Holding

The Court held that the respondent was a 'person interested' under Section 3(b) of the Land Acquisition Act and that the Section 6 notification was invalid for failure to comply with Rule 4 of the Land Acquisition (Companies) Rules, 1963, leading to dismissal of the appeals.

Summary

The Supreme Court examined a land acquisition dispute where the General Government Servants Co‑operative Housing Society Ltd. sought to acquire land for residential houses. The land had been sold by the Central Government to the first respondent, Wahab Uddin, after being declared evacuee property under the Displaced Persons Act. The State Government issued a Section 4 notification and later a Section 6 declaration without complying with Rule 4 of the Land Acquisition (Companies) Rules, 1963. The Court held that the respondent was a "person interested" under Section 3(b) of the Land Acquisition Act, but the Section 6 notification was invalid because the mandatory procedural requirements of Rule 4 were not fulfilled. The Court also rejected the appellant's argument that the respondent's claim was barred by limitation under the Uttar Pradesh Tenancy Act, finding no evidence to support it. Consequently, the appeals were dismissed with costs.

Issues considered

The first respondent's status as a 'person interested' under Section 3(b) of the Land Acquisition Act.
The validity of the Section 6 notification in view of non‑compliance with Rule 4 of the Land Acquisition (Companies) Rules, 1963.
Whether the limitation provisions of Sections 45(f) and 180 of the Uttar Pradesh Tenancy Act bar the respondent's claim.
Whether land vested in the Central Government under the Displaced Persons (Compensation and Rehabilitation) Act, 1954 can be acquired by the State Government.

Legislation cited

Constitution of Indias. Article 136
Displaced Persons (Compensation and Rehabilitation) Act, 1954s. 12
Land Acquisition Acts. 3(b), s. 4, s. 41, s. 5A, s. 6, s. 9(3)
Land Acquisition (Companies) Rules, 1963s. Rule 4
Uttar Pradesh Tenancy Act, 1939s. 171, s. 180, s. 45(f)

Subjects

Land acquisitionPerson interestedRule 4Co‑operative housing societyDisplaced Persons ActNatural justiceLimitationTenancy ActCompensationNotification

Judgment

46

A GENERAL GOVT. SERVANTS CO-OPERATIVE
HOUSING SOCIETY LTD., AGRA
v.
WAHAB UDDIN & ORS. ETC. ETC.
Marrh 2, 1981
B [R.S. PATHAK, 0. CHINNAPPA REDDY AND BAHARUL ISLAM, JJ.]

Land Acquisition Act-Sections 4, 5A and 6--Land acquired for a company-
Part Vil of the Act, if attracted-Requirement of rule 4 of Land Acquisition
(Companies) Rules 1963-Ifmandator)~"Person interested"-Meaning of.

The land in dispute originaly belonged to a person who had migrated to
c Pakistan. After acquiring the lessee rights in the land under section 12 of the
Displaced Persons (Compensation and Rehabilitation) Act, 1954 the Central
Government sold these rights by auction. The first respondent purchased a plot
of land and a sale certificate was issued to him. The respondent, however, could
not get possessi'On of the land as a result of litigation resorted to by the person in
possession of the land. Jn the meantime the State Government filed a suit against
the Custodian of Evacuee Property and the auction purchasers for possession;
D but the suit and later appeal were dismissed.

Before the respondent obtained possession of the land a notification under
section 4 of the Land Acquistion Act was issued seeking to acquire the land for
construction of residential houses for the members of the appellant society.
Having had no knowledge of the notification the respondent did not file any
objection under section SA. After the issue of notification under section 6 of
the Act proceedings relating to determination of compensation for the lands were
E started. A notice was served on the respondent under section 9(3) of the Act 1
calling upon him to prefer his claim for compensation.

Allowing the respondent's petition impugning the action of the Government
the High Court held that the State Government could acquire the land only after
complying with the provisions of Chapter VII of the Act and the Land Acquisi-
tion (Companies) Rules, 1963 and this not having been done there was a breach
F of the principle of natural justice and that secondly the respondent was a "person )-
interested" within the meaning of section 3(b) of the Act.

On the question whether the respondent was a 'person interested' and
whether the notification issued under section 6 was valid.

HELD : The expression "person interested" is defined in section 3(b) as
H including all persons claiming an interest in compensation to be made on account l
of acquisition of land under the Act. That the first respondent had interest in the
land in question is warranted by the following circumstances : (i) a sale certi·
ficate had been issued to him after he purchased the land in auction sale; (ii) the
Collector knew that he had purchased the land for he had himself filed a suit
for ejectment against him from the land and that the suit was dismissed and the.
G appeal against that order was also dismissed; (iii) the Collector called upon the
respondent to prefer his claim under section 9(3) of the Act which showed that
COOPT. HOUSING SOCIETY v. WAHAB UDDIN (Islam, J.) 47

the Collector had admitted the first respondent's interest in the land ; and A
(iv) before the High Court the Collector had not denied the respondent's right
to compensation. Therefore, the first respondent was a "person_ interested"
within the meaning of section 3(b). [50 F-H)

2. The notification under section 6 is invalid for non-compliance with
rule 4 of the Rules. (54 G]

The appellant society is a "company" within the meaning of section 3(e) of
B
the Act. When the land was acquired for the purpose of a company, Part VII
of the Act is attracted and the provisions of that Chapter have to be followed.
Rule 4 is mandaiory and unless the directions enjoined by this rule are complied
with the notification under section 6 would be invalid. Its compliance precedes
the notification under section.4 as well as compliance of section 6 of the Act.
(51 F-G]
In the instant case on receipt of the notice under section 9(3) the respondent
c
objected to the acquisition on the grounds that the land or lessee rights having
been acquired by the Central Government under the provisions of the Displaced
Persons (Compensation and Rehabilitation) Act, 1954 could not be acquired by
the State Government, and that the mandatory procedure for acquisition of land
for private companies had not been followed. No inquiry report had been
submitted by the Collector. The report submitted was under section 5A and
not under rule 4. '.\here had therefore been a failure of justice. [54 C-F)
D
3. The appellant's contention that the first respondent's claim was barred
by limitation under sections 45(f) and 180 of the Tenancy Act, has no force
because there is no evidence to show that the requirements of the section have
been satisfied. That apart, this is a mixed question of fact and law requiring
investigation into facts. Since it had not been taken before the High Court but
sought to be urged for the first time in thi~ Court, it cannot be allowed to be E
urged in an appeal by special leave under Article 136 of the Constitution. (50 C-D)

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2085 of 1978
and 7-8 of 1979.
Appeals by special leave from the Judgment and Order dated
18.5. 1977 of the Allahabad High Court in C.M.W. Nos. 5061/73,
5063/73. and 5080/73.
F
G.C. Lal, D.B. Vohra and O.P. Tewari for the Appellants in all
the Appeals.
Prohir Mitra for R.I in CAs. 2085/78, 8/79 and RR 1-2 in CA
7/79.
G. N. Dixit, and Sabha Dikshit for RR. 2 to 4 in CA 2085/78 G
RR 2-4 in CA 8/79 and RR 3&5 in CA 7/79.
E.C. AggarW{[/a for R.4 in CA 7/79 and R. 3 in CA 8/79.
The Judgment of the Court was delivered by
BAHARUL ISLAM, J. The above appeals arise. out of land acquisi- H
tion proceedings and involve similar questions of fact and the same
48 SUPREME COURT REPORTS [J 981] 3 S.C.R.

A question of law. This common judgment, therefore, will dispose of
all the three appeals. It will be sufficient if we refer to the material
facts of Civil Appeal No. 2085 of l 978 only.

2. The land involved, belonged to one Imam Khan as an
occupancy tenant. Before the partition of India, he migrated to
B Pakistan, whereafter his rights in the lands were declared evacuee
property. Subsequently, in pursuance of a notification issued under.
Section 12 of the Displaced Persons (Compensation and Rehabilita-
tion) Act, 1954, the Central Government acquired the. lessee rights.
As a result of· the notification, these rights vested in the Central
Government free from all encumbrances. The Central Government
c thereafter sold these rights by auctions in August/September 1962.
The first Respondent purchased a plot of land for a sum of
Rs. 21,700. He deposited the entire amount with the Managing
Officer, Evacuee Property, Agra. A sale certificate was issued to him
on September 12, 1962.

3. It appears that one Ramlal Lamba was in the possessi on of
D
the '·]and in question. He was asked by the Managing Officer,
Evacuee Property, to vacate the land, and deliver possession to the
first respondent. Instead of delivering possession of the land to the
first respondent Lamba, filed a Writ Petition under Article 226 of the
Constitution in the Punjab High Court at Delhi. The Writ Petition
E was dismissed on 4.12.69. He then filed an appeal which was also
·dismissed on 2.2.70. He then filed a suit in the Court of the Munsiff
Agra, for restraining the Managing Officer, Evacuee Property, from
interfering in his possession. Thus the first respondent could not
get possession of the land.
4. After the auction sale, the State of U. P. (Respondent No. 2
F herein) filed a suit under Section 171 of U. P. Tenancy Act, 1939
(hereinafter 'the Tenancy Act') against the Custodian of the Evacuee
Property, and the four auction purchasers including the first respon- )-
dent, for possession. This suit was dismissed by the Assistant
Collector, Ist Class, on 24.3.69 on the ground that it was not main-
tainable. An appeal was filed. This was also dismissed on 24.10.70.
G Thus before the petitioner could obtain possession of the. land, the
Collector of Agra (Respondent No.3 herein) issued a notification
under Section 4 of the Land Aquisition Act (hereinafter 'the Act'}
on March I, 1970, notifying that the plots in dispute '(and several
other plots) · were intended to be acquired by the State Government
H for construction of residential houses for the ·members of the General
Servants~· Co-operative Housing Society Ltd., Agra. the appellant
COOPT. HOUSING SOCIETY v. WAHAB UDDIN: (Islam, J.) 49

before us. The first respondent did not have any knowledge or in- A
formation of the said notification under Section 4 of the Act and so
he did not, as he could not, file any objection under section SA of
the Act. The notification under section 4 was followed by a notifi-
cation under section 6 of the Act on May 4, 1973. After the said
notifications, proceedings relating to determination of compensation
for the lands were started. In that connection the first Respondent B
was served with a notice under section 9(3) of the Act, calling
upon him to prefer his claim for compensation. Thereupon the
first Respondent filed objections, but before the objections were dis-
posed of he filed a writ petition before the High Court of Allahabad.
The High Court allowed the writ petition and struck down the
notification dated 5th May 1973, under Section 6 of the Act. The c
High Court held that as the acquisition was made by the State
Government for the benefit of a Co-operative Society, it could do so
only after complying with the provisions of Chapter VU of the Act,
and the Land Acquisition (Companies) Rules, 1963 (hereinafter
called 'the rules'), but as the State Government did not do so, there
was a breach of the principle of natural justice. Repelling the D
argument of the appellant to the contrary, the High Court also held
that the first respondent was a 'person interested' within the meaning
of section 3 (b) of the Act.

5. Respondents No. 2, 3 and 4 who are co-respondents appear-
ing through Mr. Dikshit before us have supported the case of the E
appellant.

6. The first question for determination is whether the first
respondent is not a 'person interested' within the meaning of section
3(b) of the L.A. Act and as such he had no locus standi to file the
writ petition before the High Court, as contended by the appellant.
F
Section 3 (b) of the Act is i11 the following terms (material
portions only) :

"3. In this Act, unless there is something repugnant in the
subject or context :-

(a) ........ .
G

(b) the expression "person interested' includes all persons
claiming an interest in compensation to be made_on account
of the acquisition of land under this Act; and a person shall be
deemed to be interested in land if he is interested in an ease- H
ment affecting the land."
50 SUPREME COURT REPORTS [1981] 3 S.C.R.

A In support of the argument the appellant refers to section 45 (f)
and section 180 of the Tenancy Act, 1939. Clause (f) of section 45
provides that the interest of the tenant shall be extinguished where
the tenant has been deprived of possession and his right to recover
possession is barred by limitation. The limitation provided is for a
period of twelve years, for a suit for ejectment of a person occupy-
B ing the land without title and for damages-if the land is contiguous
to any other land lawfully occupied by such other person-(a) if such,
person has, at the commencement of the Tenancy Act, occupied the
land for more than six years, the period runs from the time the land
holders first knew of the unauthorised occupation. In any other case
the period of limitation is six years. This point which has been
c urged for the first time before us is a mixed question of fact and
law. It does not appear to have been taken before the High Court.
A mixed question of law and fact needing investigation into facts
cannot be allowed to be urged for the first time in an appeal by
special leave under Art. 135 of the Constitution.
. \
\

D It is true that admittedly the first respondent was out of posses-
sion at the relevant time but there is no evidence before us to show
whether or not the land in question was contiguous to any other
land occupied by the person who is in possession and that his
possession had been lawful. We a_re therefore not in a position to
accept the· submission of the appellant that the first respondent's
E claim was barred by limitation. On the contrary there is ample
evidence before us to show that the first respondent had interes\ in
the land in question. We come to this conclusion from the follow-
ing circumstances :

(I) A sale certificate had been issued to the first respondent
F after the purchase of the land in auctioa sale held in 1912; (2) the
Collector, Agra, knew that the first respondent had purchased the land
in auction, for he had himself filed a suit for ejectment from the· land
in question under section 171 of the Tenancy Act against the first
respondent, and that the suit was dismissed by the Assistant Collector
Jst Class, on 24th March, J 969; the appeal preferred against the said
H order had also been dismissed by the Commissioner on the 27th of
October, 1970; (3) the Colle.i:;tor issued notice under section 9 (3) of
the Act calling upon the first respondent to prefer his claim, if any
for compensation of the land acquired. (This amounts to an admi-
ssion of the first respondent's interest in the land by the Collector)
G and (4) that in the counter affidavit filed by the Collector, in reply
to the affidavit filed by the first rerpondent before the High Court
COOPT. HOUSING SOCIETY v. WAHAB UDDIN (Islam, J.) 51

the claim of the petitioner to get compensation for the rights acquired A
by the Government was not denied by the appellant. We therefore
agree with the High Court that the first respondent was a 'person
) interested' within the meaning of clause (b) of section 3 of the
Act.
7. The next point urged before us by the appellants is that the B
first respondent in fact filed objection which was iriquired into and he
was given an opportunity o( being heard. The High Court, therefore,
it is contended, was not right in holding that th~re was a breach of ·
the principle of natural justice. In our opinion, the real question, as
urged by the first respondent, is not whether there has been any
violation of any principle of natural justice but wheth'er Rule 4 of C
the Rules has been complied with by the Collector. Sub-section
(!) of Section 4 of the Act provides that whenever it appears to the
appropriate Government that land in any locality is needed or is
likely to be needed for any public purpose a notificatio!l to that effect
shall be published in the official gazette and that he shall also cause
a public notice of the substance of the notification to be given at D
convenient places in the said locality.

Section 5A of the Act provides that any person interested in
any land which has been notified under sub-section ( l) of section 4,
as being needed or likely to be needed for a public purpose or
for a Company may, within thirty days (twenty-one days according E
to the U.P. amendment) after the issue of the notification object to
the acquisition of the land or of any land in the locality as the case
may be. Under section 3 (e), the expression 'Company', inter alia,
includes a society registered under the Societies Registration Act, 1860
and a registered society within the meaning of the Co-operative
Societies Act, 1912 or any other law relating to co-operative society F
for the time being in force in any State. The appellant-The General
Govt. Servants Co-operative Housing Society Ltd., Agra,-is a
Company. The appellant has not contended to the contrary. It is also
not disputed that when land is acquired for the purpose of a com-
pany, Part VII of the Act is attracted and the provisions of that
chapter have to be followed. G
Rule 4 of the Rules which is material and falls for our interpre-
tation runs thus :
"4. Appropriate Government to be satisfied with regard to
certain matters before initiating acquisition proceedings.- H
(I) Whenever a Company makes an application to the appro-
52 SUPREME COURT REPORTS [1981] 3 s.c.R.

A priate Government for acquisition of any land, that Govern-
. ment shall direct the Collector to submit a report to it on the
following matters, namely :-
(i) that the Company has made · its best endeavour to find
out lands in the locality suitable for the purpose of the
acquisition;
B
(ii) that the Company has made all reasonable efforts to get
such~lands by negotiation with the persons interested
therein on payment of reasonable price and such efforts
have failed;
(iii) that the land proposed to be acquired is suitable for the
c purpose;
(iv) that the area of land proposed to be acquired is not
excessive;
(v) that the Company is in a position to utilise land
expeditiously; and
D (vi) where the land proposed to be acquired is good agricul-
tural land, that no alternative suitable site can be found
so as to avoid acquisition of that land.

"'-. (2) The Collector shall, after giving the Company a
"easonable opportunity to make any representation in this
E •ehalf, hold an enquiry into the matters referred to in sub-
rule (I) and while holding such enquiry he shall,-
(i) in any case where the land proposed to be acquired is
agricultural land, consult the Senior Agricultural Officer
of the district whether or not such land is good agricultural
land;
F
(ii) determine, having regard to the provisions of sections 23
and 24 of the Act, the approximate amount of compensa-
tion likely to be payable in respect of the land which in
the opinion of the Collector, should be acquired for the
Company ; and
G (iii) ascertain whether the Company offered a reasonable price
(not being less than the compensation so determined), to
the persons interested in the land proposed to be acquired.
Explanation :-For the purpose of this rule "good agricultural
land" means any land which, considering the level of agri-
H
cultural production and the crop pattern of the area in which
COOPT. HOUSING SOCIETY v. WAHAB UDDIN (Islam, J.) 53

it is situated, is of average or above average productivity and A
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 appro-
priate Government and a copy of the same shall be forwarded B
by that Government to the Committee.
(4) No declaration shall be made by the appropriate
Government under section 6 of the Act unless-
(i) the appropriate Government has consulted the Committee
and has considered the report submitted under this rule
and the report, if any submitted under section 5A of the c

f Act; and
(ii) the agreement under section 41 of the Act has been
executed by the Company.'
Sub-rule (I) requires the Government to direct the Collector to
D
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 Compan}'.
Clause (ii) of sub-rule (1) requires that the Company has to make
all reasonable efforts to get such lands by negotiation with the person
interested therein on payment of reasonable prices and that such
E
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 to avoid acquisition of good agricultural
land, when other alternative land is available for the purpose. Sub-
F
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 coll!ply with
Clauses (i), (ii) and (iii) of sub-rule 2 during the course of the
inquiry under sub-rule (I). The Collector under sub-rule 3 then
has to send a copy of his report of the inquiry to the appropriate G
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 of advising the Government in relation to
acquisition of land 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 of land under Part VII of the Act H
(Sub-rule (5) of Rule 3). No declaration shall be made by the
54 SUPREME COURT REPORTS ( 1981] 3 S.C.R.

A appropriate Government under section 6 of the Act unless the
Committee has been consulted by the Government and has con-
sidered the report submitted by the Collector under section SA 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 shows that rule 4 is mandatory ;
B 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.

c 8. In the instant case, as stated earlier, the first respondent
on receipt of the notice under section 9(3) of the Act submitted a
representation. After the representation, a brief written note of the
arguments was also supplied (Annexure· 6). The first respondent's
objections, inter alia against the acquisition of the land were :
(I) that the land being that of the Government cannot be legally
D acquired ; (2) that the land or lessee rights having been once
acquired by the Central Government under the provisions of the
Displaced Persons (Compensation and Rehabilitation) Act, 19S4, it
cannot be acquired by the State Government; and (3) that the
proceedings fqr the acquisition of the land for the appellant were
illegal as the mandatory procedure for acquisition of land for
E private companies has not been followed. It was also stated in
the representation that no efforts to purchase the rights of the first
respondent by negotiation were made. The inquiry report sub-
mitted by Collector does not show that he applied .his mind to the
provisions of rule 4. as stated above, or to the objections of the first
respondent. In fact there was no report under rule 4. The report
F that was submitted was one under section SA of the Act. We have
examined this aspect of the matter to see that although the enquiry
was belated and not in accordance with law, there has been no
failure of justice. In our opinion there has been failure of justice.
Agreeing with the finding of the High Court, although for different
reasons, we hold that the notification under section 6 is invalid for
G non-compliance of rule 4 of the Rules. As a result we dismiss the
appeals with costs.

P.B.R. Appeals dismissed.