Holding

A preliminary notification under Section 28(1) is a lawful statutory exercise of power and its issuance is not per se mala fide; therefore the High Court’s quashing of the notification was erroneous.

Summary

The owners of a 2‑acre‑37‑guntha land (respondents) obtained a decree for possession after the watch‑factory (HMT Ltd.) had unlawfully occupied an extra 39 gunthas beyond the 1‑acre‑38‑guntha acquired in 1978. While execution of the decree was pending, HMT Ltd. requested the Karnataka Government to issue a preliminary notification under Section 28(1) of the Karnataka Industrial Areas Development Act, 1966, to acquire the disputed land for industrial development. The High Court quashed the notification on the ground that it was a mala fide exercise of power to defeat the owners' decree. The Supreme Court held that a preliminary notification is a statutory act that does not become illegal merely because a decree exists, and that the State’s power to acquire land remains exercisable in good faith. It further ruled that the High Court erred in treating the notification as void and set aside its order. Consequently, the appeal was allowed and the State was free to proceed with acquisition proceedings in accordance with the Act.

Issues considered

The issuance of a preliminary notification under Section 28(1) of the Karnataka Industrial Areas Development Act, 1966, after a court decree for possession, constitutes a mala fide exercise of power.
Whether a decree passed by a competent court bars the State from exercising its statutory power of land acquisition.
Whether simultaneous notifications under Sections 1(3), 3(1) and 28(1) of the Act are legally impermissible.
Whether the High Court was correct in quashing the preliminary notification.

Legislation cited

Constitution of Indias. Article 226
Karnataka Industrial Areas Development Act, 1966s. 1(3), s. 28(1), s. 28(2), s. 28(3), s. 28(4), s. 28(5), s. 28(6), s. 28(7), s. 3(1)
Land Acquisition Act, 1894
Official Secrets Act, 1923

Subjects

land acquisitionpreliminary notificationmala fidestatutory powerpublic purposeindustrial developmentdecreeKarnataka Industrial Areas Development Act

Judgment

HMT LTD. AND ANR. A
v.
MUDAPPA AND ORS.

FEBRUARY 8, 2007

(C.K.THAKKERANDLOKESHWARSINGHPANTA,JJ.] B

Land Acquisition:

Karnataka Industrial Areas Development Act, 1966:
c
Section 28(I)-Acquisition of land-For public purpose-Issue of
preliminary notification-A part of the land was acquired for establishing a
watch factory-However, the General Manager of the watch factory took
possession of the entire land of the ow'1er-The owner filed a suit for
declaration of title and possession of the excess /and-Trial Court decreed D
the suit-Appeal thereagainst dismissed-Executing Court directed to hand
over possession of the excess land to the owner-The revision was allowed
and the matter was remanded to the Executing Court to afford an opportunity
of hearing to the General Manager-Meanwhile, the General Manager
requested the State Government to issue a notification under Section 28(/)
to acquire land for a public purpose, i.e. for the purpose of developing E
industry-However, Single Judge quashed the said preliminary notification
on the ground of mala fide inasmuch as the authorities deprived the owner
of the land who got a decree for possession in his favour-Correctness of-
Held: Passing of a decree by a competent court is one thing and exercise of
statutory power by the authority is a/together a different thing~But, issuance F
of a preliminary notification after a decree by a court of law would not ipso
facto make it vulnerable and exercise ofpower mala fide-The power exercised
by the State was statutory in nature and irrespective of a decree in favour
of the owner, such notification could be issued-High Court judgment set
aside-Land Acquisition Act, 1894.
G
Words & Phrases:

.. t "Malice in fact, malice in law" and legal "ma/a fide"-Meaning of-
Explained.

363 H
364 SUPREME COURT REPORTS (2007] 2 S.C.R.

A The respondents were owners of the suit land. The State Government
acquired a part of the said suit land for the purpose of establishing a watch
factory of the appellant. However, the appellants took possession of the entire
land of the respondents.

The respondents filed a suit for declaration of title and possession of
B the land unauthorizedly taken over by the appellants. The trial court decreed
the suit. The appeal was dismissed. The Executing Court directed the appellant
to hand over possession of the excess land to the respondents. The revision
was lillowed and the matter was remanded to the Executing Court to afford an
)'
opportunity to the appellants of hearing and to pass an appropriate order.

c Meanwhile, the appellants requested the State Government to issue a
notification under Section 28(1) of the Karnataka Industrial Areas
Development Act, 1966 to acquire land for a public purpose, i.e. for the purpose
of developing industry.

The said notification was challenged before the High Court. A Single
D
Judge of the High Court held that the power had been exercised by the
authorities ma/a fide and quashed the notification on the ground that the
authorities deprived the owners of the land who got a decree for possession •
in their favour. The Division Bench affirmed the decision of the Single Judge. ~

Hence the appeal.
E
The following question arose before the Court:-

Whether the actions of the State authorities in initiating acquisition
proceedings under a valid law could be said to be illegal, unlawful or in ma/a
fide exercise llf power?
F
Disposing of the appeals, the Court r
HELD: I. The High Court was not right in quashing the notificatil'm
issued under the Karnataka Industrial Areas Development Act, 1966,
particularly when it was a preliminary notification reflecting the intention of
G the State to acquire land for public purpose, i.e. for the purpose of developing
industry. !Para 12] 1370-H; 371-AI

2. Passing of a decree by a competent court is one thing and exercise of
statutory power by the authority is altogether a different thing. It is possible
in a given case to come to a conclusion on the basis of evidence produced and
H
j

HMT LTD. v. MUDAPPA 365

'-<:
material placed on record to conclude that the action has been taken ma/a A
fide or for a collateral purpose or in colourable exercise of power. But,
issuance of a preliminary notification after a decree by a court of law would
not ipso facto make it vulnerable and exercise of power ma/a fide. Therefore,
the authorities were right in raising a preliminary objection that the petition
was premature as by issuance of a notification under Section 28(1) of the
Act, an intention was declared by the State to acquire the land for public B
purpose, i.e. for developing industry. [Para 13[ [371-F-H]

3. The scheme of Section 28 of the Act is thus similar to the scheme of
-.:
acquisition of land under the Land Acquisition Act, 1894 under which such
'
.(
preliminary notification is issued, opportunity of being heard is afforded to
the persons interested in the land and only thereafter final notification can
c
be issued. At the stage of raising objections against acquisition, it is open to
-· the respondents to raise all contentions. In spite of such objections, if final
notification is issued by the State, it is open to them to take appropriate
proceedings or to invoke the jurisdiction of the High Court under Article
226 of the Constitution. [Para 151 [373-D-E[ D
4. The High Court was also not right in coming to the conclusion that
-'.
_. since a decree was passed by a competent court, no notification under the Act
could have been issued by the State. The power exercised by the State was
statutory in nature and irrespective of a decree in favour of the owners, such
notification could be issued. [Para 16) [373-FJ E

State ofAndhra Pradesh v. Govardhanlal Pitti, (2003) 4 SCC 739, relied
on.

5. Where malice is attributed to the State, it could not be a case of
-t malice in fact, or personal ill-will or spite on the part of the State. It could F
only be malice in law, i.e. legal ma/a fide. The State, if it wishes to acquire
land, could exercise its power bona fide for statutory purpose and for none
other. [Para 19[ [374-E-F[
<'

" State of Andhra Pradesh v. Govardhanlal Pitti, 120031 4 sec 739,
G
relied on.

,. _, Words and Phrases Legally Defined, 3rd Edn., London Butterworth's,
" (1989), referred to.

6. It was only because of the decree passed in favour of the owners of
H

'/
366 SUPREME COURT REPORTS [2007] 2 S.C.R.

A the land that the appellants realized that an appropriate action in consonance
y
with law was to acquire the land and hence, a request was made to the State
to take an action under the Act and a notification was issued. Such an act
cannot be said to be illegal, particularly when the notification was preliminary
in nature and opportunity under the Act was to be afforded to the owners 'of
being heard'. The High Court was wrong and had committed an error of law
B in entertaining the petition and in allowing it at the stage of issuance of
notification under Section 28(1). [Para 201 (374-H; 375-A[

7.1. The approach of the Single Judge could not be s:o-id to be legal or in
'y
consonance with law. The State authorities were not required to produce
'
c material for 'perusal' of the Court as to expansio11 of industrial area or
development of industry. It was also not expected of the judgment-debtors to
contend before the Executing Court that the land was required for expansion
of the industry. The reason which weighed with the Single Judge, therefore,
could not be made a basis for quashing the notification. [Para 24)
[375-H; 376-A)
D
7.2. The Single Judge was wholly in error in taking such view and
quashing the notification. Upholding of such view would make statutory
~
provisions uuder the Act or similar provisions in other laws, (for example,
,_
the Land Acquisition Act, 1894) nugatory and otiose. The Single Judge was
not right in finding fault with the State Authorities in issuing notifications
E under Section 1(3), Section 3(1) and Section 28(1) simultaneously. There is
no bar in issuing such notifications as has been done and no provision has
been shown which prevented the State from doing so. Even that ground,
therefore, cannot help the landowners. (Para 28) [377-H; 378-A-B)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7059-7060 of
F 2000.

From the Final Judgment and Order da~ed 28.10.1998 of the High Court
ofKarnataka at Bangalore in W.A. Nos. 5051-5052/1998.

S.N. Bhat, N.P.S. Panwar and D.P. Chaturvedi for the Appellants.
G
E.C. Vidya Sagar, Vikas Rajipura, B.K. Choudhary and Kiran Suri for the
Respondents. ,t

The Judgment of the Court was delivered by

H C.K. THAKKER, J. I. These two appeals arise out of the judgment and
HMT LTD. v. MUDAPPA [TI-IAKKER, J.) 367
order dated September 8, 1998 passed by learned Single Judge of the High A
Court of Karnataka in Writ Petition No. 5580 of 1998 and co:tfomed by the
Division Bench in Writ Appeal Nos. 5051-5052 of 1998 on October 28, 1998.

2. By the· impugned order, the High Court upheld the contention of the
original petitioners and quashed notification dated November 13, 1997 issued
by the State ofKamataka under sub-section (I) of Section 28 of the Karnataka B
Industrial Areas Development Act, 1966 (hereinafter referred to as "the Act").

3. To appreciate the controversy raised in the appeals, it is necessary
to state relevant facts. The respondents are heirs and legal representatives
of deceased Akkahonnamma who died somewhere in the year 1993. She was
the owner of land bearing Survey No. 113/3 admeasuring 2 acres, 37 gunthas C
situated in Devarayapatna, Tumkur Taluk. In the year 1978, the Industrial Area
Development Board, Karnataka ('Board' for short) acquired 120 acres of land
of different survey numbers situated in Devarayapatna for the purpose of
establishing a Watch Factory, namely, H.M.T. Ltci. (appellant herein). The land
admeasuring I acre, 38 gunthas out of2 acres, 37 gunthas of Survey No. 113/ D
3 owned by the respondents was also acquired in the acquisition proceedings.
The remaining land to the extent of 39 gunthas was not acquired. It was,
however, the case of the respondents that the General Manager, H.M.T. took
pos.session of the entire area of 2 acres, 37 gunthas even though he was
entitled to take possession of land only of 1 acre, 38 gunthas. He thereby
unauthorisedly took over possession of 39 gunthas of land. A request was, E
therefore, made to the General Manager, H.M.T. to return possession of 39
gunthas to the owners. He, however, refused to hand over possession. By
a communication dated July 20, 1984, the Board called upon the owners of
the land to show cause as to why the actual extent of acquired land should
not be continued to be occupied by the H.M.T. The owners did not oblige F
the Board and filed a suit against the authorities, being O.S. No. 341 of 1985
for declaration of title and also for possession of land. The suit was decreed
by the Trial Court. An appeal filed against the said decree came to be
dismissed by the First Appellate Court. The said order was 'fl"ot challenged
and the decree became final. Execution proceedings had bee_n initiated by the
owners and by an order dated June 13, 1997, the Executing Court directed G
H.M.T. to hand over actual and peaceful possession of the land to the
owners. The order passed by the Executing Cou.rt was challenged by the
H.M.T. by filing a revision which came to be allcwed and the matter was
remanded to the Executing Court with a direction to the Executing Court to
afford an opportunity to H.M.T. of bearing and to pass an appropriate order H
368 SUPREME COURT REPORTS [2007] 2 S.C.R.

A in accordance with law. Meanwhile, however, H.M.T. appears to have requested
the State Government to acquire land and a notification under sub-section (I)
of Section 28 of the Act for proposed acquisition of land for public purpose,
viz. for developing industry came to be issued on November 13, 1997 which
was published in Official Gazette on December 11 , 1997. The owners of the
land came to know about the issuance of notification and they invoked the
B jurisdiction of the High Court ofKamataka under Article 226 of the Constitution
by filing a Writ Petition. It was alleged that the notification had been issued
ma/a fide in order to deprive the owners of their rights to recover possession .
and to defeat the decree passed by a court of competent jurisdiction. A. prayer
was made for quashing and setting aside the notification, directing the
C authorities to hand over possession of 39 gunthas of land of Survey No. 113/
3 to the owners in view of the decree passed by a competent court which had
become final.

4. Before the learned Single Judge, it was contended on behalf of the
appellants (respondents before the High Court) that the petition was premature
D and was liable to be rejected at the threshold as the Notification was merely
a preliminary notification and final declaration was yet to be made after
considering the objections, if any, to be filed by the owners of the land. It
was also submitted that the owners had failed to even prima facie satisfy the
Court that the action was malafide and the power was exercised for colourable
or collateral purpose. The land was sought to be acquired for public purpose,
E namely, for developing industry through Board and allegation of legal mala
fide was baseless. It was also urged that Civil Court had reserved the liberty
to acquire the land in accordance with law. But even otherwise, the decree
passed by a court could not take away power of the State. Moreover, the land
was covered by the provisions of the Official Secrets Act, 1923 having
F declared it as ' prohibited area'.

5. The learned Single Judge described the case as one of 'exploitation
of statutory provisions to defeat the just rights of an individual decreed by
the law Courts, in the name of public purpose' and held that the power had
been exercised by the authorities ma/a fide and the action was liable to be
G quashed and set aside. The Court noted that the respondents had no right,
title or interest in the land in question and yet it continued to retain possession
of the land for about 18 years. It refused to vacate the property though
request was made by the owners. When the suit was decreed, appeal was
dicmissed and no further action was taken, the decree had become final. In
H spite of decree in favour of the owners, possession was never returned to
HMT LTD. v. MUDAPPA [THAKKER, J.] 369
''-!
successful plaintiffs and they were constrained to take out execution A
proceedings. When warrant for possession was issued, instead of obeying
the decree of the court and handing over possession of land, the Company
requested the Board to initiate proceedings for acquisition of land under the
Act and notification under Section 28( 1) was issued. It was also observed that
neither a notification under sub-section (3) of Section 1 nor under sub-section
(I) of Section 3 was issued by the State in accordance with law and the land
B
was sought to be acquired. The Court, no doubt, noted that such notifications
were issued, but all the three notifications, i.e., notification under sub-section
(3) of Section I, sub-section (I) of Section 3 and sub-section (1) of Section
28 were issued on one and the same day. They were also published
simultaneously on December 11, 1997 in the Official Gazette. Such an action, c
in the opinion of learned Single Judge, was in mala fide exercise of power to
deprive the owners of the land who got decree for possession in their favour.
The action was, therefore, bad in law. Accordingly, the petition was allowed
and the. notification under sub-section (I) of Section 28 was quashed.
D
6. Being aggrieved by the order passed by the Single Judge, intra-court
-~ appeals were filed by the appellants which were dismissed by a Division
Bench of the Court by a cryptic order observing that the notification had been
---\
issued in violation of the provisions of the Act and to deprive the writ
petitioners of fruits of the decree obtained by them.
E
7. When the matter came up before this Court, notice was .issued on
March 15, 1999. It appears that there was some talk of settlement. Record
reflects that the matter was adjourned from time to time to explore possibility
of settlement, if any, but settlement could not be arrived at and on December
1, 2000, leave was granted.
-.., F
l
8. We have heard the learned advocates for the parties.

9. The learned counsel for the appellants strenuously contended that
the High Court has committed an error of law in allowing the petition filed by
the owners and in setting aside a statutory notification issued by the State G
of Karnataka in exercise of power under sub-section (I) of Section 28 of the
Act. He submitted that it was within the power of the State Government to
.-" -t,. issue statutory notification for acquisition of land and the High Court was
wrong in quashing it on the ground of mala fide exercise of power. So far as
decree for possession is concerned, it was submitted by the counsel that
irrespective of the decree of a court of law, statutory power could be exercised H
by the State under the Act. The notification was preliminary in nature reflecting
370 SUPREME COURT REPORTS [2007] 2 S.C.R.

A the intention of the State to acquire the land and the owners were to get an
opportunity to raise objections, if any, and thereafter the final notification was
to be issued. It was, therefore, urged that preliminary objection raised on
behalf of the authorities that the petition was premature ought to have been
upheld by granting liberty to the owners to raise all o~jections against the
B proposed action. It was also submitted that H.M.T. n'eeded the land for
expansion of the factory. Moreover, the land in question was covered by the
provisions of the Official Secrets Act, 1923 having declared the land as
'prohibited area' and on that ground also, acquisition of land was necessary.
The order passed by the learned Single Judge and confirmed by the Division )(

Bench, therefore, deserves to be set aside.
c 10. The learned counsel for the owners, on the other hand, supported
the order passed by the High Court. He submitted that initial action of the
authorities was wrong inasmuch as though acquired land was 1 acre, 38
gunthas, they illegally took possession of the entire land of Survey No. 113/
3 admeasurin1 2 acres, 37 gunthas and thereby the owners were deprived of
D lawful ownership and possession of 39 gunthas of land. In spite of several
requests, nothing was done by H.M.T. and the owners were compelled to file
a suit for declaration of title and possession which was decreed and the
decree was confirmed in appeal. Even thereafter, possession was not handed
over to the successful plaintiffs and execution proceedings were to be taken
E out. It was only when the direction was issued to the appellants herein to
hand over possession that wheels were moved fast and a request was made
to the State Government to issue notification for acquisition of 39 gunthas
of land. The High Court was, therefore, right in holding that the action was
ma/a fide and the notification was liable to be quashed. No exception can be
made against such just and equitable order and no fault can be found. The
F appeals deserve to be dismissed with exemplary costs.

11. Ms. Kiran Suri, learned counsel for the State of Karnataka supported
the case of the appellants. She submitted that power to issue notification
under sub-section (1) of Section 28 is statutory and when it was a preliminary
notification, the High Court should not have entertained a petition. It was
G only after the final notification that aggrieved party may approach a court of
law. It was, therefore, submitted that the High Court was wrong in quashing
the notification.

12. Having heard the learned counsel for the parties, in our opinion, the
H High Court was not right in quashing the notification issued under the Act,
HMT LTD, v, MUDAPPA [THAKKER, J,] 371
particularly, when it was a preliminary notification reflecting the intention of A
th~ State to acquire land for public purpose, Le. for the purpose of developing
industry. It is, no doubt, true that the land bearing Survey No. 113/3 comprises
of 2 acres, 37 gunthas and the respondents are the owners thereof. It is
equally true that by notification dated June 29, 1978, 1 acre, 38 gunthas had
been acquired and award was passed in respect of the said area. It is also
correct that instead of acquiring and taking over possession of 1 acre, 38 B
gunthas, the appellants took over possession of the entire land of Survey No.
I 13/3 admeasuring 2 acres, 37 gunthas thereby illegally and unauthorisedly
-,:, taking possession of 0 acre, 39 gunthas. Obviously, therefore, it was open to
the owners to make complaint and also to take appropriate proceedings as
they were illegally deprived of ownership and possession of 39 gunthas of C
land. When the request to return possession of the excess land was ignored
by the appellants, they naturally approached a court of law and obtained a
decree. It is not in dispute that the decree was confirmed in appeal and had
become final. Execution proceedings were taken out and at that stage, the
appellants moved the State Authorities to acquire land under the Act. The
question, however, is whether the action of the State Authorities in initiating D
acquisition proceedings under a valid law could be said to be illegal, unlawful
or in ma/a fide exercise of power? So far as the High Court is concerned, it
held that the course adopted by the authorities was contrary to law. It is
reflected in the approach of the Court wherein the learned Single Judge
observed that it was a case of exploitation of statutory provisions in the name E
of public purpose to defeat just rights of an individual who had obtained
decree in his favour.

13. In our considered view, however, this approach is neither legal nor
permissible. Passing of a decree by a competent court is one thing and
~' exercise of statutory power by the authority is altogether a different thing. It F
is possible in a given case to come to a conclusion on the basis of evidence
produced and materials placed on record to conclude that the action has been
taken ma/a fide or for a collateral purpose or in colourable exercise of power.
But, in our opinion, issuance of preliminary notification after a decree by a
court of law wo1lld not ipso facto make it vulnerable and exercise of power G
ma/a fide. To us, therefore, the authorities were right in raising a preliminary
objection that the petition was premature as by issuance of notification under
sub-section (1) of Section 28 of the Act, an intention was declared by the
State to acquire the land for public purpose i.e. for developing iadustry. To
appreciate the contention of the appellants, we may reproduce the section
which reads thus- H
372 SUPREME COURT REPORTS [2007] 2 S.C.R.

A 28. Acquisition ofland-{l) !fat any time, in the opinion of the
State Government, any land is required for the purpose of development
by the Board, or for any other purpose in furtherance of the objects
of this Act, the State Government may by notification, give notice of
its intention to acquire such land.

B 2. On publication of a notification under sub-section (i); the State
Government shall serve notice upon the owner or where the owner is
not the occupier, on the occupier of the land and on all such persons
known of believed to be interested therein to show cause, within
thirty days from the date of service of the notice, why the land should
not be acquired.
c
(3) After considering the cause, if any, shown by the owner of the
land and by any other person interested therein, and after giving such
owner and person an opportunity of being heard, the State Government
may pass such orders as it deems fit.

D (4) After orders are passd under sub-section (3), where the State
Government is satisfied that any land should be acquired for the
purpose specified in the notification issued under sub-section ( 1), a
declaration shall, by notification in the official Gazette, be made to that
effect.
E (5) On the publication in the official Gazette of the declaration
under sub-section (4), the land shall vest absolutely in the State
Government free from all encumbrances.

(6) Where any land is vested in the State Government under sub-
section (5), the state Government may, by notice in writing, order any
F person who may be in possession of the land to surrender or deliver
possession thereof to the State Goverment or any person duly
authorised by it in this behalf within thirty days of the service of the
notice.

(7) If any person refuses or fails comply with an order made under
G sub-section (5), the State Government or any officer authorised by the
State Government in this behalf may take possession of the land and
may for that purpose use such force as may be necessary.
.t ~

(8) Where the land has been acquired for the Board, the State
Government, after it has taken possession of the land, may transfer
H
)

HMT LTD. v. MUDAPPA (THAKKER, J.] 373
";
I
the land to the Board for the purpose for which the land has been A
acuqired.

14. Bare reading of the above provision makes it abundantly clear that
if in the opinion of the State Government any land is required for purpose of
development by the Board, a notification of its 'intention to acquire' the land
can be issued for acquisition of such land. The notification was accordingly B
issued on November 13, 1997. Sub-section (2) of Section 28 then requires the
State Government to serve notice upon the owner or occupier of the land and
all such persons known or believed to be interested therein to show cause
~
' why the land should not be acquired. Sub-section (3) casts an obligation on
the State Government to consider the objections of the owner, occupier or
other person interested in land and to pass such order as it deems fit after
c
affording an 'opportunity of being heard'. If it is satisfied that any land
should be acquired, a declaration can be made under sub-section (4) which
shall be notified in Official Gazette.

15. The scheme of Section 28 is thus similar to the scheme of acquisition D
of land under the Land Acquisition Act, 1894 under which such preliminary
;. notification is issued, opportunity of being heard is afforded to the persons
'
-l interested in the land and only thereafter final notification can be issued. At
the stage of raising objections against acquisition, it is open to the respondents
herein to raise all contentions. In spite of such objections, if final notification
is issued by the State, it is open to them to take appropriate proceedings or E
to invoke jurisdiction of the High Court under Article 226 of the Constitution.
Unfortunately, however, the High Court entertained the petition and quashed
the preliminary notification overruling well-founded objection as to
maintainability of petition raised by the State and the appellants herein.

1 F
16. The High Court was also not right in coming to the conclusion that
since a decree was passed by a competent court, no notification under the
Act could have been issued by the State. The power exercised by the State
was statutory in nature and irrespective of a decree in favour of the owners,
such notification could be issued. A situation similar to one before us had
arisen in State ofAndhra Pradesh & Ors. v. Govardhan/a/ Pitti, [2003] 4 SCC G
,.... 739. In Govardhan/a/, a school building belonging to G was in the possession

rt of the State as a tenant. An order of eviction was passed and the State was
directed to hand over possession of property to G within a particular period.
The State then took out proceedings under the Land Acquisition Act, 1894 -~
... for acquiring the property for public purpose, namely, for a school. G challenged
H
374 SUPREME COURT REPORTS [2007] 2 S.C.R.

A the pcoc:eedings as mala fide. The High Court upheld the contention observing
that there was 'malice in law' inasmuch as the proceedings were initiated to
scuttle a valid decree passed by a competent court. The State approached this
Court.

17. Allowing the appeal and setting aside the order of the High Court,
B this Court held that the school was there since 1954 and was catering to the
educational needs of children residing in the heart of the city. It could not,
therefore, be contended that there was no genuine public purpose. Exercise
of power under the Act in the facts and circumstances, therefore, could not
be held mala fide.
c 18. The Court also explained the concept of legal ma la fide. By referring
to Words and Phrases Legally Defined, 3rd Edn., London Butterworths, 1989,
the Court stated;

"The legal meaning of malice is "ill-will or spite towards a party
and any indirect or improper motive in taking an action". This is
D
sometimes described as "malice in fact". "Legal malice" or "malice in
law" means 'something done without lawful excuse'. In other words,
'it is an act done wrongfully and willfully without reasonable or
probable cause, and not necessarily an act done from ill feeling and
spite'. It is a deliberate act in disregard of the rights of others'."
E
19. It was observed that where malice was attributed to the State, it
could not be a case of malice in fact, or personal ill-will or spite on the part
of the State. It could only be malice in law, i.e. legal mala fide. The State, if
it wishes to acquire land, could exercise its power bona fide for statutory
purpose and for none other. It was observed that it was only because of the
F decree passed in favour of the owner that the proceedings for acquisition
were necessary and hence, notification was issued. Such an action could not
be held ma/a fide.

20. In the instant case also, the record reveals that in 1978 itself, the
possession of the entire land of Survey No. 113/3 had been taken over by
G the appellants albeit part of it illegally (to the extent of 39 gunthas). It was
only because of the decree passed in favour of the owners of the land that
the appellants realized that an appropriate action in consonance with law was ,t I

to acquire the land and hence, a request was made to the State to take aa
action under the Act and a notification was issued. Such act cannot be said
H to be illegal, particularly when the notification was preliminary in nature and
HMT LTD. v. MUDAPPA [THAKKER, .1.) 375
opportunity under the Act was to be afforded to the owners 'of being heard'. A
The High Court, in our considered opinion, was wrong and had committed an
error of law in entertaining the petition and in allowing it at the stage of
issuance of notification under sub-section (I) of Section 28.

21. The learned Single Judge had also found fault with the State
authorities in issuing simultaneous notifications under sub-section (3) of B
Section I and sub-section (I) of Section 3 of the Act. Sub-section (2) of
Section I of the Act states that the Act 'extends to the whole of the State
--•, of Kamataka'. Sub-section (3) then reads-

(3) This Act except Chapter VII shall come into force at once:
Chapter VII shall come into force in such area and from such date as C
the State Government may, from time to time, by notification, specify
in this behalf.

22. It may be noted that Chapter VII relates to 'Acquisition and Disposal
of Land'. Chapter II deals with 'Industrial Areas'. Section 3 provides for D
'declaration of industrial areas' as defined in sub-section (6) of Section 2 of
the Act. Sub-section (I) of Section 3 enables the State Government to declare
any area as 'industrial area'. It reads;

(I) The State Government may, by notification, declare any area
in the State to be an industrial area for the purposes of this Act. E
23. It is on record that notifications under sub-section (3) of Section I
and sub-section (I) of Section 3 were issued by the State. The learned Single
Judge, however, observed that it is only after the Executing Court directed the
judgment-debtors to deliver possession of the property that the latter
persuaded the State to issue such notifications. He also found fault with the p
State Authorities in not producing material for the perusal of the Court for
the alleged expansion of the industry. The learned Judge noted that it was
not the case of the judgment-debtors in execution proceedings that the land
was needed for development of industry and, therefore, a decision was taken
to acquire the land. According to the learned Single Judge, the land was
situated in one comer of the area and was lying vacant. G
24. In our opinion, the approach of the learned Single Judge could not
be said to be legal or in consonance with law. The State authorities were not
required to produce material for 'perusal' of the Court as· to expansion of
industrial area or development of industry. It was also not expected of the H
376 SUPREME COURT REPORTS [2007] 2 S.C.R.

A judgment-debtors to contend before the Executing Court that the land was ,,
required for expansion of the industry. The reason weighed with the learned
Single Judge, therefore, in our opinion, could not be made basis for quashing
the notification. The learned Single Judge also observed that issuance of
simultaneous notifications under Section 1(3), Section 3(1) and Section 28(1)
B was illegal.

25. In this connection, the learned Single Judge noted- -

c
"I 0. It is seen from the impugned notification that they have been
issued by the first respondent and not by the second respondent. It
is not the case of the first respondent that any representation of the
5th respondent to acquire any land to expand their factory was pending
...
-
consideration before the decree was made by the Court. On the other
hand, it is contended hy the second respondent that the land in
question has been sought to be acquired for expansion of the fifth
respondent factory. It is not the case of the second respondent that
D they recommended to the Government to acquire this land for the
expansion of the fifth respondent as no material was produced for
;.
perusal regarding the declaration of 'industrial area' to expand the
industry. It is further material to see that the first respondent in
exercise of its power under sub-section (3) of the Act iss11e1I 11
composite notification declaring the industrial area and the application
E of Chapter VII to such area. It is further material to see that such
notifications have been issued only in respect of the lands in question
and no other lands have been included. The notification issued under
Section 3(1) of the Act has been published in page No.253 of the
Karnataka Gazette dated December I I, 1997 without mentioning the
F lands in respect of which such notification was issued. The notification
issued under Section 1(3) of the Act has been published in page
No.254 of the same Gazette and the lands in respect of which the said
notification was issued has been published in page 255. In page No.
256 also the same schedule is published the purpose of which is not
known.
G
11. Section 3(1) of the Act requires that the State Government shall
declare any area as an industrial area by a notification and a notification .t
under sub-section (3) of Section l of the Act is required to be issued
to extend the provisions of Chapter VII in respect of the area declared
as an industrial area under Sub-section (I) of Section 3 of the Act by
H
,\..._
HMT LTD. v. MUDAPPA [THAKKER, J.] 377

the notification. It is, therefore, clear that there shall be two different A
~ and independent notifications issued under two different provisions
of the Act. The composite notification issued as per Annexure-D
under sub-section (I) of Section 3 without mentioning the particulars
of the land, and sub-section (3) of Section I of the Act is impermissible
in law, consequently the notification issued under Section 28(1) of the
Act is illegal, void and invalid". B

26. The learned Single Judge was conscious of the fact that notification
under Section 28(1) was merely a preliminary notification and in the nature of
~_A
"'.. proposal. He, however, negatived preliminary objection raised by the authorities
and observed;
c
"12. It was contended by the respondent that the petition is premature
and hence liable to be dismissed as the notification issued under
siction 28(1) of the Act is only a proposal, which may or may not be
pe'fused after considering the objections is filed by the petitioners. In
the normal course the objection of the respondents would have been D
tenable. But, in the facts and circumstances of this case, where
respondents 4 and 5 have hell bent upon retaining the land which
+ they have illegally occupied and the first respondent acceded to their
_J. request to acquire the same without considering the past history,
within a span of one month from the date of disposal of CRP by this
Court, their contentions untenable as the ·procedure under Section E
28(2) & (3) of the Act would be an empty formality. The respondents
did not produce any material to show that the land in question is
covered by the provisions of Official Secrets Act. Mere prohibition of
entry to the general public is not sufficient to hold that the land in
question is declared as a 'prohibited area' under the provisions of
F
-y Official Secrets Act. The conduct of the respondents particularly of
respondents 4 and 5 for whose benefit the land is sought to be
acquired, clearly demonstrates their ma/a fide intention to defeat the
decree of a court of competent jurisdiction".

27. According to the learned Judge, therefore, giving of opportunity of G
being heard was merely an 'empty formality' and since it was ma/a fide
exercise of power by the State to deprive the owners of the fruits of the decree
, ·i",.. obtained by them, they were entitled to relief of quashing of notification at
that stage without further delay.

28. In our judgment, the learned Single Judge was wholly in error in H
378 SUPREME COURT REPORTS [2007] 2 S.C.R.

A taking such view and quashing the notification. Upholding of such view
would make statutory provisions under the Act or similar provisions m other
laws, (for example, the Land Acquisition Act, 1894) nugatory and otiose. We
are also of the view that the learned Single Judge was not right in finding fault
with the State Authorities in issuing notifications under Section 1(3), Section
B 3(1) and Section 28(1) simultaneously. There is no bar in issuing such
notifications as has been done and no provision has been shown to us by
the learned counsel for the contesting respondents which prevented the State
from doing so. Even that ground, therefore, cannot help the land-owners.

29. The order passed by the learned Single Judge could not have been
C upheld by the Division Bench. Unfortunately however, the Division Bench
confirmed the order of the Single Judge without considering all aspects of the
matter. The said order also, therefore, deserves to be set aside.

30. For the foregoing reasons, the appeals deserve to be allowed and
are, accordingly, allowed. The order passed by the learned Single Judge and
D confirmed by the Division Bench is set aside. The authorities are at liberty
to take appropriate proceedings in accordance with law on the basis of
notification under sub-section (I) of Section 28 of the Act. It goes without
saying that all proceedings will have to be undertaken in accordance with
Section 28 of the Act and it is open to the owners to raise all contentions
that under the notification of 1978. the acquisition was to the extent of I acre,
E 38 gunthas of land but the appellants took over possession of additional 39
gunthas of land; that in spite of request and prayer, possession of 39 gunthas
of land was r.ever restored to them; that they were required to file suit for
possession; that' a decree was passed in their favour which was confirmed
by the appellate court which had become final; that even thereafter, execution
F proceedings were taken out wherein direction was issued to the appellants
to hand over possession of the land to them, and at that stage, the notification
under Section 28(1) was issued. As and when such objections will be taken,
an appropriate order would be passed by the authorities in accordance with
law. All contentions of the parties are kept open. We may clarify that we may
not be understood to have expressed any opinion one way or the other and
G all parties are at liberty to put forward their pleas before the authorities.
31. The appeals are disposed of accordingly. There shall be no order as
..
to costs.

V.S.S. Appeals disposed of.
H ,•