Rules, 1963. The High Court has negatived this
challenge. We must frankly confess that the contention canvassed
by Mr. Nariman in this behalf would necessitate an indepth E
examination of the contention. However, we consider it unnecessary
in this case to undertake this exercise because the judgment of the
High Court is being upheld for the additional reason that the
acquisition in this case was mala fide. Therefore, we do not
propose to examine the contention under this ~ead." .F
- )'
It is, on that premise, we have undertaken some study in this behalf.
50. The decision of this Court in Somawanti (supra) holding that
the stage at which Rule 4 is required to be complied with is not the stage
prior to issuance of a notification under Section 4 of the Act, but G
declaration under Section 6 does not appear to be correct from the
·- decisions of this Court in Patel Chaturbhai Narsibhai (supra) and
Wahab Uddin (supra), the earlier binding precedent, with utmost respect,
having not been taken into consideration in its entirety.
H
504 SUPREME COURT REPORTS [2007] 11 S.C.R.
A 51. In Abdul Husein Tayabali & Ors. v. State ofGujarat & Ors.,
[1968] 1 SCR 597, this Court observed :
" ... Next it was urged that the inquiry under Rule 4 has to be held
after the notification under section 4 is issued and not before and
B
therefore the inquiry held by Master was not valid. We do not find
anything in Rule 4 or in any other Rule to WaITaI).t such a
proposition. The inquiry, the report to be made consequent upon
such inquiry, obtaining the opinion of the Land Acquisition
Committee, all these are intended to enable the Government to
come to a tentative conclusion that the lands in question are or are
c likely to be needed for a public purpose and to issue thereafter
section 4 notification ...." ...
52 .. In Srinivasa Cooperative House Building Society Ltd. v.
Afadam Gurumurthy Sastry and Ors., (1994] 4 SCC 675, noticing
D Somavanti (supra) wherein it was held that the manufacturing of the
articles was for the benefit of the community and to save substantive part
of foreign exchange and staff quarters to workmen, it was held :
" ... On the other hand, in the case of an acquisition for a company,
the compensation has to be paid by the company. In such a case
E
there can be an agreement under Section 41 for transfer of the
land acquired by the Government to the company on payment of
the cost of acquisition, as also other matters. The agreement
contemplated by Section 41 is to be entered into between the
company and the appropriate Government only after the latter is
F
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. Section
6 is in terms, made subject to the provisions of Part VII of the
Act. The declaration for acquisition for a company shall not be
G
made unless the compensation to be awarded for the property is
to be paid -by a company. In the case of an acquisition for a
company simipliciter, the declaration cannot be made without
satisfying the requirements of Part VII. But that does not necessarily
mean that an acquisition for a company for a public purpose cannot
H
> DEVINDER SINGH v. STATE [SINHA, J.] 505
be made otherwise than under the provisions of Part VII, if the A
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
is for a public purpose and that the cost of 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 B
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, fora
company is to be made at the cost entirely of the company itself,
such an acquisition comes under the provisions of Part VII. .. " ·
53. The approach of the High Court in this behalf, in our opinion, is
c
totally erroneous. A provision of a statute is either mandatory or directory.
Even if a provision is directory, the same should be substantially complieQ
with. It cannot be ignored in its entirety only because the provision is helq
to be directory and not an imperative one.
D
54. In this case admittedly there has been no compliance of Rule 4,
i
If Rule 4 has not been complied with, the exercise of jurisdiction unde11
Part VII must be held to have been erroneous.
55. For the reasons aforementioned, the impugned judgment cannot' E
be sustained, which is set aside accordingly. The appeals are allowed with'
costs. Counsel's fee assessed at Rs.25,000/- (Rupees twenty five'
thousand only).
S.K.S. Appeals allowed.
- r
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