Supreme Court of India
KEDAR NATH YADAVversusSTATE OF WEST BENGAL & ORS.
- Citation
- 2016 INSC 639
- Decided
- 31 August 2016
- Disposal
- Appeal(s) allowed
- Bench
- V GOPALA GOWDA
Holding
The acquisition was for a company, not a public purpose, and the State’s non‑compliance with Part VII procedures rendered the acquisition illegal and void.
Summary
The Supreme Court examined the acquisition of about 1,000 acres of land in Singur, West Bengal for Tata Motors' small‑car project. The Court held that the acquisition was made at the instance of a private company, not for a public purpose, and that the State failed to follow the mandatory procedures under Part VII of the Land Acquisition Act, 1894, including proper consideration of objections under Section 5‑A and payment of compensation. Consequently, the acquisition was declared illegal and void, the land was ordered to be restored to the owners, and the compensation already paid was not to be recovered.
Issues considered
- The acquisition was for a public purpose or for a company under the Land Acquisition Act, 1894.
- Whether the procedures prescribed in Part VII of the Act and the 1963 Companies Rules were complied with.
- Whether the Land Acquisition Collector properly considered objections under Section 5‑A(2).
- Whether the award of compensation complied with Sections 9 and 11 of the Act.
Legislation cited
- Constitution of Indias. Article 136, s. Article 142
- Land Acquisition Act, 1894s. 11, s. 3(f), s. 4, s. 5-A, s. 6, s. 9
- Land Acquisition (Companies) Rules, 1963s. Rule 4
Subjects
land acquisitionpublic purposePart VIITata MotorsSingureminent domainprocedural fairnesscompensationcolourable exercise of powerSection 5-ASection 6Section 4West Bengal industrial policy
Judgment
[2016] 1l S.C.R. 263
KEDAR NATH YADAV A
v.
STATE OF WEST BENGAL & ORS.
(Civil Appeal No. 8438 of2016)
AUGUST 31, 2016 B
[V. GOPALA GOWDA AND ARUN MISHRA, JJ.]
Land Acquisition Act, 1894:
Parts II and VII; ss. 3(j), 4, 6, 5A. 9 and 11 - Acquisition of
lancf - At the instance of a particular Company for its project - c
Notification uls 4(1) stating therein that the land was likely to be
needed to be taken by the Government/Government Undertaking/
Development Authorities for a public purpose viz. employment
generation, socio-economic development by setting up an industrial
project of a particular Company - Objections u/s 5-A filed -
D
Objections were rejected by Land Acquisition Collector and stated
in its report that the acquisition by State Industrial Development
Corporation was for public purpose - Piirsuant thereto Notification
u/s. 6 issued - Award of compensation - The Corporation took
possession of the land - Lease Deed executed in favuur of the
Company - Acquisition proceedings challenged - High Court upheld E
the acquisition - On appeal held: Pt;r V. Gopala Gowda, J.:
Acquisition in the present case was for 'a Company and hence not
covered under 'public purpose' - When the acquisition is for a
company, procedure to be adopted is laid down in Part VII r/w rules
framed thereunder - Since the procedure under Part VII was not
F
followed, the acquisition is grossly perverse, illegal and void ab
initio - The objections u/s 5-A have been rejected without assigning
any clear reason or application of mind rendering the report of the
Land Acquisition Collector invalid - The award of compensation is
also vitiated for non-compliance of provisions uls. 9 - Per Arun
Misltra, J.: There can be an acquisition for public purpose and G
ultimately the land may go on lease or other mode of transfer 'to a
company in case the compensation is paid out of public revenue -
In the present case the State Industrial Development Corporation
i.e. a Govt. Authority was the acquiring body and compensation
paid by. it is to be treated out of public revenue - Therefore, the
H
263
264 SUPREME COURT REPORTS r20l61 l l S.C.R.
A acquisition was for public purpose and hence procedure adopted
under Part II cannot be said to be impermissible - Non-compliance
of provisions under s.9 in awarding the compensation would also
not vitiate the Notifications ulss. 4 and 6 - However, there was no
objective consideration of objections u/s. 5-A at any stage - The
inquiry held uls. 5-A was a farce and therefore, the entire acquisition
B
stands vitiated -- Per Court: Acquisition of the land is illegal and
void - Directions to restore the possession of the land to respective
land-owners - Compensation which has already been paid, not to
be recovered - Land-owners who have not withdrawn the
compensation, permitted to withdraw the same.
c Part-JI and Part VII-Distinction between-PerArun Mishra,
J.: Existence or non-existence of a public purpose is not a primary
distinguishing factor between the acquisition under Part II and that
under Part VII - The real point of distinction is the source of.funds
to cover the cost of acquisition - The second proviso to s.6(I) is the
D main driving ground for the two types of acquisit:"ri.
Practice and Procedure:
Government litigant - Change in stand by subsequent
Government - Permissibility - Held: Per V. Gopa/a Gowda, J.:
Though rule of law cannot be sacrificed for the sake of fi1rthering
E political agenda - However, the subsequent Government can change
the stand if there is material on record to show that the earlier action
by the Government was illegal or suffered from legal malafides or
colourable exercise of power.
Affidavits - Binding effect, on the Supreme Court - Held:
F Per V. Gopala Gowda, J.: Supreme Court is not bound by affidavits
and counter affidavits filed by parties - The Court in exercise of its
power u/Art.136 can decide the legality of the issue on the basis of
the material on record - Constitution of IndiaArt.-136.
Doctrines/Principles:
G
Principles of stare decisis - Discussed.
Allowing the appeals, the Court
HELD: Per V. Gopala Gowda, J.
1.1 It cannot be said that the State of West Bengal cannot
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 265
be allowed to resile from the position taken by them in their A
pleadings, that Part VII of the Land Acquisition Act, 1894 has no
application in the instant case and the acquisition of land was one
which was done in the public interest,,,without even filing an
affidavit. While it is true that rule oflaw cannot be sacrificed for
the sake offurthering political agendas, it is also a well established
B
position of law that a stand taken by Jhe State Government can
be changed subsequently if there is material on record to show
that the earlier action of the acquisition of lands by the State
Government was illegal or suffers from legal malafides or
colourable exercise of power. [Paras 41, 47] [317-F-G; 320-C-D]
Jal Mahal Resort (P) Ltd. v. K.P. Sharma 2014 (11) SCR
c
765 : (2014) 8 SCC 804; Andhra Pradesh Dairy
Development Corpn. Federation v. B. Narasimha Reddy
2011 (14) SCR 1 : (2011) 9 SCC 286; Ml. Builders
Pvt. Ltd. v. Radhey Shyam Sahu & Ors. 1999 (3) SCR
1066 : (1999) 6 sec 464 - referred to. D
1.2 It is also well settled position of law that this Court is
not bound by affidavits and counter affidavits filed by the parties.
In exercise of its power under Article 136 of the Constitution of
India, this Court can examine the material on record in order to
determine whether the action of the previous State Government E
· in acquiring the lands in the instant case was in accordance with
law or not. In the instant case, the cabinet records, communication
between Tata Motors Ltd. and representative of the State
Government, the notifications published under Sections 4 and 6
of the Act are all on .record. The Court shall examine the same to
assess the validity of the acquisition of the lands in these F
proceedings. [Para 48] [320-D-E; 321-A]
P.S:R. Sadanatham v. Arunachalam 1980 (2) SCR
873 : (1980) 3 sec 141 - followed.
2.1 When the acquisition of land is for a public purpose, it G
is Part II of the'Act which would apply and where the acquisition
of land is at the instance of a Company, the procedure to be
adopted is laid down in Part VII of the Act. [Para 60] [327-D]
2.2 Section 3(f) of the Land Acquisition Act, which defines
what public purpose is for the purpose ofacquisition ofland, clearly
H
266 SUPREME COURT REPORTS f20161 11 S.C.R.
A indicates that the acquisition ofland for companies is not covered
within the public purpose. A perusal of the notification issued
under Section 4(1) of the Land Acquisition Act clearly shows that
the proposed lands in the notification are needed for the setting
up of the Tata Small Car project. The Cabinet Memo dated
30.05.2006 mentioned acquisition of lands by West Bengal
B
Industrial Development Corporation (WBIDC) for the purpose
of setting up of the Tata Motor's 'Small Car Project' in the State
of West Bengal. [Paras 52, 53, 54] [323-B, C-E]
2.3 As is evident from the Notifications issued under the
Act and from the· cabinet memo, there is no mention about such
c requisition being made by the Corporation (WBIDC) to.the State
Government regarding the proposed lands being required for
acquisition in favour of WBIDC for planned development of land
in pursuance of any ..scheme or policy of the Government. Even
from a perusal of the letter dated 29.08.2006, written by the Joi.ut ·
D Secretary, Land and Land Reforms Department, Government of
West Bengal, it becomes clear that the State Government did
not apply its mind while considering the need of the land and
merely followed the document on which the Collector had signed.
[Para 55] [323-G-H; 324-A]
E 2,4 Even if it is accepted that it was the policy of the State
Government to generate employment and increas.e socio-
economic development in the State, the relevant policy iJocuments
are not forthcoming in the original acquisition files which were
made available for this Court. Thus, by no stretch of imagination
can the acquisition of lands in the instant case be said to be at the
F instance of WBIDC, or for the fulfilment of some scheme of the
Corporation or the State Government. Thus, it cannot be said to
attract Section 3(f)(iii), (iv) or (vi) either. [Para 56] [324-E-F]
2.5 It is undisputed fact that the State Government has not
deposited the public money towards the cost of acquisition ofland to
G initiate the acquisition proceedings to show that the acquisition of
lands is for public purpose which is an essential requirement under
the provision of.Section 6 of the Act. The notification issued under
Section 6 of the Act merely provides tlfat the land is needed for the
setting up of the Tata Small Car project, which is a public purpose
H under the Act. [Para 56] [325-A~C)
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 267
2.6 There seems to be no application of mind either at the A
stage of issuance of the notification under Section 4 of the Act, or
the report of Collector under Section 5-A (2) of the Act or the
issuance of the final notification under Section 6 of the Act. Such
an acquisition, if allowed to sustain, would lead to the attempt to
justify any and every acquisition of land of the most vulnerable
B
sections of the society in the name of 'public purpose' to promote
socio-economic development. Neither there is a scheme of the
Government, nor the funds have been derived from the public
revenue and that is why the acquisition in the instant case cannot
be said to be one for 'public purpose'. [Paras 56, 57) [325-G-H;
[326-A, DJ c
2. 7 After the passing of the Land Acquisition Amendment
Act, 1984, acquisition of land for a company is no longer covered
under 'public purpose' in view of Section 3(f)(viii) of the Land
Acquisition Act. Apart from the above statutory provisions
inserted by way of an amendment, the Objects and Reasons for D
such amendment that the mandatory procedure as laid down under
Part VII of the Act read with the rules framed thereunder was
not followed by t_he State Government bl.'fore the notifications
were published. [Para 58) [326-F-G)
2.8 Before land could be acquired, the procedure consistent E
with the statutory provisions oflaw must be followed mandatorily.
There is nothing in law which would support the acquisition of
land for a particular Company under the guise of 'public purpose',
rendering the exception provided under Section 3(f)(viii) of the
Act useless and nugatory. [Para 59) [327-C]
F
2.9 In this day and age of fast paced development, it is
completely understandable for the State Government to want to
acquire lands to set up industrial units. What, however, cannot
be lost sight of is the fact that when the brunt of this 'development'
is borne by the weakest sections of the society, more so, poor
agricultural workers who have no means of raising a voice against G
the action of the mighty State Government, as is the case·in the
instant fact situation, it is the onerous duty of the State
Government to ensure that the mandatory procedure laid down
under the Act and the Rules framed thereunder are followed
scrupulously otherwise the acquisition proceedings will be H
268 SUPREME COURT REPORTS [2016] 11 S:C.R.
A rendered void ab initio in law. Compliance with the provisions of
the Act cannot be treated as an empty formality by the State
Government, as that would be akin to handing over the eminent
domain power of State to the executive, which cannot be permitted
in a democratic country which is required to be governed by the
rule of law. It is also a well settled principle of law that if the
B
manner of doing a particular act is prescribed under any statute
the act must be done in that manner or not at all. [Para 63] (328-
E-G; 330-D]
2.10 In the instant case, what makes the acquisition
proceedings perverse is that the proper procedure as laid down
c under Part VII of the Land Acquisition Act read with Rules was
not followed by the State Government. The acquisition of land for
and at th~ instance of the Company was sought to be disguised
as acquisition of land for 'public purpose' in order to circumvent
compliance with the mandatory provisions of Part VII of the Land
D Acquisition Act. This action of the State Government "is grossly
perverse and illegal and void ab in~tio in law and such an exercise
of power by the State Government for acquisition of lands cannot
be allowed under any circumstance. If such acquisitions of lands
are permitted, it would render entire Part VII of the Land
Acquisition Act as nugl;ltory and redundant, as then virtually every
E acquisition of land in favour of a Company could be justified as
one for a 'public purpose' on the ground that the setting up of
industry would generate employment and promote socio-economic
development in the State. That could not have been the intention
of the legislature in providing the provisions of Part VII read
F with s.3(f) of the Land Acquisition Act. [Para 64] (331-A-D]
2.11 From a perusal of the materials on record it becomes
clear that in the instant case, the lands in question were acquired
by the State Government for a particular Company, at the instance
of that Company. Further, the exact location and site of the land
G was also identified by Company. Even the notifications ,issued
under Sections 4 and 6 of the Act clearly state that the land in
question was being acquired for the 'Small Car Project' of the
Company. In view of the foregoing reasons, by no stretch of
imagination can such an acquisition of lands be held to be one for
'public purpose' and not for a Company. [Para 64] [331-D-F)
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL' & ORS. 269
2.12 Admittedly, the procedure for acquisition as A
contemplated under Sections 39, 40 and 41 of Part VII of the Act
read with Rules 3, 4 and 5 of the Land Acquisition (Companies)
Rules, 1963 has not been followed, as the acquisition was sought
to be guised as one for 'public purpose' under Sections 3(f) (iii),
(iv) and (vii) of the Act. The acquisition of land in the instant case
8
in favour of the Company is thus, improper for not following the
mandatory procedure prescribed under Part VII of the Act and
Rules and therefore the acquisition proceedings are liable to be
quashed. [Para 65) [332-A-B]
S. Pratap Singh v. State of Punjab AIR 1964 SC 72 :
1964 SCR 733 - followed. c
Devender Pal Singh v. State. of Punjab 2007 (11)
SCR 475 : (2008) 1 sec 728; R. L. Arora V. State of
U.P. AIR 1962 SC 764 : 1962. Suppl. SCR 149;
Valjibhai Muljibhai Soneji v. State of Bombay & Ors.
AIR 1963 SC 1890 : 1964 SCR 686; Calcutta State D
Road Transport Corporation v. Commissioner of Income
Tax, West Bengal 1996 (3) SCR 50 : (1996) 8 SCC
758; S. Sundaram Pillai & Ors. v. R. Pattabiraman &
Ors. 1985 (2) SCR 643 : (1985) 1 SCC 591; Royal
Orchid Hotels Ltd. v. G. Jayaram Reddy & Ors. 2011 .
(11) SCR 701 : (2011) 10 SCC 608; Raghubir Singh E
Sherawat v. State of Haryana and O:s. 2011 (14) SCR
1113 : (2012) 1 SCC 792; Surinder Singh Brar & Ors.
v. Union of India 2012 (12) SCR 1077 : (2013) 1 SCC
403; State of Punjab v. Gurdial Singh 1974 AIR 1871:
1974 (3) SCR 657; Babu Verghese & Ors. v. Bar F
Council Of Gerald & Ors. 1999 (1) SCR 1121: (1999)
3 sec 422 - relied on.
Pandit Jhandu Lal v. State of Punjab (1961) 2 SCR
459; Somawanti v. State of Punjab AIR 1963 SC 151 :
1963 SCR 774; Jage Ram v. State of Haryana 1971 (3)
G
SCR 871 : 1971 (1) SCC 71; Ajlatoon v. Lt. Governor
of Delhi 1975 (1) SCR 802 : (1975) 4 sec 285;
Pratibha Nema v. State of M.P. 2003 (1) Suppl.
SCR 890 : {2003) 10 SCC 626 ..- distinguished.
Amarnath Ashram Trust Society & Anr. v. Governor of ·
U.P. & Ors. 1997 (6) Suppl. SCR 143: (1998) 1 SCC H
270 SUPREME COURT REPORTS (20 I 6] I I S.C.R.
A 591; Chaitram Verma and Ors. v. Land Acquisition
Officer, Raipur and Ors. A.I.R. 1994 MP 74; Pooran
and Ors. v. State of U.P. and Ors. 2010 Supp All. L.J.
1; Mandir Shree Sita Ramji v. Land Acquisition Collector
& Ors. 2005 (2) Suppl. SCR 969 : (2005) 6 SCC 745;
Usha Stud and Agricultural Farms Pvt. Ltd. v. State of
B
Haryana & Ors. 2013 (5) SCR 645 : (2013) 4 SCC
210 - referred to.
3.1 From a perusal of the materials on record and original
acquisition files, it is evident that a large number of objections
were filed by the land owners before the notification was issued
c under Section 4 of the Act. The same were not considered
properly under Section 5-A (2) of the Act. Notices were issued to
the objectors individually but the same could not be served upon
the owners/cultivators of the proposed lands to be acquired. [Para
68] [333-C-D]
D 3.2 Even though the land owners/cultivators did not appear
before the Land Acquisition Collector, the objections filed by them
ought to have been considered objectively by him as required
under Section 5-A (2) of the Act. Additionally, seven objections
were filed under Section 5-A itself and some of the objections
E pertained to persons who were already running industrial units.
[Para 68] [333-F-G]
3.3 Some of these objectors were not given the opportunity
to be heard as required under Section 5-A (2) of the Act. The
same ought to have been given to them as required both under
the statutory provisions of the Act as well as the principles of
F
natural justice, as the acquisition of lands of the objectors would
entail a serious civil consequence. [Para 69) [334-B-C]
Mandir Shri Sita Ramji v. Lt. Governor of Delhi 1975
(1) SCR 597 : (1975) 4 SCC 298 - followed.
G Babu Ram v. State of Haryana 2009 (14) SCR 1111 :
(2009) 10 sec 115 - relied on.
3.4 From a perusal of the proceedings before the Collector,
which are made available to this C011rt, it becomes clear that the
same have been rejected without assigning any clear reasons or
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 271
application of mind. Thus, the report of the Collector is not a A
valid report in the eyes of law. The State Government has
mechanically accepted the same without application of mind
independently before issuing notification under Section 6 of the
Land Acquisition Act declaring that the lands are required for
establishment of automobile industry by the Company. [Paras 70,
B
71) [335-D-F)
4.1 After issuing the notifications under Section 6 of the
Land Acquisition Act declaring that the lands have been acquired
for the purpose of industrial development, a statutory duty is cast
upon the Collector to issue notice to the land owners/cultivators,
as required under Section 9 of the Land Acquistion Act, to c
determine the market value of the acquired land and award
compensation as required under Section U of the Land Acquistion
Act which is mandatory for taking possession of the land by the
State Government. [Para 72) [335-G]
4.2 It is evident from material on record that no individual D
notices were served upon the land owners/cultivators. A joint
inquiry appears to have been conducted by the Land Acquisition
Collector without giving them an adequate opportunity to
establish their claim for determination of reasonable
compensation for acquisition of lands by presenting true and E
correct market value of the lands. The determination of market
value of lands by clubbing a number of cases together and passing
a composite award is no award in the eyes of law. The inquiry, as
contemplated under Section 11 of the Land Acquistion Act, is a
quasi judicial exercise of power on the part of the Collector in
awarding just and reasonable compensation to the landowners/ F
cultivators. That has not been done in the instant case. Further,
the proviso to Section 11(1) of the Land Acquistion Act provides
that no award shall be made by the collector without the previous
approval of either the appropriate Government or such officer
authorised by it for the above purpose. It was also brought to G
the notice of this Court that supplementary awards were also
passed which is not legally permissible in law. For non-compliance
of the above provisions of the Land Acquistion Act, the composite
awards are vitiated in law and therefore, the same are also liable
to be quashed. [Para 73) [336-A-D)
H
272 SUPREME COURT REPORTS f20161 11 S.C.R.
A Per ARUN MISHRA, J: (Partly concurring) HELD: 1.1
"Public purpose" has been defined in section 3(1) of the Land
Acquisition Act. The definition is inclusive and the Amendment
Act, 1984 excludes the acquisition for Company from the definition
of "public purpose". Acquisition of land for Company has been -
B dealt with under Part VII of the Act. Under section 39 previous
consent of the appropriate Government and execution of
agreement is necessary for acquiring land for a Company. Both
sections 6 to 16 and sections 18 to 37 shall not be used to acquire
land for any Company under Part VII unless the previous consent
of the appropriate Government has been obtained and Company ·
c has executed the agreement as provided in section 41 of the Act.
Section 41 further provides that in the case of acquisition for a
Company the payment of the cost of acquisition has to be borne
by the Company and other matters as specified in section 41 are
also to be provided in the agreement. Such an agreement is
D required to .be published in the Official Gazette and a statutory
force is given to its terms on which the public shall be entitled to
use the work. [Para 4] [336-H; 337-A-C]
1.2 Section 3(f) though excludes the acquisition for a
Company. However, at the same time it is inclusive definition
E and it is provided in section 3(1) that it includes the provision for
development ofland from public funds in pursuance of any scheme
or policy of the 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. Public purpose
in section 3(iv) also includes the provision ofland for a corporation '
F owned or controlled by the State. The West Bengal Industrial
Development Corporation is established by the State. [Para 5]
[337-D]
1.3 Public purpose has to be adjudged in the background
of the facts of the instant case and the State of West Bengal
G decided to make effort to establish manufacturing industries with
a view to attract more private sector investment and foreign
direct investment for industrialization at par with the model
adopted by other progressive States. It has considered the offer
of Company - manufacturer of Nano car - as an opportunity for
H establishing manufacturing industry so as to further grab attention
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 273
of automobile industry in the State of West Bengal to boost its A
economy for creating job opportunities, direct and indirect impact
on secondary employment in the associated services. The
proceedings were initiated under the Act and the West Bengal
Industrial Development Corporation (WBIDC) was the acquiring
body which bore the entire cost of acquisition. [Para 6) [337-E-G]
B
1.4 It is apparent from the provisions contained in second
proviso to section 6 that declaration under section 6 shall not be
made unless the compensation to be awarded for such property
is to be paid by a Company either wholly or partly out of public
revenues or some fund controlled or managed by a local authority.
The Explanation second to section 6(1) of the Act makes it clear
c
that where the compensation awarded for the property is to be
paid out of funds of a corporation owned or controlled by the
State, such compensation shall be deemed to be compensation
paid out of public revenue. Thus Explanation second makes it
clear that when corporation pays the funds for acquisition of the D
property that such compensation shall be deemed to be paid out
of public revenue. Therefore, the acquisition for a corporation is
indeed within the public purpose as defined in section 3(t)(iv).
Thus the concept of funds in section 6 as amended in 1984 comes
into play in the case of acquisition of a land for a corporation and
it is not necessary that the State Government itself should bear E
the cost of acquisition so as to make it expenditure out of public
revenue even expenditure by the corporation owned or controlled
by the State for acquisition shall be deemed to be made out of
public revenues and when the land had been acquired for a
corporation the land is to be vested in the Corporation though F
lease of the land has been granted to the Company for its aforesaid
project. It would remain acquisition for a public purpose as
provided in section 3(t) of the Act. [Para 6) [339-D-H]
1.5 Acquisition of land for establishing such an industry
would ultimately benefit the people and the very purpose of G
industrialization, generating job opportunities hence it would be
open to the State Government to invoke the provisions of Part II
of the Act. When Government wants to attract the investment,
create job opportunities and aims at the development of the State
and secondary development, job opportunities, such acquisition
is permissible for public purpose. [Para 7] [340-A-B) H
274 SUPREME COURT REPORTS r20l6] l l S.C.R.
A Somawanti v. State of Punjab AIR 1963 SC 151: 1963
SCR 774; Jage Ram & Ors. v. State of Haryana & Ors.
(1971) 1 SCC 671 : 1971 (3) SCR 871; Narayan
Govind Gavate v. State of Maharashtra (1977) 1 SCC
133 : 1977 (1) SCR 763; Arnold Rodricks v. State of
Maharashtra (1966) 3 SCR 885; Sooraram Pratap
B
Reddy & Ors. v. District Collector, Ranga Reddy District
& Ors. (2008) 9 sec 552 : 2008 (13) SCR 126;
National Textile Workers' Union v. P R. Ramakrishnan
& Ors. (1983) 1 SCC 228 : 1983 (1) SCR 922; Nand
Kishore Gupta v. State of Uttar Pradesh and Ors. (2010)
c 10 SCC 282 : 2010 (11) SCR 356 - relied on.
State of Bombay v. Ali Gu/shall' AIR 1955 SC 810 :
1955 SCR 867; Dau/at Singh Surana & Ors. v. First
Land Acquisition Collector & Ors. (2007) 1 SCC 641 :
2006 (8) Suppl. SCR 1076; Pandit JhanduLal v. State
D of Punjab AIR 1961 SC 343 : 1961 SCR 459- referred
to.
Susette Keio v. City of New London 162 L.Ed 439 =
545 US 469; Samuel Berman v. Andrew Parker, 99 L.Ed
27 - referred to.
E 1.6 A conjoint reading of the provisions contained in
sections 3(t), 6, other provisions of Part II and the provisions
contained in Part VII of the Act makes it Clear that there can be
an acquisition for public purpose and ultimately land may go on
lease or other mode of transfer to a company and in case the
p compensation is paid out of public revenue, it would be an
a~quisitiOJ! for a public purpose under Part n and ig. case
compensation is borne as per the agreement provided in section
41, it would be an acquisition under Part VII of the Act. Though
acquisition for public purpos,, can also be for the purpose of
industrialization or for a company in case setting up of the company
G has a public purpose behind it as provided in section 3(t) and
payment of compensation for acquisition of land is made out of
. public revenue as per the provisions of section 6 as amended in
1984. [Para 15) [365-G-H; 366-A-BJ
Babu Barkya Thakur v. State of Bombay, AIR (1960)
H SC 1203; Pandit Jhandu Lal v. State of Punjab, AIR
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 275
(1961) SC 343 : 1961 SCR 459; RL. Arora v. State of A
Uttar Pradesh (1962) Supp. 2 SCR 149; Somawanti v.
State of Punjab (1963) 2 SCR 774; Jage Ram & Ors. v.
State of Haryana & Ors. (1971) 1 sec' 671 : 1971 (3)
SCR 871; Indrajeet C. Parekh v. State of Gujarat
(1975) 1 SCC 824; Aflatoon v. Lt. Governor of Delhi
B
_(1975) 4 SCC 285 : 1975 (1) SCR 802; Bai Malimabu
v. State of Gujarat & Ors. (1978) 2 SCC 373; Manubhai
Jethalal Patel v. State of Gujarat (1983) 4 SCC 553;
Srinivasa Cooperative House Building Society Ltd.- v.
Madam Gurumurthy Sastry & Ors. (1994) 4 SCC 675;
Mandir Sita Ramji v. Land Acquisition Collector & Ors., c
(2005) 6 SCC 745 : 2005 (2) Suppl. SCR 969; Amarnath
Ashram Trust Society & Am: v. Governor of UP. & Ors.
(1998) 1 SCC 591 : 1997 (6) Suppl. SCR 143; Pratibha
Nema & Ors. v. State of MP. & Ors. (2003) 10 SCC
626 : 2003 (1) Suppl. SCR 890 - relied on.
D
1.7 The existence or non-existence of a public purpose is
not a primary distinguishing factor between the acquisition under
Part II and acquisition finder Part VII. The real point of distinction
seems to be the source of funds to cover the cost of acquisition.
The second proviso to section 6-(1) is the main driving ground
for the two types of acquisitions. The amendment made in 1984 E
in section 6 does not deal with the concept of token consideration
for such acquisition paid out of the public revenues. The second
provision to section 6(1) makes it clear that where the
compensation to be awarded for such property is to be paid out
of the funds of the corporation, it is deemed to be compensation F
paid ouf of public revenue. Section 6 requires compensation
determined to be paid out of the funds of the corporation then it
would be deemed to be expenditure out of public revenue to
make it acqui_sition under Part II. In the instant case corporation
has paid entire compensation. It is not a case of token amount
paid out of public revenue. [Para 20) [380-C-E] G
Devinder Singh & Ors. v. State of Punjab & Ors. (2008)
1 SCC 728 : 2007 (11) SCR 475 - referred to.
1.8 When an application is filed by a company for acquisition
bu~ the decision of the State has to be seen how -it intended to H
276 SUPREME COURT REPORTS [20 I 6] I I S.C.R.
A deal with sucJ. a prayer, is a relevant factor. In case of public
purpose the ilCquisition could be made at public expense.
Therefore, evidently the provisions made in Part II shall be
resorted to. On the other hand if the State forms an opinion that
acquisition may not be for public purpose then the State would
not bear the expenses and then the procedure laid down in .Part
B
VII shall be resorted to. [Para 21] [380-F-G]
Sooraram Pratap Reddy & Ors. v. _District Collector,
Ranga Reddy District & Ors. (2008) 9 SCC 552 : 2008
(13) SCR 126; Urmila Roy & Ors. v. Bengal Peerless
Housing Development Co. Ltd. & ·ors. (2009) 5 SCC
c 242 : 2009 (4) SCR 834; Nand Kishore Gupta & Ors.
v. State of U.P. & Ors. (2010) 10 SCC 282 : 2010 (11)
SCR 356 - relied on.
1.9 For the purpose of acquiring land in the instant case it
was not necessary to have recourse to the provisions contained
D in Chapter VII of the Act. The proposal submitted to the Cabinet
ou 30.5.2006 indicates that the West Bengal Industrial
Development Corporation (WBIDC) was the acquiriug body. Thus
the Cabinet has approved the said proposal. WBIDC was
associated with the project right from the begiuning and was
E instrumental iu getting the land identified by the Company for
the purpose of selection. The memo for the Standiug Committee
of the Cabinet on Industry dated 26.7.2006 contains the decision
of acquisition of land for public purpose under Land Acquisition
Act. Notification under section 4 of the Act was published in the
Gazette on 21. 7.2006 in which it was mentioned that the land is
F likely to be needed by the Government/Government undertaking/
Development Authorities at the public expense for public
purpose, viz., employment generation and socio-economic
development of the area by setting up small car project. Though
it was not specifically mentioned that the WBIDC is to be the
G acquiring body but a decision had already been taken in this regard
and the aforesaid expression Government Undertaking/
Development authorities would include acquisition by WBIDC
as the Government has decided to treat it as a public purpose as
it was to generate direct employment to 1800 persons and by
direct employment through vendors and through other service
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 277
providers to 4700 persons approi. [Para 25] [398-E-F; 399-D-F] A
1.10 Similar is the position with respect to declaration under
section 6 of the Act. As the Government has treated the
acquisition for a public purpose and the entire money has been
paid by WBIDC consequently by mere mention that the land was
required for the small car project of the Company would not make B
it an acquisition for a company under Part VII. Non-mention of
WBIDC cannot be taken to be an illegality impinging the validity
of the notification under section 4 of the Act. The fact that the
application was filed by the Company indicating its willingness
for setting up the industry would not also make it an acquisition
for a company but how the State has dealt with the same, would c
be the decisive factor. Since WBIDC was involved right from the
beginning by the State Government and a decision was taken by
the State Government that WBIDC would be the acquiring
authority and WBIDC was involved in identification of the land
and the reports were submitted by it to the Government, the D
acquisition was for WBIDC is apparent as the land was to vest in
the WBIDC and it has paid the compensation. Payment of premium
amount as per the conditions of lease agreement fastened upon
the Company would also not make it a compensation paid by the
Company. It was not necessary for the State Government to
deposit the amount of compensation as compensation paid by E
the corporation is also to be treated out of public revenue. [Para
25] [399-F-H; 400-A-C]
1.11 The aims and objects of the amendment of section
3(f) when taken into consideration would not alter the aforesaid
position of law. Acquisition of land for a company or for F
industrialization if it is for public purpose would be covered under
section 3(f) as amended and when corporation is the acquiring
authority and amount of compensation is borne by it in entirety
and land has been ultimately leased out to the Company for its
project by it the acquisition would remain for a public purpose G
under section 3(t) attracting Part II of the Act. The procedure
adopted under Part II cannot be said to be impermissible. It
cannot be said to be acquisition under guise of public purpose so
as to violate the intendment of exclusion of the company from
section 3(f) as amended. [Para 26] [400-C-E]
H
278 SUPREME COURT REPORTS [2016] 11 S.C.R.
A 2. Various decisions rendered by this Court in post-
amendment period are binding on a Co-ordinate Bench and there
is no reason to take a different view on merits. Even otherwise
the Court is bound by the principle of stare decisis in view of the
consistent decisions of this Court. The rule of stare decisis requires
that it is unnecessary to enquire or determine as to what was the
B
rationale of the earlier decision which is said to operate as stare
tlecisis. The doctrine of binding precedent has the merit of
promoting certainty and consistency in judicial decisions. The
doctrine is based on 'public policy' and should be adhered to
subserve the ends of justice. The doctrine has the merit of
c promoting certainty and consistency in judicial decisions, and
enables ·an organic development of the law, besides providing
assurance to the individual as to the consequence of transactions
forming part of daily affairs. The view which has held the field for
a long time should not be disturbed only because another view is
D possible. The decision of two Judges is binding on another
Division Bench of two Judges. A Co-ordinate Bench should not
disturb the decision on an identical question. The rationale of
this rule is the need for continuity, certainty and predictability in
the administration of justice. It is necessary to inculcate confidence
in the administration of justice. It cannot be referred to a larger
E Bench unless there is an error apparent on its face or that a
particular earlier· decision was not noticed, which has a direct
bearing or has taken a contrary view. In reviewing and revising
its earlier decision, in the interests of the public good or for any
other valid and compulsive reasons, it must be the constant
endeavour and concern of this Court to introduce and maintain
F
an element of certainty and continuity in the interpretation of
law. [Paras 27, 28) (400-F-H; 401-A-D, F-H; 402-A)
Waman Rao v. Union of India (1981) 2 SCC 362 : 1981
(2) S~R 1; Union of India v. Raghubir Singh (1989) 2
SCC 754 : 1989 (3) SCR 316; Krishena Kumar v. Union
G of India (1990) 4 SCC 207 : 1990 (3) SCR 352; lvlishri
Lal V. Dhirendra Nath (1999) 4 sec 11 : 1999
(2) SCR 453; Central Board of Dawoodi Bohra
Community v. State of Maharashtra (2005) 2 SCC 673
: 2004 (6) Suppl. SCR 1054; Shanker Raju v. Union of
H India (2011) 2 SCC 132 : 2011 (2) SCR 1; Fida Hussain
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 279
v. Moradabad Development Authority & Am: (2011) A
12 SCC 615 : 2011 (9) SCR 290; Union of India v.
Paras Laminates (P) Ltd. (1990) 4 SCC 453; Joint
Commissioner of Income Tax, Surat v. Saheli Leasing
and Industries Ltd. (2010) 6 SCC 384 : 2010
(6) SCR 747; The Keshav Mills Co. Ltd. v. CIT, AIR
B
1965 SC 1636 : 1965 SCR 908 - relied on.
3.1 Even before issuance of notification under section 4 of
the Act decision has been taken to acquire the land in question.
The notification under section 4 is an introductory measure. [Para
31) [402-C-D]
c
3.2 It is apparent from section 4(2) that after notification is
issued it shall be lawful for any officer to enter upon and survey
and to do all the acts which are necessary to ascertain whether
land is adapted for such purpose. The notification is of exploratory
character and it does not proprio motu result in acquisition. The
proposal for acquisition in any particular locality ripens into D
definite proceedings where Government is satisfied how land is
needed for public purpose. Section 4(1) does not require land to
be defined or identified but requires locality to be stated so as to
file objection under section 5 of the Act. In the instant case the
Cabinet has taken a decision to acquire the said land beforehand E
for which a notification has ultimately been issued under sections
4 followed by declaration under section 6 of the Act. The right
under section SA of the Act is a valuable right. [Para 32) [403-D-
E]
Raghubir Singh Sherawat v. State of Haryana & Ors. F
(2012) 1 SCC 792 : 2011 (14) SCR 1113; Surfnder
Singh Brar & Ors. v. Union of India & Ors. (2013) 1
SCC 403 : 2012 (12) SCR 1077; (}ojer Brothers Private
Ltd. & Anr. v. State of West Bengal & Ors. (2013) 16
· SCC 660 : 2013 (12) SCR 489; Usha Stud &
Agricultural Farms (P) Ltd. v. State of Haryana (2013)
0
4 SCC 210 : 2013 (5) SCR 645; Sharma Agro Industries
v. State of Haryana & Ors. (2015) 3 SCC 341; Vinod
Kumar v. State of Haryana & Ors. '(2014) 3 SCC 203;
Gurbinder Kaur Brar & Anr. v. Unioil of India & Ors.
(2013) 11 · sec 228 - relied on. H
280 SUPREME COURT REPORTS [2016] 11 S.C.R.
A 3.3 In the instant case it is apparent from the report that
there is no objective consideration of objections at any stage.
The inquiry held and ~he report sent under section 5A of the Act
was clearly influenced by the decision of the Cabinet taken before
issuance of notification under section 4 of the Act to acquire land
in certain J L numbers in particular mouza's as per the choice of
B
location by the Company which has prevailed whereas in the
matter of acquisition of such vast area comparative fertility aspect
of chunk of land to be selected ought to have been considered
and land which is more or less barren ought to have been
p,referred which exercise has not been resorted to. Though the
c State Government could have taken decision before issuance of
notification under section 4 for setting up of project however it
could not have taken decision to acquire particular land in various
mouza 's before survey is undertaken as authorized by the
provisions contained in section 4 of the Act, the action of the
State has the effect of frustrating very purpose of holding inquiry
D
under section 5A. The inquiry_ held under section 5A is a farce
and an eyewash neither the Collector nor State Government
considered the matter with objectivity as mandated. Inquiry has
not been done with open mind with requisite fairness they were
clearly influenced by decision of cabinet. Entire acquisition stands
E vitiated in the facts and circumstances of the case. The case need
not be relegated to. the stage of inquiry as project itself has been
abandoned. [Para 40] [414-G-H; 415-A-C]
3.4 However, for enquiry under section 5A individual
notices are not provided. It is not provided in the Act that
F individual notices should be issued. The publications as envisaged
under section 4 are enough and are the only requirement of the
law to be mandatorily observed pursuant to which objections under
section 5A are required to be filed. The notification under section
4 is required to be published in the Official Gazette and two daily
newspapers; out of that one newspaper shall be in the regional
G language, and public notice of such substance has to be given at
the convenient places in the locality. Within thirty days the
objections are to be filed under section 5A. Thus non-service of
individual notices on farmers would not vitiate the enquiry. [Para
41] [415-D-F]
I-I
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 281
4. It appears that the award has been passed without A
issuance of notices to holders on the pretext that it was not
possible to serve them due to prevailing situation. For
determination of compensation individual notices are required
to be issued. The service of personal notice is mandatory as
required under section 9(3) of the Act. Non-compliance of the
B
provision would render the award invalid requiring determination
of compensation afresh at the same time it would not have the
effect on the validity of the notification under section 4 and
declaration made under section 6 of the Act. The award cannot
be questioned in the writ jurisdiction and non-issuance of
individual notices under section 9 would not vitiate the notification c
issued under sections 4 and declaration made under section 6 of
the Act. However, the fact remains that proper procedure has
not been followed in the instant matter. The question of adequacy
of the compensation determined cannot vitiate the acquisition.
It was also not disputed that after the award was passed on merits,
D
further consent awards were passed in favour of certain persons
for which no authority or provision of law could be shown. Be
that as it may. It would have no impact on validity of notification
under section 4 or declaration made under section 6 of the Act.
Determination of proper compensation cannot be co-nsida-ed in
writ jurisdiction as any person aggrieved by inadequacy of E
compensation has the remedy to seek reference as provided in
section 18 of the Act. [Paras 43, 44) [415-G-H; 416-A-E)
5.1 After acquisition of the land by WBDIC it granted lease
to the Company and handed over possession. Ultimately, the
_Company could not start operations as is apparent from its letter F
dated 28.9.2010. They had removed their equipment and
machinery also. Though the project would have been beneficial,
however in the circumstances it has moved out as environment
could not be created for normal working of the plant as mentioned
in letter of the Company. The State Government has taken
possession of the land from the Company and the Company has G
abandoned its project in the State of West Bengal and has shifted
it to the State of Gujarat. Possession has been taken ten years
before from the landowners. In a case where there are no sale-
deeds, evidence forthcoming compensation is awarded to land-
owners on annualized yield of 10 years. [Paras 45, 46) [416-F-H] H
282 SUPREME COURT REPORTS f2016] l l S.C.R.
A S.2 In the facts of this case, it would be appropriate to
direct that land is given back to all land-owners since they have
been deprived of the usufruct of the land for a decade as such the
compensation paid to them shall not be recovered. They are
permitted to retain it or claim it in full and final settlement of
claim towards damages for deprivation of use of their land etc.
B
[Para 46) [417-A-B]
S.3 Due to violation of the provisions contained in section
SA of the Act, in the facts of the case to do complete justice
between the parties in exercise of power under Article 142 of
Constitution, the entire proceedings pertaining to land acquisition
c are quashed and case is not relegated in the instant case to the
stage of inquiry under section SA of the Act as ordinarily resorted
to, as the very purpose of acquisition has failed and directing an
inquiry afresh would be an exercise in futility. The land shall be
given back to the land owners and compensation if any paid to
D them shall not be recovered from them those who have not
collected it are free to collect the same in lieu of damages for
deprivation of possession for ten years. [Para 47] (417-C-D]
Special Land Acquisition Officer v. Virupax Shankar
Nadagouda (1996) 6 SCC 124 : 1996 (S) Suppl. SCR
E 2S; Collector, Land Acquisition v. Gana Ram Dhoba
(1996) 1 SCJ lS - relied on.
Per Court: The acquisition of land of the landowners/
cultivators in the instant case is declared as illegal and void. Since
the nature of the acquired lands has been changed in view of the
F acquisHion, the Survey Settlement Department of the State
Government of West Bengal is directed to conduct a survey and
identify the mouzas of lands acquired with reference to lay ·out
plans, other connected records, village maps and survey
settlement records of the lands in question within 10 weeks from
the date of receipt of the copy of this order, in order to. identify
_G the respective portions of land which needs to be returned to the
respective landowners/cultivators. Let possession of the lands
be restored to the landowners/cultivators within 12 weeks from
the date of receipt pf the copy of this judgment and order. The
compensation which has already been paid to the land owners/
H cultivators shall not be recovered by t!Je State Government as
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 283
they have been deprived of the occupation and enjoyment of their A
lands for the last ten years. The landowners/cultivators who have
not withdrawn the compensation are permitted to withdraw the
same which is in deposit either with the Land Acquisition
Collector or the Court. (417-F-H; 418-A-B)
Case Law Reference B
In the Judgment of V. Go~ala Gowda, J.
2007 (11) SCR 475 relied on Para 15
1997 (6) Suppl. SCR 143 referred to Para 16
1962 Suppl. SCR 149 relied on Para 16
c
1964 SCR 686 relied on Para 18
1996 (3) SCR 50 relied on Para 18
1985 (2) SCR 643 relied on Para 18
D
2011 (11) SCR 701 relied on Para 22
A.I.R. 1994 MP 74 referred to Para29
2010 Supp All. L.J. 1 referred to Para 29
(1961) 2 SCR 459 distinguished Para30
E
(1963) 2 SCR 774 distinguished Para30
1971 (3) SCR 871 distinguished Para 30
1975 (1) SCR 802 distinguished Para30
2011 (14) SCR 1113 relied on Para 31 F
2012 (12) SCR 1077 relied on Para32
2005 (2) Suppl. SCR 969 referred to Para36
2003 (1) Suppl. SCR 890 distinguished Para 37
2014 (11) SCR 765 referred to Para 42 G
2011 (14) SCR 1 referred to Para 43
1999 (3) SCR 1066 referred to Para43
19~Q (2) SCR 873 followed Para 48
2oi~ (5) SCR 645 referred to Para 56 H
284 SUPREME COURT REPORTS [2016] II S.C.R.
A 1974 (~) SCR 657 relied on Para 63
1964 SCR 733 followed Para 63
.1999 (1) SCR 1121 relied on Para 63
1975 n) SCR 597 followed Para 69
B 2009 (14) SCR 1111 relied on Para 70
In the Jndgment of Arun Mishra 2 J.
1963 SCR 774 relied on Para 7
c 1971 (3) SCR 871 relied on Para9
1977 (1) SCR 763 relied on Para 10
(1966) 3 SCR 885 relied on Para 11
2008 (13) SCR 126 relied on Paras12, 22
D
162 L.Ed 439 referred to Para 12
99 L.Ed 27 referred to Para 12
1955 SCR 867 referred to Para 13
2006 (8) Suppl. SCR 1076 referred to Para 13
E
1983 (1) SCR 922 relied on Para 13
2010 (11) SCR 356 relied on Para 14, 24
1961 SCR 459 referred to Para 14
F AIR (1960) SC 1203 relied on Para 16
1961 SCR 459 relied on Para 16
(1962) Supp. 2 SCR 149 relied on Para 16
(1963) 2 SCR 774 relied on Para Hi
G 1971 (3) SCR 871 relied on Para 16
(1975) 1 sec 824 relied on Para 16
1975 (1) SCR 802 relied on Para 16
(1978) 2 sec 373 relied on Para 16
H (1983) 4 sec 553 relied on Para 16
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 285
0?94) 4 sec 675 relied on Para 16. A
2005 (2) Suppl. SCR 969 relied on Para 16
1997 (6) Suppl. SCR 143 relied on Para 18
2003 (1) Suppl. SCR 890 relied on Para 20
2007 (11) SCR 475 referred to Para 21 B
2009 (4) SCR 83 relied on Para23
2009 (4) SCR 834 relied on Para24
1981 (2) SCR 1 relied on Para 28
. c
1989 (3) SCR 316 relied on Para28
1990 (3) SCR 352 reli~<Lon Para 28
19~9. (2) SCR 453 relied on Para 28
2004 (6) Suppl. SCR 1054 relied on ·Para 28
D
2011 (2) SCR 1 relied on Para28
20P. (9) SCR 290 relied on Para28
0?90) 4 sec 453 relied on Para 28
20t~ (6) SCR 747 relied on Para 28
E
1965 SCR908 relied on Para28
2011 (14) SCR 1113 relied on Para33
2012 (12) SCR 1077 ·relied on . Para 33
2013 (12) SCR 489 relied on Para35 F
20p (5) SCR 645 relied on Para 36
(2015) 3 sec 341 relied on Para 37
(2914) 3 sec 203 'relied on Para38
(2013) 11 sec 228 relied on Para39 G
1996 (S) Suppl. SCR 25 relied on Para 46 _
(1996) 1 SCJ 15 relied on Para 46
CIVIL APPELLATE JURISDICTION: c;vil Appeal No. 8438
of2016.
H
286 SUPREME COURT REPORTS r10161 11 S.C.R.
A From the Judgment and Order dated 18.01.2008 of the High Court
of Calcutta in Writ Petition no. 23836 of2006.
WITH
C. A. Nos. 8440, 8441, 8444, 8446, 8447, 8453 and 8449 of2016
B Rakesh Dwivedi, Kalyan Kumar Bandopadhyay, Colin Gonsalves,
K. Parasaran, Dr. A. M. Singhvi, Gopal Jain, Siddharth Mitra, Sr. Advs.,
Soumitra G. Chaudhuri, Abhrotosh Majumdar, Gaurav Ghosh, Parijat
Sinha, Santi Ranjan Das, Mrs. Sarla Chandra, Dr. M. P. Raju, James P.
Thomas, Ms. Mary Scaria, Ashwani Bhardwaj, Anip Sachthey, Mohit
Paul, Ms. Paroma.Banerjee, Ms. Jyoti Mendiratta, Prashant Bhushan,
c . \..
Pranav Sachdeva, 0. Kuttan, Dharam Bir Raj Vohra, Ms. Reshmi Rea
Sinha, Parijat Sinha, Joydeep Mazumdar, Avijit Bhattacharjee, Rauf
Rahim, R. N. Karanjawala, Ms. Nandini Gore,Abhishek Ray, Ms. Tahira
Karanjawala, Arjun Sharma, Ms. Devina Sehgal, Mrs. Manik
Karanjawala, Sidharth Sharma, Amit Bhandari, (For Karanjawala, &
D Co.), Sunil Kumar Verma,Abhijit Sengupta, Joydeep Mazumdar, Mrinal
Kanti Manda!, S. C. Ghosh, Soumik Ghosal, Advs. for the Appearing
parties.
The following Judgments and Order of the Court were delivered :
V. GOPALA GOWDA, J. 1. Delay condoned in SLP (C) CC
E No. 13645 of2008.
Leave granted in all the special leave petitions.
2. The present appeals arise out of the impugned final common
judgment and order dated 18.01.2008 in W.P. No. 23836 (W) of2006
and connecte(i petitions, passed by the High Court of Calcutta, wherein
F
the Writ Petitions filed challenging the proceedings of the acquisition of
land to an extent of about I 000 acres within the mouzas Gopalnagar, 0
Singherberi, Beraberi, Khaserberi and Bajemelia, P.S. Singur, District
_Hooghly were dismissed.
- -.
3: The relevant facts which are required for us to appreciate the
G rival° legal contentions advanced on behalf ofthe parties are stated in
brief as hereunder:
The State of West Bengal formulated an industrial policy to
establish automobile industries in the State to cater to the needs of the
people and to solve the problem of unemployment in the State. In
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 287
[V. GOPALA GOWDA, J.]
pursuance of the same, the respondent, Tata Motors Ltd. (hereinafter A
referred to as "TML"), entered into discussions with the State
Government of West Bengal regarding the infrastructural needs of the
project. In a letter dated 19.01.2006 addressed to then Principal Secretary
of the Commerce and Industries Department of the Government ofWest
Bengal, TML stated that a team had visited the State and met
B
representatives of the Government. It also thanked the Government for
the openness with which the discussions were held and the assurance of
its full support on the project, and summarized its requfrements for the
· same. The relevant portion of the proposal is extracted hereunder:
"
c
SI. Aspect I Requirement Remarks
No. Parameter .
I Land (including 1000 acres I) 75% for Tata Motors land
·vendor park) 25% for Vendor Park
2) Unconditional flexibility for D
allotment to vendors
3) Land title on out-right sale
basis, or long lease of99
years transfer of title after
the lease period, without
condition.
4) Land to be stabilised/graded E
and given, or the costto be
reduced from the land cdst.
L
2 Land for I) Schooling land to be
schooling and allotted free of cost or
township Government to promote
establishment of prominent
F
schools in proximity.
2) Land for township to be
given at 50% of rate applied
for factory Iand.
3 .Power (including IOOMVA Quality of power (50 Hz+/-
vendor park) 3%), availability from 2 G
sources, regulatory voltage
+/- 5%
4 Water (including 15000 Cllm Potable water as per ln\lian
vendor park) · Standards (IS-10500)
~
H
288 SUPREME COURT REPORTS f2016l II S.C.R.
A 5 6 lane road Approach road to be
around tl1e available within 3 months
boundary of from the date of land
the plant, and allonnent.
4- lane
approach road
to the site
B .
B Commercial
I Land Cost Rs. 2 lakh per acre. Land
cost to be paid after 5 years
at the rate ofO.I % interest
p.a.
"
c
4. The then Principal Secretary to the Government of West Bengal,
Commerce & Industries Department, sent the letter dated 24.01.2006,
annexing the proposal which TML had sent, to the then Principal Secretary
Land and Land Reforms Department, Shri Sukumar Das to communicate
D his views to the Commerce and Industries Department. A letter was
also sent on the same day to the then Principal Secretary, Finance
Department seeking his view on the matter. Further, the 'Record Note
of Discussion held between TML and a team from the Government of
West Bengal and West Bengal Industrial Development Corporation
E (hereinafter referred to as the "WBIDC") produced on record, shows
that a team from TML met representatives of the Government of West
Bengal and WBIDC on 08.03.2006 in Kolkata and on I 7.03.2006 in
M_umbai. The relevant portion of the record note reads as under:
"TML has ·shown interest in setting up a "Special Category
F Project" in West Bengal for manufacture of its new car for a
volume of 2, 50,000 per year on maturity. The West Bengal
Government is a!s'o keen to attract a "Special Category Project"
in line with their Industrial Policy Document."
The record note also states that the project was looking at a direct
G investment worth Rs.650 crores in the plant and machinery and the IT
infrastructure by TML, a direct investment by the company in factory
building including utilities such as roads, water line, sewage line, power
lines drainage and effluent treatment plants etc. to the tune of Rs. 176
crores, a direct investment by TML in a township of approximately 2000
dwelling units ofan average area of I 000/- sq. ft. per dwelling unit with
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 289
[V. GOPALAGOWDA, J.]
complete municipal facilities such as roads, power line, water line, A
drainage, parks and other municipal facilities at Rs. 150 crores. The
record note further mentions an indirect investment by vendors in the
vendor park in plant and machinery valued at Rs. 200 crores and a
further indirect investment by vendors in factory building including facilities
such as roads, power line, water line, drainage, sewage and other
B
municipal facilities amounting to Rs. 90 crores. The employment potential
of this project was assessed at 1,800 employees in direct employment
by TML and a futiher 4,700 employees through vendors and service
providers.
The estimated project requirement of land, is extracted as under:
c
"Land
TML factory - 400 acres
Vendor park - 200 acres
Township - I 00 acres"
D
5. At this stage, it is also important to consider the incentive
package offered by the State Government to TML. The relevant portion
is extracted as under:
"The West Bengal government has offered to TML an incentive
package equal to some of the best being offered in some States. E
The two teams have worked out the following package which
may vary downwards or upwards based on the volumes of sales
in West Bengal:
1. The State Government will develop the land admeasuring
approx. 600 acres and lease it to TML for its own factories as F
well as for sub-leasing to the vendors for vendor park needed
for the project. The entire land will be leased to TML for 30
years at an annual lease rental of Rs. I 0 lakhs. This lease can
be renewed for further blocks Of 30 years at a negotiated
lease rental anhe option ofTML. On each renewal, the lease G
rental would not be increased by more than 5 times of the
lease rental existing on the date of renewal.
2. The State Government would develop the land and construct
the factory building including the facilities such as roads, power
line, water line, drainage, sewage, effluent treatment plant, H
290 SUPREME COURT REPORTS (2016] 11 S.C.R.
A other utilities e.g. Air compressors, standby generators and
I PG storage yard, etc. and lease it to the TML at an annual
1.'!ase rental of Rs. 90 lakhs per annum for 30 years renewable
at the option ofTML for further blocks of30 years. At each
renewal the. lease rental will be negotiated. However, the
increase in rental will not be more than 500% at any renewal
B
compared tu the rental existing on the date of renewal.
3. The State Government will construct an integrated township
of approximately 2000 dwelling units of an average area of
I 000 sq. ft. per dwelling unit, including the facilities such as
roads, power line, water line, drafriage, sewage, effluent
c treatment plants, parks, schools, training institutes, shopping
complex, etc. and lease it to TML on lease for 30 years on
annual lease rental of Rs. 25 lakhs. This lease can be renewed
in future at the option ofTML for further blocks of30 years
and the increase in lease rental at each renewal would not be
D more than 5 times the lease rental existing on the date of
renewal.
The township is estimated to cost Rs. 150 crores."
6. The Principal Secretary, Commerce and Industries Department
of the Government of West Bengal sent a letter dated 23.03.2006 to the
E Deputy General Manager, Government Affairs and Collaborations of
TML with reference to the letter dated 19.01.2006 and the record notes
of the subsequent discussions between the Government ofWest Bengal
and TML on the subject signed on 17 .03 .2006, approving the proposal as
under:
F " .... from TML to set up a plant on 600 acres of land near
Kharagpur to manufacture a new car addressing the lower end
of the market, with annual capacity of 2,50,000 units on
maturity ...... the targeted date of commencement of commercial
production being the year 2008."
G By way of letter dated 29.03.2006, the then Chief Minister of
West Bengal wrote to the then Chairman ofTML regarding the project.
There was some discussion regarding the location of the plant, the relevant
portion of which is extracted from the file as under:
"During our discussion today, you had mentioned the allocation
H close to Kolkata may be considered. As you are undoubtedly
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 291
[V. GOPALA GOWDA, J.]
aware, land around Kolkata is difficult to come by and the cost A
of such land is also very high. Also, land has. to be suitable for
industry. We had to keep these aspects in view while selecting a
1.:>cation for the TML plant.
We had at first proposed location of this project at Guptamoni,
which is about 25km west of Kharagpur towards Jamshedpur B
on National Highway 6. Thereafter, based on the suggestion given
by Shri Ravi Kant during his meeting with Shri Nirupam Sen, we
have now selected a site right next to Kharagpur town, on National
Highway 6 ...... The distance to Kharagur from Kolkata can now
be covered in approximately 90 minutes. Haldia Port is at a
distance of 100 kms. from this location, while J amshedpur is about
c
2 hours away. ''-
We now await a visit from Shri Ravi Kant for his approval of the
proposed location. I can assure you that this is one of the best D
locations in-West Bengal for locatii:Jg your plant. I look forward
to the final approval from the Board of Directors ofTML so that
we can immediately start taking all the necessary steps."
· (emphasis laid by this Court)
7. TML subsequently informed the representatives of the State E
Government of West Bengal that they would like to.be sh()~n the site at
Singur again for their technical team to reconfirm the suitability of the
site. Consequently the said site was again shown to the representatives
ofTML on 05.05.2006. They confirmed-that this is the site which would
be ideally suited for the proposed small car project. The total land area · F
was 1053 acres for the small car project and 200 acres in Telipukur
mouza for the township. The Draft Note for Cabinet Memo mentions
the mouzas for which the WBIDC had proposed for acquisition of land
as well.
The Principal Secretary, Commerce and Industries Department
G
drafted the Cabinet Memo No. 2995/PrS/C&l dated 30.05.2006 titled
as under:c
"Proposal for acquisition ofland measuring I 053 acres for small
car project of Tata Motors at Singur; Hooghly and 200 acres in
Telipukur in Singur P.S. District-Hoogly for Housing and related
H
292 SUPREME COURT REPORTS [2016] 1I S.C.R.
A amenities to be developed by Tata Housing Development Co.
Ltd."
The Cabinet Memo mentions the investment in the project and the shift
in the proposed site as well. The relevant portion is extracted hereunder:
" .... The Tata Motors Co. Ltd. (TML:) have decided to set up
B their Small Car Projec, in West Bengal. For this purpose for the
last several months, they have scouted for various sites around
Kolkata and have finally chosen a site in Singur P.S. in the Hooghly
district due to its locational advantage. The site chosen will also
cater to the requirement of the vendors of the Company who
c will be located in the Vendors' Park within the Tata Motors
Factory site. The total investment including that by vendors is
expected to be about Rs. 1000 crores. The plant will generate
substantial direct and indirect employment, and will also create a
number of ancillary units, which also generate local employment.
D 1. The State Government had initially proposed location of this
plant in Kharagpur. TML have informed that this will be flagship
project, providing very high visibility to West Bengal as an
investment destination. They also need very good connectivity
. and proximity to airport, as well as quality urban and physical
infrastructure.
E
Taking all these factors into account, TML, after seeing a number
of sites in Howrah, Hooghly, Paschim Medinipur and Purba
Medinipur, finally selected a site in Singur Block.
2. West Bengal Industrial Development Corporation Ltd.
F (WBJDC) now proposes to acquired 1053 acres of land for the
said Small Car Project of Tata Motors Co. Ltd. in following
mouzas under Singur P.S. in Hooghly district:
Mouza J. L. No
Gopal Nagar 13
G Singherberi IO
Beraberi 05
Khaserberi lI
Bajemelia. 12
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 293
[V. GOPALA GOWDA, J.]
. 3. The Tata Housing Company Ltd. has proposed to set up A
housing and related infrastructure at Telipukur under Singur P.S.
in Hooghly district comprising of200 acres to cater to the Housing
and Social infrastructure requirements of the proposed Small
Car Project of the Tata Motors Co. Ltd. at Singur, which is not
far away from the proposed project site. WBIDC, therefore,
B
proposes to acquire 200 acres of land at Telipukur, Singur P.S. in
Hooghly district for the purpose.
4. The identification oflands involved in this acquisition proposal
has been made in such a manner that existing settlements/
habitations are avoided. Where isolated homesteads are involved,
suitable rehabilitation in the form of providing land/house will be c
taken up.
Detailed land survey and plot identification will be carried out
after Cabinet accords approval to the proposal. Efforts will also
be made to avoid/minimize intensively cropped lands.
This has the approval of the Chief Minister. D
Cabinet may kindly approve the proposed acquisition of 1253
(1053+200) acres of land as proposed at para 3 and 4 above."
(emphasis laid by this Court)
8. Pursuant to the approval of the said decision of the Cabinet by
the Chief Minister dated 05 .06.2006, the notification under Section 4 (I) E
of the Land Acquisition Act, 1894 (hereinafter referred to as the "L.A.
Act") was published in the Calcutta Gazette Extraordinary dated
21.07.2006, the relevant portion of which reads as under:
"Whereas, it appears to the Governor that land as mentioned in
schedule below is likely to be needed to be taken by Government/ F
Government Undertaking/Development Authorities, at the public
expense for a public purpose, viz., employment generation and
socio economic development of the area by setting up TATA
Small Car Project in the Mouza Beraberi, jurisdiction list No. 5,
P.S. Singur, District Hooghly; it is hereby notified that for the G
above purpose an area ofland comprising RS/LR plots as detailed ·
below and measuring more or Jess, 72.03 acres, as specified
below within the aforesaid Mouza ...... "
(emphasis laid by this Court)
H
. ,.
294 SUPREME COURT REPORTS [2016] I I S.C.R.
A A perusal of the said notification makes it clear that it does not
specifically mention that the land in question is being acquired in favour
ofWBIDC. It merely states.that the land in question might be needed
for Government I Government Undertaking/Development Authorities.
Proposal numbers 3 and 4 of Cabinet Memo, referred to supra, approved
'by the Chief Minister make it clear that acquisition ofland comprising of
B
I 053 acres is needed for the Small Car Project ofTML and 200 acres of
land is needed to cater to the housing and social infrastructure needs of
the project.
9. Section 4 of the L.A. Act reads as under:
c " (!) Whenever it appears to the appropriate Government the
land in any locality is needed or is likely to be needed for any
public purpose or for a company, a notification to that ef(ect
shall be published in the Official Gazette [and in two daily
newspapers circulating in that locality of which at least one shall
be in the regional language], and the Collector shall cause public
D notice of the substance of such notification to be given at
convenient places in the said focalitythe last of the dates of such
publication and the giving of such public notice, being hereinafter
referred to as the date of the publication of the notification."
I 0. The Act, under the provision of Section 5-A further provides
E that after the notificatiqn, the objections, if any, may be submitted in
writing to the Collector. The Collector, afterthe receipt of such objections,
needs to give an opportunity of being heard to the person so objecting.
The Collector is then required to conduct an inquiry and submit a report
in that respect to the State Government for its consideration. In the
F instant case, five objection petitions were received from the land owners/
cultivators within 30 days after publication of notific.ation under Section
4 ofthe L.A. Act. One objector applied for exemption of his land from
acquisition as he intended to set up a petrol pump from it. Another applied
for exemption of the land from acquisition on the ground that they are
running a number of agro-based industries like cold storage, factory and
G fisheries covering a large area of land providing employment to a
considerable number of persons. The Land Acquisition Collector
submitted the report dated 31.08.2006 to the State Government. In the
report, the Land Acquisition Collector concluded that WBIDC intends
to acquire the land for generating employment and for socio-economic
H development of the area by setting up a factory for the 'Small Car Project'
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 295
[V. GOPALA GOWDA, J.]
of TML at Singur. Being such a large scale project, it was bound to A
create immense job opportunities for the local youth, both directly and
indirectly. The Land Acquisition Collector, thus, concluded that the
acquisition of the land in question was indeed for public purpose. As far
as certain other objectors were concerned, the Land Acquisition Collector
observed that the objectors did not appear before him to justify their
B
objections to the proposed acquisition oflands, despite the factum of
hearing before the Land Acquisition Collector being widely advertised,
including by way of announcement in two local daily newspapers. The
Land Acquisition Collector concluded that it appears that the objectors
are no more interested to proceed further in the proceedings with their
objections. Therefore, he concluded that those objections may be ignored c
in the greater interest of the public and the State and submitted his reports
to the State Government dated 29.08.2006. Pursuant to the report of the
Land Acquisition Collector, the State Government issued notification under
Section 6 of the L.A. Act published in the official gazette dated
30.08.2006, the relevant portion of which reads as under:
D
"Whereas the appropriate Government is satisfied, after
considering the report sent by the CoJlector u/s 5-A (2), the land
mentioned in the schedule given below is needed by the State
Government I Government Undertaking I Development
Authorities, at the public expense for a public puri)ose, viz.,
employment generation and socio economic development of the E
area by setting up of TATA Small Car Project ......... "
11. The Land Acquisition Collector subsequently made award of
compensation on 25.09.2006. WBIDC then took possession of the land
in question, the extent of which was 997 acres. By its letter dated
20.12.2006, WBIDC asked TML to take "permissive possession of950 F
acres of land pending finalization of the lease.deed and lease terms and
conditions." The formal lease deed was executed on 15.03.2007.
Subseque'ntly, the acquisition proceedings were challenged before the
High Court of Calcutta by way of Writ Petitions. By common judgment
and order dated 18.01.2008, a Division Bench of the Calcutta High Court, G
dismissed the Writ Petitions, and upheld the acquisition ofland, holding
the same to be in the interest of the public and for public purpose. The
same was chaJlenged by way of Special Leave Petition before this Court
being SLP (Civil) No. 8463 of2008 and other connected SLPs as clearly
mentioned in the cause title of this judgment.
H
296 SUPREME COURT REPORTS [2016] 11 S.C.R.
A 12. Even as the above said cases were pending before this Court,
the State Government of West Bengal and TML went ahead with the
development of the land and setting up of the factory for the' Small Car~
Project'. It was, however, at around that time that the local population
started protesting against the acquisition of the land and setting up of the
factory. Numerous incidents of blockade, protests and violence were
B
reported in the print and electronic media. By letter dated I 0.11.2008
addressed to the Director General of Police, West Bengal, TML informed
that it is suspending operations as the circumstances were no longer
conducive for them to work in a peaceful manner. TML started removing
the equipments, machines and other materials from the site from
c I 0.11.2008 onwards. The said plant was then relocated to the State of
Gujarat. The new Government of West Bengal enacted a legislation on
20.06.2011 titled the 'Singur Land Rehabilitation and Development Act,
2011' (hereinafter referred to as the "Singur Act, 2011 ")for taking over
the land covered by the lease granted in favour ofTML. TML challenged
the constitutional validity of the said Act by way of Writ Petition before
D
a single Judge of the Calcutta High Court. By judgment ai'rl order dated
28.09.2011 the learned single Judge upheld the validity of the said Act.
The correctness of the said decision was challenged by way of appeals
before a Division Bench of the High Court. By its common judgment
and order dated 22.06.2012, the Division Bench allowed the appeals and
E struck down Sections 2, 4(3), 5 and 6 of the Singur Act, 2011 as
unconstitutional as they were in direct conflict with the provisions of the
L.A. Act and hence, repugnant to the said Act. It was further held that
the entire Singur Act, 2011 itself is void and unconstitutional as the same
had not received assent from the President oflndia. Hence, the present
appeals.
F
13. By way oforder dated 11.05.2016, this Court has de-tagged
the appeals arising out of SLP (C) No. 23843 of 2012, SLP (C) No.
24269 of 2012 and SLP (C) No. 1881-1911 of 2013, as they deal with
the constitutional validity of the Singur Act, 2011. The scope of the present
appeals is only restricted to deciding the validity of the acquisition of
G land and the compensation awarded thereafter in favour of the land
losers.
14. Mr. Colin Gonsalves, the learned senior counsel appearing on
behalf of the appellant in the appeal arising out ofSLP (C) No. 12724 of
2008 submits that admittedly, TML approached WBIDC to develop a
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 297
[V. GOPALA GOWDA, J.]
small car manufacturing unit within the State of West Bengal. The learned A
senior counsel further contends that a perusal of the documents on record,
being the Cabinet Memo as well as the letters exchanged between TML
and the West Bengal State Government would clearly show that the site
of the project was chosen jointly by the State Government and TML as
the best possible site for the project which was to be implemented by
B
establishing the factory in consultation with each other. The land it;i
question was acquired by WBIDC at the behest of TML. The learned
senior counsel contends that such an acquisition would be hit by the
provisions of Part VII of the L.A. Act, the heading of which is "Acquisition
of land for companies". lt is submitted that the provisions of the said
part were not followed in the instant case, though the same are mandatory c
in nature. The learned senior counsel draws our attention to Section 39
of the L.A. Act which reads as under:
"39.Previous consent of appropriate Government and
execution of agreement necessary:- The provisions of section
6 to 37 (both inclusive) shall not be put in force in order to acquire D
land for any Company, unless with the previous consent of the
appropriate Government, nor unless the Company shall have
executed the agreement hereinafter mentioned"
It is contended that the Agreement in terms of Section 39 of the L.A.
Act has not been published in the official gazette. · · E
15. The learned senior counsel places reliance on the decision of
this Court in the case of Devender Pal Singh v. State of Punjab 1,
wherein this Court has held as under:
1'16. When a request is made by any wing of the State or a
Government company for acquisition ofland for a public purpose, F
different procedures ·are adopted. Where, however, an application
is filed for acquisition ofland at the instance ofa "company", the
procedures to be adopted therefore 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 with such a requisition, is a G
relevant factor. The action of the State provides for an important
condition to consider as to whether the purpose where for a
company requests it for acquisition of land is a public purpose
and/or which could be made at public expenses either as a whole
1
(2008) 1 sec ns H
298 SUPREME COURT REPORTS f2016] J 1 S.C.R.
A or in part, evidently provisions laid down in Part II shall be
resorted to. On the other hand, ifthe State forms an opinion that
the acquisition of land at the instance of the company may not
be for public purpose or, therefore the expenses to be incurred
therefore either in whole or in part shall not be borne by the
State, the procedures laid down in Part VII thereof have to be
B
resorted to. The procedures laid down under Part VII of the Act
are exhaustive. Rules have been framed prescribing the mode
and manner in which the State vis-a-vis the company should
proceed. It provides for previous consent of the Appropriate
Government, execution of the agreement, previous inquiry before
c a consent is accorded, publication of the agreement, restriction
on transfer, etc. It also provides for statutory injunction that no
land shall be acquired except f~r the purpose contained in Clause
(a) of Sub-section (I) Section 40 of the Act for a private company-
which is not a Government company. For the purpose of Section
44B of the Act, no distinction is made between a private company
D
and a public limited company."
The learned senior counsel contends that the abovementioned case makes
it clear that land can be acquired either for a company, or for a public
purpose, but not for both.
E 16. The learned senior counsel further places reliance on the
decision of this Court in the case of Amarnath Ashram v. Governor of
U.P. & Ors. 1, wherein this Court held as under:
"Admittedly, in the present case the entire cost of acquisition is
to be borne by the appellant society and, therefore, it is an
F acquisition for a company and not for a public purpose. That is
also borne out by the notification issued Under Section 6 of the
Act which states "that the land mentioned in the schedule below
is needed for the construction of play-ground for students of
Amar Nath Vidya Ashram (public school). Mathura in district
Mathura by the Amar Nath Ashram Trust, Mathura". Therefore,
G simply because in the notification issued Under Section 4 of the
Act it was stated that the land was needed for a public purpose,
namely, for a play- ground for students of Amar Nath Vidya
Ashram (public school), Mathura, it cannot be said that the
acquisition is for a public purpose a11d not under Chapter VII for
H ' (1998) 1 sec 591 -
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 299
[V. GOPALA GOWDA, J.]
the appellant-society in view of subsequent events and the A
declaration made Under Section 6. The learned counsel for the-
State also relied upon the decision of this Court in Srinivasa
Cooperative House Building Society Ltd. v. Madam Gurumurthy
Sastry, , wherein this Court has held that though there is "no
provision in the Act to say that when a land is required for a
B
company, it may also be for a public purpose. However, even
the acquisition for a company, unless utilisation of the land so
acquired is integrally connected with public use, resort to the
compulsory acquisition under Chapter VII cannot be had''. It
was submitted on the basis of this observation that even in case
of an acquisition for a company an element of public purpose c
has to be there and if for that reason it was believed by the
Government that it was necessary for it to make substantiaf
contribution from public revenue so as to avoid the charge of
~olourable exercise of powers, the decision of the Government
to withdraw from the acquisition cannot be said to be arbitrary
D
.~ or illegal. The aforesaid observatfon was made by this Court in
the context of requirement of Section 40 of the Act and they
cannot be construed to mean that no land cannot be acquired by
the State Government without making substantial contribution
towards the cost of acquisition. We cannot read something more
in the said observation than what they were intended to convey. E
The provisions of part VII and particularly the provisions regarding
payment of the entire costs of the acquisition would otherwise
become redundant."
Further reliance has been placed by him on the case of R.L. Arora',
wherein this Court held as under: F
"Therefore, though the words "public purpose" in Sections 4
and 6 have the same meaning, they have to be read in the restricted
sense in accordance with s. 40 when the acquisition is for a
company under s. 6. In one case, the notification under s. 6 will
say that the acquisition is for a public purpose, in the other case G
the notification will say that it is for a company. The proviso to s.
is
6( 1) shows that where the acquisition for a public purpose, the
compensation has to be paid wholly or partly out of public
revenues or some fund controlled or managed by a local authority.
3
AIR 1962 SC 764' H ·
300 SUPREME COURT REPORTS [2016) 11 S.C.R.
A Where however the acquisition is either for a company, the
compensation would be paid wholly by the company. Though
therefore this distinction is there where the acquisition is either
for a public purpose or for a company, there is not a complete
dichotomy between acquisitions forthe two purposes and it cannot
be maintained that where the acquisition is primarily for a company
B
it must always be preceded by action under Part VII and
compensation must always be paid wholly by the company. A
third class of cases is possible where the acquisition may be
primarily for a company but it may also be at the same time for
a pub! ic purpose and the whole or part of compensation may be
c paid out of public revenues or some fund controlled or managed
by a local authority. In such a case though the acquisition may
look as if it is primarily for a company it will be covered by that
part ofs. 6 which lays down that acquisition may be made for a
public purpose ifthe whole or part of the compensation is to be
paid out of the public revenues or some fund controlled or
D
managed by a local authority."
The learned senior counsel contends that the mere mention of public
purpose in the notifications, does not in fact make the acquisition one for
a public purpose, when the acquisition of lands was made in favour of
TML. To make the acquisition one for public purpose, it must be directly
E useful to the public, and the benefit must not be merely incidental in
nature. The learned senior counsel places reliance on the Statement of
Objects and Reasons of the Amendment Act 68 of·l 984 to the L.A. Act,
which states thus:
"With the enormous expansion of the State's role in promoting
F public welfare and economic development since independence,
acquisition ofland for public purposes, industrialisation, building
of institutions, etc., has become far more numerous than ever
before. While this is inevitable, promotion of public purpose has
to be balanced with the rights of the individual whose land is
G acquired, thereby often depriving him of his means oflivelihood.
Again, acquisition of land for private enterprises ought not to be
placed on the same footing as acquisition for the State or for an
enterprise under it. The indiv,idual and institutlons who are
unavoidably to be deprived of their property rights in land need
to be adequately compensated for the loss keeping in view the
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 301
[V. GOPALA GOWDA, J.]
sacrifice they have to make for the larger interest of the A
community. The pendency of acquisition proceedings for long
periods often causes hardship to the affected parties and renders
unrealistic the scale of compensation offered to them.
2. It is necessary, therefore, to restructure the legislative"
framework for acquisition of land so that it is more adequately B
inforriled by this objective of serving the interests of community
in harmony with the rights of the individual. Keeping the above
objects in view and considering the recommendations of the Law
Commission, the Land Acquisition Review Committee as well
as the State Governments, institutions and individuals, proposals
for amendment to the Land Acquisition Act, 1894, were
c
formulated and a Bill for this purpose was introduced in the Lok
Sabha <;in the 30th April, 1982. The same has not been passed by
either House of Parliament. Since the introduction of the Bill,
various other proposals for amendment of the Act have been
received and they have also been considered in consultation with D
State Governments and other agencies. It is now proposed to
include all these proposals in a fresh Bill after withdrawing the
pending Bill. The m~in proposals for amendment are as fgllows:-
i) The definition of public purpose as contained in the Act is
proposed to be amended so as to idclude a longer illustrative list E
retaining, at the same time, the inclusive character of the
· definition.
(ii) Acquisition of land for non- Government companies under
the Act will hence forth be made in pursuance of Part VII of the
Act in all cases." F
(emphasis laid by this Court)
17. Mr. Kalyan Banerjee, the learned senior counsel appearing
on behalf of the some of the appellants, who are cultivators, in the appeal
arising out of SLP (C) No. 11830 of 2008 and SLP (C) No. 11783 of
2008 contends that the acquisition of lands in the instant case was not G
for a public purpose, but fora company, (TML) under the guise of public
purpose. The lands were acquired by WBIDC at the specific instance
of TML, as becomes clear from a perusal of the notifications issued
under Sections 4 and 6 of the L.A. Act, the relevant !'Ortions of which
have been extracted supra.
H
302 SUPREME COURT REPORTS r20l 6l l l S.C.R.
A 18. The learned senior counsel further draws our attention to
Section 6 of the L.A. Act, which reads as under:
"6. Declaration that land is required for a
public purpose. - ( 1) Subject to the provision of Part VII of this
Act, [appropriate Government] is satisfied, after considering the
B- report, if any, made under section SA, sub-section (2)], that any
particular land is neeaed for a public purpose, or for a Company,
a declaration shall be made to that effect under the signature of
a Secretary to such Government or of some officer duly
authorized to certify its orders [and different declarations may
be made from time to time in respect of different parcels of any
c land covered by the same notification under section 4, sub-section
(I) irrespective of whether one report or different reports has or
have been made (wherever required) under section SA, sub-
section (2)];
D · Provided further that no such declaration shall be made unless
the compensation to be awarded for such property is to be paid
by a Company, wholly or partly out of pub Iic revenues or some
fuhd controlled or managed by a local authority.
Explanation 2. - Where the compensation to be awarded for
E such property is to be paid out of the funds of a corporation
owned or controlled by the State, such compensation shall be
deemed to be compensation paid out of public revenues."
The learned senior c'ounsel contends tliat as per Section 6 of the L.A.
Act, the deposit of money is the deposit of public revenue is to be examined
F in the light ofExplanation-2. Explanation-2 to Section 6, which has been
added by way of the Land Acquisition (Amendment) Act 68 of 1984
provides that no declaration under Section 6 shall be made unless the
compensation to be awarded for the lands in question is paid by a
Company, wholly or partly out of public revenues or some fund controlled
G or managed by a· local authority. The learned senior counsel further
contends that WBIDC cannot be said to be 'local authority'. A local
authority must have representative character. This means that it must
comprise of elected members and must be under the control of the
Government with the control and management of a municipal or local
fund. This aspect of the matter has been considered by this Court in a
H number of cases wherein it was held that a statutory corporation or a
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 303
[V. GOPALA GOWDA, J.]
company formed by a State Government or Central Government cannot A
be construed as a local authority. The learned senior counsel places
reliance on the Constitution Bench decision of this Court in the case of
Va(iibltai Muljibltai Sonejiv. State ofBombay & Ors4, wherein onthe
question of whether or not the State Road Transport Corporation was a
local authority for the purpose of the L.A. Act, it was held as under:
B
"The expression "local authority" is not defined in the Land
Acquisition Act but is defined in s. 3(3 1) of the General Clauses
Act, 1897, as follows:
'"local authority' shall mean a municipal committee, district board,
body of port commissioners or other authority legally entitled to,
or entrusted by the Government with, the control or management
c
of a municipal or local fund:"
The definitions given in the General Clauses Act, 1897, govern
all Central Acts and Regulations made after the commencement
of the Act. No doubt, this Act was enacted later in point of time
than the Land Acquisition Act; but this Act was a consolidating D
and amending Act and a definition given therein of the expression
"local authority" is the same as that contained in the earlier Acts
of 1868 and 1887. The definition given ins.. 3(31) will, therefore,
hold good for construing the expression "local authority" occurring
in the Land Acquisition Act. We have already quoted the E
definition. It will be clear from the definition that unless it is
shown that the State Transport Corporation is an 'authority' and
is legally entitled to or entrus~ed by the Government with control
or management of a local fund it cannot be regarded as a local
authority. No material has been placed before us from which it
could be deduced that the fonds of the Corporation can be _ F
regarded as local funds."
The learned senior counsel further places reliance on the decision of this
Court in the case of Calcutta State Road Transport Corporation v.
Commissioner of Income Tax, West Bengal-', wherein it was held as
under: G
"The expression "local authority" is not defined in the Income
Tax Act. Its definition is, however, contained in the General
Clauses Act in Clause (31-) of Section 3. It reads :
'AIR 1963 SC 1890
' (1996) 8 sec 758 H
304 SUPREME COURT REPORTS r10161 11 S.C.R.
A 'Local authority' shall mean a municipal committee, district board,
body of port commissioners or other authority legally entitled to,
or entrusted by the Goveniment with, the control or management
of a municipal or local fund.
The contention of Sri Ray is tha~ inasmuch as the assessee is
B entrusted by the Government with the control or management of
a "local fond", it is a local authority within the meaning of the
said definition. Sri Ray placed strong reliance upon the judgement
of this Court in Union of India and Ors. v. Shri R.C. Jain and
Ors. The question in the said decision was whether the Delhi
Development Authority (D.D.A.) constituted under the Delhi
c Development Act, 1957 is a "local autliority". The question had
arisen under the provisions of the Payment of Bonus Act.
Chinnappa Reddy, J., speaking for the Bench, laid down the
following test for determining whether a particular body is a "local
authority" within the meaning of Section 3(31) of the General
D Clauses Act: "An authority, in order to be a local authority, must
be oflike nature and character as a Municipal Committee, District .
Board or Body of Port Commissioners. possessing. therefore,
many. ifnot all. of the distinctive attributes and characteristics of
a Municipal Committee, District Board or Body of Port
Commissioners, but possessing one essential feature, viz.. that it
E is legally entitled to or entrusted by the government with, the
control and management of a municipal or local fund." The
learned Judge elaborated the said test saying that to be
characterised as a "local authority", the authority must have
separate legal existence as a corporate body. it must not be a
F mere government agency but must be legally independent entity,
it must function in a defined area and must ordinarily, wholly.or
partly, directly or indirectly, be elected by the inhabitants of the
area. It must also enjoy a certain degree of autonomy either
complete or partial, must be entrusted by statute with such
government functions and duties as are usually entrusted to
G
Municipal Bodies such as those connected with providing
amenities to the inhabitants of the locality like health and
education, water and sewerage, town planning and development.,
roads, markets, transportation, social welfare services etc. Finally
it was observed-such body must have the power to raise funds
H for furtherance of its activities and fulfillment of its objects by
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 305
[V. GOPALA GOWDA, J.]
levying taxes, rates, charges or fees." A
(emphasis laid by this Court)
The learned senior counsel fmther places reliance on the decision of this
Court in the case of S. Su11daram Pillai & Ors. v. R. Pattabiranum &
Ors. 6 to contend that explanation cannot extend the scope of the proviso.
B
It was held by this Court as under:
"42. In Hiralal Rattanlal etc. v. State of U :P. and Anr. etc. this
Court made the following observations:
Ordinarily, a proviso to a section is intended to take out a part of
the main section for special treatment. It is not expected to enlarge
the scope of the main section. But cases have arisen in which c
·this Court has held that despite the fact that a provision is called
proviso, it is really a separate provision and the so-called proviso
has substantially altered the main section.
43. We need not multiply authorjties after authorities on this point
because the legal position seems to be clearly and manifestly D
well established. To sum up, a proviso may serve four different
purposes:
1) qualifying or excepting certain provisions from the main
enactment;
2) it may entirely change the very concept of the intendment of E
the enactment by insisting on certain mandatory conditions to be
fulfilled in order to make the enactment workable;
3) it may be so embedded in the Act itself as to become an
integral part of the enactment and thus acquire the tenor and
colour of the substantive enactment itself; and
4) it may be used merely to act as an optional addenda to the F
enactment with the sole object of explaining the real intendment
of the statutory provision.
44. These seem to be by and large the main purport and
parameters of a proviso."
19. The learned senior counsel contends that explanation is only G
relatable to the main provision and not the proviso. The learned senior
counsel thus, reiterates that even where the acquisition of land is for a
corporation, provisions of Part Vil of the L.A. Act must be complied
with.
' l 1985) 1 sec 591 H
306 SUPREME COURT REPORTS [2016] II S.C.R.
A 20. Mr. Prashant Bhushan, the learned counsel appearing on behalf
of the appellant -Association of Democratic Rights in the appeal arising
out of SLP(CJ No. CC 13645 of 2008 submits that acquisition for a
public purpose is made under Part 11 of the L.A. Act, whereas acquisition
for a company is made under Part VII of the L.A. Act. The procedure
under Part VII of the L.A. Act is mandatory and strict compliance of
B
the same is required for th0 state to exercise its power of eminent domain
to acquire the lands in favour of a Company. It is submitted that in ~he
instant case, the lands were acquired for a particular company, TML, at
the in stance of the said company and the exact location and site of the
land was also identified by the said company. Even the notifications
c issued under Sections 4 and 6 of the L.A. Act clearly state that the land
was being acquired for the Tata Motor's 'Small Car Project'.
21. The learned counsel draws our attention to Rule 4 of the Land
Acquisition (Companies) Rules, 1963 framed under Section 55 of the
L.A. Act of which reads as under:
D "A,ppropriate Government to be satisfied with regard to
certain matters before initiating acquisition proceedings-
(!) Whenevera company makes in application to the appropriate
Government for acquisition of any land, that Government shall
direct the Collector to submit a report to it on the following matters
namely:-
E
(i) that the company has made its best endeavour to find out
lands in the locality suitable for the purpose of acquisition.
(ii) that the company has made all reasonable efforts to get such
lands by negotiation with the person interested therein on payment
ofreasonable price and such efforts have failed,
F
(iii) that the land proposed to be acquired is suitable for the
purpose;
(iv) that the area ofland proposed to be acquired is not excessive;
(v) that the company is in a position to utilize the land
expeditiously ; and
G
(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 ..................... "
It is submitted that Rule 4 is mandatory in nature and that unless the
directions enjoined by Rul.e 4 are complied with, the notification under
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 307
[V.-GOPALA GOWDA, J.]
Section 6 of the L.A. Act will be invalid. The learned counsel submits A
that the aforesaid Rule came up for the consideration before this Court
in the case of Devender Singh (supra), wherein it was held as under:
"44. Another question which arises for our consideration is as to
whether Rule 4 of the Companies Rules is mandatory or directory
in nature. The High Court held it to be directory. B
4S. Rule 4 of the Rules employs the word "shall" not once place
but twice. Ordinarily, it is imperative in character. No reason has
been shown before us as to why it should be held to be directory
provision particularly when the Land Acquisition Act is an
expropriatory legislation.
c
46. In State of Gujarat and Anr. v. Patel Chaturbhai Narsibhai
and Ors., this Court held:
l S. 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 D
that the Collector is to submit a report among other matters
that the Company has made all reasonable efforts to get such
lands by negotiation with the persons interested therein on
payment ofreasonable price and such efforts have failed. The
persons interested therein are the owners of the land which is E
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 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 F
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 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 G
any time after the publication of the notification under Section
4 of the Act. Therefore, the enquiry under Section SA may not
beheld.
4 7. ln General Government Servants Cooperative Housing
0
Society Ltd., Agra etc. v. Sh. Wahab Uddin and Ors. etc., this
H
308 SUPREME COURT REPORTS r2016] ll S.C.R.
A Court held:
13. Sub-rule (1) requires the Government to direct the Collector
to submit a.. report to it on the matters enumerated in Clauses
(i) to (vi) of the Sub-rule (I) which is for the benefit of the
Company. The purpose is to avoid acquisition of land not
B suitable for a Company. Clause (ii) of Sub-rule (I) 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 efforts have failed.
The purpose of Clause (ii) seems to be to avoid unnecessary
land acquisition proceedings and payment of exorbitant prices.
c 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-
rule 2 of Rule 4 requires the Collector to give reasonable
opportunity to the Company so that the Collector may hold an
D inquiry into the matters referred in Sub-rule ( 1). The Collector
has to comply 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 Government and a copy of the report
has to be forwarded by the Government to the Land Acquisition
E Committee constituted under Rule 3 for the purpose ofadvising
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
ofland under Part VII of the Act (Sub-rule (5) of Rule 3). No
F declaration shall be made by the appropriate Government under
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 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
G consideration 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."
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 309
[V. GOPALA GOWDA, J.]
22. The learned counsel further places reliance on the decision A
of this Court in the case of Royal Orchid Hotels Ltd. v. G Jayaram
Reddy & Ors. 7, wherein it was held that if the land is to be acquired for
a company, then the State Government and the company are bound to
comply with the provisions contained in Part VII of the L.A. Act.
23. The learned counsel further submits that the argument B
advanced on behalf of TML that the cost of acquisition has been borne
by the public exchequer, if accepted, would in fact make this an even
more egregious violation of the L.A. Act. It is submitted that this would
not only mean that a colourable device has been used to circumvent the
provisions of Part VII of the L.A. Act, but that there has also been a
clear violation of Section 41 of the L.A. Act, which provides that the c
cost of acquisition must be borne by the company and not by the State.
24. The learned counsel thus, submits thatthe entire land acquisition
proceedings being a colourable exercise of power carried out ~n violation
of the L.A. Act and the relevant Rules be set aside.
25. Mr. Rakesh Dwivedi, the learned senior counsel appearing D
on behalf of the State of West Bengal in the appeal arising out of SLP
(C) No. 13645 of2008 submits that the acquisition ofland in Singur for
TML is illegal as the same has been done in complete violation of the
provisions of Sections 4 and 6 of the L.A. Act, as well as the non-
compliance with Part VII of the L.A. Act and Rules applicable for E
acquisition of land in favour of a Company.
26. The learned senior counsel takes us through the cabinet notes
with reference to the requisition letter of TML, extracted supra and
submits that it becomes very clear from a perusal of the documents on
record that the scouting and selection ofland was done completely by
F
TML, much before the issua11ce of the notification under Section 4 of
the L.A. Act. The learned senior counsel further submits that initially,
TML had submitted a proposal of requirement of 600 acres of land,
which 'Yas subsequently increased to I 000 acres without any justification
for seeking such vast extent of lands in favour of TML. This action of
the State Government and its officers shows a complete non application G
of mind on the part of the cabinet while assessing how much land is
needed for the project, before acquiring lands at the behest ofTML.
27. The learned senior counsel further submits that post the
amendment to the L.A. Act in the year 1984, it becomes clear that the
, <2011) 10 sec 608 H
310 SUPREME COURT REPORTS [2016] 11 S.C.R.
A acquisition for a company must .comply with the requirements of Part
VII of the L.A. Act, and must only be done in accordance with the
same. The same cannot be fused with acquisition of land for a public
purpose. The learned senior counsel places reliance on the Statement of
Objects and Reasons of the Amendment Act 68 of 1984, the relevant
part of which has been extracted supra.
B
28. The learned senior counsel fu1iher submits that Par! iamentary
Debates relating to the Amendment Act 68 of 1984 also indicate that
acquisition for company could be done'only under Part VII of the L.A.
Act.
29. The learned senior counsel places reliance on the decision of
c the Madhya Pradesh High Court in the case of Clwitram Verma mu/
Ors. v. Land Acquisition Officer, Raipur a11d Ors. 8 and the Allahabad
High Court in the case of Poorcm a11d Ors. v. St(lte of U.P. a11d Ors. 9 ,
wherein it has been held that after the amendment to the L.A. Act in
the year 1984, acquisition of land for a company can happen only in
D accordance with Part VII of the L.A. Act.
30. The learned senior counsel further contends that the doctrine
of infusion of public revenue by the government or by corporations
covered by Section 3(cc) of the L.A. would not be available after the
amendments made in the year· 1984. In the pre-1984 legal position, there
E was lack of clarity in the inclusive definition of public purpose in Section
3(f) to the L.A. Act. Therefore, the Supreme Court in a number of
cases resorted to the second proviso to Section 6 for holding that infusion
of public revenue would make the acquisition for a company an acquisition
for public purpose. After the exclusion of companies.from the purview
.of Section 3(f) of the L.A. Act, infusion of public revenue cannot be
F · resorted to for holding that acquisition of land in favour ofa company is
one for public purpose. The learned senior counsel thus, submits that the
reliance placed by the learned senior counsel appearing on behalf of
TML on the pre-1984 decisions, including P(lndit Jlwmlu Lal v. State
of Punjab 10 , SonWW(lllti v. St(lte of P1111jab 11 , Jage Ram v. St(lte of
Haryana 11 and Ajl(ltoo11 i~ Lt. Govemor of Delhi 13 is misplaced as the
G
8 A.LR. 1994 MP 74
9
2010 Supp All. L.J. I
Ill (1961) 2 SCR 459
II (1963)2 SCR 774
12 (1971) J sec 671
H " (1975) 4 sec 285
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 311
[V. GOPALA GOWDA, J.]
same have no application to the facts of the instant case as the same A
pertain to the pre-1984 situation. It is further submitted that the reliance
placed upon the decisions of this Court in the cases of Pratib/la Nema
(supra) and Amarnatli As/tram (supra) has no bearing on the facts of
the instant case as the same have not correctly appreciated the scope of
the 1984 amendment to the provision Section 3 (f) of the L.A. Act.
8
31. The learned senior counsel further contends that the objections
filed by the landowners/ cultivators before the Land Acquisition Colleetor
after publication of the notification under Section 4 of the L.A. Act were
also rejected under Section 5-A(2) of the L.A. Act in a mechanical
manner without any application of mind. The learned senior counsel
contends that the State Government of West Bengal also recorded its c
satisfaction under Section 6 of the L.A. Act by recording its satisfaction
mechanically, without considering the need of the lands. It is further
submitted by the learned senior counsel that with regard to conducting
an inquiry under Section 5-A(2) of the L.A. Act, this Court has held in a
catena of decisions that it is a valuable right available to the land owners D
arrd cultivators, and therefore, it casts a statutory obligation on the part
of the Collector and the State Government to consider the objections
and take a decision in accordance with law. The application of mind by
the concerned Land Acquisition Collector including the State Government
before issuing the notification under Section 6 of the Act, for acquisition
of lands is a sine qua 11011. The learned senior counsel places reliance E
on the decision of this Court in the case of RaKllubir SbiKll Sllerawat
v. State of Haryana and Ors. 14 , wherein it has been held as under:
"In this context, it is necessary to remember that the rules of
natural justice have been ingrained in the scheme of Section SA
with a view to ensure that before any person is deprived of his F
land by way of compulsory acquisition, he must get an opportunity
to oppose the decision of the State Government and/or its
agencies/instrumentalities to acquire the particular parcel ofland.
At the hearing, the objector can make an effort to convince the
Land Acquisition Collector to make recommendation against the G
acquisition of his land. He can also point out that land proposed
to be acquired is not suitable for the purpose specified in the
notification issued under Section 4(1 ). Not only this, he can
produce evidence to show that another piece ofland is available
1
' (2012i 1 sec 792
H
312 SUPREME COURT REPORTS r2o 161 11 S.C.R.
A and the same can be utilized for execution of the particular project
or scheme. Though, it is neither possible nor desirable to make a
list of the grounds on which the landowner can persuade the
Collector to ma~e recommendations against the proposed
acquisition of land, but what is important is that the Collector
should give a fair opportunity of hearing to the objector and
B
objectively consider his plea against the acquisition ofland. Only
thereafter, he should make recommendations supported by brief
reasons as to why the particular piece of land should or should
not be acquired and whether or not the plea put forward by the
objector merits acceptance. In other words, the recommendations
c made by the Collector must reflect objective application of mind
to th_e objections filed by the landowners and other interested
persons."
32. The learned senior counsel further places reliance on the
observations made by this Court in the case of Suriluler Singfl Brar &
D Ors. v. Union of bufial.i to submit that the Collector did not apply his
mind at all while considering the objections under S-;:lion 5-A (2) of the
L.A. Act. In that case, this Court observed as under:
"The reason why the LAO did not apply his mind to the objections
filed by the Appellants and other landowners is obvious. He was
E a minion in the hierarchy of the administration of the Union
Territory of Chandigarh and could not have even thought of
making recom'mendations contrary to what was contained in the
letter sent by the Administrator to Surinder Singh Brar. lfhe had
shown the courage of acting independently and made
recommendation against the acquisition of land, he would have
F surely been shifted from that post and his career would have
been jeopardized. In th~ .system of governance which we have
today, junior officers in the administration cannot even think of,
what to say of, acting against the wishes/dictates of their
superiors. One who violates this unwritten code of conduct does
G so at l~is own peril and is described as a foolhardy. Even those
constituting higher strata of services follow the path of least
resistance and find it most convenient to tow the line of their
superiors. Therefore, the LAO cannot be blamed for having acted
as an obedient subordinate of the superior authorities, including
H " (2013) 1 sec 403
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 313
[V. GOPALA GOWDA, J.]
the Administrator. However, that cannot be a legitimate ground A
to approve the reports prepared by him without even a semblance
of consideration of the objections filed by the Appellants and
other landowners and we have no hesitation to hold that the
LAO failed to discharge the statutory duty cast upon him to
prepare a report after objectively considering the objections filed
B
under Section SA(!) and submissions made by the objectors during
the course of personal hearing."
33. The learned senior counsel thus, contends thatthe acquisition
of the vast tracts of lands of the owners/cultivators, depriving them of
their constitutional rights for non-compliance with the mandatory
procedure as provided under Section 5-A (2) and Part VII of the L.A.
c
Act. Therefore the acquisition proceedings are void ab initio in law.
34. Mr. K. Parasaran, the learned senior counsel appearing on
behalf of WBIDC adopts the arguments advanced by learned senior
counsel Mr. Rakesh Dwivedi on behalf of the West Bengal State
Government. D
35. On the other hand, Mr. Abhishek Manu Singhvi, the learned
senior counsel appearing on behalf ofTML contends that the government
is free to acquire certain lands keeping in mind a certain entity, and the
mere fact that the acquisition oflands has been done keeping that entity
in mind will not render the acquisition invalid. It is submitted that the E
State of West Bengal as a matter of Industrial Policy decided to make
efforts to establish more manufacturing industries with a view to attract
more private sector investment in the manufacturing industry. The
tremendous growth potential ofautomobile industry in the State ofWest
Bengal would have boosted economy, created job opportunities, direct F
and indirect, and have had an impact on the secondary employment in
the associated service sectors. The learned senior counsel further places
strong reliance on the constitution bench decision of this Court in the
case of Ajlatoon (supra), wherein this Court has held thatthe acquisition
ofland for the "planned development of Delhi" was a valid public purpose.
It was held that the fact that after the acquisition, the land was handed G
over to the co-operative housing societies would not attract Part VII of
the L.A. Act, 1894. This Court has held as under:
"24. It was contended by Dr. Singhvi that the acquisition was
really for the cooperative housing societies which are companies
within the definition of the word 'company' in Section 3(e) of H
314 SUPREME COURT REPORTS f2016] l l S.C.R.
A the Act, and, therefore, the provisions of Part VII of the Act
should have been complied with. Both the learned Sing!e Judge
and the Division Bench of the High Court were of the view that
the acquisition was not for 'company. We see no reason to differ
from their view. The mere fact that after the acquisition the
Government proposed to hand over, or, in fact, handed over, a
B
portion of the property acquired for development to the
cooperative housing socie~ies would not make the acquisition
one for 'company'. Nor are we satisfied that there is any merit
in the contention that compensation to be paid for the acquisition
came from the consideration paid by the cooperative societies.
c In the light of the averments in the counter affidavit filed in the
writ petitions here, it is difficult to hold that it was cooperatives
which provided the fund for the acquisition. Merely because the
Government allotted a part of the property to cooperative societies
for development, it would not follow that the acquisition was for
cooperative societies, and therefore, Part VII of the Act was
D attracted." ·
36. The learned senior counsel further placed reliance on the
decision of this Court in the case of Mandir Shree Sita Ramji v. Land
Acquisition Collector & Ors. 16, wherein it 'Yas held as under:
"12. We hav.e considered the submissions of both the sides. In
E our view, there is no merit in the challenge to the proposed
acquisition on the ground thatthe acquisition was forthe purposes
of the society covered by Agreement dated 9th May, 1972. The
subsequent Notification is merely a follow up of the earlier
Notification. The entire acquisition is for "planned development
F of Delhi". To be remembered that Appellants' land is in the midst
of the 35000 acres which have been acquired pursuant to the
Notification under Section 4 issued in 1959. The Agreement dated
19th May, 1972 does not specify that it is the Appellants' land
which is to be allotted to that Society. The Society is to be allotted
some land arid even ifAppellants' land is allotted to this Society,
G after acquisition, it will not mean that the acquisition was for this
Society. Therefore, the provisions of Part VII of the Land
Acquisition Act need not have been complied with." ·
37. The learned senior counsel submits that in the instant case,
the mere fact that TML looked at and inspected some sites before the
H 1
' (2005) 6 sec 745
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 315
[V. GO PALA GOWDA, J .]
lands were finally acquired does not take away from the fact that the A
lands were, in fact, acquired in favour ofWBIDC for a public purpose.
It is further submitted that the fact that the compensation amount of Rs.
138 crores was deposited by WBIDC and not by TML also keeps the
acquisition of the lands in the instant case out of the purview of Part VII
of the L.A. Act and the relevant Rules. It is submitted that the essential
B
test to determine as to whether the acquisition of the lands in question is
for public purpose, is whether the funds for acquisition are coming from
public funds. The learned senior counsel places reliance on the
Constitution Bench decision of this Court in the case of Pandit Jlumdu
Lal (supra), wherein it was held as under:
"Section 6 is, in terms, made subject to the provisions of Part c
VII of the Act. The provisions of Part VII, read with section 6
of the Act, lead to this result that the declaration for the acquisition
for a Company shall not be made unless the compensation to be
awarded for the property is to be paid by a company. The
declaration for the acquisition for a public purpose, similarly, D
cannot be made unless the compensation, wholly or partly, is to
be paid out of public funds. Therefore, in the case of ari acquisition
for a Company simpliciter, the declaration cannot be made without
satisfying the requirements of Part VII. But, that does not
necessarily mean that an acquisition of a Company for a public
purpose cannot be made otherwise than under the provisions of E
Part VII, ifthe 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 for a public purpose is thatthe cost of the acquisition
is should be borne, wholly or in part, out of public funds. Hence,
an acquisition for a Company may also be made for a public F
purpose, within the 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 acquis"ition for a Company is to be made at the cost
entirely of the Company itself, such an acquisition comes under
th·e provisions of Part VII. As in the present instance, it appears
that part at any rate of the compensation to be awarded for the G
acquisition is to come eventually from out of public revenues, it
must be held that the acquisition is not for a Company simpliciter.
It was not, therefore, necessary to go through the procedure
prescribed by Part VII. We, therefore, agree with the conclusion
of the Hjgh Court, though not for the same reasons." H
316 SUPREME COURT REPORTS [2016] 11 S.C.R.
A The learned senior counsel further submits that the above position of
law was reiterated by this Court more recently in the case of Pratibha
Nema v. State of M.P.'7, wherein it was held as under:
"Thus the distinction between public purpose acquisition and Part
VJI acquisition has got blurred under the impact of judicial
B interpretation ofrelevant 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 nominal contribution by the Government was held to be
sufficient compliance with the second proviso to Section 6 as
held in a catena of decisions. The net result is that by contributing
c even a trifling sum, the character and pattern ofacquisition 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 private sector could get imbued with the character
of public purpose acquisition if only the Government comes
D forward to sanction the payment of a nominal sum towards
compensation. In the present state of law, tl}at seems to be the
real position."
38. The learned senior counsel further contends that this Court
has in fact, also held that it is enough if only a part of the amount comes
E from public funds to make the acquisition as one for public purpose.
Reliance has been placed on the Constitution Bench decision of this
Court in the case of Somawanti (supra), wherein it was held as under:
"We would like to add that the view taken in Senja Naicken's
case I.L.R. (1926) Mad. 308 has been followed by the various
F High Courts of India. 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 amounts
towards 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.
·G therefore, on the principle of stare decisis the vi·ew takenjn Senja
Naicken's case l.L.R. (1926) Mad. 308 should not be disturbed.
We would, however, guard ourselves 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
H " (2003) 1o sec 626
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 317
[V. GOPALA GOWDA, J.]
and every case. Whether such contribution meets the A
requirements of the law would depend 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 of power. In our opinion
'part' does not necessarily mean a substantial part and that it
B
will be open to the Court in every case which comes up before it
to examine.whether the contribution made by the state_ satisfies
the requirement of the law."
39. It is further submitted that the __said position was reiterated by
this Court in the case of Jage Ram (supra), wherein it was held that a
contribution of Rs. I 00/- by the State Government was sufficient to take
c
the acquisition of land outside the purview of Part VII of the L.A. Act.
40. The learned senior counsel further contends that the cabinet
meeting and cabinet memo do not substitute the notification under Section
4 of the L.A. Act, as well as the~rquiry by the Land Acquisition Collecto_r.
It is submitted that even after the cabinet approval, it was upon the Land D
Acquisition Collector to survey and decide whether the lands in question
can be acquired for that r;>articular purpose or not. The discretion of the
Land Acquisition Collector was unfettered and uncompromised. It is
submitted that the inquiry of the Land Acquisition Collector was submitted
in the instant case, and all the requirements as provided for under Part II E
of the L.A. Act were complied with while acquiring the lands in question
in the instant case.
41. We have heard the learned counsel appearing on behalf of all
the parties. Before we examine the contentions in detail and consider
the matter on merits, it is important to address an issue raised by Mr. F
Abhishek Manu Singhvi and Mr. Gopal Jain, theJearned senior counsel
appearing on behalf of TML, that the State of West Bengal cannot be
allowed to resile from the position taken by them in their pleadings, without
even filing an affidavit. It is contended by them that the State of West
Bengal had specifically contended before the High Court that Part VII
of the L.A. Act has no application in the instant case and the acquisition G
of land was one which was done in the public interest. The learned
senior counsel submit that even before the Supreme Court, the State of
West Bengal has stated in its counter affidavit that establishing a new
industry is the public purpose as envisaged under Section 3(f) of the
L.A. Act and that in the instant case, it was the state government which
H
318 SUPREME COURT REPORTS f20161 11 S.C.R.
A had acquired the lands in favour ofWBIDC for the purpose of fulfilling
its industrialization policy in the State of West Bengal.
42. Dr. Abhishek Manu Singhvi, learned senior counsel very
vehemently contends that the State Government of West Bengal and
WBIDC cannot be allowed to change their stand before this Court in
B these proceedings at the time-of arguments merely because of change
of Government in the State of West Bengal after the completion of the
land acquisition proceedings. It is further contended that the change of
stand by the State government at this stage without filing an affidavit
amounts to violation of the principles of natural justice. Strong reliance is
placed by him on the decision of this Comi in the case of Jal Malta/
c Resort (P) Ltd. v. K.P. S/wrma 1' in this regard.
43. Further reliance is placed by him on the decision of this Court
in the case of Andltra Pradesh Dairy Development Corpn. Federation
v. B. Narasimlw Ret!tly 19, wherein it was held as under:
D "40. In the matter of Government of a State, the succeeding
Government is duty bound to continue and carry on the unfinished
job of the previous Government, for the reason that the action is
that of the "State", within the meaning of Article 12 of the
Constitution, which continues to subsist and therefore, it is not
required that the new Government can plead contrary from the
E State action taken by the previous Government in respect of a
pa1iicular subject. The State, being a continuing body can be
stopped from changing its stand in a given case, but where after
holding enquiry it came to the conclusion that action was not in
conformity with law, the doctrine of estoppel would not apply.
F Thus, unless the act done by the previous Government is found
to be contrary to the statutory provisions, unreasonable or against
policy, the State should not change its stand merely because the
other political party has come into power. "Political agenda of an
individual or a political party should not be subversive ofrule of
law". The Government has to rise above the nexus of vested
G interest and nepotism etc. as the principles of governance have
to be tested on the touchstone of justice, equity and fair _pley.
The decision must be taken in good faith and must be legitimate."
Reliance is also placed by him on the decision of this Court in the case of
1
' (2014) s sec 804
H 1
' (201IJ9 sec 286
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 319
[V. GOPALA GOWDA, J.]
M.L Builders Pvt. Ltd. v. Radltey Sltyam Sahu & Ors.1°, wherein it A
was held as under:
" ...... No doubt Mahapalika is a continuing body and it will be
estopped from changing its stand in the given case. But when
Mahapalika finds that its action was contrary to the provisions
of law by which it was constituted ther~ could certainly be no B
impediment in its way to change its stand. There cannot be any
estoppel operating against the Mahapalika."
44. It is further contended that State government should not be
allowed to change its stand merely because some other political party
has come into power after the acquisition proceedings and the legal c
proceedings of the land owners were concluded in the High Court by
passing the impugned common judgment and order.
45. Mr. Rakesh Dwivedi, learned senior counsel appearing on
behalf of the State of West Bengal on the other hand rebuts the above
submission made by the learned senior counsel appearing on behalf of
D
TML. It is submitted that there is absolutely no law which mandates that
upon the change of government, the stance taken earlier cannot be
changed, more so, when the earlier stance is clearly opposed to both law
and public policy. The learned senior counsel submits that even in the
case of A.P. Dairy (supra) on which reliance has been placed upon by
the learned senior counsel appe~ring on behalf ofTML, this Court has E
held that the state can change its stand if it is found that the act done by
the previous government is contrary to provisions of law or is agairist
public policy.
46. The learned senior counsel further submits that in the instant
case, having regard to the nature of acquisition of lands made by the F
previous Government, the lands were acquired by the State Government
in exercise of its eminent domain power without following the statutory
provisions contained in Sections 3(f), 4 and 6 of the L.A. Act as well as
Part VII of the L.A. Act. It is submitted that the previous government of
the state has violated statutory provisions of the L.A. Act in acquiring
G
the vast extent of lands having immense agricultural potential, thus
depriving the agricultural occupation of a large number of land owners/
cultivators, thereby depriving them oftheir constitutional and fundamental
rights guaranteed under the Constitution oflndia. lt is submitted thatthe
acquisition of the lands in the instant case has bee11 made at the instance
'" (I 999) 6 sec 464 H
320 SUPREME COURT REPORTS [2016] 11 S.C.R.
A of TML. Therefore, the previous Government has violated the law in
acquiring the lands. It is submitted that the stand of the present government
becomes clear from the fact that it enacted the Singur Act, 2011, the
constitutional validity of which has been challenged by TML by way of
filing petitions, which were allowed by the High Court, against which
judgment, the State Government filed SLPs which are currently pending
B
before this Court. Therefore, the State GovernllJent has changed its
stand in not justifying the acquisition proceedings.
4 7. We are unable to agree with the contentions advanced by the
learned senior counsel appearing on behalf ofTML. While it is true that
rule oflaw cannot be sacrificed for the sake of furthering political agendas,
c it is also a well established position oflaw that a stand taken by the state
government can be changed subsequently ifthere is material on record
to show that the earlier action of the acquisition cif lands by the State
Government was illegal or suffers from legal malafides or colourable
exercise of power.
D 48. Further, in any case, it is also well settled position oflaw that
this Court is not bound by affidavits and counter affidavits filed by the
parties. In exercise of its powerunder Article 136 of the Constitution of
India, this Court can examine the material on record in order to determine
whether the action of the previous state government in acquiring the
E lands in the instant case was in accordance with law or not. In the case
of P.S.R. Sada11atltam v. Arimaclwlam11 , a Constitution Bench of this
Court held as under:
"7 .......... In express terms, Article 136 does not confer a right
of appeal on a party as such but it confers a wide discretionary
F power on the Supreme Court to interfere in suitable cases. The
discretionary dimension is considerable but that relates to the
power of the court~The question is whether it spells by implication,
a fair procedure as contemplated by Article 21. In our view, it
does. Article 1:fo is a special jurisdiction. It is residuary power; it
is extraordinary in its amplitude. its limit, when it chases injustice,
G in the sky itself. This Court functionally fulfils itself by reaching
out to injustice wherever it is and this power is largely derived in
the common run of cases from Art 136 ............ "
(emphasis laid by this Court)
H " (1980) 3 sec 141
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 321
[V. GOPALA GOWDA, J.]
In the instant case, the cabinet records, communication between TML A
and representative of the State Government, the notifications published
under Sections 4 and 6 of the L.A. Act are all on record. We shall
examine the same to assess the validity of the acquisition of the lands in
these proceedings.
49. The above said preliminary objection, as has been raised by B
the learned senior counsel appearing on behalf of TML is thus, not
accepted. We now proceed to decide the matter on merits.
50. On the basis of the factual and rival legal contentions advanced
on behalf of the learned counsel appearing on behalf of the parties as
well as the material produced on record and from perusal of the original C
files, the following points would arise for consideration of this Court:
I. Whether the lands involved in these proceedings have been acquired
for a public purpose or for a Company (TML)?
2. If the lands have been acquired for a Company, whether the procedure
provided for under Part VII of the L.A. Act has been complied with by D
the state government?
3. Whether the inquiry as contemplated under Section 5-A(2) of the
L.A. Act has been duly conducted by the Land Acquisition Collector?
4. Whether the Land Acquisition Collector has assigned reasons in his
E
report for rejecting the objections raised by the landowners/cultivators
after application of mind?
5. Whether the report of the Land Acquisition Collector is based on the
decision of the State Government taken prior to issuing notification under
Section 6 of the L.A. Act?
F
6. Whether the awards have been passed after holding due inquiry
under Section 9 of the L.A. Act and also in compliance with the principles
of natural justice?
7. Whether the compensation awarded in favour of the land owners/
cultivators is based on a proper appreciation of the market value of the G
land?
8. What is the legal effect on the acquisition proceedings of not conducting
an inquiry under Section 5-A (2) and passing composite awards under
Section 11 of the L.A. Act?
9. What order can be passed in these proceedings at this stage? H
322 SUPREME COURT REPORTS r20161 11 S.C.R.
A Answer to Po;nt .~os. 1 and 2
51. Issue Nos. I and 2 are inter-related, hence, they are answered
together as under:
Section 3(f) of the Act defines acquisition ofland for 'public purpose' by
the State Government, which reads thus:
B
"3(f) the expression "public purpose' includes-
(iii) the provision ofland for planned development of land from
public funds in pursuance ofany scheme or policy ofGovemment
C and subsequent disposal tflereof 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;
D
(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 out any
such scheme, or, with the prior approval of the appropriate
E
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 of any law relating to co-
operative societies for the time being in force in any State;
F (vii) the provision of land for any other scheme of development
sponsored by Government or. with the prior approval of the
rumropriate Government, by a local authority;
G but does not include acquisition oflands for Companies"
(emphasis laid by this Court)
The definition of the term 'Company' was inserted in the definition of
Section 3(e) of the L.A. Act by Act 68 of 1984 with effect from
24.09.1984. Section 3(e) of the L.A. Act defines a company as:
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 323
[V. GO PALA GOWDA, J .]
"(i) a company as defined in Section 3 of the Companies Act, A
1956 (I of 19560 other than a Government Company referred to
incl.(cc)
"
52. Section 3(t) of the L.A. Act, which defines what public purpose
B
is for the purpose of acquisition of land, clearly indicates that the
acquisition ofland for companies is not covered within the public purpose.
It is in light of this statutory scheme under the provisions of the L.A. Act
that it becomes crucial to examine whether the lands in question were
acquired for a public purpose or was it acquired by the State Government
for a company (TML) in the instant case. c
53. A perusal of the notification issued under Sectfon 4(1) of the
L.A. Act extracted supra clearly shows that the proposed lands in the
notification are needed for the setting up of the Tata Smal 1Car project in
mouza Berabery, P.S. Singur, District Hooghly.
54. The Cabinet Memo dated 30.05.2006, extracted supra, at D
Serial No. 3 mentioned acquisition of lands measuring I 053 acres by
WBIDC for the purpose of setting up of the Tata Motor's 'Small Car
Project' in the State of West Bengal. The said Cabinet Memo received
the approval of the Chief Minister on 05.06.2006 after which the
notification under Section 4 of the L.A. Act was published in the official E
gazette.
55. As far as the proposal is concerned, there is nothing on record
to indicate that WBIDC made such requisition to the State Government
giving its proposal for acquisition of the proposed lands mentioned in the
notification issued under Section 4 of the L.A. Act, which are required
F
for 'public purpose' as defined under Section 3(t) (iii) of the L.A. Act,
which enables the WBIDC to give requisition for acquiring the lands in
its favour for the planned development of land out of the public funds in
pursuance of any scheme or policy of Government. As is evident from
the Notifications issued under the L.A. Act and from the cabinet memo,
there is no mention about such requisition being made by the Corporation G
to the State Government regarding the proposed lands being required
for acquisition in favour ofWBIDC for planned development ofland in
pursuance of any scheme or policy of the Government. Even from a
perusal of the letter dated 29.08.2006, written by the Joint Secretary,
Land and Land Reforms Department, Government of West Bengal, it
H
324 SUPREME COURT REPORTS r2016l 1l S.C.R.
A becomes clear that the state government did not apply its mind while
considering the need of the land and merely followed the document on
which the Collector had signed. It reads as under:
"It is clear from the report and records relating to the proceedings
u/s SA of the L.A. Act, 1894 received from the L.A. Collector
B after disposal of objections from the persons having rights and
interest in land in the Berabari and Khaserbari mouzas ofSingur
PS where 6 LA cases comprising for setting up Tata Small Car
Project have been initiated, that the Collector did not find any
objection having merits for change/ modification of the area within
the conceived area of acquisition and he has recommended the
c land covered u/s 4 notification in the aforesaid mouzas are fit for
acquisition for the public purpose on behalf ofWBIDC, the RB.
On perusal of the reports and records we may agree to the above
recommendation of the Collector and issue declaration u/s/ 6 as
prescribed in the aforesaid Act."
D
The letter of the Joint Secretary mentions the WBIDC to be the
requisitioning body. However, the same finds no mention in the notification
issued under Section 6 of the L.A. Act, the relevant portion of which has
been extracted supra.
E 56. Even ifthe argument advanced on behalf ofTML were to be
accepted, that it was the policy of the state government to generate
employment and increase socio economic development in the State, the
relevant policy documents are not forthcoming in the original acquisition
files which were made available for this Court. Thus, by no stretch of
imagination can the acquisition oflands in the instant case be said to be
F at the instance of WBIDC, or for the fulfilment of some scheme of the
Corporation or the State Government. Thus, it cannot be said to attract
Section 3(f)(iii), (iv) or (vi) either. On the contrary, what is on record is
the minutes of meetings between the representatives of the West Bengal
Government and TML dated 17.03.2006, which state that TML is
G interested in setting up a 'special category project' in the State to
manufacture 2,50,000 units for its' Small Car Project'. As perthe project
requirement mentioned in the letter written by Deputy General Manager
TML to the Principal Secretary, Commerce & Industries Department,
Government of West Bengal dated 19.01.2006, 400 acres of land were
required for setting up of the factory, 200 acres for vendor park and I 00
H acres for township. The said letter was forwarded by the Commerce
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 325
[V. GOPALA GOWDA, J.]
and Industries Department to the Principal Secretary, Land and La.nd A
Reforms Department on 24.01.2006 and the Finance Secretary for their
consideration and seeking their views in this regard. It is undisputed fact
that the State Government has not deposited the public money towards
the cost of acquisition ofland to initiate the acquisition proceedings to
show that the acquisition oflands is for public purpose which is an essential
B
requirement under the provision of Section 6 of the L.A. Act. As can be
seen, the notification issued under Section 6 of the L.A. Act merely
provides that the land is needed for the setting up of the Tata Small Car
project, which is a public purpose under the L.A. Act. ln the case of
Usha Stud and Agricultural Farms Pvt. Ltd. " State of Haryana &
Ors. 22, a three judge bench of this Court, after adverting to a catena of c
case law on the subject held as under:
"The ratio of the aforesaid judgments is that Section 5-A{2),
which represents statutory embpdiment of the rule ofaudi alteram
partem, gives an opportunity to the objector to make an endeavour
to convince the Collector that his land is not required for the D
public purpose specified in the notification issued under Section
4( 1) or that there are other valid reasonS"for not acquiring the
same. That section also makes it obligatory for the Collector to
submit report(s) to the appropriate Government containing his
recommendations on the objections, together with the record of
the proceedings held by him so that the Government may take E
appropriate decision on the objections. Section 6( I) provides that
ifthe appropriate Government is satisfied, after considering the
report, if any, made by the Collector under Section 5-A that
particular land is needed for the specified public purpose then a
declaration should be made. This necessarily implies that the F
State Government is required to apply mind to the report of the
Collector and take final decision on the objections filed by the
landowners and other interested persons. Then and then only, a
declaration can be made under Section 6( !). "
(emphasis laid by this Court) G
Thus, there seems to be no application of mind either at the stage of
issuance of the notification under Section 4 of the L.A. Act, or the report
of Collector under Section 5-A(2) of the L.A. Act or the issuance of the
final notification under Section 6 of the L.A. Act. Such an acquisition, if
22 (2013) 4 sec 210 H
326 SUPREME COURT REPORTS [2016] 11 S.C.R.
A . allowed to sustain, would lead to the attempt to justify any and every
acquisition of land of the most vulnerable sections of the society in the
name of 'public purpose' to promote socio-economic development.
57. On the other hand, it is the Corporation which has raised the
cost of acquisition by way of taking loan from nationalized banks and the
B same is said to have been deposited with the State Government. As has
rightly been contended by Mr. Kalyan Banerjee, learned senior counsel
by placing reliance on various decisions of this Court, which have been
adverted to supra, WBIDC cannot even be said to be a local authority
for the purpose of the L.A. Act and therefore the deposit of money
towards acquisition cost does not satisfy the statutory requirement under
c Section 6 of the Act. Thus, the contention advanced by the learned senior
counsel appearing on behalf of TML that the acquisition in the instant
case is one for public purpose as the funds for same have come from
public revenue, also cannot be accepted. Thus, neither there is a scheme
of the Government, nor the funds have been derived from the public
D revenue and that is why the acquisition in the instant case "'"nnot be said
to be one for 'public purpose'.
58. The contention advanced by the learned senior counsel
appearing on behalf of TML that this Court has consistently taken the
view that acquisition in favour of a statutory corporation or development
E authority for land development including industrial development, makes
the acquisition oflands one for 'public purpose', as defined under Section
3(t) (iv) or (vii) of the L.A. Act and there is no need to follow the
procedure for acquisition as laid down in Part VII of the L.A. Act, cannot
be accepted by me. After the passing of the Land Acquisition Amendment
Act, 1984, acquisition of land for a company is no longer covered under
F 'public purpose' in view of Section 3(t)(viii) of the L.A. Act. Apart from
the above statutory provisions inserted by way of an amendment the
Objects and Reasons for such amendment referred to supra upon which
strong reliance has been placed by Mr. Colin Gonsalves and Mr. Rakesh
Dwivedi, learned senior counsel on behalf of the owners and State would
G make it abundantly clear that the mandatory procedure as laid down
under Part VII of the L.A. Act read with the rules framed there under
was not followed by the State Government before the notifications were
published.
59. From a perusal of both the statutory provisions of the L.A.
H Act as well as the case law on the subject referred to supra upon which
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 327
[V. GOPALA GOWDA, J.]
strong reliance has been rightly placed by the learned senior counsel on A
behalf of the owners/cultivators and State Government, it becomes clear
that the state government can acquire land under the public purpose
clauses (iv) and (vii) of the Act for industrial estates, housing colonies
and economic parks/zones even wher_e the type of industry has been
identified. So, an acquisition made for an industrial estate of a particular
B
type of industry like small cars is permissible under the 'public purpose'
for the purpose of the L.A. Act under the above clauses of Section 3 (f)
of the Act. Before land could be acquired, the procedure consistent
with the statutory provisions oflaw must be followed mandatorily. There
is nothing in law which would support the acquisition of land for a
particular Company under the guise of 'public purpose', rendering the c
exception provided under Section 3(f)(viii) of the L.A. Act useless and
nugatory.
60. Jn the case of Devemler Pal Singh (supra), this Court has
held that when the acquisition of land is for a public purpose, it is Part II
of the L.A. Act which would apply and where the acquisition of land is D
at the instance of a Company, the procedure to be adopted is laid down
in Part VII of the L.A. Act. It was held as under:
"40. Distinction between acquisition under Part IJ and Part VII
are self- evident. The State was not only obligated to is~:.;e a
notification clearly stating as to whether the acquisition is for a E
public purpose or for the company. Section 6 categorically states
so, as would appear from the second proviso appended thereto.
41. A declaration is to be made either for a public purpose or for
a company. It cannot be for both.
42. It is furthermore trite that Land Acquisition Act is an F
expropriato1y legislation. (See Hindustan Petroleum Corporation
Ltd. v. Darius Shapur Chenai and Ors.; and Chairman, Indore
Vikas Pradhikaran v. Pure Industrial Cock & Chem. Ltd. and
Ors.)
43. Expropriatory legislation, as is well-known, must be strictly G
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 of compensation are principal requisites
therefore. In the case of acquisition ofland for a private company.
H
328 SUPREME COURT REPORTS [2016] 11 S.C.R.
A existence of a public pumose being not a requisite criteria, other
statutory requirements call for strict compliance, being imperative
in character."
(emphasis laid by this Court)
, 61. The decisions of this Court in the cases of Pandit J/umdu
B Lal (supra), Sonwwanti (supra), Jage Ram (supra) and Ajlatoo11 (supra)
upon which strong reliance has been placed by the learned senior counsel
appearing on behalf ofTML, have no bearing on the facts of the instant
case, as they were decided prior to the enactment of the Land Acquisition
(Amendment) Act, 1984, except the decision of this Co mt in the case of
c Pratibha Nema (supra).
62. In the case of Pratiblw Nema, this Court did not consider
the statement of objects and reasons of the Land Acquisition (Amendment)
Act, 1984, the relevant portion of which has been extracted supra. Further,
the fact situation in that case was also very different as this Court was
D dealing with acquisition ofland for the purpose of setting up a 'diamond
park' pursuant to the policy decision by the state government of Madhya
Pradesh.
63. In this day and age of fast paced development, it is completely
understandable for the state government to want to acquire lands to set
E up industrial units. What, however, cannot be lost sight of is the fact that
when the brunt of this 'development' is borne by the weakest sections
of the society, more so, poor agricultural workers who have no means of
raising a voice against the action of the mighty state government, as is
the case in the instant fact situation, it is the onerous duty of the state
Government to ensure that the mandatory procedure laid down under
F the L.A. Act and the Rules framed there under are followed scrupulously
otherwise the acquisition proceedings will be rendered void ab initio in
law. Compliance with the provisions of the L.A. Act cannot be treated
as an empty formality by the State Government, as that would be akin to
handing over the eminent domain power of State to the executive, which
G cannot be permitted in a democratic country which is required to be
governed by the rule of law. This Court in the case of State ofPunjab v.
Gurdial Singh 2-', has held with regard to the legal mala tides as under:
"9. The question, then, is what is mala tides in the jurisprudence
of power? Legal malice is gibberish unless juristic clarity keeps
H " AIR 1980 SC 318
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 329
[V. GOPALA GOWDA, J.]
it separate from the popular concept of personal vice. Pithily A
put, bad faith which invalidates the exercise of power-sometimes
called colourable exercise or fraud on power and oftentimes
overlaps motives, passions and satisfactions-is the attainment of
ends beyond the sanctioned purposes of power by simulation or
pretension of gaining a legitimate goal. If the use of the power is
B
for the fulfillment of a legitimate object the actuation or
catalysation by malice is not legicidal. The action is bad where
the true object is to reach an end different from the one for
which the power is entrusted. goaded by extraneous
considerations. good or bad. but irrelevant to the entrustment.
When the custodian of power is influenced in its exercise by c
considerations outside those for promotion of which the power
is vested the court calls it a colourable exercise and is undeceived
by illusion. In a broad, blurred sense, Benjamin Disraeli was not
off the mark even in Law when he stated: "I repeat...that all
power is a trust-that we are accountable for its exercise-that,
D
from the people, and for the people, all springs, and all must
exist". Fraud on power voids the order if it is not exercised bona
fide for the end designed. Fraud in this context is not equal to
moral turpitude and embraces all cases in which the action
impugned is to effect some object which is beyond the purnose
and intent of the power. whether this be malice- laden or even E
benign. If the purpose is corrupt the resultant act is bad. If
considerations, foreign to the scope of the power or extraneous
to the statute, enter the verdict or impel the action, mala fides or
fraud on power. vitiates the acquisition or other official act."
(emphasis laid by this Court) F
In the case of S. Pratap Sinl(h v. St(lfe ofPunJab 24 , a constitution
bench of this Court has held that:
"In legal parlance it would be a case of a fraud on a power, ..
though no corrupt motive or bargain is imputed. In this sense, if
it could be shown that an authority exercising a power has taken G
into account - it may even be bona fide and with the best of
intention,- as a relevant factor something which it could not
properly take into account, in deciding whether or not to exercise
the power or the manner or extent to which it should be exercised,
" AIR 1964 SC 72 H
330 SUPREME COURT REPORTS [2016] 11 S.C.R.
A the exercise of the power would be bad. Sometimes Courts an~
confronted with cases where the purposes sought to be achieved
are mixed, - some relevant and some alien to the purpose. The
courts have, on occasions, resolved the difficulty by finding out
the dominant purpose which impelled the action, and where th"<
power itself is conditioned by a purpose, have proceeded to
B
invalidate the exercise of the power when any irrelevant purpose
is proved to have entered the mind of the authority (See Sadler
v. Sheffield Corporation [1924] 1 CH 483. as also Lord Denning's
observation Earl fitzwilliam etc. v. Minister ofT. & C. Planning
[1951] 2 K.B. 284,. This is on the principle that if in such a
c situation the dominant pumose is unlawful then the act itself is
unlawful and it is not cured by saying that they had another purpose
which was lawful."
(emphasis laid by this Court)
It is also a well settled principle of law that if the manner of doing a
D particular act is prescribed under any statute the act must be done in
that manner or not at all. In the case of Babu Verghese & Ors. v. Bar
Council Of Kera/a & Ors. 25 , th is Court has held as under:
"31. It is the basic principle oflaw long settled that ifthe manner
of doing l! particular act is prescribed under any Statute, the act
E must be done in that manner or not at all. The origin of this rule
is traceable to the decision in Taylor v. Taylor which was
followed by Lord Roche in Nazir Ahmad v. King Emperor who
stated as under :
"Where a power is given to do a certain thing in a certain way,
F the thing must be done in that way or not at all."
32. This rule has since been approved by this Court in Rao Shiv
Bahadur Singh and Anr. v. State of Vindhya Pradesh and
again in Deep Chand v. State of Rajasthan. These cases were
considered by a Three-Judge Bench of this Court in State of
Uttar Pradesh v. Singhara Singh and Ors. and the rule laid
G
down in Nazir Ahmad's case (supra) was again upheld. This
rule has since been applied to the exercise of jurisdiction by courts
and has also been recognized as a salutary principle of
administrative law."
(emphasis laid by this Court)
H " (1999) 3 sec 422
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 331
[V. GOPALA GOWDA, J.]
64. In the instant case, what makes the acquisition proceedings A
perverse is not the fact that the lands were needed for setting up of an
automobile industry, which would help to generate employment as well
as promote socio economic development in the State, but what makes
the acquisition proceedings perverse is that the proper procedure as laid
down under Part VII of the L.A. Act read with Rules was not followed
B
by the State Government. The acquisition ofland for and at the instance
of the company was sought to be disguised as acquisition of land for
'public purpose' in order to circumvent compliance with the mandatory
provisions of Part VII of the L.A. Act. This action of the State
Government is grossly perverse and illegal and void ab initio in law and
such an exercise of power by the state government for acquisition of c
lands cannot be allowed under any circumstance. If such acquisitions of
lands are permitted, it would render entire Part VII of the L.A. Act as
nugatory and redundant, as then virtually every acquisition of land in
favour of a company could be justified as one for a 'pub_lic purpose' on
the ground that the setting up of industry would generate employment
D
and promote socio economic development in the State. Surely, that could
not have been the intention of the legislature in providing the provisions
of Part VII read with 3 (t) of the L.A. Act. From a perusal of the
materials on record from the original files, the relevant extracts from
the letters addressed by TML to the State Government of West Bengal
and Cabinet notes which have been extracted and discussed supra, it E
becomes clear that in the instant case, the lands in question were acquired
by the State Government for a particular Company (TML), at the instance
of that Company. Further, the exact location and site of the land was
also identified by TML. Even the notifications issued under Sections 4
and 6 of the L.A. Act clearly state that the land in question was being
F
acquired for the 'Small Car Project' ofTML. In view of the foregoing
reasons, by no stretch of imagination can such an acquisition of lands be
held to be one for 'public purpose' and not for a company. If the
acquisition of lands in the instant case does not amount to one for the
company, I ~o not know what would.
v
65. In view of the aforesaid categorical findings recorded by me G
based on the materials on record, jncluding cabinet memo, minutes of
meetings between representatives of the state government and TML as
well as the notifications issued under Sections 4 and 6 of the L.A. Act,
1984, it is clear that the acquisition of lands in the instant case is for the
H
332 SUPREME COURT REPORTS r2016111 s.c.R.
A Company (TML). Admittedly, the procedure for acquisition as
contemplated under Sections 39, 40 and 41 of Part VII of the L.A. Act
read with Rules 3, 4 and 5 of the Land Acquisition (Companies) Rules,
1963 has not been followed, as the acquisition was sought to be guised
as one for 'public purpose' under Sections 3(t) (iii), (iv) and (vii) of the
L.A. Act. The acquisition of land in the instant case in favour of the
B
Company is thus, improper for not following the mandatory procedure
prescribed under Part VII of the L.A. Act and Rules and therefore the
acquisition proceedings are liable to be quashed.
66. Further, even after the lands were acquired in its favour, TML
could not start operations in accordance with the terms of the lease
c deed. The same becomes clear from a perusal of the letter dated
28.09.2010 written by the Managing Director, India Operations ofTML
to the Managing Director ofWB~DC, which reads as under:
"We had proposed an integrated Automobile Plant consisting of
manufacturing operations by Tata Motors as well as co-locating
D vendors in the same complex.You were kind enough to lease
645 acres to Tata Motors and 290 acres to vendors as
recommended by Tata Motors ..... .
We, therefore, concluded that a peaceful environment could not
be created for normal working of the plant and we had to take
E the most painful decision to close the operations on 3'd October,
2008. Meanwhile, we also took permission from you to remove
our equioment and machinery, which we have now done. We,
invested Rs. 440 crores and of course continue to incur Rs. 1
crore per month towards maintenance. Th is is an addition to the
investment of about Rs. 171 crores (inclusive of Rs. 40 crores
F for land premium charges) done by our vendors.
We have also had discussions with the Hon'ble Industry Minister
as well as with the Industry Secretary for finding various
alternative uses for this plant. In this respect, we would like to
G submit that we could also consider the option of moving out from
the premises provided we and our vendors are compensated for
the cost of the buildings, sheds on the premises aii.d expenses
incurred in developing the infrastructure which remains on the
premises.
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 333
[V. GOPALA GOWDA, J.]
Thus, it is an undisputed fact that even once the cost of acquisition was A
borne by WBIDC by way of raising loan from banks, TML did not start
operations and held on to the possession of the land. It did not engage in
any other manufacturing activity either. Subsequently, TML also removed
the machinery from the concerned plant and shifted the same to the
state of Gujarat and the lands in question have since been resumed by
B
WBIDC.
67. In view of the foregoing reasons, Point Nos. I and 2 are
answered in favour of the land owners/cultivators.
Answer to Point Nos. 3, 4 and 5
68. From a perusal of the materials on record and original c
acquisition files, it is evident that a large nmnber of objections were filed
by the land owners before the notification was issued under Section 4 of
the L.A. Act. The same were not considered properly under Section S-
A (2) of the L.A. Act. Notices were issued to the objectors individually
but the same could not be served upon the owners/cultivators of the D
proposed lands to be acquired. It is fu1iher mentioned in the record that
the announcements were made through loudspeakers and by publications
in the newspapers. It has been submitted by Mr. Rakesh Dwivedi, learned
senior counsel appearing on behalf of the State of West Bengal that
once a decision was takei1 to serve the land owners/cultivators individually
then it should have been ensured by the Land Acquisition Collector that E
the notices were so served. However, the fact that the same was not
done is evident from a perusal of the acquis.ition files maintained by the
State Government.
Even though the land owners/cultivators did not appear before the
Land Acquisition Collector, the objections filed by them ought to have F
been considered objectively by him as required under Section 5-A (2) of
the L.A. Act. Additionally, seven objections were filed under Section 5-
A itself a1.d some of the objections pertained to persons who were already
running industrial units. The names of the objectors are as follows:
" G
I. Kuldip Maity ofBeraberi, P.S. Singur;
2. Subir Kumar Pal, Director of M/s Shree Bhumi Steel Pvt.
Ltd., P.S. Singur;
3. Mis. Shanti Ceramics Pvt. Ltd., P.S. Singur; H
334 SUPREME COURT REPORTS f20161 11 S.C.R.
A 4. Prashanta Kumar Jana, Vill-Habaspota, Singur;
5. Mis. Ajit Services Station on behalf ofTapan Kumar Bera,
Advocate;
6. Mis. Shree Padma Sagar Exports Pvt. Ltd. of Singherbheri,
P.S. Singur"
B
69. Some of these objectors were not given the opportunity to be
heard as required under Section 5-A (2) of the L.A. Act. The same
ought to have been given to them as required both under the statutory
provisions of the L.A. Act as well as the principles of natural justice, as
the acquisition of lands of the objectors would entail a serious civil
C consequence. In the case of Mandir Sltri Sita Ramii v. Lt. Governor
of Delhi26, a Constitution Bench of this Court has held that it is the
mandatory duty cast upon the Collector to follow the provision of Section
5-A (2) of the L.A. Act as under: .~
"5. The learned Single Judge allowed the writ petition on the
D basis that the appellant had no opportunitv of being heard by the
Collector under Section 5-A. The duty to afford such an
opportunity is mandatory. A decision by the Government on the
'objection, when the Collector afforded no opportunity of being
heard to the objector. would not be proper. The power to hear
E the objection under Section 5-A is that of the Collector and not
of the appropriate Government. It is no doubt true that the
recommendation of the Land Acquisition Collector is not binding
on the Government. The Government may choose either to
accept the recommendation or to reject it; but the requirement
of the section is that when a person's property is proposed to be
F acquired, he must be given an opportunity to show cause against
·it. Merely because the Government may not choose to accept
the recommendation of the Land Acquisition Collector, even when
he makes one, it c~nnot be said that he need not make the
recommendation at all but leave it to the Government to decide
the matter. In other words, the fact that the Collector is not the
authority to decide the objection does not exonerate him from
his duty to hear the objector on the -objection and make the
recommendation."
'(emphasis laid by this Court) ..
H " (1975) 4 sec i9s
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 335
[V. GOPALA GOWDA, J.]
70. In the case of Babu Ram v. State of Haryana 27, this Court A
observed as under:
"30. As indicated hereinabove in the various cases cited by Mr.
Pradip Ghosh and, in particular, the decision in Krishnan Lal
Arneja case, in which reference has been made to the
observations made by this Court in Om Prakash case, it has B
been emphasized that a right under Section 5-A is not merely
statutory but also has the flavour of fundamental rjghts tinder
Articles 14 and 19 ofthe Constitution. Such observations.had
been made in reference to an observation made in the earlier .
decision in Gurdlal Singh case and k~eping in mind the fact that
right to property was no longer fundamental right, an observation c
a
was made that even if the right to property was no longer a
fundamental right, the observations relating to Article 14 would
continue to apply in full force with regard to Section 5-A of th~
L.A. Act."
(emphasis laid by this Court) D
From a perusal of the proceedings before the Collector, which are made
available to this Court, it becomes clear that the same have been rejected
without assigning any clear reasons or application of mind ., .
71. Thus, the report of the Collector is not a valid report in 1he E
eyes oflaw. The State Government has mechanically accepted the same '·
without application of mind independently before issuing notification under
Section 6 of the L.A. Act declaring that th~ lands are required for
establishment of automobile industry by TML. Therefore, the point nos.
3, 4 and 5 are answered against the Stak Government and in favour of
the land owners/cultivators. F
Answer to Point Nos. 6, 7 and 8
72. After issuing the notifications under Section 6 of the L.A. Act
declaring that the lands have been acquired for the purpose of industrial
development, a statutory duty is cast upon the Collector to issue notice
G
to the land owners/cultivators, as required under Section 9 of the L.A.
Act, to determine tht; market·value of the acquired land and ..award
compensation a~ r_equired under Seetion 11 of the L.A. A~t which ts·
mandatory for taking possession ofthe land by the State Gove01ment. ·
21
(2009) 1o sec 115
H
336 SUPREME COURT REPORTS f2016111 S.C.R.
A 73. As can be seen from material on record, no individual notices
were served upon the land owners/cultivators. A joint inquiry appears to
have been conducted by the Land Acquisition Collector without giving
them an adequate opportunity to establish their claim for determination
of reasonable compensation for acquisition of lands by presenting true
and correct market value of the lands. The determination of market
B
value of lands by clubbing a number of cases together and passing a
composite award is no award in the eyes of law. The inquiry, as
contempiated under Section 11 of the L.A. Act, is a quasi judicial exercis(~
of power on the part of the Collector in awarding just and reasonable
compensation to the landowners/cultivators. That has not been done in
c the instant case. Further, the proviso to Section 11 ( 1) of the L.A. Act
provides that no award shall be made by the collector without the previous
approval of either the appropriate government or such. officer authorised
by it for the above purpose. It was also brought to the notice of this
Court that supplementary awards were also passed which is not legally
permissible in law. For non-compliance of the above provisions of the
D
L.A. Act, the composite awards are vitiated in law and therefore, the
same are also liable to be quashed.
74. Accordingly, the point nos. 6, 7 and 8 are answered in favour
of the land owners.
E ARUN MISHRA, J. 1. Leave granted.
2. I have gone through the draft judgment, however I find myself
unable to agree with the same except on points for determination nos. 3,
4 and 5 framed bfesteemed brother for the reasons mentioned
hereinafter. Since esteemed Brother has taken pains to elaborate the
F facts and submissions in detail they need not be restated.
IN RE. QUESTION NOS. 1 AND 2
3. Question Nos. I and 2 are inter-related and the main question
for consideration is whether the acquisition of land is for a company and
·if so procedure provided under Part VII of the Land Acquisition Act,
G 1894 (hereinafter referred to as "the Act") is required to be complied
with by the State Government.
4. "Public purpose" has been defined in section 3(f) of the Land
Acquisition Act. The definition is inclusive and the Amendment Act,
1984 excludes the acquisition for company from the definition of"public
H purpose". Acquisition of land for company has bten dealt with under
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 337
[ARUN MISHRA, J.]
Part VII of the Act. Under section 39 previous consent of the appropriate A
Government and execution of agreement is necessary for acquiring land
for a company. Both sections 6 to 16 and sections 18 to 3 7 shall not be
used to acquire land for any company under Part VII unless the previous
consent of the appropriate Government has been obtained and company
has executed the agreement as provided in section 41 of the Act. Section
B
41 further provides that in the case of acquisition for a company the
payment of the cost of acquisition has to be borne by the company and
other matters as specified in section 41 are also to be provided in the
agreement. Such an agreement is required to be published in the Official
Gazette and a statutory force is given to its terms on which the public
shall be entitled to use the work. c
5. Section 3(f) though excludes the acquisition for a company.
However, at the same time it is inclusive definition and it is provided in
section 3(f) that it includes the provision for development of land from
public funds in pursuance of any scheme or policy (~f the Government
and subsequent disposal thereof in whole or in pati by lease, assignment D
or outright sale with the object of securing further development as
planned. Public purpose in section 3(iv) also includ~ the provision of
land for a corporation owned or contra lied by the State. The west Bengal
Industrial Corporation is established by the State.
6. Public purpose has to be adjudged in the background of the E
facts of the instant case and the State of West Bengal decided to make
effort to establish manufacturing industries with a view to attract more
private sector investment and foreign direct investment for
industrialization at par with the model adopted by other progressive States.
It has considered the offer of TML - manufacturer of Nano car - as an
opportunity for establishing manufacturing industry so as to further grab F
attention ofautomobile industry in the State of West Bengal to boost its
economy for creating job oppo1iunities, direct and indirect impact on
secondary employment in the associated services. The proceedings were
initiated under the Land Acquisition Act and the West Bengal Industrial
Development Corporation (WBIDC) was the acquiring body which bore G
the entire cost of acquisition.
Section 6 of the Act is extracted hereunder :
"6. Declaration that land is required for a public
purpose.- (I) Subject to the provisions of Pati VII of this
Act, when the appropriate Government is satisfi~d after H
338 SUPREME COURT REPORTS f20161'1 l S.C.R.
A considering the repon, 1f any, made under section SA, sub-
section (2), that any .particular land is needed for a public
purpose, or for a Company, a declaration shall be made to tllat
effect under the signature of a Secretary to such Government
or of some officer duly authorised to certify. its orders, ·and
different declarations may be made from time to time in respect
B
of different parcels of any land covered by the same notification
under section 4, sub-section (I), irrespective of whether one
report or different reports has or have been made (wherever
required) under section SA, sub-section (2):
Provided that no declaration in respect of any particular land
c covered by a notification under section 4, sub-section (I),-
(i) published after the commencement of the Land
Acquisition (Amendment and Validation) Ordinance, 1967
(1 of 1967) but before the commencement of the Land
Acquisition (Amendment) Act, 1984 68of1984) shall be
D made after the expi1y of three years from the date of the
publication of the notification; or
(ii) published after the commencement of the Land
Acquisition (Amendment) Act, 1984, shall be made after
the expiry of one year from the date of the publication of
E the notification:]
[Provided further that] no such declaration shall be made unless
the compensation to be awarded for such property is to be
paid by a Company, or wholly or partly out of public revenues
or some fund controlled or managed by a local authority.
F [Explanation I .-In computing any of the periods referred to
in the first proviso, the period during which any action or
proceeding to be taken in pursuance of the notification issued
under section 4, sub-section (I), is stayed by an order of a
Court shall be excluded.
G [Explanation 2.-Where the compensation to be awarded
for such property is to be paid out of the funds of a corporation
owned or controlled by the State, such compensation shall be
deemed to be compensation paid out of public revenues].
(2) [Every declaration] shall be published in the Official
.,H Gazette, [and in two daily newspapers circulating in the locality
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 339
[ARUN MISHRA, J.]
in which the land is situate of which at least one shall be in the A
regional language, and the Collector shall cause public notice'
of the substance of such declaration to be given at convenient
places in the said locality (the last of the date of such publication ·
and the giving of such public notice, being hereinafter referred
to as the date of publication of the declaration), and such
B
declaration shall state] the district or other territorial division in
which the land is situate, the purpose for which it is needed, its
approximate area, and where a plan shall have been made of
the land, the place where such plan may be inspected.
(3) The said declaration shall be conclusive evidence that the
land is needed for a public purpose or for a Company, as the c
case may be; and, after making such declaration
the [appropriate Government] may acquire the land in a manner
hereinafter appearing."
It is apparent from the provisions contained in second proviso to section
6 that declaration under section 6 shall not be made unless the D
compensation to be awarded for such property is to be paid by a company
either wholly or partly out of pub I ic revenues or some fund controlled or
managed by a local authority. The Explanation second to section 6( I) of
the Act makes it clear that where the compensation awarded for the
property is to be paid out of funds of a corporation owned or controlled E
by the State, such coinpensation shall be deemed to be compensation
paid out of public revenue. Thus Explanation second makes it clear that
when corporation pays the funds for acquisition of the property that
such compensation shall be deemed to be paid out of public revenue. As
already mentioned above the acquisition for a corporation is indeed within
the public purpose as defined in section 3(f)(iv). Thus the concept of F
funds in section 6 as amended in 1984 comes into play in the case of
acquisition of a land for a corporation and it is not necessary that the
State Government itself should bearthe cost ofacquisition so as to make
it expenditure out of public revenue even expenditure by the corporation
owned or controlled by the State for acquisition shall be deemed to be G
made out of public revenues and when the land had been acquired fot a
corporation the land is to be vested in the Corporation though lease of
the land has been granted to the company - Tata Motors Ltd., for short
TML- for its aforesaid project. In my opinion it would remain acquisition
for a public purpose as provided in section 3(1) of the Act; as also opined
in the various decisions to be adverted hereinafter of this Court. H
340 SUPREME COURT REPORTS f2016l l l S.C.R.
A 7. Acquisition of land for establishing such an industry would
ultimately benefit the people and the very purpose of industrialization,
generating job opportunities hence it would be open to the State
Government to invoke the provisions of Part II of the Act. When
Government wants to attract the investment, create job oppo1iunities
and aims at the development of the State and secondary development,
B
job opportunities, such acquisition is permissible for public purpose.
8. In So111airn111i v. State of Punjab AIR 1963 SC 151, the
concept of"public purpose" has been considered by this Court as under:
"53. '"Public Purpose" as explained by this Court in
c Babu Barkaya Thakur case ( 1961) 1 SCR 128 : AIR 1960 SC
1203 means a purpose which is beneficial to the community. But
whether a particular purpose is beneficial or is likely to be
beneficial to the community or not is a matter primarily for the
satisfaction of the State Government. In the notification under
Section 6( 1) it has been stated that the land is being acquired for
D a public purpose, namely, for setting up a factory for
manufacturing various ranges of refrigeration compressors and
ancillary equipment. It was vehemently argued before us that
manufacture of refrigeration equipment cannot be regarded as
beneficial to the community in the real sense of the word and
E that such equipment wi II at the most enable articles of luxury to
be produced. But the State Government has taken the view that
the manufacture of these articles is for the benefit of the
community. No materials have been placed before us from which
we could infer that the view of the Government is perverse or
that its action based on it constitutes a fraud on its power to
F acquire land or is a colourable exercise by it of such power.
54. Fmiher, the notification itself sets out the purpose
for which the land is being acquired. That purpose, if we may
recall, is to set up a factory for the manufacture of refrigeration
compressors and ancillary equipment. The importance of this
G undertaking to a State such as the Punjab which has a surplus of
fruit, dairy products etc. the general effect of the establishment
of this factory on foreign exchange resources, spread of
education, relieving the pressure on unemployment etc. have been
set out in the affidavit of the respondent and their substance
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 341
[ARUN MISHRA, J.]
appears in the earlier pat1 of this judgment. The affidavits have A
not been controverted and we have, therefore, no hesitation in
acting upon them."
9. fn Jage Ram & Ors. v. State of Haryana & Ors. (1971) I
SCC 671, this Court held that setting up of a factory for purpose of
manufacture of Ch in a-ware and Porcelain-ware including wall Glazed B
Tiles was a public purpose. This Court has held thus:
"8. There is no denying the fact that starting of a new industry is
in public interest. It is stated in the affidavit filed on behalfofthe
State Government that the new State of Haryana was lacking in
industries and consequently it had become difficult to tackle the c
problem of unemployment. There is also no denying the fact that
the industrialisation of an area is in public interest. That apart,
the question whether the starting of an industry is in public interest
or not is essentially a question that has to be decided by the
Government. That is a socio-economic question. This Court is
not in a position to go into that question. So long as it is not D
established that the acquisition is sought to be made for some
co !lateral purpose, the declaration of the Government that it is
made for a public purpose is not open to challenge. Section 6(3)
says that the declaration of the Government that the acquisition
made is for public purpose shall be conclusive evidence that the E
land is needed for a public purpose. Unless it is shown that there
was a colourable exercise of power, it is not open to this Court to
go behind that declaration and find out whether in a pat1icular
case the purpose for which the land was needed was a public
purpose or not: see S1111. So111ava11ti v. State of Pu11jab AIR
1963 SC 151 and Raja A11a11d Brahma Shah v. State of U.P. F
AIR 1967 SC I 081. On the facts of this case there can be hardly
any doubt that the purpose for which the land was acquired is a
public purpose."
I 0. In Narayan Govi11d Uarnte 1: Slate of Maharashtra ( 1977)
I SCC 133, this Court held that development and utilization of land as G
residential industrial area qualified as "public purpose". This Court held
that:
"6. In writ petitions before the High Court, the submission that
no public purpose existed was not pressed in view of the decision
H
342 SUPREME COURT REPORTS [2016] 11 S.C.R.
A of this Court in Somavanti Smt v. State of Punjab AIR 1963
SC 151. In Ramtanu Cooperative Housing Society Ltd. Shri
v. State of Maharashtra ( 1970) 3 SCC 323, acquisition of land
for development of industrial· areas and residential tenements
for persons to live on industrial estates was held to be legally
vali,d for a genuinely public purpose. This ground, ther¥fore, need
B
not detain us, although the appellants, who are owners of the
properties acquired, have formally raised it also by means of the
six appeals filed by them (Civil Appeals 1616-1621 of 1969). In
agreement with the High Court, we hold that notifications under
Section 4(1) of the Act were valid in all these cases."
c 11. In Arnold Rodricks v. State of Maharashtra ( 1966) 3 SCR
885 the acquisition ofland for development and utilization as industrial
and residential area met the test of "public purpose". This Court laid
down thus:
"We may further take up the question of the validity of Section
D 3(f)(2). In our view it is not necessary to decide this point
. because we have come to the conclusi01; that the notifications
issued under Sections 4 and 6 specified a public purpose;
the purpose specified was '"development and utilization of
the said lands as industrial and residential areas". In our
E opinion this purpose is a public purpose within the Land
Acquisition Act as it stood before the amendment made by the
Bombay Legislature and it is not necessary for the ·respondents
to rely on the amendment to sustain the notification ...
It was urged before us that the State Government was not
F entitled to acquire property from A and give it to B. Reliance
was placed on the decision of the Supreme Judicial Court of
Massachusetts (204 Mass. 607). But as pointed out by this Court,
public purpose varies with the times and the prevailing conditions
in localities, and in some towns like Bombay the conditions are
such that it is imperative that the State should so all it can to
G increase the availabilityofresidential and industrial sites. It is
true that these residential and industrial sites will be
ultimaiely allotted to members of the public and they would
get individual benefit, but it is in the interest of the general
community that these members of the public should be able
H to have sites to put up residential houses and sites to put up
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 343
[ARUN MISHRA, J.]
factories. The main idea in issuing the impugned notifications A
was not to think of the private comfort or advantage of the
members of the public but the general public good. At any
rate, as pointed out in Babu Barkva Thakur v. State of Bombay
[( 1961) 1 SCR 128 at p 13 7] a very large section of the
community is concerned and its welfare is a matter of public
B.
concern. In our view the welfare of a large proportion of persons
living in Bombay is a matterof public concern and the notifications
served to enhance the welfare of this section of the community
and this is public purpose. In conclusion we hold that the
notifications are valid and cannot be impugned on the ground
that they were not issued for any public purpose." [Emphasis c
supplied]
12. In Sooraram Pratap Reddy & Ors. v. District Collect01;
Ranga Reddy District & Ors. (2008) 9 SCC 552 this Court has
considered concept of "eminent domain" and has referred to Susette
Keio v. City ofNew London 162 L.Ed 439 = 545 US 469 wherein it had D
been observed that "using eminent domain for economic development
impennissibly blurs the boundary between the public and private taki1Jgs".
Government's pursuit of a public purpose might benefit individual purpose.
Samuel Berman v. Andrew' Parker, 99 L.Ed 27, has also been referred
to wherein it has been observed that public ownership cannot be said to
be the sole method of promoting the public purposes of community E
redevelopment projects. Other decisions as to public domain have also
been referred to. "Eminent domain" has been discussed thus:
"43. "Eminent domain" may be defined as the right or power
of a sovereign State to take private property for public use without
the owner's consent upon the payment of just compensation. It F
means nothing more or Jess than an inherent political right, founded
on a common necessity and interest of appropriating the property
of individual members of the community to the great necessities
and common good of the whole society. It embraces all cases
where, by the authority of the State and for the public good, the
G
property of an individual is taken without his consent to be devoted
to some particular use, by the State itself, by a corporation, public
or private, or by a private citizen for the welfare of the public
(American Jurispr1Jdence, 2d, Vol. 26, pp. 638-39, Para I;
Corpus Juris Secundum, Vol. 29, p. 776, Para I; Words and
Phrases, Permanent Edition, Vol. 14, pp. 468-70). H
344 SUPREME COURT REPORTS r10161 11 S.C.R.
A 44. '·Eminent domain" is thus inherent power of a
governmental entity to take privately owned property, especially
land and convert it to public use. subject to reasonable
compensation for the taking (vide P. Ramanatha Aiyar s
Advanced Law Lexico11, Vol. 2, p. 1575).
B 45. The term "eminent domain" is said to have originated
by Grotius, legal scholar of the seventeenth century. He believed
that the State possessed the power to take or destroy property
for the benefit of the social unit, but he believed that when the
State so acted, it was obligated to compensate the injured property
owner for his losses. In his well-known work De Jure. Belli
c etPacis, the learned author proclaimed:
''The property of subject is under the eminent domain of
the State, so that the State or he who acts for it may use,
alienate and even destroy such prope11y, not only in the case
of extreme necessity, in which even private persons have a
D right over the property of the other, but forthe ends of public
utility, to which ends those who founded civil society must be
supposed to have intended the private ends should give way."
46. Blackstone too believed that the State had no general
power to take private property of landowners, except on the
E payment of a reasonable price. The right of the State or the
sovereign to its or his own prope11y is absolute while that of the
subject or citizen to his property is only paramount. The citizen
holds his property subject always to the right of the sovereign to
take it for a public purpose. The power of eminent domain is
F merely a means to an end viz. larger public interest.
47. The power of eminent domain does not depend for its
existence on a specific grant. It is inherent and exists in every
sovereign State without any recognition thereof in the Constitution
or in any statute. It is founded on the law of necessity. The
G power is inalienable. No legislature can bind itself or its successors
not to exercise this oower when public necessity demands it.
Nor can it be abridged or restricted by agreement or contract.
48. Nichols in his classic book £111i11e11t Domain defines it
(eminent domain) as "the power of sovereign to take property
for public use without the owner·, consent".
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 345
[ARUN MISHRA, J.]
49. Another constitutional expert (Cooley) in his treatise on A
the Constitutional Limitations, states:
"More accurately, it is the rightful authority which must rest
in eve1y sovereignty to control and regulate those rights of a
public nature which pertain to its citizens in common and to
appropriate and control individual property for the public benefit, B
as the public safety, convenience or necessity may demand."
50. Willis in his well-known work Constitutional Lall'
discusses two viewpoints as to exercise of power of eminent
domain. The older and stricter view was that unless the property
was dedicated for user by the public at large or a considerable c
section thereof, it would not be for public use or for public
purpose. The modern and more liberal view,"however, is that it is
not an essential condition of public use that the property should
be transfeITed to public ownership or for public user and it is
sufficient that the public derives advantage from the scheme.
D
51. In Fall brook Irrigation District v. Bradley 4 I. L Ed
369 : 164 US 112 (1896) an Act of California provided for the
acquisition of lands whenever fifty landowners or a majority of
them in a pa1ticular locality required it for construction of a
watercourse, the object of the legisl~tion being to enable dry
lands to be brought under wet cultivation. The validity of the Act E
was challenged on the ground that the acquisition would only
benefit pa11icular landowners who could take water from the
channel and the public as such had.no direct interest in the matter
and consequently there was no public user. The contention was
right ifnarrow view was to be accepted but was not well founded
F
if liberal view was to be adopted. Rejecting the contention, the
Court observed: (L Ed pp. 389-90)
"To irrigate and thus to bring into possible cultivation these
large masses of otherwise worthless lands would seem to be a
public purpose and a matter of public interest, not confined to
G
the landowners, or even to any one section of the State. The
fact that the use of the water is 1imited to the landowners is
not, therefore, a fatal objection to this legislation. It is not
essential that the entire community, or even any
considerable portion thereof, should directly enjoy or
participate in an improvement in order to constitute a public H
346 . SUPREME COURT REPORTS [2016] 11 S.C.R.
A use. ... It is not necessary, in order that the use should be
public, that every resident in the district should have the
right to the ttse of the water."
(emphasis supplied)
The aq9ve statement of law was reiterated in subsequent
B cases. '...,
52. In Rindge Co. v. County ofLos Angeles 67 L Ed 1186:
262 US 700 (1922) the Court observed t!Jat: (L Ed p. 1192)
" ... It is not essential that the entire community, nor even any .
c considerable portion, should directly enjoy or participate in an
improvement in order to constitute a public use".·
53. In New York City HousinJ? Authority v. Muller 270
NYP 333 : I 05 ALR 905 certain lands were acquired in pursuance
of a governmental project for clearing slums and providing housing
D accommodation to persons with low income. The validity of the
acquisition was questioned on the ground that the use was private
and not public. The Court, however, rejected the contention and
stated:
"Over many years and in a multitude of cases the courts
have vainly attempted to define comprehensively the concept
E
of a public use; and to formulate a universal' test even though it
were possible, would in an inevitably changing world be unwise
ifncit futile." ·
... and holding that those purposes were for the benefit of
the public the Court went on to observe:
F
"It is also said that since the taking is to provide apartments
to be rented to a dass designated as persons of low income or
to be leased or sold to limited dividend corporations the use is
priyate and not public. This objection disregards the primary
purpose of the legislation. Use ofa proposed structure,facility
G or service by ·everybody and anybody is one of the
abandoned, univer~l tests of a public use ."(emphasis
supplied)
54. In Murray v. LaGuardia 291 NY 320 a town corporation
was formed for acquiring certain lands. It was financed by
H Metropolitan Insurance Company which held all the stocks of
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 347
[ARUN MISHRA, J.]
the corporation. The owners of the lands contended that the A
scheme was to benefit only few individuals and the Insurance
Company which was aprivate·corporation and there was no
public use in the proJect. The Court, however, rejected the
argument. Dealing with/the contention that there was no public
use in the project because the Insurance Company was benefited,
B
the Court observed:
"Nor do we find merit in the related argument that
unconstitutionality results from the fact that in the present case
the statute permits the city to exercise the power of 'eminent
domain' to accomplish a project from which 'Metropolitan', a
private corporation may ultimately reap a profit. If upon
c
completion of the project the public good is enhanced it
does not matter that private interests may be benefited."
(emphasis supplied)
55. In Samuel Berman v. Andrew Parker 99 L Ed 27 : 348
US 26, owners instituted an action of condemnation of their D
property under the District of Columbia Redevelopment Act, 1945.
Plans were approved and the Planning Commission certified them
to the agency for execution. The agency undertook the exercise
of redevelopment of the area. It was contended by the landowners
that the project was not public project and their property could E
not be acquired. Rejecting the contention, the Court observed
that it does not sit to determine whether a particular housing
project is or is not desirable.
56. The concept of public welfare is broad and inclusive.
The values it represents are spiritual as well as physical, aesthetic F
as well as monetary. It is within the power of the legislature to
determine that the community should be beautiful as also healthy,
spacious as also clean, well balanced as also carefully patrolled.
According to the Court, the Congress and its authorised agencies
nave made determinations that take into account a wide variety
of values and it was not for the Court to reappraise them: G
" ... If those who govern the District of Columbia decide
that the nation'.\'. capital should be beautiful as well as
sanitary, there is nothing in the Fifth Amendment that stands
in the way." (Samuel Berman case 99 L Ed 27, L Ed p.38 :
348 us 26) H
348 SUPREME COURT REPORTS f20161 11 S.C.R.
A 57. Dealing with the contention that the project was
undertaken by one businessman for the benefit of another
businessman, the Court observed: (Samuel Berman case[ supra])
"The public end may be as we11 or better served through
an agency of private enterprise than through a department
8 of government-or so the Congress might conclude. We
cannot say that public ownership is the sole method of
promoting the public purposes of community redevelopment
projects. What we have said also disposes of any contention
concerning the fact that certain property owners in the area
may be permitted to repurchase their properties for
c redevelopment in harmony with the overall plan. That, too, is a
legitimate means which Congress and its agencies may adopt,
if they choose." (emphasis supplied)
58. In Hawaii Housin;z Authority v. Midkiff 81 L
D Ed 2d I_ 86 : 467 US 229 (1984) the Cou11 held that, no doubt
there is a role for courts to play in reviewing a legislature's
judgment of what constitutes a pub! ic use, even when the eminent
domain power is equated with the police power. Butthe Court in
Berman (supra) made clear that it is ·'extremely narrow". The
Court emphasised that any departure from this judicial restraint
E would result in courts deciding on what is and what is not a
governmental function and in their invalidating legislation on the
basis of their view on that question. And the court would not
substitute its judgment for a legislatun.:·s judgment as to·what
constitutes a public use "unless the use be palpably without
F reasonable foundation".
59. Recently, in SusetteKelo v. City ofNe1r London l 62 L
Ed 439: 545 US 469 the landowners challenged the city's exercise
of eminent domain power on the ground that it was not for
public use. The project in question was a community project for
economic revitalisation of the city ofNew London for which the
G
land was acquired. It was submitted by the learned counsel for
the respondents that the facts in Keio (supra) were similar to
the facts of the present case. For that the counsel relied upon
the integrated development project. Dealing with the project, the
Court stated: [Keio case (supra)]
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS ... 349
[ARUN MISHRA, J.]
"The Fort Trumbull area is situated on a peninsula that juts into A
Thames River. The area comprises approximately 115 privately
owned properties, as well as the 32 acres of land formerly
occupied by the naval facility (Trumbull State Park now
occupies 18 of those 32 acres). Parcel I is designated for a
waterfront conference hotel at the center of a 'small urban
B
village' that will include restaurants and shopping. This parcel
will also have marinas for both recreational and commercial
uses. A pedestrian 'riverwalk' will originate here and continue
down the coast, connecting the waterfrcmt areas of the
development. Parcel 2 will be the site of approximately 80
new residences organised into an urban neighbourhood and c
linked by public walkway to the remainder of the development,
including the State park. This parcel also includes space
reserved for a new US Coast Guard Museum. Parcel 3, which
is located immediately north of the Pfizer facility, will contain
at least 90,000 sqft of research and development office space.
D
Parcel 4A is a 2.4 acre site that wi II be used either to support
the adjacent State park, by providing parking or retai I services
for visitors, or to support the nearby marina. Parcel 4B will
include a renovated marina, as well as the final stretch of the
ri~rwalk. Parcels 5, 6 and 7 will provjde land for office and
retail space, parking, and water-dependent commercial uses." E
The Court also stated:
"Two polar propositions are perfectly clear. On the one hand,
it has long been accepted that the sovereign may not take the
property of A for the sole purpose of transferring it to another
private party B, even though A is paid just compensation. On F
the other hand, it is equally clear that a State may transfer
property from one private party to another if future 'use by the
public' is1he purpose o'fthe taking; the condemnation ofland
for a railroad with commonccarrier duties is a familiar example."
The Court noted the contention of the petitiorters that "using G
eminent domain for economic development impermissibly blurs
the boundary between public and private takings". It also
conceded that quite simply; the Government's pursuit of a public
purpose might benefit individual private pa1 ties, but rejected the·
argume!lt by stating: H
350 SUPREME COURT REPORTS [2016] 11 S.C.R.
A "When the legislature's purpose is legitimate and its mean~
are not irrational, our cases make clear that empirical debates
over the wisdom of other kinds of socio-economic legislation
are no.t to be carried o_ut in the Federal Courts."
60. The Court reiterated: (Samuel Berman case (supra)
B "The public end may be as well or better served through an
agency of ptivate enterprise than through a department of
government--or so the Congress might conclude. We cannot
say that public ownership is .the sole method oj promoting
the public purposes of community redevelopment projects."
c 61. The above principles have been accepted and applied
in India also. Immediately after the Constitution came into force,
this Court had an occasion to consider the power of eminent
domain in the leading case of Charanjit Lal Chowdhury v.
Union of India AIR 1951 SC 41 : 1950 SCR 869. Referring to
D the doctrine of eminent domain· in the American legal system,
Mukherjea, J. (as His Lordship then was) stated: (Charanjit
Lal case (sup1'a) '
"./8. It is a right inherent in every sovereign to take and
appropriate private propert)' belonging to individual citizens for
E public use. This right, which is described as eminent domain
in American law, is like the power of taxation, and offspring of
political necessity, and it is supposed to be based upon an implied
reservation by Government that private property acquired by
its citizens under its protection may be taken or its use controlled
for public benefit irrespective of the wishes of the owner."
F
62. In Commr. & Collector v. Durganath Sanna AIR 1968
SC 394 : ( 1968) l SCR 561 drawing distinction between police
power and power of f!111inentdomain, this Court observed: (SCC
p. 399, para 9)
"9 . ... In the exercise of its eminent domain power the
G
State may take any property from the owner and may
appropriate it for public purposes. The police and eminent
domain powers are essentially distinct. Under the police power
many restrictions may be imposed and the property may even
be destroyed without compensation being given, whereas under
H the power of eminent domain, the property may be appropriated
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 351
rARUN MISHRA, J.l
to public use on payment of compensation only." A
63. In Coffee Board v. CCT (1988) 3 SCC 263 referring to
American authorities, Mukharji, J. (as His Lordship then was)
stated: (SCC p. 282, para 29)
"29 . ... It is trite knowledge that eminent domain is an
essential attribute of sovereignty of every State and authorities B
are universal in support of the definition of eminent domain as
the power of the sovereign to take property for public use
without the owner's consent upon makingjust compensation."
64. In Scindia Employees' Union v. State of Maharashtra
(1996) 10 SCC 150 this Court observed: (SCC p. 152, para 4) c
"4 . ... The very object of compulsory acquisition is in
exercise of the power of eminent domain by the State against
the wishes or willingness of the owner or person interested in
the land. Therefore, so long as the public purpose subsists the
exercise of the power of eminent domain cannot be questioned. D
Publication of declaration under Section 6 is conclusive
evidence of public purpose. In view of the finding that it is a
question of expansion of dockyard for defence purpose, it is a
public pmpose."
65. In Sharda Devi v. State of Bihar (2003) 3 SCC 128 E
this Court said: (SCC p. 144, para 27)
"27 ... The power to acquire by the State the land owned
by its subjects hails from the right of eminent domain vesting in
the State which is essentially an attribute of sovereign power
of the State. So long as the public purpose subsists, the exercise F
of the power by the State to acquire the land of its subjects
without regard to the wishes or willingness of the owner or
person interested in the land cannot be questioned."
-::i
13. The definition of "Public purpose" as amended in 1984 has
been considered in Sooraram Pratap Re_ddy (supra) thus : G
"67. The expression "public purpose" is of very wide
amplitude. It is merely illustrative and not exhaustive. The inclusive
definition does not restrict its ambit and scope. Really, the
expression is incapable of precise and comprehensive definition.
And it is neither desirable nor advisable to attempt to define it. It H
352 SUPREME COURT REPORTS [2016] 11 S.C.R.
A is used in a generic sense of including any purpose wherein even
a fractiqn of the community may be interested or by which it
may be benefited.
68. We may .also refer to few decisions wherein the
expression came up for consideration of coutis.
B 69. Before about a century, in Hamabai Framjee Petit v.
Secy. of State for India in Council AIR 1914 PC 20 certain
lands were sought to be acquired for erecting buildings for the
use of government officials. The action was challenged in the
High Court of Judicature at Bombay contending that the purpose
c ofacquisition could not be said to be "public purpose". Negativing
the arguments and upholding the acquisition, Batchelor, J.
observed: (Hamabai case).
" ... 'General definitions are, I think, rather to be avoided
where the avoidance is possible, and I make no attempt to
D define precisely the extent of the phrase "public purposes" in
the lease; it is enough to say that, in my opinion, the phrase,
whatever else it may mean, must include a purpose, that is,
an object or aim, in which the general interest of the
community, as opposed to the particular interest of
individuals, is directly and vitally concerned.' "(emphasis
E supplied)
The aggrieved appellant approached the Privy Council. The
Council in Hamabai Framjee Petit v. Secy. of State for India
in Council AIR 1914 PC 20 approved the above observations
of Batchelor, J. Speaking for the Judicial Committee, Lord
F Dunedin stated: (IA p. 47)
" ... all that remains is to determine whether the purpose
here is a purpose in which the general interest of the community
is concerned. Prima facie the Government are good judges of
that. They are not absolute judges. They cannot say: 'Sic volo
G sicjubeo', but at least a court would not easily hold them to be
wrong. But here, so far from holding them to be wrong, the
whole of the learned Judges, who are thoroughly conversant
with the conditions of Indian life, say that they are satisfied
that the scheme is one which will redound to public benefit by
helping the Government to maintain the efficiency of its
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 353
fARUN MISHRA, J.l
servants. From such a conclusion Their Lordships would A
be slow to differ, and upon its own statement it commends
itse(f to theirjudf!,ment." (emphasis supplieq)
70. In Veeraraghavachariar V. Sl!cy. of State for India
AIR 1925 Mad 837 certain vacant sites were acquired for
enabling panchamas to build houses. It was argued that this was B
not a public purpose as the benefits of the acquisition were to go
only to few individuals. The contention was rejected by the Court
observing that it is not possible to define what a public purpose
is. There can be no doubt that provision of house sites for poor
people is a public purpose for it benefits a large class of people
and not one or two individuals. c
71. In State of Bihar v. Kameshwar Singh AIR 1952 SC
252 a Constittition Bench of this Court was examining vires of
certain provisions of the Bihar Land Reforms Act, 1950 and
other State laws in the context of Article 31 of the Constitution
(as then stood). The constitutional validity was challenged on D
the ground that the Act failed to provide for compensation and
there was lack of public purpose. The Court, however, negatived
the contention. As to "public purpose", Mahajan, J. (as His
Lordship then was), observed: (Kameshil'ar Singh case [supra])
"208 . ... The expression 'public purpose' is not capable of a E
precise definition and has not a rigid meaning. It can only be
defined by a process ofjudicial inclusion and exclusion. In other
words, the definition of the expression is elastic and takes its
colour from the statute in which it occurs, the concept varying
with the time and state of society and its needs. The point to F
be determined in each case is whether the acquisition is in
the general interest of the community as distinguished from
the private interest of an individual." (emphasis supplied)
In the concurring judgment, S.R. Das, J. (as His Lordship then
was) stated: (Kameshwar Singh case (supra), AIR p. 290, para G
106)
"I 06. From what I have stated so far, it follows that whatever
furthers the general interests of the community as opposed to
the particular interest of the individual must be regarded as a
public purpose. With the onward march of civilisation our notions
H
354 SUPREME COURT REPORTS [20I6] I I S.C.R.
A as to the scope of the general interest of the community are fast
changing and widening with the result that our old and narrower
notions as to the sanctity of the private interest of the individual
can no longer stem the forward flowing tide of time and must
necessarily give way to the broader notions of the general.interest
of the community. The emphasis is unmistakably shi.ftingfrom
B
the individual to the community. This modern trend in the
social and political philosophy is well reflected and given
expression to in our Constitution." (emphasis supplied)
72. In State of Bombay v. Ali Gulshan AIR I 955 SC 8 I 0
a Constitution Bench of this Court considered vires of the Bombay
c Land Requisition Act, 1948. (Act 23 of 1948). Interpreting
provisions of the Omstitution and Schedule VII thereof, the Court
held that requisition of property by the Government of Bombay
for accommodation of foreign consulate could be said to be "public
purpose". It was held that every State purpose or Union purpose
D is a public purpose but there may be acquisition or requisition
which is neither for the State nor for the lJ nion and yet it may be
for a "public purpose"; for instance, acquisition for construction
of hospital or educational institution by a private individual or
institution.
E 73. In State of Bombay v. R.S. Nanji AIR 1956 SC 294
land was requisitioned for accommodating employees of Road
Transport Corporation. It was contended that there was no
"public purpose" and hence the action was illegal. Referring to
Hamabai(supra), Ali Gulshan AIJ3. 1955 SC 810 and State of
Bombay v. Bhanji Munji AIR 1955 SC 41, the Constitution
F Bench stated that the expression "public purpose" must be
decided in each case examining closely all the facts and
circumstances of the case. On the facts of the case, it was held
that a breakdown in the organisation,ofthe Corporation, leading
to dislocation of the road transport system would create a chaotic
G condition to the detriment of the interest of the community.
Providing living accommodation for its employees is a statutory
activity of the Corporation and it is essential for the Corporation
to provide such accommodation in order to ensure an efficient
working of the road transport system and it must, therefore, be
held to be "public purpose".
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 355
[ARUN MISHRA, J.]
74. In the leading case of Somawanti v. State of Punjab A
AIR 1963 SC 151 certain lands were acquired by the Government
for public purpose viz. for setting up a factory for manufacturing
various ranges of refrigeration compressors and ancillary
equipments. It was contended that acquisition was not for "public
purpose" and hence it was unlawful.
B
75. Interpreting ihclusive definition of"public purpose" in
the Act, Mudholkar, J. stated: (Somawanti case, AIR p. 161,
para 24)
"2./ . ... This is an inclusive definition and not a compendious
one and, therefore, does not assist us very much in ascertaining c
the ambit of the expression 'public purpose'. Broadly speaking
the expression 'public purpose' would, however, include a
purpose in which the general interest of the community, as
opposed to the particular interest of individuals, is directly and
vitally concerned."
D
It was also observed that ''public purpose" is bound to vary with
the times and the prevailing conditions in a given locality and,
therefore, it would not !Je a practical proposition even to attempt
a comprehensive definition of it. It is because of this that the
legislature has left it to the Government to say what is a public
purpose and also to declare the need of a given land for a public E
purpose.
76. In Arnold Rodricks v. State of Maharashtra AIR
1966 SC 1788 this Court held that the phrase "public purpose"
has no static connotation, which is fixed for all times. It is also
not possible to lay down a definition of what public purpose is, as F
the concept of public purpose may change from time to time. It,
'however, involves in it an element of general interest of the
community which should be regarded as a public purpose.
77. In Bhim Singhji v. Union of India (1981) I SCC 166
this Court held that the concept of public purpose implies that G
acquisition or requisition of property is in the interest of general
public and the purpose for which such acquisition or requisition
is made directly and vitally subserves pub! ic interest.
78. Recently, in Dau/at Singh Surano v. Collector (L.A.)
(2007) I SCC 641 land was sought to be acquired for construction H
356 SUPREME-COURT REPORTS f2016] l 1 S.C.R.
A of office of the Deputy Commissioner of Police (Security
Control). It v:as contended that there was no element of publi.c
purpose and hence the acquisition was not in accordance with
law. Negativing the contention and upholding the acquisition, the
Court held that the expression "public purpose" includes a public
purpose in which greatest interest of the community as opposed
B
to a particular interest of an individual is directly concerned. The
concept is not static but changes with the passage of time. Power
of eminent domain can, therefore, be exercised by the State in
public interest.
79. A "public purpose" is thus wider than a "public
c necessity". Purpose is more pervasive than urgency. That which
one sets before him to accomplish, an end, intention, ·aim, object,
plan or project, is purpose. A need or necessity, on the other
hand, is urgent, unavoidable, compulsive. "Public purpose should
be liberally construed, not whittled down by
D logomachy."( emphasis supplied)
80. In State of Karnataka v. Ranganatha Reddy ( 1977)
4 SCC 471 Krishna Iyer, J. stated: (SCC p. 502, para 57)
"57. :.. There may be many processes of satisfying a public
purpose. A wide range of choices may exist. The State may
E walk into the open market and buy the items, movable and
immovable, to fulfil the public purpose; or it may compulsorily
acquire from some private person's possession and ownership
the articles needed to meet the public purpose; it may
requisition, instead ofresorting to acquisition; it may take on
F loan or on hire or itself manufacture or produce. All these steps
are various alternative means to meet the public purpose. The
State may need chalk or cheese, pins, pens or planes, boats,
buses or buildings, carts, cars, or eating houses or any other of
the innumerable items to run a welfare-oriented administration
or a public corporation or answer a community requirement. If
G the purpose is for servicing the public, as governmental purposes
ordinarily are, then evel)'thing desiderated for subserving such
public purpose falls under the broad and expanding rubric. The
nexus between the taking of property and the public purpose
springs necessarily into existence ifthe former is capable of
H answering the latter. On the other hand, if the purpose is a
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 357
, [ARUN MISHRA, J.]
private or non-public one, the mere fact that the hand that A
acquires or requires is Government or a public corporation,
does not make the purpose automatically a public purpose. Let
us illustrate. If a fleet of cars is desired for conveyance of
public officers, the purpose is a public one. If the same fleet of
cars is sought for fulfilling the tourist appetite of friends and
relations of the same public officers, it is a private purpose. If
B
bread is 'seized' for feeding a starving section of the community,
it is a public purpose that is met but, ifthe same bread is desired
for the private dinner of a political maharajah who may pro
tern fill a public office, it is a~private purpose. Of course, the
thing taken must be capable of serving the object of the taking. c
If you want .to run bus transport you cannot take
buffaloes."
81. As observed by Bhagwati, J. (as His Lordship then
was) in National Textile Workers' Union v. P.R. Ramakrishnan
( 1983) I SCC 228 the law must adapt itself with the changing D
socio-economic context. His Lordship said: (SCC p. 255, para
9)
"9 . ... We cannot allow the dead hand of the past to stifle the
growth of the living present. Law cannot stand still; it must
change with the changing social concepts and values. If the E
bark that protects the tree fails to grow and expand along with
the tree, it will either choke the tree or if it is a living tree, it will
shed that bark and grow a new living bark for itself. Similarly,
if the law fails to respond to the needs of changing society,
then either it will stifle the growth of the society and choke its
progress or ifthe society is vigorous enough, it will cast away F
the law which stands in the way of its growth. Law must
therefore constantly be on the move adapting itself to the
fast changing society and not lag behind."
(emphasis supplied)
G
82. Finally,"we may refer to the Tenth Report of the Law
Commission of India on "The Law of Acquisition and
Requisitioning of Land" wherein the Law Commission
considering the meaning of"public purpose" under the-Act, stated:
"37. (a) Public pwpo:se .-Public purpose is not defined in
H
358 SUPREME COURT REPORTS [2016] 11 S.C.R.
A the Act. There is only an inclusive definition which relates to
village sites in districts. In other respects, there is no indication
in the Act of any test for determining whether a purpose is a
public purpose or not. A large number of suggestions have
been r.eceived by us urging that we should clearly and
exhaustively define the term 'public purpose'. In an ever-
B
changing world, the connotation of the expression 'public
purpose' must necessarily change. If a precise definition is
enacted, it would become rigid and leave no room for alteration
in the light of changing circumstances. It would leave no room
for the courts to adjust the meaning of the expression
c according to the needs of the times."
(emphasis supplied)
Referring to leading authorities on eminent domain and "public
purpose'', the Commission observed:
D "38 . ... It is, in our view, neither possible nor expedient to
attempt an exhaustive definition of public purposes. The only
guiding rule for the determination of its meaning is that the
proposed acquisition or requisition should tend to promote the
welfare of the community as distinct from the benefit conferred
upon an individu·a1. The mere fact that the immediate use is
E to benefit a particular individual would not prevent the
purpose being a public one, if in the result it is conducive
to the welfare ofthe community. The question is exhaustively
discussed in P. Thambiran Padayachi v. State of Madras
AIR 1952 Mad 756 by Venkatarama Aiyar, J. All that can,
F therefore, be attempted in a legislation of this kind is to provide
an inclusive definition, so as to endow it with sufficient elasticity
to enable the courts to interpret the meaning of the expression
'public purpose' according to the needs of the situation, and
this is what we have attempted."
G This Court has observed in Sooraram Pratap Reddy (supra) that public
purpose is of very wide amplitude. It has referred to State of Bombay"
Ali Gulshan,AIR 1955 SC 810 where considering the public purpose it
was held that there may be acquisition or requisition which is neither for
the State nor for the Union yet it may be for public purpose. Dau/at
Singh Surana & Ors. v. First Land Acquisition Collector & Ors.
H (2007) I SCC 641 has also been referred to in which it has been laid
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 359
[ARUN MISHRA, J.]
down that public purpose includes a purpose in which the greatest interest A
is of community as opposed to particular interest of an individual is directly
concerned. The concept is not static but changes with the passage of
time. Power of eminent domain can therefore be exercised by the State
only in public interest. The project in hand would have definitely served
the public purpose and public purpose should be liberally construed, not· B
whittled down by logomachy. It has been observed in National Textile
Workers' Union v. P.R.Ramakrishnan & Ors. (1983) 1 SCC 228 that
law must change with the changing social concepts and values. Ifthe
law fails to respond to needs of changing society, then either it will stifle
the growth of the society and choke its progress or if the society is
vigorous enough, it will cast away the law which stands in the way of its c
growth. Law must constantly be on the move adapting itself to the fast-
changing society and not lag behind, that is, to adjust to the meaning of
the expression according to the needs of the times in the matter of public
purpose. That is the purpose behind the inclusive definition of public
purpose in section 3(t) also.
D
14. This Court has again considered the public purpose in Nand
Kishore Gupta v. State of Uttar Pradesh and Ors. '(2010) 10 SCC
282. On a consideration of various judgments in Sooraram Pratap Reddy
v. District Collector (2008) 9 SCC 552, JhanduLal v. State of Punjab
(AIR 1961 SC 343) and various other decisions, this Court has laid down
thus: E
"56. During the debate, our attention was invited to Section 3(()
of the Act, which contains a definition for "public purpose". It
was pointed out that where the acquisition is for the Company, it
cannot amount to a public purpose. There can be no dispute
about this proposition that where the acquisition ofland is forthe F
companies, it cannot amountto a public purpose. It was, therefore,
our endeavour to find out_whether this land was for the Company
and we are quite satisfied with a finding recorded by the High
Court that this acquisition was not for the Company but was for
the public purpose. G
57. The Expressway is a work of immense public importance.
The State gains advantages from the construction of an
expressway and so does the general public. Creation of a corridor
for fast-moving traffic resulting into curtailing the travelling time,
as·also the transport of the goods, would be some factors which . H
360 SUPREME COURT REPORTS r2o 16111 S.C.R.
A speak in favour of the Project being for the public purpose. Much
was stated about the 25 million sq m of land being acquired for
the five parcels of land. In fact, in our opinion, as has rightly
been commented upon by the High Court, the creation of the
five zones for industry, residenpe, amusement, etc. would be
complementary to the creation of the Expressway.
B
58. It cannot be forgotten that the creation of land parcels would
give impetus to the industrial development of the State creating
more jobs and helping the economy and thereby helping the
general public. There can be no doubt that the implementation of
the Project would result in coming into existence of five
c developed parcels/centres in the State for the use of the citizens.
There shall, thus, be the planned development of this otherwise
industrially backward area. The creation of these five parcels
will certainly help the maximum utilisation of the Expressway
and the existence of an Expressway for the fast-moving traffic
D would help the industrial culture created in the five parcels. Thus,
both will be complimentary to each other and can be viewed as
parts of an integral scheme. Therefore, it cannot be said that it is
not a public purpose.
59. We must, at this stage, take into account the argument that
E the whole compensation is coming wholly from the Company
and not from the Government or from YEIDA. The appellants
invited our attention to Clause 4.1 (d) of the Concession
Agreement. On that basis, if was argued that the Company has
paid the compensation cost and, therefore, the acquisition is clearly
covered under Part VII of the Act, and there may be no public
F purpose ifthe acquisition is made for the Company and it is the
Company who has to shell out the whole compensation. Now,
this argument is clearly incorrect.
60. Even if we accept for the sake of argument that all this
compensation is coming from the Company, we must firstly bear
G it in mind that the Company gets no proprietary or ownership
rights over the Project assets. Now, if it is presumed that the
compensation is coming from the Company, then it will have to
be held that the whole assets would go to the Company. At least
that is envisaged in Part VII of the Act. Here, that is not the
H case. The assets are to revert back to the acquiring body or, as
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 361
[ARUN MISHRA, J.]
the case may be, the Government. Even the lands which are A
utilised for the construction of the Expressway are to go back to
the Government barely after 36 years i.e. after the Company
has utilised its rights to recover the toll on the Expressway:
Secondly, it must be borne in mind that the Concession Agreement
has been executed in February 2003, whereas the acquisition
B
process started somewhere in the month of September 2007.
61. When the Concession Agreement was executed, the cost
factor was not known. The acquiring body was only to make
available the land to the concessionaire to implement the Project.
There would be a number of difficulties arising, as for example,
it would be clearly not contemplated that the land would be made
c
available without any value or that there would be no scheme
for the State Government for recovering the expenses that it
would incur in obtaining the land. The learnea counsel appearing ·
for the State as also for the Company and YEIDA argued that in
order to overcome and iron out such difficulties, the Agreement D
provides that the land would be leased on a premium equivalent
to the acquisition cost. This·argument proceeds on the basis of
Clause 4.3(C) of the Concession Agreement. It is to be noted
then that the premium of the land was not going to be just the
acquisition cost, but also the lease rent of Rs. 100 per hectare. ·
Therefore, the State Government was to earn Rs. 100 per hectare E
for the total acquired land, which was about 25 million sq mover
and above the compensation to be decided. The mention of the
compensation amount in addition to the lease money of Rs. I 00
per hectare would clearly provide that the whole compensation
was not going to be paid by the Company alone. This is apart F
from the fact that through this Agreement, only the extent of the
compensation payable by the Company to YEIDA was decided.
However, once all the amounts went to the coffers ofYEIDA, it
would lose its independent character as a premium. When it
goes into the coffers ofYEIDA, it is YEIDA which would make
the payments of the estimated compensation and thereby it would G
be as if the compensation is paid not by the Company, but by
YEIDA. .
62. The respondents have relied on the law laid down in Pratibha
Nema case (2003) 10 SCC 626, more particularly, paras 24 and
25 therein. The respondents also argued ~elying upon the decision H
362 SUPREME COURT REPORTS [2016] 11 S.C.R.
A in Naihati Municipality v. Chinmoyee Mukherjee ( 1996) I 0
SCC 632. The respondents argued that the law laid down in
Pratibha Nema case (supra) emanates from the judgment in
Naihati Municipality v. Chinmoyee Mukherjee (supra).
63. Two judgments in State of Karnataka v. All India
B Manl{facturers Organisation (2006) 4 SCC 683 and Sooraram
Pratap Reddy v. Collector (2008) 9 SCC 552 were pressed in
service by the respondents.
64. The first judgment in State of Karnataka v. All India
Manl{facturers Organisation (supra) pertain to Bangalore-
c Mysore Infrastructure Corridor Project. While considering what
the public purpose was, this Court in paras 76, 77, 78 and 79 took
stock of the contention, whereby it was suggested that land far
away from the actual alignment of the road and periphery had
been acquired and, therefore, even ifthe implementation of the
Highway Project was assumed to be for the public purpose, the
D acquisition of the land far away therefrom would not amount to
a public purpose nor would it be covered by the provisions of the
Karnataka Industrial Areas Development Act, 1966 (the KIAD
Act). ,.
65. In the present case also, it was argued that the lands which
E are being acquired for the interchange would not at all be
necessary. Fmiher, it was argued that the five parcels of land
which are being acquired forthe development of five industrial
townships, could not be said to be for the public purpose nor
could it be said to be a part of the present integrated scheme.
This Court had refuted this argument holding that even in case
of Bangalore-Mysore Highway Project, the lands even a little
away from the main alignment of the road, had to be a part of
this Project and the Project was an integrated infrastructure
development project and not merely a highway project. It was
conceived originally as the Bangalore-Mysore Infrastructure
G CoJTidor Project, which conceived of the development ofroads
between Bangalore and Mysore, for which there were several
interchanges in and'around the periphery of the city of Bangalore,
together with numerous developmental infrastructure activities
along with the highway at several points. The situation is no
different in the present case. Therefore, the contention that this
H
KEDAR NATHYADAV v. STATE OF WEST BENGAL & ORS. 363
[ARUN MISHRA, J.l
acquisition was not for public purpose, is rejected. A
66. In Sooraram Pratap Reddy v. Collector (supra) the same
question cropped up which has been mentioned in paras 9, 10
and 11 of the judgment suggesting that there was no public purpose
and in fact, it was an acquisition for a private company under
Part VII of the Act and, therefore, the power of eminent domain B
would have no application to such case. The contentions raised
in that judgment in paras 16, 17 and 18 are almost similar to the
contentions raised herein. The Court has extensively dealt with
the question of public purpose in para 66 and has taken stock of
. practically all the cases till para 109 therein. It will not be necessary
for us to repeat all the case law and the questions raised and
c
considered in these paragraphs, such as industrial policy of th~
State, acquisition for Company, etc.
67. In fact, while considering the contention regarding the
industrial policy of the State, the Court has taken into consideration
the oft quoted case of Dhampur Sugar (Kashipur) Ltd. v. State D
of Uttaranchal (2007) 8 SCC 418 where this Court has come
to the conclusion that in the absence of illegality or violation of
law, a court oflaw will not interfere in the policy matters. Similar
is the case here, where the development of the industrial
infrastructure along the Expressway for the overall betterment E
of the region and further for the industrialisation of the otherwise
backward region ofUttar Pradesh, was considered as a policy.
In this..judgment again, the Court has extensively considered the
question as to whether and under what circumstances, the
acquisition could be said t<'> be the acquisition for the Company.
In that, the Court has also considered the decision in Babu F
Barkya Thakur v. State of Bombay AIR 1960 SC 1203.
68. The Court quoted the observations in the aforementionep
decision in Babu Barkya Thakur v. State of Bombay (supra)
to the following effect: {AIR 1960 SC p. 1207, para 10)
G
"I 0 . ... These requirements indicate that the acquisition for
a company also is in substance for a public purpose inasmuch
as it cannot be seriously contended that constructing dwelling
houses, and providing amenities for the benefit of the workmen
employed by it and construction of some work of public utility
do not serve a public purpose." H
364 SUPREME COURT REPORTS [2016] 11 S.C.R.
A 69. We have already considered this question that in the present
case, there is nothing to indicate that the acquisition is for the
Company i.e. for Jaiprakash Industries Ltd. It is only, therefore,
that we are at pains to point out that the Government was only
using the Company for implementing its policy.
B 70. In the aforementioned judgment of Sooraram Pratap Reddy
v. Collector (supra), Hon'ble Thakker, J. has also referred to
the decision in Jhandu Lal v. State of Punjab AIR 1961 SC 343
where the acquisition was for construction of houses by members
ofThapar Industries Cooperative Housing Society Ltd., Yamuna
Nagar. The challenge was that there was non-compliance with
c the provisions of Part VII of the Act, though the acquisition was
for the Company under Part VII of the Act. The High Court, in
that case, held that the acquisition was for a public purpose and
there was no need to comply with the provisions of Part VII of
the Ac(
D 71. In fact, practically all the decisions on the subject ofacquisition
for the Company and public purpose have been comidered in
this judgment of Sooraram Pratap Reddy v. Collector (supra),
which itself is a locus classic~1s. Ultimately, this Court came to
the conclusion that the acquisition made by the State ofAndhra
E Pradesh could not be faulted, as it was in pursuance of policy
decision for development of the.city of Hyderabad and in
pursuance of that policy, an integrated project was taken up for
development of the city of Hyderabad into a business-cum-leisure
tourism infrastructure centre. The Court also came to the
conclusion that Andhra Pradesh Infrastructure and Investment
F Corporation (APIIC) in the reported decision was a nodal agency
like YEIDA in the present case which was to generate the
revenue and help the development of infrastructure for
industrialisation of the area. The Court also recognised that such
- instrumentality of the State would have the power of eminent
G domain. Like the present case~ the Court held the Project to be
an integrated and indivisible project-We have no doubt that in
the present case also, the Expressway as well as the five parcels
which are to be developed are part of an integrated and indivisiqle
project.
72. In Sooraram Pratap Reddy v. Collector (supra) it has also
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 365
rARUN MISHRA, J.l
been found thafthe entire amount of the compensation was t'o A
be.paid by the State agency APIIC,just like in the present case,
·where the entire amount is to be paid by YEIDA, which agency
is working as a· nodal ·agency for the execution of the Project.
The Court has also found that where the power of eminent
domain is exercised ma!a fide or for collateriil puri)oses and · B
--Oehors the Act or in an irrational or unreasonable mann~r 'or
when the purpose is "no public purpose" aJ.W the fraud on statute
is apparent-, a writ court can undoubtedly intetfer('l, It has been
found very specifically here that the present matter is not suffering
· from the above defects. ""
73. In this judgment, the subject of eminent domain has been
c
discti'ssed and considered with thoroughness and all the
ramifications of the principle of eminent domain have been
discussed. We have already culled out the principles emanating
from this decision in the earlier part of1his judgment and even.at
the cost of repetition, we may say that this judgment is practically, D
the law-setter on the subject of eminent domain, as also on the
other allied subjects of acquisition. The judgment has also
explained the concept of"public purpose", which has been held
tb be wider than "public necessity". The judgment proceeds on
a basis that ·merely because the benefit goes to a particular
sectiqp of the society, the acquisition does not cease to be for E
the public purpose. It has been specifically held that where the . _
State is satisfied about the existence of a.public purpose, the
acquisition would be governed by Part II of the Act,. as has
happened in the present matter.
74. The judgment in Sooraram Pratap Reddy v. Collector F
!(supra) is an- authoritative pronouncement on the mode of
payment, as also ori the construction' of Sections 40 and 41 of
the Act. In fact, this j_udgment
. . is a complete
. answer to . the.
..
argument of the appellants t~at this-acquisition is not for public
purpose." .- ,. •,. . G
15. A. conjoint reacting O£ the provisions co.nta_ined in sections :}(t),
· 6, other provisions of PartI II and the provisions
·
contained in Part
·
VII of t
.the Act makes it clear that there can be an acquisition for public purpose ·
and ultimately land may goon lease or other mode of transfer to a company
and in case the compensation is paid out of public revenue, it would be H
366 SUPREME COURT REPORTS f2016l ll S.C.R.
A an acquisition for a public purpose under Part II and in case compensation
is borne as per the agreement provided in section 41, it would be an
acquisition under Part VII of the Act. Though acquisition for public:
purpose can also be for the purpose of industrialization or for a company
in case setting up of the company has a public purpose behind it as
provided in section 3(f) and payme11t of compensation for !1cquisitioF1 of
B
land is made out of public revenue as per the provisions ofsection 6 as
. ' amended in 1984.
16. This Court in the decisions before the amendment of sections
3, 3(f) and 6 in 1984 in the pre-amended period in the cases of Babu
Barkya Thakur v. State of Bombay, AIR (1960) SC 1203, Pandit
C Jhandu Lal v. State of Punjab, AIR (1961) SC 343, R.L. Arora v.
State of Uttar Pradesh (1962) Supp. 2 SCR 149, Somawanti v. State
of Punjab (1963) 2 SCR 774, Jage Ram & Ors. v. State of Haryana
& Ors. (1971) 1 SCC 671, Indrajeet C. Parekh v. State of Gujarat
(1975) 1 SCC 824, Ajlatoon v. Lt. Governor of Delhi (1975) 4 SCC
D 285, Bai Malimabu v. State of Gujarat & Ors.. (1978) 2 SCC 373;
Manubhai Jetha/al Patel v. State of Gujarat (198-3) 4 SCC 553,
Srinivasa Cooperative House Building Society Ltd. v. Madam
Gur:umurt!Jy Sastry & Ors. (1994) 4 SCC 675 in which notification
was published on 8.2.1979; and Mandir Sita Ramji v. Land Acquisition
Collector & Ors., .(2005) 6 SCC 745 in which notifications under section
E 4 were published on 13. l l .1959 and 13.3.1975 has taken the view that
an acquisition for a company could also be for public purpose,whe.~\;..t,he
Government provides compensation out of public revenue. The
contribution of the Government could even be small that is Rs. I 00/- or
so. Though the contribution so made would have to be judged in th~:
F facts of the case by the doctrine of colorable exercise of power.
· · 17. Even after the amendments made in definition of "public
purpose" in section 3(f) and other provisions of Part II and Part VII of
the Act in the year 1984, where the acquisition was initiated after the
amendment has been made, the amended provisions has been taken into
G · consiqeration by this Court in various decisions referred to hereinafter.
, . ,
18. In Amdrnath Ashram Trust Society & Am: v. Qovernor of
U.J/_ & Ors. (1998) 1 SCC 591 which is a decision rendered post·:
amendment wherein this Court has observed thus :
"4. The appellant wants land adjacent to its school building
H -for the purpose of a playground for its students. The land belongs
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 367
rARUN MISHRA, J.l
to Respondent 5. So it tried to obtain it from Respondent 5 by A
offering a price higher than its market value but did not succeed.
It, therefore, moved the State Government to acquire that land
for it. The Government agreed and issued notification under
Section 4 of the Land Acquisition Act on 1-8-1986 notifying its
intention to acquire that land for a public purpose namely
8
"playground of students of Ainar NathVidya Ashram (Public
School), Mathura". Thereafter, inquiries under Section 5-A and
·under Rule 4 of the Land Acquisition (Company) Rules, 1963
were made. The Government also entered into an agreement
with the appellant as required by Section 40(1) of the Act on 11-
8-1987. It then issued a declaration under Seetion 6 on 4-9-1987 c
mentioning the fact that the report made under sub-rule (4) of
Rule 4 of the Land Acquisition (Company) Rules, 1963 was
considered by the Government that the Land Acquisition ·
Committee constituted under Rule 3 of the said Rules was
consulted, that the agreement entered between the appellant and
D
·the Governor was duly published that the Governor was satisfied
that the land mentioned in the schedule is needed for construction
· of a-playground for students ofAmar NathVidya Ashram (Public
School), Mathura by the Amar Nath Ashram Trust, Mathura.
This acquisition of land was challenged by the owner by !\ writ
. petition filed int.he Allahabad High Court. An foterim order was · E
passed directing the parties to maintain status E§/i594quo as regards
possession. During the pendencx_of the said petition, on 1-5-
1992, the Government denotified the land from acquisition in
exercise of its power under Section 48 of the Land Acquisition
Act. The appellant challenged that notification by filing a writ
F
petition in the High Court. The petition filed by the appellant and
the one filed by the owner were heard t,ogether. The petition
filed by the owner was dismissed as infructuous and-the petition
filed by the appellant was-dismissed on the ground that the decision
of the State Governmei:it to withdraw from the acquisition for
the reason that the acquisition having been proclaimed as one G
for a pubHc purpose a part of cost of acquisition was required to
be borne by the State and as no such provision was made, it was
not likely to be sustained if challenged, cannot be said to be .
contrary or illegal. _, - ··
~: It is now weUestablished Jhat if the cost of acquisition ..H
36S -
SUPREME COURT REPORTS [2016] 11 S.C.R.
A is borne either wholly or partly by the Government, the
acquisition can be said to be for a public purpose within the
meaning of the Act. But if the cost is entirely borne by the
company then it is an acquisition for a company 'under Part
VII of the Act. it was !i.O held by'1his Court in Jhandu Lal v.
State of Punjab AIR 1961 SC 343. This deCision was relied
B
upon by the learned counsel for !_be State to support his
contentions but it is difficult to appreciate how it supports him. It
is held in that case that it is not correct to say that no acquisition
for a company for a public purpose can be made except under
Part VII of the Act. In that case a part of the cost was to be
c borne by the Government and, therefore, it was held that it was
not necessary to comply with the provisions of Part VII of the
Act. Admittedly, in the present case the entire cosi of
acquisition is to be borne by the appellant-Society and,
therefore, it is an acquisition for a company and not for a
public purpose. That is also borne out by the notification issued
D
under Section 6 of the Act which states "thatthe land mentioned
in the schedule below is needed forthe construction of playground
for students of Amar. NathVidya Ashram (Public School),
Mathura in District Mathura by the Amar Nath Ashram Trust,
Mathura". Therefore, simply because in the notification, issued
E under Section 4 of the Ad it was stated thatthe land was needed
for a public purpose, namely, for a'·pfayground for students of
Amar Nath Vidya Ashram (Public School),. Mathura, it cannot
be said that the acquisition is for a public purpose and not under
ChaP,ter VII for the appellant-Society in view of subsequent
events and the declaration made under Section-6. The learned
' '
" com;isel for the State also relied upon the decision of tliis Court
in Srinivasa Coop. House Building Society Ltd. v. Madam
Gurumurthy Sastry (1994) 4 SCC 675 wherein this C(l)Urt ·has·
held (at p: ~76, SGC Headnote) that though there is
"no provision in the Act to say that when a land is required for
G a company, it may also be for a public purpose. However, even
-the acquisition for a company, unless utilisation of the land so
acquired is integrally connected with public use, resort to the
, compulsory acquisition under Chapter VII cannot be had". ·
It was submitted on the basis of this observation that even -
H .in case of an acquisition for a company an element of public
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 369
fARUN MISHRA, J.l
purpose has to be there and if for that reason it was believed by A·
the Government that it was necessary for it to make substantial
contribution from public revenue so as to avoid the charge of
colourable exercise of powers, the decision of the Government
to withdraw from the acquisition cannot be said to be arbitrary
or illegal. The aforesaid observation was made by this Courtin
B
the context of requirement of Section 40 of the Act and they
cannot be construed to mean that no land cannot (sic can) be
acquired by the State Government without making substantial
contribution towards the cost of acquisition. We cannot read
something more in the said observation than what they were
intended to convey. The provisions of Part VII and particularly c
the provisions regarding payment of the entire costs of the
acquisition,, would otherwise become redundant.
9. In an acquisition under Part VII of the Act, position of
the company or the body for which the land is acquired is quite
different from that of the owner of the land. As a result of D
withdrawal from the acquisition whereas the owner of land is
ordinarily not likely to suffer any prejudice or irreparable loss,
the company for whose benefit the land was to be acquired,
'l may suffer substantial loss.
10. However, it is not necessary to go into this larger E
question whether iq such a case the- State Government can
withdraw from acquisition without the consent of the co1npany.
as the justification given by the Government is otherwise not
·sustainable. As stated earlier the reason given by the Government
for withdrawing from the acquisition is that as no part of the cost
of acquisitionwali to be borne by the Government the acquisition F
could not have been sustained as for a public purpose. We have .
already pointed out that in this case the acquisition was not for a
public purpose but it was an acquisition for a company under
Chapter VII of the Act. In respect ofan acquisition for a company
under Chapter VU of the Act law does not require that the State G
should also bear some cost of acquisition to make it an acquisition
for public use. Thus th_e decision of the Government to withdraw
from acquisition was based upon a misconception of the correct
legal position. Such a decision has to be regarded as arbitrary
and not bona fide. Particularly in a case where as a result of a
H
370 · SUPREME COURT REPORTS f2016] l l S.C.R.
A decision taken by the Government the other party is likely to b1~
prejudicially affected, the Government has to exercise its power
bona fide and not arbitrarily. Even though Section 48 of the Act
confers upon the State wide discretion it does not permit it to act
in an arbitrary manner. Though the State cannot be compelled to
acquire land compulsorily for a company its decision to withdraw
B
from acquisition can be challenged on the ground that power has
been exercised mala fide or in an arbitrary manner. Therefore,
we cannot accept the submission of the learned counsel for the
State that the discretion of the State Government in this behalf is
absolute and not justiciable at all." (emphasis supplied)
c 19. This Court has laid down that in case cost of acquisitjon is
borne either wholly or partly by the Government, the acquisition can be
said to be for a public purpose. lfthe cost is entirely borne by the company
then the acquisition is for a company under Part VII of the Act.
20. In Pratibha Nema & Ors. v. State of MP. & Ors.· (2003) 10
D sec 626, considering the amended provisions it was observed:
"6. In order to appreciate the contentions set out above in a
proper perspective, it would be appropriate to advert to certain
basic provisions of the Act and recapitulate the well-settled
principles relating to public purpose and acquisition ofland under
E Part II and Part VII of the Act. Section 4(1) which occurs in
Part II of the Act contemplates a notification to be published in
the Official Gazette etc. whenever it appears to the appropriate
Government that land in any locality is needed for any public
purpose or for a company. Thereupon, various steps enumerated
F in sub-section (2) could be undertaken by the authorized officer.
There is an i'i1clusive definition of"public purpose" in clause (f)
of Section 3. This clause was inserted by .Central Act 68 of
1984. Many instances of public purpose specified therein would
have perhaps been embraced within the fold of public purpose
as generally understood. Maybe, by way of abundant caution or
G to give quietus to legal controversies, the inclusive definition has
been added. One thing which deserves particular notice is
the rider at the end of clause (j) by which the acquisition of
land for companies is excluded from the purview of the
expression "public purpose". However, notwithstanding this
H dichotomy, speaking from the point of view of public
-,
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 371
[ARUN MISHRA, J.l
purpose, the .provisions of Part II and Part VII are not A
mutually exclusive as elaborated later.
7. The concept of public purpose (sans inclusive definition)
was succinctly set out by Batchelor, J. in a vintage decision of
the Bombay High Court. In Hamabai Framjee Petit v. Secy. of
State for India AIR 1914 PC 20 the Privy Council quoted with B
apprdval the following passage from the judgment of Batchelor,
J.: (AIR p. 21)
"General defihitions are, I think, rather to be avoided where
the avoidance is possible, and I make no attempt to define
precisely the extent of the phrase 'public purposes' in the lease; C
it is enough to say that, in my opinion, the phrase, whatever
else it may mean, must include a purpose, that is, an object or
aim, in which the general interest of the community, as opposed
to the particular interest of individuals, is directly and vitally
concerned."
D
8. The Privy Council then proceeded to observe that prima
facie the Government are good judges to determine the purpose
of acquisition i.e. whether the purpose is such that the general
interest of the community is served. At the s~me time, it was
aptly said that they are not absolute judges. This decision of the
Privy Council and the words of Batchelor, J. were referred to E
with approval by a Constitution Bench in Somawanti v. State of
Punjab, AIR 1963 SC 151 and various other decisions of this
Court.
9. We may now advert to Section 6. It provides for a
declaration to be made by the Government or its duly authorized F
officer that a particular land is needed for a public purpose or for
a company when the Government is satisfied after considering
the report, if any, made under Section 5-A(2). It is explicitly
made clear that such declaration shall be subjectto the provisions
of Part VII of the Act which bears the chapter heading G
"Acquisition ofLand for Companies". Thus, Seetion 6 reiterates
the apparent distinction between acquisition for a public purpose
and acquisition for a company. There is an important and crucial
proviso to Section 6 which has a bearing on the question whether
the acquisition is for a public purpos-e or for a company. The
second proviso lays down that H
372 SUPREME COURT REPORTS [2016] 11 S.C.R.
A "no such qeclaration shall be made unles·s the compensation to
be awarded for such property is to be paid by a company, or
wholly or partly out ofpubljc revenues or some fund controlled
or managed by a local authority ...
Explanation 2 then makes it clear that where the compensation
to be awarded is to be paid out of the fimds of a corporation
B
owned or controlled by the State, such compensation shall
be deemed to be compensation paid out of public revenues.
Thus, a provision for payment of compensation, wholly or partly,
out of public revenues or some fund controlled or managed by a
local authority is sine qua non for making a declaration to the
c effect that a particular land is needed for a public purpose. Even
if a public purpose is behind the acquisition for a company,
it shall not be deemed to be an acquisition for a public
purpose unless at least part of the compensation is payable
out of public revenues which includes the fimd of a local
authority or the fimds of a corporation owned or controlled
D by the State. However, it was laid do\vn in Somairanti case
(supra) that the notification under Section 6(1) need not explicitly
set out the fact that the Government had decided to pay a part of
the expenses of the acquisition or even to state that the
Government is prepared to make a part of contribution to the
E cost of acquisition. It was further clarified that. the absence of a
provision in the budget in respect of the cost of acquisition., whole
or part, cannot affect the validity of the declaration. The majority
Judge$ of the Constitution Bench also clarifiedthat a contribution
· to be made by the State ne.ed not pe substantial and even thf:
token contribution ofRslOO which was made in that case satisfied
F the requirements of the proviso to Section 6(1 ). The contribution
of a small fracti.on of the total probable cost of the acquisition
does not necessarily vitiate the declaration on the ground of
colourable exercise of power, according to the ruling in the said
case. Following Somail'anti (supra), the same approach was
G adopted in Jage Ram v. State of Haryana (1971) 1 SCC 671:
The question, whether the contribution of a nominal amount from
the public exchequer would' meet the requirements of the proviso
to Section 6, had again come up for consideration in Manubhai
Jehtalal Patel v. State of Gujarat (1983) 4 SCC 553. D.A.
Desai, J. after referring to Somall'anti (supra), speaking for the
H three-Judge Bench observed thus: (SCC p. 555, para 4)
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 373
fARUN MISHRA, J.l
"It is not correct to determine the validity of acquisition A
keeping in view the amount of contribution but the motivation
for making the contribution would help in determining the bona
fides of acquisition. Further in Malimabu case ( 1978) 2 SCC
373 contribution of Re 1 from the State revenue was held
adequate to hold that acquisition was for public purpose with
B
State fund. Therefore, the contribution of Re 1 from public
exchequer cannot be dubbed as illusory so as to invalidate the
acquisition."
10. In Soma111anti case (supra) the following note of caution
was sounded: (AIR p. 169, para 52)
c
"We would, however, guard ourselves agairist being
understood to say that a token contribution by the State towards
the cost of acquisition will be sufficient compliance wifh the
law in each and every case. Whether such contribution meets
the requirements of the law would depend upon the facts of
every case. Indeed the fact that the State's contribution is D
nominal may well indicate, in particular circumstances, that
the action of the State was a colourable exercise of power. In
our opinion 'part' does not necessarily mean a substantial part
and that it will be open to the Comt in every case which comes
up before it to examine whether the contribution made by the E
State satisfies the requirement of the law. In this case we are
satisfied that it satisfies the requirement oflaw."
U. A three-Judge Bench of this Court in1ndrajit C. Parekh
v. State of Gujarat (1975) I SCC 824 without much of
. elaboration, relegated the observations in the above passage to F
very narrow confines by stating thus: (SCC p. 82 7, para 3)
"In view of the decision in this case that a nominal
contrib-ution out of public revenues would satisfy the
requirement of the proviso to Section 6(1) the observation
'whether such contribution meets the requirement of the law G
would depend upon the facts of every case' must necessarily
be taken to refer to the requirement of some law other than
the proviso to Section 6(1 ). No such law was pointed out to us;
and it is not necessary for the purposes of this appeal to enter
on a discussion as to what such other law could be."
H
374 SUPREME COURT REPORTS (2016] II S.C.R.
A 12. Another important provision is sub-section (3) of Section
6 which enjoins that the declaration (required to be published in
the Official Gazette etc.) shall be conclusive evidence that the
land is needed for a public purpose or for a company and on .
publication of declaration, the appropriate Government is enabled
to acquire the land in accordance with the other provisions of
B
the Act. This sub-section came up for interpretation of this Court
in Sommvanti case (supra). The Court emphasised that the
conclusiveness contemplated by sub-section (3) is not merely
regarding the satisfaction of the Government on the question of
need but also with regard to the question that the land is needed
c for a public purpose or for a company, as the case may be.
However, the learned Judges highlighted an important exception
to the finality or conclusiveness of the declaration under Section
6(1). It was observed thus: (AIR p. 164, para 36)
"That exception is that ifthere is a colourable exercise of power
D the declaration will be open to challenge at the instance of the
aggrieved party. The power committed to the Government by
the Act is a limited power in the sense that it can be exercised
only where there is a public purpose, leaving aside for a moment
the purpose of a. company. If it appears that what the
Government is satisfied about is not a public purpose but a
E private purpose or no purpose at all the action of the
Government would be colourable as not being relatable to the
power conferred upon it by the Act and its declaration will be
a nullity. Subject to this exception, the declaration of the·
Government wi II be final."
F 13. The main contention.of the learned Senior Counsel for
the appellant, as already noticed, rests on the plea of colourable
exercise of power.
14. Colourable exercise of power or mala fides in the
province of exercise of power came up for discussion in State
of Punjab v. Gurdial Singh ( 1980) 2 SCC 4 71. In the words of
G
.Krishna Iyer, J.:' (SCC p. 475, para 9)
"Pithily put, bad faith which invalidates the exercise of power
- sometimes called colourable'exercise or fraud on power
and oftentimes overlaps motives, passions and satisfactions
- is the attainment of ends beyond the sanctioned purposes
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 375
fARUN MISHRA, J.l
of power by simulation or pretension of gaining a legitimate A
goal. ... When the custodian of power is influenced in its
exercise by considerations outside those forpromotion of which
the power is vested the court calls it a colourable exercise and
is undeceived by illusion .... Fraud on power voids the order if
it is not exercised bona fide for the end designed. Fraud in this
B
context is not equal to moral turpitude and embraces all case~
in which the action impugned is to effect some object which is
beyond the purpose and intent of the power, whether this be
malice-laden or even benign. If the purpose is corrupt the
resultant act is bad. If considerations, foreign to the scope of
the power or extraneous to the statute, enter the verdict or c
impel the action, mala fides or fraud on power vitiates the
acquisition or other official act."
15. The above exposition of law unfolds the right direction
or the line of enquiry which the court has to pursue to test the
validity of declaration made under Section 6( 1) exalted by the D
legal protection accorded to it under sub-section (3 ).
16. In order to proceed on these lines, the ambit and
contours of public purpose as understood by this Court in
certain decided cases has to be taken note of We have
already noticed the broad and general meaning of the
expression ''public purpose" as stated by Batchelor, J. nearly E
a century back. In the particular context of setting up
industries by private enterprise, this Courts perspective of
public purpose is discernible from certain decided cases to
which we shall make reference.
17. In Jage Ram case (supra) the public purpose mentioned F
in the notifications under Sections 4 and 6 was "the setting up of
a factory for the manufacture of Chinaware and porcelain ware".
The State Government had contributed a sum of Rs 100 as was
done in the case of Somawanti (supra) towards the cost of the
land. The question arose whether it was necessary for the
G
Government to proceed with the acquisition under Part VII of
the Act. Holding that acquisition under Part VII need not have
been resorted te, this Comt proceeded to discuss the question
whether the as;quisition was intended for a public purpose. K.S.
Hegde, J. speaking for the Court observed thus: (SCC p. 674,
para 8) H
376 SUPREME COURT REPORTS [2016] 11 S.C.R.
A "8. There is no denying the fact that starting of a new
industry is in public interest. It is stated in the affidavit
filed on behalf of the State Government that the new State
of Haryana was lacking in industries and consequently it
had become difficult to tackle the problem of unemploymeni.
There is also no denying the fact that the industrialization
B
of an area is in public interest. That apart, the question
whether the starting of an industry is in public interest or
not is essentially a. question that has to be decided by the
Government. That is a socio-economic question. This Court
is not in a position to go into that question. So long as it-is not
c established that the acquisition is sought to be made for some
collateral purpose, the declaration of the Government that it is
made for a public purpose is not open to challenge. Section
6(3) says that the declaration of the Government that th<!
acquisition made is for public purpose shall be conclusive
evidence that the land is needed for a public purpose. Unless it
D
is shown that there was a colourable exercise of power, it is
not open to this Court to go behind that dedaration and find out
whether in a particular case the purpose for which the land
was needed was a public purpose or not: see Somawanti v.
Stqte of Punjab (supra) and Raja Anand Brahma Shah v.
E State of U.P., AIR 1967 SC 1081. On the facts of this case
there can be hardly any doub.t that the purpose for which the
land was acquired is a public purpose."
18. li1 Somawanti case (supra) setting up a factory for the
manufacture of refrigeration compressors and ancillary
F equipment, was held to subserve public purpose. The importance
of such industry to a State such as Punjab which had surplus
food and dairy products, the possibl~: generation of foreign
exchange resources and employment opportunities were all taken
into account to hold that public purpose was involved in
establishing the industry. It was observed: (AIR p. 169, para 55)
G
"55. On the face of it, therefore, bringing into existence
a factory of this kind woul.d be a purpose beneficial to the
public even though that is a private venture."
The decisron in Jage Ram case (supra) was cited with approval
H by this Court in Bajirao T. Kate v. State of Maharashtra ( 1995)
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 377
r
ARUN MISHRA, J .1
2 SCC 442. In R.L. Arora v. State of U.P. AIR 1964 SC 1230 a A
Constitution Bench of this Court observed that there was a
definite public purpose behind the acquisition ofland for taking
up works in connection with the setting up of a factory for
production of textile machinery parts. How~ver, that was in the
context of a case of acquisition tinder Part VII.
B
19. These decisions establish that a public purpose is involved .
in the acquisition ofland for setting up an industry in the private
sector as it would ultimately benefit the people. However, we
would like to add that any and every. industry need, not
necessarily promote public purpose and there c<Ju[d be
. exceptions. which negate the public purpose. But, it must be
c
borne in mind that the satisfaction of the Government as to
the existence of public purpose cannot be lightly faulted
and it must remain uppermost in the mind of the court.
20. Having noted the salient provisions and the settled
principles governing the acquisition for a public purpose, it is D
time to turn to Part VII dealing with acquisition of land for
companies. The important point which we would like to highlight
at the outset is that the acquisition under Part VII is not divorced
from the element of public purpose. The concept of public purpose
runs through the gamut of Part VII as well. E
21.._"Company" is defiped to mean by Section 3(e) as: (I) a
company within the meaning of Section 3 of the Companies Act
other than a government comp.any, (ii) a society registered under
· the Sodeties Registration Act other than a cooperative society
referred to in.clause (cc), and (iii) a cooperative society governed F
by the law relating to the cooperative· societies iIJ force fo any _
State other than a cooperative society referred to in clause {cc).
An industrial concern employing not less than 100 workmen.and
conforming to the other requirements specified in Section 38"A
·is also deemed to be a company for the purposes of Part VII. In
order to acquire land for a company as defined above, the previous G
consent of the appropriate Government is the first requirement'
and secondly,. t~e execution of agr-:ement by the company
confomiing to the requirements of Section 41 is anothei:essentiaJ
formality. Section 40 enjoins that consent should not be given by
the appropriate Government unless it is satisfied that: (J) the H
378 SUPREME COURT REPORTS r10161 11 S.C.R.
A purpose of the acquisition is to obtain land for erection of dwelling
houses for workmen or for the provision of amenities connected
therewith; (2) that the acquisition is needed for construction of
some building or work for a company which is engaged or about
to engage itself in any industry or work which is for a public
purpose; and (3) that the proposed acquisition is for the
B
construction of some work that is likely to be useful to the public.
The agreement contemplated by Section 41 is meant-to ensure
the compliance with these essentialities. It is a!So meant to ensure
that the entire cost of acquisition is borne by ano paid to the
Government by the company concerned. Thus, it is seen that
c even in a case of acquisition for a company, public purpose is not
eschewed. It follows, therefore, that the existence or non-
existence of a public purpose is not a primary distinguishing
factor between the acquisitfon under Part II and acquisition
under Part Vil The real point of distinction seems io be the
source of funds to cover the cost of acquisition. In other
D
words, the second proviso to Section 6(I) is the main dividin~i
ground for the two types of acquisition. This point has been
stressed by this Court in Srinivasa Coop. House Building
Society Ltd. v. Madam G_urumurthy Sastry (1994) 4 SCC 675
at para 12: (SCC p. 684)
E "In the case of an acquisition for a company simpliciter, 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 be made
otherwise than under the provisions of Part VII, ifthe cost or
F 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 CQSt of acquisition
should be borne, wholly or in part, out of public funds."
The legal position has been neatly and succinctly stated by .
G Wanchoo, J, speaking for the Constitution Bench in R.L. Arora
v. State of U.P., AIR.1962 SC 764. This is what has been said:
(AIR pp. 767-68, para 5)
"Therefore, though the words 'public purpose' in Sections
4 arid 6 have the ·same meaning, they have to be read in the
H restricted sense in accordance with Section 40 when the
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 379
rARUN MISHRA, J.l
acquisition is for a company under Section 6. In one case, the A
notification under Section 6 will say that the acquisition is for a
public purpose, in the other case the notification will say that it is
for a company. The proviso to Section 6(1) shows that where
the acquisition is for a public purpose, the compensation has to
be paid wholly or partly out of public revenues or some fund
B
controlled or managed by a local authority. Where however the
acquisition is for a company, the compensation would be paid
wholly by the company. Though therefore this distinction is
there where the acquisition is either for a public purpose or
for a company, there is not a complete dichotomy between
- acquisitions for the two purposes and it cannot be c
mai-ntained that where the acquisition is primarily for a
_ company it must always be preceded by action under Part
VII and compensation must always be paid wholly by the
company. A third class of cases is possible where the_
acquisition may be primarily for a company but it may also
D
be at the same time for a public purpose and the whole or
I
part of compensation may be paid out of public revenues or I
some fund controlled or managed by a local authority. In
such a case though the acquisition may look as if it is
primarily for a company it will be covered by that part of
Section 6 which lays down that acquisition may be made for. E
a pu,blic purpose if the whole part of the compensation is io
be paid out of the public revenues or some fund controlled
or managed by a local authority. Such was the case in Pandit_
Jhandu Lal v. State of Punjab, AIR 196} SC 343 .... It is only
where the acquisition is for a company and its cost is to be met
F
entirely by the company itself that the provisions of Part VII
apply."
22. Thus the distinction between public purpose
acquisition and Part VII acq!fisition has got blurred under
the impact of judicial interpretation of relevant provisions.
The main and perhaps the decisive distinction lies in the G
fact whether the cost of acquisition comes out ofpublic funds
wholly or partly. Here again, even a token or nominal
contribution by the Government was held to be sufficient
compliance with the second proviso to Section 6 as held in a
catena of decisions. The net result is that by contributing even a H
380 SUPREME COURT REPORTS [2016] 1I S.C.R.
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 acquisition if only the Government
comes forward to sanction the payment of a nominal s~m towards
B
compensation. In the present state of law, that seems to be the
real position.,, (emphasis supplied).
In Pratibha Nema (supra) on due consideration of amended
provisions, this Court has clearly laid down that the existence or non-
e . existence of a public purpose is not a primary distinguishing facto"r
between the acquisition under Part II and acquisition under Part VII.
The real point of distinction seems to b~ the sour~e of funds to cover the -
cost ofacquisition. The second proviso to section 6(1) is the main-driving
ground for the two types of acquisitions. The amendment made in 1984
in section 6 does not deal with the concept of token consideration for
-n such acquisition paid out of the public revenues. The second provision to
section 6( 1)-makes it clear that where the compensation to be awarded
for such property is to be paid out of the funds of the corporation, it is
deemed to be compensation paid out of public revenue. Section 6 requires
compensation determined to be paid out of the funds of the corporation
then it would be deemed to be expenditure out of public revenue to
E make it acquisition under Part II. In tl1e instant case corporation has
paid entire compensation. It is not a case of token amount paid out of
public revenue .
. _ 21. In Devii1der Singh & Ors. v. State of Punjab & Ors. (2008)
1 SCC 728, this Court has considered concept of public purpose and
F observed that when aIJ_ application is filed by a coll!-pany for acquisition
but the decision of the State has to be seen how it intended to deal with
such a prayer, is a relevant factor. In case of public purpose the acquisition
-could be made at public· expense. Therefore, evidently the provisions
made in Part II shall be 'resortep to. On the other hand if the State fonns
G an opinion that acquisition may not be for public purpose then the State
would not bear the expenses and then the procedure laid down in Part
VII shall be resorted to. This Court has laid down thus:
"16. Whena request is made by any wing of the State or a
. government company for acquisition ofland for a public purpose,
different procedures are adopted. Wher(:, however,.tm
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 381
fARUN MISHRA, J.l
application is filed for acquisition of land at the instance of A
a '"company'', the proced_ures 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
with such a requisition, is a relevant factor. The action of
the State provides for an important condition to consider as · B
to whether the purpose 1!herefor a company requests" .it for
acquisition of land is_ a public purpose and/or which could
·be made at public expenses either as a wh9le or in part,
where/or evidently provis.ions.laid down in Part II shal{ be
resorted to. On the othe{ hand, ifthe State forms an opinion that
the acquisition of land at the instance of the company may not . C
be for public purpose or, therefore 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 of the AcCare
exhaustive. The Rules have been framed prescribing the mode
and manner in which the State vis-a-vis the company should
D
proceed. It provides for previous consent of the appropriate
Government, execution of the agreement, previous inquiry before
a consent is accorded, publication of the agreement, restriction
/
on transfer, etc. It also provides for statutory injm1ction that no
land shall be acquired except for the purpose contained in Clause E
(a) of sub-section (1) of Section 40 of the Act for a private
company which is not a government company. For the purpose
of Section 44-B of the Act, no distinction is made between a
private company and a public limited company.
37. In this case we may notice that purported contribution had F
been made only after the writ petitions wen~ 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 me~t a part of the expenses for acquisition ofland. Such.
an opinion on the part of the State having rega.nt to the statutory · G
scheme should have b_een formed prior to' entering into the
agreement itself. The agreement does not mention about any
payment of a part of compensation by the State. We, ~n the
absence of any other material on record, must hold that the State
had not formed any opinion in that behalf at least when the H
382 SUPREME COURT REPORTS f20161 11 S.C.R.
A agreement was executed. The wisdom in all probabilities dawned
on the officers of the State at a later stage.
38. Satisfaction on the part of the State required to.be arrived
at upon formation of opinion on the basis of materials brought on
record for the purpose of Part II of the Act are different' from
B that of Part 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 not go behind it, as
the same may furnish a valid argument for upholding an
acquisition under Part IL But when an acquisition is made
under Part VII, the conditions and precedents therefor as
c contained in the Companies Rules must be satisfied. On the face
of record, if it can be shown that the Government liad ignored
the mandatory provisions of the Act, the acquisition would have
to be Struck down. ·
39. In Shyam Behari v. State of MP., AIR 1965 SC 427 it
D was held: (AIR p. 429, para 3)
"3 . ... In the second-·place, the declaration under Section 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
E paid by a company, the notification under Section 6must contain
a declaration that the land is needed for a company. NO"
notification under Section 6 can be made where _the entire
compensation is to be paid by a company declaring that the -
acquisition is for a public purpose, for such a declaration requires
F that either wholly or in part, compensation must come out of
public revenues or some fond controlled or managed by a local
authority." ·
40. Distinction between acquisition under Part II and Part
VII is self-evident. The State was not only obligated to issue a
G notification dearly stating as to whether the acquisition is for a
public purpose or for the Company. Section 6 categorically &tates
so, as would appear from the second proviso appended thereto~.
41. A declaration is to be made either for a public purpose
or for a company. It cannot be for both.
H 54. In Srinivasa Coop. House Building Society Ltd. v. ,
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 383
[ARUN MISHRA, J.]
Madam Gurumurthy Sastry (1994) 4 SCC 675, noticing A
Somawanti (supra) wherein it was held that the manufacturing
of the articles was forthe benefit of the community and to save
· substantive part of foreign ~xchange and staff qua!"_ters to
workmen, it was held: (SCC p. 684,. para 12)
"12 . ... On the other hand, in the case of an acquisition for B
a company, the compensation has to be paid by the company.
In such a case 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 c
Government only after the latter is 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. D
Tlle~aeclaration for acquisition for a company shall not be made
uni es~ the compensation to be awarded for the property is to
be paid by a compan}'. In the case of an acquisition for a
cqmpany simpliciter, 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 E
purpose cannot be made otherwise than under th~ provisions
of Part VII, if the 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_ F
public funds. Hence an acquisition.for a company may also be
made fora public purp0se, within the meaning of the Act, if a
part or the whole of the cost o(acquisition is met by public
funds. If, on the other hand, the acquisition, for a company is
to be made at the cost entirely of the.company.itself; such an
acquisition comes under the provisions of Part VII." 0
·..
55. Tl1e approach of the High Court in this behalf, in our opinion,
is totally erroneous. A provision of a statute is either mandatory
or directory. Even if a provision is directory, the same should. be
substantially complied with. It cannot be ignored in its entirety
H
384 SUPREME COURT REPORTS [2016] 11 S.C.R.
A only because the provision is held to be directory and not an
imperative one.
56. In this case admittedly there has been no compliance
with Rule 4. If Rule 4 has not been complied with, the exercise
of jurisdiction under Part VII must be held to have been
B erroneous." (emphasis supplied)
In the case of Devinder \supra) the acquisition was under Part
VII and the State contribution of Rs. I 00/- towards cost of acquisition
came during the pendency of the writ petition. This Court has held that
the acquisition which was for a company could not be termed into
c acquisition for a public purpose by making a nominal contribution during
the pendency of the writ petition. However, this Court has laid down
that the soul'ce of funds to cover the cost of acquisition is determinative
of the applicability of the procedure in Part II or Part VII of the Act. In
case fund is coming from the company then Patt VII would apply and
not otherwise. "
D
22. In Sooraram Pratap Reddy's case (supra), this Court h·as
also dealt with the submission where the acquisition is for a private
company whether it would be governed by the provisions of Part VII of
the Act whereas the submission of the respondent was that pursuant to
the Government policy it was to be acquired by APIIC and the entire
E compensation was to be paid by APIIC. As such the acquisition would
fall under Part II of the Act. This Court has discussed the matter thus:
"96. Whereas the contention ofthe appellants is that the
so-called acquisition is for a private company and hence it would
be governed by Part VII of the Act, the stand of the respondents
F is that it was in pursuance of industrial policy of the State that
land was to be acquired by..APIIC and the entire amount of
compensation was to be paid by APIIC and as such .,th~
acquisition is covered by Part II of the Act.
97. Our attention has been invited by the learned counsel.
G for both the parties to some of the decisions on this issue.
98, Babu Barkya Thakur v. State of Bombay, AIR 1960
SC 1203 was probably the first leading decision of this Court on
the point. In that case, a notification was issued by the,erstwhile
State of Bombay on 3-4-1959 under Section 4 of the Act wherein
H it was stated that the lands specified in the Schedule attached to
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 385
rARUN MISHRA, J.l
the notification were likely to be needed for the purpose ofM/s A
Mukund Iron~ Steel Works Ltd., a companyregistered under
the Companies Act, 1913. The petitioner lodged objections
challenging the notification on the ground that the lands were not ·
required for "public purpose" and the proceedings were vexatious
and malicious. In the counter-affidavit filed by the Special Land
B
Acquisition Officer, it was denied that the acquisition of the land
was not for the public purpose and the proceedings were,
therefore, vitiated. The Court, after referring to the Preamble
and the relevant provisions of the Act, held that acquisition for
company under the Act was for a "public purpose" inasmuch as
constructing dwelling houses and providing amenities for the c
benefit of workmen employed by the company would serve public
purpose. The Court observed: (AIR pp. 1206-07, para 10)
·"JO . ... Further, though it may appear on the words of the
Act contained in Part II, which contains the operative portions
of the proceedings leading up to acquisition by the Collector D
that acquisition for a company may or may not be for a public
purpose, the provisions of Part·VII make it clear that the
appropriate Government cannot permit the bringing into
oper(\ti_on the effective machinery ofthe Act unless it is satisfied
as aforesaid, namely, that the purpose of acquisition is to enable
the company to erect dwelling houses for workmen employed E
by it or for the provision of amenities directly connected with
the company or that the land is needed for construction of
some work of public utility. These requirements indicate that
the acquisition for a company also is in substance for a
public purpose inasmuch as it cannot be seriously F
contended that constructing dwelling houses, and
providing amenities for the benefit of the workmen
employed by it and construction of some work of public
utility do not serve a public purpose." (emphasis supplied)
99. In Pandit Jhandu Lal v. State of Punjab, .AIR 1961 G
SC 343 the land of the appellant was sought to be acquired for
construction of houses by members of Thapar Industries
Cooperative Housing Society Ltd., Yamuna Nagar. Proceedings
were, therefore, initiated for acquisition ofland under Part II of
the Act. The action was challenged, inter alia, on the ground that
H
·' .
386 SUPREME COURT REPORTS (2016] 11 S.C.R.
A there was non-compliance with the provisions of Part VII of the
Act and the proceedings were liable to be qttashed as the said
procedure had not been followed. The High Court held thatthe
land was acquired for a public purpose and there was no need to
comply with the provisions of Part Vll, even though the company
was to pay the entire amount of compensation (which according
B
to this Court was not factually correct). The aggrieved landowner
approached this Court.
100. According to this Court (in Pandit Jhandu Lal case
(supra)~ the main point for determination was whether or not the
acquisition proceedings had been vitiated by reason of the
admitted fact that there was no attempt made by the Government
to comply with the requirement of Part VII of the Act. Referring
to Babu Barkya (supra) this Court held that the conclusion
arrived at by the High Court was "entirely co~rect", though the
process of reasoning by which it had reached the conclusion
D was erroneous.
101. The Court (in Pandit Jhandu Lal case (supra)
observed that the Act contemplates acquisition for (i) a public
purpose, and (ii) for a company; thus, conveying the idea that
acquisition for a company, is not for a public purpose. It was also
E observed that the purposes of public utility, referred to in Sections
40 and 41 of the Act were akin to public purpose. Hence,,
· acquisition for a public purpose as also acquisition for a company
are governed by considerations of public utility. But the procedure
for the two kinds of acquisitions is different and if it is for a
company, then acquisition has to be effected in accordance with
F the procedure laid down in Part VII. Considering the ambit and
scope of Sections 6 and 39 to 41 and referring to Babu Barkya
(supra), the Court observed: (Pandit Jhandu Lal case (supra).,
AIR pp. 346-47, para 8)
"8 . ... There is no doubt that, as pointed out in the recent
G decision of this Court, the Act contemplates for a public purpose
and for a company, thus conveying the idea that acquisition for
a company is not for a public purpose. It has been held by this
Court, in that decision, that the purposes of public utility, referred
to in Sections 40-41 of the Act, are akin to public purpose.
H Hence, acquisition for a public purpose as also acquisitions for
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 387
fARUN MISHRA, J.l
a company are governed by considerations of public utility. A
But the procedure for the two kinds of acquisitions is different,
insofar as Part VII has made substantive provisions for
acquisitions ofland for companies. Where acquisition is made
for a public purpose, the cost of acquisition for payment
of compensation has to be paid wholly or partfy out of
B
Public Revenues, or some fund controlled or managed by
a local authority. On the other hand, in the case of an
acquisition for a company, the compensation has to be paid
by the company. But, in such a case, there has to be an
agreement, under Section 41, for the transfer of the land
acquired by the Government to the company on payment of c
the cost of acquisition, as also other matters not material to our
present purpose. The agreement contemplated by Section 41
is to be entered into between the.company and the appropriate
Government only after the latter is satisfied about the purpose
of the proposed acquisition, and subject to the condition D.
precedent that the previous consent of the appropriate
Government has been given to the acquisition. The 'previous
consent' itself of the appropriate Government is made to depend
upon the satisfaction of that Government that the purpose of
the acquisition was as laid down in Section 40. It is, thus, clear
that the provisions of Sections 39-41 lay down conditions E
precedent to the application of the machinery of the Land
Acquisition Act, if the acquisition is· meant for a company."
(emphasis supplied)
102. The Court then dealt with the extent and applicability
of Section 6 of the Act and stated: (Pandit Jhandu Lal case F
(supra), AIR p. 347, para 8)
"8 . ... Section 6 is in terms made subject to the provisions
of' Part VII of the Act. The provisions of Part VII, read with
Section 6 of the Act, lead to this result that the declaration for
the acquisition for a company shall not be made unless the G
compensation to be awarded for the property is to be paid by a
company. The declaration for the acquisition for a public
purpose, similarly, cannot be made unless the compensation,
wholly or partly, is to be paid out of public funds. Therefore, in
the case of an acquisition for a company simpliciter, the
H
388 SUPREME COURT REPORTS f20161 l I S.C.R.
A declaration 'cannot be made without satisfying the requirements
of Part VII. But, that ~foes not necessarily mean that an
acquisition for a company for a public purpose cannot be made
otherwise than under the provisions of Part VII, ifthe cost or
a portion of the cost of the acquisition is to come out of public
funds. li1 other words, the essential condition for acquisition
B
for a public purpose is that the cost of the 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 meaning of the Act, if a
part or the whole of the cost of acquisition is met by public
c funds. If, on the other hand, the acquisition for a company
is to be made at the cost entirely of the company itself,
such an acquisition comes under the provisions of Part
VII. As in the present instance, it appears that part at any rate
of the compensation to be awarded for the acquisition is to
come eventually from out of public revenues, it must be held
D
that the acquisition is not for a company simpliciter. It was not,
therefore, necessary to go through the procedure prescribed
by Part VIL We, therefore, agree with the conclusion of the
High Court, though not for the same reasons." (emphasis
stfpplied)
E 106. fo R.L. Arora (If) v. State of U.P, AIR 1962 SC 764
this Court held that in view of the amendment made in the Act,
even ifthe acquisition did not satisfy conditions laid down under
clause (a) and clause (b) of sub-section (I) of Section 40 of the
Act, it would be valid, if they satisfy conditions in clause (aa)
F introduced by the Amendment Act. It was also held that once
the Government decided to acquire land for public purpose, such
acquisition cannot be challenged on the ground that procedure
laid down in Part VII had not been followed. The Court, keeping
in view the Land Acquisition (Amendment) Act, 1962 (Act 31 of
1962), held that clause (aa) of sub-section (I) of Section 40 as
G
inserted by Act 31 of 1962 did not contravene Article 31 (2) or
, Article 19(1 )(()of the Constitution. Accordingly, the acquisition
was held legal and valid.
107. A special reference may be made to a decision of the
Division Bench of the High Court of Gujarat in Motibhai
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 389
fARUN MISHRA, J.l
Vithalbhai Patel v. State of Gujarat AIR 1961 GUJ 93. In A
Motibhai (supra) land was soughtto be acquired for a company,
namely, Sarabhai Chemicals for its expansion. It was contended
that acquisition was not for public purpose under Section 4 of
the Act and it was bad in law.
108. Considering the relevant provisions of the Act as also B
leading cases on the point, the Com1 (in Motibhai case (supra)
held that even if the acquisition of land is for a private concern
whose sole aim is to make profit, the intended acquisitio'n ofland
would materially help in saving foreign exchange in which the
public is also vitally concerned in our economic system. If can,
therefore, be said to be a public purpose and would not be bad. c
The Court stated: (Motibhai case (supra), AIR p. I 04, para 42)
"./2. This is just as well. So diverse and varied can be the
activities, engagements and operations which may redound to
the general benefit of the public and in ..yhich the general interest
of the public can be said to be really involved that it is impossible D
to expect a definition exclusive or inclusive which will aptly
meet every particular objective within the matrix of public
purpose and not fail in some circumstances. The expression is
of convenient vagueness and the court can at best give
temporary definiteness but not definitiveness to the undefined E
and shifting boundaries of a field which now seems likely to
raise some frequent and fighting issues and give rise to different
problems for adjudication."
It was also observed: (Motibhai case (supra), AIR p. I 04, para
- 43) F
"./3. Public purpose is not a constant. The scope of an
expression which conjugates general interest of the public
must necessarily depend inter alia on social and economic
needs and broad interpretation of the democratic ideal. It
must alter as social and economic conditions alter. The social G
and economic theorist may contend for an extremely wide
application of this concept of public purpose and overemphasise
the element of the general interest of the public. The reactionary
on the other hand may strive for stringent restraints on its
shifting boundaries and oppose any shift in emphasis. The true
rule of the matter would seem to lie midway. The Court will H
390 SUPREME COURT REPORTS [2016] 11 S.C.R.
A not attach too much weight to the apparent character of the
activity or agency but would prefer to lean in favour of an
application of the rule which has regard to the· substance of
the matter and embraces activities, engagements and operations
which would serve the common good as being affected with
public interest. The application of the rule must rest on the
B
modern economic system of a welfare State having its own
requirements and problems. The application of the rule
would not be governed by right distinctions nor would the
economic principle be allowed to be blurred by the blending
offorms and interests." (emphasis supplied)
c The Court proceeded to state: (Motibhai case (supra); AIR p.
I 04, para 44)
"44. In the field of economic progress and interest of the
·public the application ofthe rule would include operations which
are more or less indispensable to the community. The very
D lack of definitiveness of the expression public purpose,
somewhat paradoxical though it may s::em requires that the
field of its coverage must extend to concerns which are fit to
serve the common welfare. That coverage can include activities
open to the initiative of both pri_vate enterprise and public
E administration for private enterprise is certainly amenable to
public control and can be an efficient instrument of economic
benefit."
Upholding the acquisition, the Court concluded: (Motibhai case
(supra), AIR p. 105, para 48)
F "48 . ... It cannot be ignored that Respondent 2 Company is
a scheduled industry controlled by the provisions of the
Industries (Development and Regulation)Act, 1951. The price
of its products is subjectto these controls. We are also satisfied
that the public is vitally concerned in the saving of foreign
G exchange in our present economic situation and that this is an
aspect of the matter which has to be borne in mind. We are
satisfied that the respondents are correct in their submission
that the intended acquisition oflands in dispute would materially
help in the saving of such exchange. We have to consider
together all the aspects of the case which redound to and result
H in the benefit of the public and on an assessment of all the
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 391
rARUN MISHRA, J.l
facts and circumstances of the case and the cumulative effect A
of the same_ we are of the opinion that the land in dispute is
. n~eded for a public purpose as contended by the respondents.
We may add that the notifications under Sections 4 and 6 are
not defective on any of the grounds urged before us on behalf
of the petitioner-as held by us and the declar,ation under Section
B
6 is conclusive evidence that the land in dispute is needed for a
public purpose."
111. In Aflatoon v. Lt. Governor of Delhi (1975) 4 SCC
285 land was sought to be acquired for "Planned Development
of Delhi". Neither the master plan nor the zonal plan was ready.
The question before this Court was whether acquisition c
proceedings could have been initiated in the absence of master
plan or zonal plan. Considering the relevant provisions of the
Delhi Development Act, 1957, the Court held that the proceedings
did not get vitiated in the absence of such plan. The Court observed
that acquisition generally precedes development. If for proper D
development, land is sought to be acquired, such action could not
be said to be illegal, unlawful or in colourable exercise of power.
If was also contended that the acquisition was for company
inasmuch as after acquisition, the Government proposed to hand
over the property or a portion thereof to cooperative housing
societies and since procedure in Part VII of the Ad was not E
followed, the acquisition was not val id. Even the said contention
was negatived by the Court observing that merely because the
Government allotted a portion of the property to cooperative
societies, Part VII did not get attracted and the acquisition could
not be held invalid. (See also Ajay Krishan Shinghal v. Union F
of India (1996) 10 SCC 721.)
112. In S.S. Darshan v. State of Karnataka ( 1996) 7 SCC
302 land was sought to be acquired under the Act for public
purpose, namely, for setting up Information Technological Park.
Challenging the acquisition, it was contended by the petitioners G
that the acquisition was mala fide and in colourable exercise of
power since primarily the acquisition was for a private limited
company and not for the State. The relevant part of the notification
read thus: (S.S. Darshan case (supra), SCC p. 304, para 5)
"The lands shown in the annexed index are required for a public
H
392 SUPREME COURT REPORTS r2o 16111 s.c.R.
A purpose, that is, to establish information technological park
through Karnataka Industrial Areas l)evelopment Board."
(emphasis supplied)
Emphasising the fact that the acquisition was through the Board,
this Court ruled that acquisition was for a public purpose. The
B notification stated ab"out public purpose of establishment of
information technological park through the Board.
Considering various clauses in the joint venture agreement, the
Court held that the cumulative effect of all went to show that
acquisition was for the public purpose of setting up technological
park by the Government of Karnataka through the Karnataka
c Industrial Areas Development Board and was, therefore, valid.
113. In W.B. Housing Board v. Brijendra Prasad Gupta
(1997) 6 sec 207 land was acquired for providing houses to
poor people. The action was challenged, inter alia, on the ground
that the Housing Board was to earn profit and hence it could not
D have been said to be a public purpose. Refuting the contention
and upholding the acquisition, the Court took note of the fact that
it was a matter of common knowledge that there is acute shortage
of housing accommodation both in rural and urban areas of the
country. The Court also stated that since late the prices of real
E estate have sky-rocketed making it beyond the reach of low
income and middle income groups of people, hence, the ·State
has a duty to give shelter to homeless people, specially, to the
people of the low .income group. If for that purpose it sought to
acquire land, it could not be said that acquisition was illegal or
unlawful.
F
114. Regarding earning of profit, the Court stated:
(Brijendra Prasad Gupta case (supra), SCC p. 225, para 26)
"26. Simply because there is an element of profit, it could
not make the whole scheme illegal. A private entrepreneur will
G
certainly look to some profit but to see that the profit motive
does not lead to exploitation even of the rich and that the houses
are available to the poor people and to middle class people at
nominal or affordable prices, or even on no-profit-no-loss basis,
the Housing Board exercises the necessary control. It is
certainly a public purpose to provide houses to the comqmnity
H especially to poor people for whom the prices are beyond their
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 393
fARUN MISHRA, J.l
means and they would otherwise never be able to acquire a A
house."
The Court concluded: (Brijendra Prasad Gupta case (supra),
sec p. 225, para 28)
"28. The Court must shake off its myth that public purpose
B
is served only if the State or the Housing Board or the joint
-sector company does not earn any profit. There cannot be any
better authority than the State or the statutory corporation to
supervise or monitor the functions of the joint venture company.
Courts will certainly step in if the public purpose is sought
to be frustrated."( emphasis supplied) c
116. Reliance was also placed· on State of Karnataka v.
All India Manufacturers Organisation (2006) 4 SCC 683. In
that case, the Government ofKarnataka undertook a mega project
for developing its transport and communication system. A
memorandum of understanding was entered into between the D
State Government and a company for implementation of the
project and lands were acquired. A public interest litigation (PIL)
was filed in the High Court alleging that the land was not needed
for public purpose and yet excess land was acquired and had
been given to a company. The action was, therefore, illegal,
unlawful and mala fide. Negativing the contention and upholding E
the action, this Court observed that the project was an integrated
infra.structure development project and not merely a highway
project As an integrated project, it required acquisition and
transfer of lands even away from the main alignment of the
.road. Acquisition of land and giving it to the company was, F
therefore, legal l\!ld lawful and did not suffer from mala fides. ·
127. We would have indeed considered the contention of
the learned counsel for the appellants closely in the light of earlier
decisio_ns of this Court.·We are, however, of the view that on the
facts and· in the· circumstances .of the present case, the G
Government was right in forming an opinion and reaching a
· satisfaction as to "public purpose" and in initiating proceedings
under Sections 4 and ·6 and in invoking Part U ofthe Act. We,
therefore, refrain from undertaking further exercise·. In our
considered opinion, it is not necessary for u_s to enter into larger
question in view of"fact situation" in the instant case. H
394 SUPREME COURT REPORTS [2016] 11 S.C.R.
A Conclusions
128.Applying the aforesaid principles to the case on hand,
in our considered opinion, it cannot be said that the proceedings
· initiated by the State for acquisition of land under the Land
Acquisition Act, 1894 are illegal, unlawful, unwarranted, inala
B fide, fraud on statute or have been taken in colourable exercise
of power.
· 131. In our judgment, the respondents are right in submitting
that in case of integrated and indivisible project, the project has
to be taken as a whole and must be judged whether it is in· the
c larger public interest. It cannot be split into different components
and to consider whether each an·aevery component will serve
. public good. A holistic apprnach has to be adopted in such matters.
If the project taken as a wlfole is an attempt in the direction of
bringing foreign exchange, generating employment opportunities
and securing economic benefits to the State and the public at
D large, it will serve public purpose. ·
132. It is clearly established in this case that the infrastructure
development project conceived by the State and executed under
the auspices of its instrumentality (APIIC) is one covered by the
Act. The joint venture mechanism for implementing the policy,
E executing the project and achieving lawful public purpose for
realising the goal oflarger public good would neither destroy the
object nor vitiate the exercise of power of public purpose for
developme.nt of infrastructure. The concept of joint venture to
tap resources of private sector for infrastructural development
F for fulfilment of public purpose has been recognised in foreign
countries
. as also in India in several decisions of this Court. .
· 133. The entire amount of compensation is to be paid
by State agency (AP/IC) which also works as nodal agency
for execution of the project. Ji is primarily for the State to
G decide whether there exists public purpose or not.
Undoubtedly, the decision of the State is not beyond judicial
scrutiny. Jn appropriate cases, where such power is exercised
ma/a fide or for collateral purposes fJr the purported action
is dehors the Act, irrational or otherwise unreasonable or
the so-called purpose is "no public purpose" at all and fraud
H on statute is apparent, a writ court can undoubtedly interfere.
KEDAR NATH YADAV v. STATE OF WEST BENGAL & OR$. 395
[ARUN MISHRA, J.]
_But except in such cases, the declaration of the Government A
is not subject to judicial review. In other words, a writ court,
while exercising powers under Articles 32, 226 or 136 of
the Constitution, cannot substitute its o~n judgment for the
iudgment of the Gpvi!_rnment as to what constitutes ''public
purpose". (emphasis supplied)
B
Thus this Court has laid down that when the entire compen;;ation
is to be paid by APIIC, it is for the State to decide whether there exists
a public purpose or not, though the decision of the State is not beyond
judicial scrutiny. Whether it is exercised mala fide or collaterally'or de
hors of the Act and no public purpose would be served, court can
interfere. The expenditure out of the funds oftheAPIIC was held to be c
from public revenue as provided in Explanation 2 of section 6(1) of the
Act.
23. In Urmila Roy & Ors. v. Bengal Peerlesis Housing .
Development Co. Ltd. & Ors. (2009) 5 SCC 242, this Court has
considered the amended provisions and ExpJanation 2 of section 6 and D
held th~t the expenditure is the test for appilcability of the procedure
prescribed in Part II as it was borne by the State Government or the
Housing Board that the acquisition was for Part II and not Part VII of
the Act. This Court has held thus:
"38. A perusal of the second proviso and Explanation 2 of E
Section 6 in particular reveals that ifthe compensation awarded
for the _property is paid substantially out of the funds of a
corporation owned or controlled by the State, such compensation
will be deemed to be paid out of public funds and as such would
satisfy the test of-acquisition for a public purpose. F
39. We see from the record that as per the letter issued by
the Land Acquisition Collector on 13-11-2001 to the Housing
Ministry of the State Government, a request had been made that
a sum of Rs 3 crores which represented about ·so% of the
compensation of the acquired land be.deposited. This memo had G
been forwaroed by the State Government to the Housing Board
and on 23-11-2001 a sum of Rs I. 70 crores towards compensation
. had been sent by Bengal Peerless to the Land Acquisition
Collector through the Housing Board.
40. It appears that on 30-10-2003 the State Government
H
396 SUPREME COURT REPORTS [2016] 11 S.C.R.
A had requested the Housing Board to make an-angements for the
balance payment of compensation of about Rs 82,04, 138 and by
a memorandum of3 l-l 0-2003 the Government of West Bengal
had directed the Housing Board to pay the additional balance
compensation which too was defrayed by an account payee
cheque dated 3-11-2003 drawn on Bank of Maharashtra. The
B
accounts statement of Bank of Maharashtra was produced before
us for perusal and this statement supports the argument that the
aforesaid amount had, indeed, been paid from the funds of the
Housing Board which is completely owned and controlled by the
State Government.
c 41. In their written submissions the appellants have doubted
the accuracy of this accounts statement, by asserting that they
had not been able to verify its contents as it had been produced
for the first time in this Court. We find that even if this objection
is accepted and the statement ruled out of consideration, the
D other evidence on record does indicate. that a substantial part of
the compensation had been paid from the government funds.
43. In Indra} it Parekh v. State of Gzljarat (1975) I SCC
824 in which a somewhat restricted meaning has been given to
the extremely broad parameters laid down in Pratibha Nema
E case (supra), but it has nonetheless been observed that if a
reasonable amount of compensation had been drawn out of.
government funds, it would satisfy the requirement of a public
purpose as per the Act.
44. In the present case, as already mentioned above, we
F find that a substantial part of the compensation has, indeed, been
paid by the State Government or by the Housing Board which
clearly satisfies the test of public purpose. In this background,
we endorse the finding of the Division 6ench that the procedure
envisaged in Part I1 and not in Part VIT of the Act would be
applicable. This is precisely what has been done."
G
24. ·In Nand Kishore Gupta & Ors. v. State of U.P. & Ors.
(20 I 0) I 0 SCC 282, this Court has referred to the decisions in Devinder
Singh (supra) and Pratibha Nema (supra) and has laid down that there
was no conflict in the decisions. This Court has considered the matter
thus:
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 397
fARUN MISHRA, J.l
"80. During the debate, the decision in Devinder Singh v. A
State of Punjab (2008) I SCC 728 was also referred to. It was
urged that there was a conflict in this decision and the decision
in Pratibha Nema case (2003) 110 SCC 626. This was a case
where the petitioners who were the owners of the agricultural
lands, had challenged the acquisition oflands for M/s International
B
Tractors Ltd. It was claimed that the land was being acquired
for public purpose i.e. setting up Ganesha Project of M/s
International Tractors Ltd. at various villages. The High Court
had held that the land acquisition was for public purpose. This
Court explained the "public purpose" as defined in Section 3(t)
of the Act and noted that the aforementioned Ganesha Project c
was not a project of the State, but the one undertaken by the
Company M/s International Tractors Ltd. The Court then went
on to consider Sections 40 and 41 of the Act along with Rule 4 of
the LandAcqui~ition (Companies) Rules, 1963 and came to the
conclusion that the same could not be a public purpose as the
D
whole compensation was coming from the coffers of the
Company. In that view, the Court further came to the conclusion
that the State not having followed the provisions of Sections 40
and 41 of the Act, the whole process had suffered illegality.
81. The Court also considered the decision in Pratibha
Nema case (supra) and distinguished the same by making a E
comment to the following effect: (Devinder Siugh case (supra),
sec p. 738, para 22)
"22 . ... But we 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 F
II and Part VII of the Act simultaneously.".
The Court, however, refused to go into the nicety of the question
and observed that in a case of acquisition for a public company,
public purpose is not to be assumed and the point of distinction
between acquisition of lands under Part 11 and Part VII of the G
Act would be the source of funds to cover the cost of acquisition.
The Court also considered the judgment of this Court in
Somawanti v. State of Punjab, AIR 1963 SC 151, Jage Ram v.
State of Haryana ( 1971) 1 SCC 671 and Shyam Behari v. State
of MP. AIR 1965 SC 427 Ultimately, the Court came to the H
398 SUPREME COURT REPORTS [2016] 11 S.C.R.
A conclusion that the necessary provisions not having been found,
the view of the High Court was not correct, whereby it had
upheld the land acquisition, holding it to be for the public purpose.
82. We have '?losely seen the judgment in Devinder Singh
(supra) however, the factual situation in the judgment is quite
B different. In our opinion, the judgment will not help the appellants
to contend that the present land acquisition is not for public
purpose. We also do not think that there is any serious conflict
between the decision in Pratibha Nema case (supra) and the
decision in Devinder Singh v. State of Punjab (supra), so as to
require a reference to the larger Bench. In our opinion, the
c decision in Pratibha Nema case (supra) applies to the fact
situation in this case.
83. Therefore, considering the overall factual situation, we
are of the opin'ion that the High Court was right in holding that
the acquisition was made for the public purpose. We find from
D the order of the High Court that the High Court has considered
the question of public purpose keeping in mind the correct
principles of law. We are, therefore, of the opinion that the
contention raised by the learned counsel for the appellants that
this acquisition was not for the public purpose for various reasons
E which we have disc1;1§sed, is not correct."
25.In my opinion for the purpose of acquiring land in the instant
case it was not necessary to have recourse to the provisions contained
in Chapter VII of the Act. The proposal submitted to the Cabinet on
30.5.2006 indicates that the West Bengal Industrial Development
F Corporation (WBIDC) was the acquiring body to acquire I 053 acres of
land for Small Car Project ofTML at Singur which was comprised in
Gopal Nagar, Singherberi, Beraberi, Khaserberi and Bajemelia. Thus
the Cabinet has approved the said proposal. WBIDC was associated
with the project right from the beginning and was instrumental in getting _
the land identified by the TML for the purpose of selection. The memo
.G forthe Standing Committee of the Cabinet on Industry dated 26'.7.2006
contains the decision of acquisition ofland for public purpose under Land
Acquisition Act it was made considering the following facts :
"(B) Declaration of Acquisition as Public Purpose under the LA
Act -
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 399
[ARUN MISHRA, J.]
Keeping in view the importance of this Industrial investment in A
the automobile sector for the industrial development of the State,
and keeping in view the fact that the land is being acquired by
the West Bengal Industrial Development Corporation as the
Requiring Body, and WBIDC being a Corporation owned and
contro!Ied by the State Government, it is proposed that this
B
acquisition be done for public purpose in terms of Section 3(t)(iv)
of the Land Acquisition Act, 1894. ·
The matter is accordingly placed before the Standing Committee
of the Cabinet on Industries for decision on the following:
I. Approval of the revised package of incentives as described c
in item A above;
2. Approval for taking up land acquisition for public purpose
as described in item B above."
The Standing Committee has approved the same as apparerfFfrom
the Minutes placed on record. Notification under section 4 of the Act b
was published in the Gazette on 21.7.2006 in which it was mentioned
that the land is likely to be needed by the Government/Government
undertaking/DevelopmentAuthorities at the public expense for publi1< ·
purpose, viz., employment generation and socio-economic development
of the area by setting up small car project. Though it was not specifically E
mentioned that the WBIDC is to be the acquiring body but a deCision
had already been taken in this regard and the aforesaid expression
· Government Undertaking/Development authorities would include
acquisition by WBIDC as the Government has decided to treat it as a
public purpose as it was to generate direct employment to 1800 persons
and by direct employment through vendors and through other service F
providers to 4 700 persons approx. Similar is the position with respect to
. declaration under section 6 of the Act. As the Government has treated
the acquisition for a public purpose and the entire money has been paid
_by WBIDC consequently by mere mention that the land was required
for the small car project of TML .would not make it an acquisition for a . G
comp.any under Part VII. Non-mention of WBIDC cannot be taken to
be an illegality impinging the validity of the notification under section 4 of
the Act. The fact that the application was filed by TML indicating its
willingness for setting up the industry would not also make ii an acquisition
for a company but how the State has dealt with the.same, would be the
H
400 SUPREME COURT REPORTS [2016] 11 S.C.R.
A decisive factor. Since WBIDC was involved right from the beginni_ng by
the State Government and a decision was taken by the State Government
that WBIDC would be the acquiring authority and WBIDC was involved
in identification of the land and the reports were submitted by it to the
Government, the acquisition was for WBIDC is apparent as the land
was to vest in the WBIDC and it has paid the compensation. Payment
B
of premium amount as per the conditions of lease agreement fastened
upon the TML would also not make it a compensation paid by TML as
already discussed hereinabove. In my opinion it was not necessary for
the State Government to deposit the amount of compensation as
compensation paid by the corporation is also to be treated out of public
c revenue.
26. The aims and objects of the amendment of section 3(f) when
taken into consideration would not alter the aforesaid position of law.
Acquisition ofland for a company or for industrialization ifit is for public
purpose would be covered under section 3(f) as amended and when
D corporation is the acquiring authority and amount of compensation is
borne by it in entirety and land has been ultimately leased out to TML for
it$ project by it the acquisition would remain for a public purpose under
section 3(f) attracting Part II of the Act. The procedure adopted under
Part II cannot be said to be impermissible. It cannot be said to be
acquisition under guise of public purpose so as to violate the intendment
E of exclusion of the company from section 3(f) as amended.
27. Considering the various decisions rendered by this Court in
post-amendment period in Amarnath Ashram Thtst Society & Am: v.
.. Government of U.P. & Ors., Pratibha Nema, Devinder Singh v. State
of Punjab, Sooraram Pratap Reddy, Urmila Roy & Ors. v. Bengal
F Peerless Housing Development Co. Ltd. & Ors., and Nand Kishore
Gupta v. State of U.P. discussed hereinabove are binding on a Co-
ordinate Bench and I find no reason to take a different view on merits_
28. Even ot)1erwise I feel bound by the principle of stare decisis
in view of the aforesaid consistent decisions of this Court. In WamanRao
G v. Union ofIndia ( 198 I) 2 SCC 362, it has been laid down that the rule
of stare decisis requires that it is unnecessary to enquire or determine
as to what was the rationale of the earlier decision which is said to
operate as stare decisis. In Union of India v. Raghubir Singh (1989)
2 SCC 754, it has been laid down that the law declared by this Court
H should be certain, clear and consistent. The doctrine of binding precedent
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 401
rARUN MISHRA, J.l
has'the merit of promoting certainty and consistency in judicial decisions. A
In Krishena Ku111ar v. Union of India (1990) 4 SCC 207, law to the
similar effect has been laid down when departure is rendered necessary
to vindicate plain, obvious principles of law· and remedy continued
injustice. In Mishri Lal v. Dhirendra Nath, (1999) 4 SCC 11 it has
been laid down that the doctrine is base9 on 'pug_lic policy' and should be
B
adhered to subserve the ends of justice.
In Central Board of Dawoodi Bohra Community v. State of
Maharashtra (2005) 2 SCC 673, it has been observed that the doctrine
has the merit of promoting certainty and _consistency in judicial decisions,
and enables an organic development of the law, besides providing
assurance to the individual as to the consequence of transactions forming
c
part of daily affairs. In Shanker Raju v. Union of India (2011) 2 SCC
132 it has been observed that a judgment, which has held the field for a
long time, should not be unsettled. The view which has held the field for
a long time should not be disturbed only because another view is possible.
In Fida Hussain v. Moradabad Development Authority & Am: (2011) D
12 sec 615 it has been observed that the decision of two Judges is
binding on another Division Bench of two Judges. Following obs~rvations
have been made by this Court in Union of India v. Raghubir Singh
(1989) 2 sec 754:
"28. We are of the opinion that a pronouncement of E
law by a Division Bench of this Court is binding on a Division
Bench of the same or a smaller number of Judges, and in order
that such decision be binding, it is not necessary that it should
be a decision rendered by the Full Court or a Constitution Bench
of the Court."
F
In Union of India v. Paras La111inates (PJ Ltd. ( 1990) 4 SCC
453 it has been observed that a Co-ordinate Bench should not disturb
the decision on an identical question. The rationale of this rule is the
need for continuity, certainty and predictability in the administration of
justice. It is necessary to inculcate confidence in the administration of
justice as laid down in Joint Co111111issio11er of Income Tax, Surat v. G
Saheli Leasing and Industries Ltd. (2010) 6 SCC 384. It cannot be
referred to a larger Bench unless there is an error apparent on its face
or that a particular earlier decision was not noticed, which has a direct
bearing or has taken a contrary view. In The Keshav Mills Co. Ltd. v.
CIT, AIR 1965 SC 1636 a Constitution Bench of this Court has observed H
402 SUPREME COURT REPORTS [2016] ll S.C.R.
A that in reviewing and revising irs earlier decision, in the interests of the
public good or for any other valid and compulsive reasons, it must be the .
constant endeavour and concern of this Court to introduce and maintain
an element of certainty and continuity in the interpretation oflaw.
29. In my opinion, on merits the view taken by this Court does not
B require reconsideration at all and otherwise also I find no ground in view
of the consistent decisions to take a different view.
30. For the aforesaid i·easons I respectfully disagree with the
conclusion of esteemed brother on question numbers I and 2.
IN RE. QUESTION NOS. 3, 4 AND 5
c
31. Coming to question nos. 3, 4 and 5 as they are inter connected,
it appears that even before issuance of notification under section 4 of
the Act decision has been taken to acquire the land in question. The
notification under section 4 is an introductory measure. Section 4 of the
Act is extracted hereunder :
D
"4. Publication of prelimi,nary notification and powers of
officers thereupon.-( l) Whenever it appears to the appropriate
Government that land in any locality is needed or is likely to be
needed for any public purpose or for a company a notification to
· that effect shall be published in the Official Gazette and in two
E daily new~papers circulating in that locality of which at least one
shall be in the regional language and the Collector shall cause
public notice of the substance of such notification to be given at
convenient places in the said locality (the last of the dates of
such publication and the giving of such public notice, being
F hereinafter referred to as the date of publicat'ion of die
notification).
(2) Thereupon it shall be lawful for any officer, either
(
generally or specially authorized by such Government in this
behalf, and for his servants and workmen,-
G to enter upon and survey and take levels of any land in such
localitY; to dig or bore in the sub-soil;
to do all other acts necessary to ascertain whether the land is
adapted for such purpose;
to set out the boundaries of the land proposed to be taken and
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 403
[ARUN MISHRA, J.]
the intended line_ of the work (if any) proposed to be made A
thereon;
to mark such levels, boundaries and line by placing marks and
cutting trenches; and,
where otherwise the survey cannot be completed and the levels ·· ·
taken and the boundaries and line marked to cut down and B
clear away any part of any standing crop, fence or jungle:
Provided that no person shall enter into any building or upon any·
enclosed court or garden attached to a dwelling-house (unless
with the consent of the occupier thereof) without previously giving
such oc.:upier at least seven days' notice in writing of his intention c
to do so."
32. It is apparent from section 4(2) that after notification is issued
it shall be lawful for any officer to enter upon and survey and to do all
the acts which are necessary to ascertain whether land is adapted for
such purpose. The notification is of exploratory character and it does D
not proprio motu result in acquisition. The proposal for acquisition in any
particular locality ripens into definite proceedings where Government is
satisfied how land is needed for public purpose. Section 4( I) does not
require land to be defined or identified but requires locality to be stated
so as to file objection under section 5 of the Act. In the instant case the E
Cabinet has taken a decision to acquire the said land beforehand for
which a notification has ultimately been issued under sections 4 followed
by declaration under section 6 of the Act. The right under section SA of
the Act is a valuable right has been laid down in various decisions cited
at bar referred her_einafter.
F
33. In Raghubir Singh Sherawat v. State of Haryana & Ors.
(2012) 1 sec 792 it was observed thus:
"39. In this context, it is necessary to remember that the rules
of natural justice have been ingrained in the scheme of Section
5-A with a view to ensure that before any person is deprived of
G
his land by way of compulsory acquisition, he must get .an
opportunity to oppose the decision of the State Government and/
or its agencies/instrumentalities to acquire the particular parcel
of land. At the hearing, the objector can make an effort to
convince the Land Acquisition Collector to make
recommendation against the acquisition of his land. He can also H
404 SUPREME COURT REPORTS f20161 11 S.C.R.
A point out that the land proposed to be acquired is not st1itable for
the purpose specified in the notification issued under Section
4( I). Not only this, he can ·produce evidence to show that another
piece ofland is available and the same can be utilised for execution
of the particular project or scheme."
B In Kamal Trading (P) Ltd. v. State of W.B. (2012) 2 SCC it was held
thus:
"25. According to the appellant, the notification under Section
.4 of the LA Act was not served on the owner companies.
However, upon coming to know of this notification, the appellant
c vide their letter dated 8-9-1997 submitted objections running into
four pages containing 8 paragraphs. We have already noted that
the Second Land Acquisition Officer adjourned the hearing on
one occasion as requested by the appellant. He, however, refused
to adjourn the maJter any further. The second request was
rejected. We feel that looking to the nature of the issues involved,
D the Second Land Acquisition Officer could have adjourned the
proceedings after putting the appellant to terms because hearing
the representative of the owner companies was mandatory. In
any event, if he did not want to adjourn the proceedings and
wanted to consider the objections in the absence of the counsel
E for the owner companies and assuming such a course is
permissible in law, he should have dealt with the objections
carefally and not in such a light-hearted manner because a
heavy responsibility rested on his shoulders." (emphasis
supplied)
F 34. In Surinder Singh Brar & Ors. v. Union of India & Ors.
(2013) I SCC 403 it was observed thus : .
"69. In the context of the statement contained in the first
line of the paragraph titled "Observations", we repeatedly asked
ShriSudhirWalia, learned counsel assisting Dr Raj iv Dhavan to
G show as to when the LAO had summoned the revenue records
and when he had conducted spot inspection but the learned
counsel could not produce any document to substantiate the
statement contained in the two rcp011s of the LAO. This leads
to an inference that, in both the reports, the LAO had made a
misleading and false statement about his having seen the revenue
H records and conducted spot inspection. That apai1, the reports
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 405
[ARUN MISHRA, J.]
do not contain any iota of consideration of the objections filed by A
the landowners. Mere reproduction of the substance of the
objections cannot be equated with objective consideration
thereof in the light of the submission made by the objectors
during the course ofhearing. Thus, the violation of the mandate
of Section 5-A(2) is writ large on the face of the reports prepared
B
by the LAO. (emphasis supplied)
70. The reason why the LAO did not apply his mind to the
objections filed by the appellants and other landowners is obvious.
He was a minion in the hierarchy of the administration of the
Union Territory of Chandigarh and could not have even thought
of making recommendations contrary to what was contained in c
the letter sent by the Administrator to Surinder Singh Brar. If he
had shown the courage of acting independently and made
recommendation against the acquisition of land, he would have
surely been shifted from that post and his career would have
been jeopardised. In the system of governance which we have D
today, junior officers in the administration cannot even think of,
what to say of, acting against the wishes/dictates of thei1;
superiors. One who violates this unwritten code of conduct does
so at his own peril and is described as foolhardy. Even those
constituting higher strata of services follow the path of least
resistance and find it most convenient to tow the iine of their E
superiors. Therefore, the LAO cannot be blamed for having acted
as an obedient subordinate of the superior authorities, including
the Administrator. H01l'eve1; that cannot be a legitimate ground
to approve the reports prepared by him without even a
semblance of consideration of the objections filed by the F
appellants and other landowners and we have no hesitation
·to hold that the LAO failed to discharge the statutory duty
cast upon him to prepare a report after objectively
co11sidering the objections filed under Section 5-A(l) and
submissions made by the objectors during the course of
personal hearing. (emphasis supplied). G
76. Section 5-A, which embodies the most important
dimension of the rules of natural justice, lays down that any
person interested in any land notified under Section 4( I) may,
within 30 days of publication of the. notification, submit objection
H
406 SUPREME COURT REPORTS [2016) 11 S.C.R.
A in writing against the proposed acquisition ofland or of any land
in the locality to the Collector. The Collector is required to give
the objector an opportunity of being hern:d either in person or by
any person authorised by him or by pleader. After hearing the
objector(s) and rnaking such further inquiry, as he may think
necessary, the Collector has to make a report in respect ofland
B
notified under Section 4(1) with his recommendations on the
objections and forward the same to the Government along with
the record of the proceedings held by him. The Collector can
make different reports in respect of different parcels of land
proposed to be acquired.
c 84. What needs to be emphasised is that hearing required
to be given under Section 5-A(2) to a person who is sought to be
deprived ofhis land.and who has filed objections under Section
5-A(I) must be effective and not an empty formality. The
Collector who is enjoined with the task of hearing the objectors
D has the freedom of making further enquiry as he may think
necessary. In either eventuality, he has to make report in respect
of the land notified under Section 4(1) or make different reports
in respect of different parcels of such la1id to the appropriate·
Government containing his recommendations on the objections
and submit the same to the appropriate Government along with
E the record of proceedings held by him for the latter's decision.
The appropriate Government is obliged to consider the report, if
any, made under Section 5-A(2) and then record its satisfaction
that the particular land is needed for a public purpose. This
exercise culminates into making a declaration that the land is
F needed for a public purpose and the declaration is to be signed
by a Secretary to the Government or some other officer duly
authorised to certify its orders. The formation of opinion on the
. issue ofneed ofland for a public purpose and suitability thereof
is sine qua non for issue of a declaration under Section 6( I). Any
violation of the substantive right of the landowners and/or other
G interested persons to.file objections or denial of opportunity of
personal hearing to the objector(s) vitiates the recommendations
made by the Collector and the decision taken by the appropriate
Government on such recommendations. The recommendations
made by the Collector without duly considering the objections
H filed under Section 5-A(I) and submissions made atthe hearing
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 407
fARUN MISHRA, J.l
given under Section 5-A(2) or failure of the appropriate A
Government to take objective decision on such objections in the
light of the recommendations made by the Collector will denude
the decision of the appropriate Government of statutory finality.
To put it differently, the satisfaction recorded by the appropriate
Government that the particular land is needed for a public purpose
and the declaration made under Section 6(1) will be devoid of
legal sanctity if statutorily engrafted procedural safeguards are
not adhered to by the authorities concerned or there is violation
of the principles of natural justice. The cases before us are
illustrative of flagrant violation of the mandate of Sections 5-
A(2) and 6(1). Therefore, the second question is answered in c
the affirmative. (emphasis supplied)
87. The proposition laid down in the aforementioned two
judgments does not support the stance of the Chandigarh
Administration that even though there is breach of the mandate
of Section 5-A read with Section 6(1 ), the Court cannot, after D
the issue of declaration under Section 6(1 ), nullify the acquisition
proceedings. As a matter of fact, the ratio of both the judgments
is that satisfaction of the appropriate Government envisaged in
Section 6( I) must be preceded by consideration of the report
prepared by the Collector after considering the objections filed
E
under Section 5-A and hearing the objectors. This necessarily
implies that the Government must objectively apply its mind to
the report of the Collector and the objections filed by the
landowners and then take a decision whether or not the land is
needed for the specified public purpose. A mechanical
endorsement of the report of the Collector cannot be a substitute F
for the requirement of application of mind by the Government
which must be clearly reflected in the record.
88. In addition to what we have observed on the issue of
flagrant violation of the two sections, it will be apposite to
recapitulate the language of the declarations issued under Section G
6( I), which were published on 28-2-2007. A reading of the
declarations makes it clear that the authority issuing the same
was totally unmindful of the requirement of the statute. This
could be the only reason why instead ofrecording satisfaction of
the appropriate Government that the land is needed for a public
H
408 SUPREME COURT REPORTS [2016] 11 S.C.R.
A purpose, the notification uses the expressions "appears to the
Administrator" and "likely to be needed". This only adds to the
casualness with which the entire issue of acquisition has been
dealt with by the .higher functionaries of the Chandigarh
Administration.
8 89. Adverting to the impugned order [Surinder Singh Brar
v. Union of India, W.P. (C) No. 5065 of2007, decided on 18-3-
2011 (P&H)], we find that the High Court has not examined the
substantive grounds on which the appellants had challenged the
acquisition of their land with the required seriousness and failed
to notice that the LAO had not at all considered several objections
c including those relating to adverse impact on the environment
and ecology of the area raised by the landowners and mechanically
recommended the acquisition ofland notified under Section 4(1 ),
that the reports of the LAO were not placed before the competent
authority and that even the Adviser had not objectively considered
D the reports of the LAO in the light of the objections filed under
Section 5-A( I) and simply appended his s;~natures on the note
prepared by the Secretary (Finance). This omission on the High
Court's part has resulted in miscarriage of justice."
35. Jn Gojer Brothers Private Ltd. & Anr. v. State of West
E Bengal & Ors. (2013) 16 SCC 660 this Court observed :
"18. In Surinder Singh Brar v. Union of India (2013) I
SCC 403, this Court extensively considered the report prepared
by the Land Acquisition Officer and the decision taken by the
administration of the Union Territory of Chandigarh and observed:
F (SCC pp. 450-5 I, 455-58, paras 68-70, 76-79 & 84)
"68. A cursory reading of the reports of the LAO may
give an impression that he had applied his mind to the objections
filed under Section 5-A( I) and assigned reasons for not
ente1ia.ining the same, but a careful analysis thereof leaves no
G doubt that the officer concerned had not at all applied his mind
to the objections of the landowners and merely created a facade
of doing so. In the opening paragraph under the heading
'Observations', the LAO recorded that he had seen the revenue
records and conducted spot inspection. He then reproduced
the Statement of Objects and Reasons contained in the Bill
H which led to the enactment of the Punjab New Capital
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 409
rARUN MISHRA, J.l
(Periphery) Control Act, 1952 and proceed to extract some A
portion ofreply dated 31-7-2006 sent by the Administrator to
Surinder Singh Brar.
19. In Usha Stud and Agricultural Farms (P) Ltd. v. State of
Haryana (2013) 4 SCC 210, the Court reiterated the propositions
laid down in Raghbir Singh Sehrawat case (2012) 1 SCC 792 . B
and Kamal Trading (P) Ltd. v. State of W.B. (2012) 2 SCC 25
and observed: (Usha Stud case (supra), SCC p. 227, para 30)
"30. The ratio of the aforesaid judgments is that Section 5-
A(2), which represents statutory embodiment of the rule of
audi alteram paiiem, gives an opportunity to the objector to c
make an endeavour to convince the Collector that his land is
not required for the public purpose specified in the notification
issued under Section 4(1) or that there are other valid reasons
fornot acquiring the same. That section also makes it obligatory
for the ·collector to submit report(s) to the appropriate
Government containing his recommendations on the objections, D
together with the record of the proceedings held by him so that
the Government may take appropriate decision on the objections.
Section 6( 1) provides that if the appropriate Government is
satisfied, after considering the report, if any, made by the
Collector under Section 5-A(2) that particular land is needed E
for the specified public purpose then a declaration should be
made. This necessarily implies that the State Government is
required to apply mind to the report of the Collector and take
,final decision on the objections filed by the landowners and
other interested persons. Then and then only, a declaration
can be made under Section 6( 1)." F
21. In our view, non-consideration of the objections filed
under Section 5-A( I) has resulted in denial of effective opportunity
of hearing to the appellant. The manner in which the Joint
Secretary to the Government approved the recommendation
made by the Land Acquisition Collector favouring acquisition of G
the property is reflective of total non-application of mind by the
competent authority to the recommendation made by the Land
Acquisition Collector and the report prepared by him."
36. In Usha Stud & Agricultural Farms (P) Ltd. v. State of
Haryana (2013) 4 SCC 210 this Court observed: H
410 SUPREME COURT REPORTS [2016] 11 S.C.R.
A "30. The ratio of the aforesaid judgments is that Section 5-
A(2), which represents statutory embodiment of the rule of
audialterampartem, gives an opportunity to the objector to make
an endeavour to convince the Collector that his land is not required
for the public purpose specified in the Notification issued under
Section 4(1) or thatthere are other valid reasons for not acquiring
B
the same. That section also makes it obligatory for the Collector
to submit report(s) to the appropriate Government containing his
recommendations on the objections, together with the record of
the proceedings held by him so that the Government may take
appropriate decision on the objections. Section 6( 1) provides that
c ifthe appropriate Government is satisfied, after considering the
report, if any, made by the Collector under Section.S-A(2) that
particular land is needed for the specified public purpose then a
declaration should be made. This necessarily implies that the
State Government is required to apply mind to the report of the
Collector and take final decision on the objections filed by.the
D
landowners and other interested persons. Then and then only, a
declaration can be made under Section 6( I)."
37. In Sharma Agro Industries v. State of Haryana & Ors.
(2015) 3 sec 341, it was observed:
E "14. The Land Acquisition Collector in the present case has
recommended to the State Government that the land covered in·
these civil appeals need not be acquired. On our direction, Mr.
Manjit Singh, the learned Additional Advocate General
representing the Stat~ of Haryana has made available the record
pertaining to acquisition of the;; lands involved in these appeals.
F The following is the relevant translated extract of the
recommendations made by the Land Acquisition Collector: '
"On 16-1-2003 I visited the spot concerned for the purpose of
inspection; with the Kanoongo and Patwari belonging to the
Revenue Department. A sellc;;r has been established since 1981
G in Khasra Nos. 3959, 3960, 396111, 3961/2, 3963, 3964, 3965,
396611, "3967: 3968 with a total area of 29 bighas 11 biswas ..
The Government ofHaryana, Department oflndustry, had also
issued a licence to the seller for this industry, and the same is
operative till date. An old factory is established in Khasra Nos.
H 39(:i6/2, 3971/2, with a total area of I bigha 11 biswas. Small-
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 411
[ARUN MISHRA, J.]
scale industry licences established in Khasra Nos. 4000, 4001/ A
2, 4001/1/1, 4001/1/2, 4001/1/3, 4002/1, 4002/2 where old
factories along with lantered houses have been constructed.
When the land was acquired in 1986 in Sector 3, the
abovementioned khasra numbers were excluded from the
acquisition process. Hence the abovementioned land may be
B
released, measuring total of3 7 bighas and 13 biswas. The above
numbers are leftover for acquirement.
sd/-
Land Acquisition Collector, Karna!"
The State Government ha.s neither accepted the
recommendations of the Land Acquisition Collector nor assigned c
any reasons before issuing declaration notification under Section
6 of the Act. The same is sought to be justified by the learned
Additional Advocate General contending that it is the prerogative
of the Government to either accept or reject the
recommendations of the Land Acquisition Collector with respect D
to the proposed land to be acquired by issuing declaration
notification under Section 6 of the Act. This contention of the
learnedAdditiona!Advocate General is wholly untenable in law
in vtew of the decisions referred to above. However, after
adverting to the decisions of this Court in the above case and in
the cases referred to supra, the said report of the Land Acquisition . E
Collector was neither accepted by the Government nor did the
Government assign any reasons before issuing the declaration
notification by holding that the land is required for public purpose,.
we are of the view that the acquisition proceedi.ngs are vitiated
in law. F
15. The learned Senior Counsel for the appellants has rightly
placed reliance upon the decision of this Court in Vi1iod Kumar
v. State of Haryana (2014) 3 SCC 203, wherein this Court
referred to the legal principle laid down in Womens Education
Trust v. State of Haryana (2013) 8 SCC 99, and has held as G
under: (SCC p:l J 9, para 35)
"35. What is most surprising is that the High Court did not
even deal with the issue relating to application of mind by the
Government to the report submitted by the Land Acquisition
Collector under Section 5-A(2) along with his recommendations. H
412 SUPREME COURT REPORTS [2016] ll S.C.R.
A The documents produced before the High Court and this Court
do not show that the State Government had objectively applied
mind to the recommendations made by the Land Acquisition
Collector and felt satisfied thatthe land in question deserves to
be acquired for the purpose specified in the notification issued
under Section 4(1). The record also does not contain any
B
indication as to why the State Government did not consider it
proper to accept the recommendations of the Land Acquisition
Collector. Therefore, there is no esc_ape from the conclusion
that the impugned acquisition is ultra vires the provisions
contained in Section 6 of the Act.""
c 38. In Vinod Kumar v. State of Haryana & Ors. (2014) 3 SCC
203 it was observed thus:
"10. In Kamal Trading (P) Ltd. v. State of WB. (2012) 2
SCC 25 it has been held as under: (SCC pp. 29-30, paras 14-16)
D "14. It must be borne in mind that the proceedings under
the LA Act are based on the principle of.eminent domain and
Section 5-A is the only protection available to a person whose
lands are sought to be acquired. It is a minimal safeguard
afforded to hiin by law to protect himself from arbitrary
acquisition by pointing out to the authority concerned, inter alia,
E that the important ingredient, namely, 'public purpose' is absent
in the proposed acquisition or the acquisition is ma la fide. The
LA Act being an expropriatory legislation, its provisions will
have to be strictly construed.
15. Hearing contemplated under Section 5-A(2) is
F necessary JP enable the Collector to deal effectively with
the objections raised against the proposed acquisition and
make·a report. The report of the Collector referred to in
this provision is not an empty formality because it is required
to be placed before the appropriate Government together
G with the Collectors recommendations qnd the r~cord of
the case. It is only upon receipt of the said report that the
Government can take a final decision on the objections. It
is pertinent to note that declaration under Section 6 has to
be made only after the appropriate Government is satisfied
on the consideration of the report, if any, ~made by the
H Collector under Section 5-A(2). As said by this Court in
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 413
[ARUN MISHRA, J.]
Hindustan Petroleum C01pn. Ltd v. Darius Shapur Chenai A
(2005) 7 SCC 627the appropriate Government while issuing
declaration under Section 6 of the LA Act is required to
apply its mind not only to the objections filed by the owner
of the land in question, but also to the report which is
submitted by the Collector upon making such further
B
inquiry thereon as he thinks necessary and also the
recommendations made by him in that behalf. .
16. Sub-section (3) of Section 6 of the LA Act makes a
declaration under Section 6 conclusive evidence that the land
is needed for. a public purpose. Formation of opinion by the
appropriate Government as regards the public purpose must c
be preceded by application of mind as regards consideration
of relevant factors and rejection of irrelevant ones. It is,
therefore, that the hearing contemplated under Section 5-A
and the report made by the Land Acquisition Officer and his
recommendations assume importance. It is implicit in this D
provision that before making declaration under Section 6 of
the LA Act, the State Government must have the benefit of a
report containing recommendations of the Collector submitted
under Section 5-A(2) of the LA Act. The recommendations
must indicate objective application of mind." (emphasis supplied)
E
11. In Usha Stud and Agricultural Farms (P) Ltd. v. State
of Haryana (2013) 4 SCC 210 it was held as under: (SCC p.
227, para 30)
'''30 . ... Section 6(1) provides that if the appropriate
Government is satisfied, after considering the report, if F
any, made by the Collector under Section 5-A(2) that
particular land is needed for the specified public purpose
then a declaration should be made. This necessarily implies
that the State Government is required to apply mind to the
report of the Collector and tµke final decision 'on the
objections filed by the landowners and other interested G
persons. Then and then only, a declaration can be made
under Section 6(1)." (emphasis supplied)
· 12. Further, in Women '.s Education Trust v. State of
Haryana (2013) 8 SCC 99, this Court has held as under: (SCC
p.119,para35) ·H
414 SUPREME COURT REPORTS f20161 11 S.C.R.
A "35. Whqt is most surprising is that the High Court did
not even deal with the issue relating to application of mind
by the Government to the report submitted by the Land
Acquisition Collector under Section 5-A{2) along with his
recommendations. The documents produced before the High
Court and {his Court do npt show that the State Government
B
had objectively applied mind to the recommendations made
by the Land Acquisition Collector and felt satisfied that
the land in question deserves to be acquired for the purpose
specified in the notification issued under Section 4(1). The
record also does not contain any indication as to why the
c State Government did not consider it proper to accept the
recommendations of the Land Acquisition Collector.
Therefore, there is no escape from the conclusion that the
impugned acquisition is ultra vires the provisions contained
in Section 6 of the Act." (emphasis supplied)
D 14. In the light of the foregoing cases, it is evident that the
Government has to consider the report of the Land Acquisition
Collector while making declaration ofacquisition ofland under
Section 6 of the Act. Further, ifthe Government is coming to a
conclusion which is contrary-to the repo11, then the Government
has to provide appropriate reasons for the same."
E
39. In Gurbinder Kaur Brar & Am: v. Union of India & Ors.
(2013) 11 sec 228 it was observed:
"9. We also agree with the learned counsel for the appellants
that the report of the Lan_d Acquisition Officer was vitiated due
F to total non-application of mind by the officer concerned to a
large number of substantive objections raised by the appellants
under Section 5-A(l). He mechanically rejected the objections
. and senior officers of the Chandigarh Administration accepted
the report of the Land Acquisition Officer despite the fact that
the same had been prepared in violation of Section 5-A(2)."
G
40 .In the instant ca~e it is apparent from the report that there is
no objective consideration of objections at any stage. The 'inquiry held
and the report sent under section SA of the Act was clearly influenced
by the decision of the Cabinet taken before issuance of notificatfon under
section 4 of the Act to acquire land in certain J L numbers in particular
H mouza's a~ per the choice of location by TML which has prevailed
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 41S
[ARUN MISHRA, J.]
whereas in the matter of acquisition of such vast area comparative fertility A
aspect of chunk ofJand to be selected ought to have been considered
and land which is more or less barren ought to have been preferred
which exercise has not been resorted to. Though the State Government
could have taken decision before issuance ofnotification under section
4 for setting up of project however it could not have taken decision to
B
acquire particular land in various mouza's before survey is undertaken
as authorized by the provisions contained in section 4 of the Act, the
action of the State has the effect of frustrating very purpose of holding
inquiry under section 5A. The inquiry held under section 5A is a farce
and an eyewash neither the Collector nor State Government considered
the matter with objectivity as mandated. Inquiry has not been done. with c
open mind with requisite fairness they were clearly influenced by decision.
of cabinet. Entire acquisition stands vitiated in the facts and circumstances
of the case. The case need not be relegated to the stage of inquiry as
project itself has been abandoned.
41. However, for enquiry under section 5A individual notices are D
not provided. It is not provided in the Act that individual notices should
be issued. The publications as envisaged under section 4 are enough and
are the only requirement of the law to be mandatorily observed pursuant
to which ..g_bjections under section SA are required to be filed. The
notification under s_ectjon 4 is required to be published in the Official
Gazette and two daily newspapers; out of that one newspaper shall be in E
the regional language, ·and public notice of such substance has to be
given at the convenient places in the locality. Witliin thirty days the
objections are to be filed under section SA.Thus non-servi.1<e ofindividual
notices on farmers would not vitiate the enquiry.
42. For the aforesaid reasons, I agree with the ultimate conclusion F
of e;steemed brother as to question nos.3, 4 and S.
IN RE. QUESTION NUMBERS 6 TO 9
43. It appears that the award has been passed without issuance
ofnotices to holders on the pretext that it was not possible to serve them G
due to prevailing situation. For determination of compensation irn;lividual
notices are required to be issued. Section 9(1) requires the Collector to
publish public notice fortaking possessiort and for claims to compensation
to be made. Section 9(3) requires the Collector shall serve notice to the
same effect on the occupier if any, of the Ian.:! and on all such persons
known or seem to be interested therein etc. In case the person interested H
416 SUPREME COURT REPORTS (2016] 11 S.C.R.
A resides elsewhere notice has to be sent by post to the last known address
or place of business which has not been followed in the instant case. In
my opinion the service of personal notice is mandatory as required under
section 9(3) of the Act. Non-compliance of the provision would render
the award invalid requiring determination of compensation afresh at the
same time it would not have the effect on the validity of the notification
B
under section 4 and declaration made under section 6 of the Act. The
award cannot be questioned in the writ jurisdiction and non-issuance of
individual notices under section 9 would not vitiate the notification issued
under sections 4 and declaration made under section 6 of the Act.
However, the fact remains that proper procedure has not been followed
-c in the instant matter. The question of adequacy of the compensation
determined cannot vitiate the acquisition. It was also not disputed before
us that after the award was passed on merits, further consent awards
_were passed in favour of certain persons for which no authority or
provision of law could be shown. Be that as it may. It would have no
impact on validity of notification under section 4 or declaration made
D
under section 6 of the Act. ·
44. In my opinion question number 7 as to determination of proper
compensation cannot be considered in writ jurisdiction as any person
aggrieved by inadequacy of compensation has the remedy to seek
reference as provided in section 18 of the Act.
E
Accordingly I answer the question numbers 6, 7 and 8.
RELIEF
45. After acquisition of the land by WBDIC it granted lease to
TML and handed over possession. Ultimately, the TML could not start
F operations as is apparent from its letter dated 28.9.2010. They had
removed their equipment and machinery also. Though the project would
. circumstances
have been beneficial, however in the . - it has moved out as
environment could not be created for normal working of the plant as
mentioned in letter ofTML. The State Government has taken possession
G of the land from TML and TML has abandoned its project in the State of
West Bengal and has shifted it to the State of Gujarat.
46. -P-Ossession has bee~ taken tet1.- years before from the
landowner:s. In a case wh.ere there are no sale-deeds evidence
forthcoming compensation is awarded to land-owners on annualized yield
of 10 years as held by this Court in Special Land Acquisition Officer
H
KEDAR NATH YADAV v. STATE OF WEST BENGAL & ORS. 417
v. Virupax Shankar Nadagouda (1996) 6 SCC 124 and Collector, A
Land Acquisition v. Gana Ram Dhoba (1996) 1 SCJ 15. In.the facts
of this case it would be appropriate to direct that land is given back to all
land owners since they have been deprived of the usufruct of the land
for a decade as such the compensation paid to them shall n9t be
recovered. They are permitted to retain it or claim it in full and final
B
settlement of claim towards damages for deprivation of use of their land
etc.
4 7. In view of determination on question numbers 3, 4 and S and
due to violation of the provisions contained in section SA of the Act, in
the facts of the case to do complete justice between the parties in exercise
of power under Article 142 of Constitution the entire proceedings c
pertaining to land acquisition are quashed and case is not relegated in
the instant case to the stage of inquiry under section SA. of the Act as
ordinarily resorted to, as the very purpose of acquisition has failed and
directing an inquiry afresh would be an exercise in futiliiy. The land shall
be given back to the land owners and compensation if any paid to them D
shall not be recovered from them those who have not collected it are
free to collect the same in Iieu of damages for deprivation·of possession
for ten years.
48. The impugned orders are set aside, the appeals are allowed
with the aforesaid directions. Parties to bear their own costs. E
ORDER
The points formulated above have been answered by separate
opinions. Howeve.r we concur on the question of quashing the impugned
acquisition proceedings and reliefs to be granted to the land owners/
cultivators. The appeals are allowed, the common judgment and order F
dated 18.01.2008 passed in W.P. No. 23836 (W) of2006 and connected
writ petitions by the High Court of Calcutta is set aside. The acquisition
of land of the landowners/cultivators in the instant case is declared as
illegal and void. Since the nature ofthe acquired lands has been changed
in view of the acquisition, we direct the Survey Settlement Department
G
of the State Government of West Bengal to conduct a survey and identify
the mouzas of lands acquired with reference to lay out plans, other
connected records, village maps and survey settlement records of the
lands in question within'! 0 weeks from the date ofreceipt of the copy of
this order, in order to identify the respective portions ofland ~hich needs
to be returned to the respective landowners/cultivators. Let possession H
418 SUPREME COURT REPORTS r20l6l l l S.C.R.
A of the lands be restored to the landowners/cultivators within 12 weeks
from the date pf re1 eipt of the copy of'this judgment and order. The
compensation which has already been paid to the land owners/cultivators
shall not be recovered by the state government as they have been
deprived of the occupation and enjoyment of their lands for the last ten
years. The landowners/cultivators who have not withdrawn the
B
compensation are permitted to withdraw the same which is in deposit
either with the Land Acquisition Collector or the Court.
Kalpana K. Tripathy Appeals allowed.
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