Holding

When an acquisition is found to be totally mala‑fide and not for a bona‑fide public purpose, the grounds of delay and acquiescence have no substance and the notification is void.

Summary

The Karnataka government issued a notification under Section 4 of the Land Acquisition Act, 1894 in 1984 to acquire land for a housing scheme of Vyalikaval House Building Co‑op. Society. The society and the State later declared the acquisition under Section 6 and passed an award, taking possession of the land by 1992. Several landowners filed writ petitions challenging the notification and award, alleging that the society was a bogus cooperative, the acquisition was fraudulently motivated and not for a bona‑fide public purpose, relying on the earlier Karnataka High Court decision in Narayana Reddy v. State of Karnataka. The Single Judge dismissed the petitions on the ground of 14‑year delay and acquiescence, but the Division Bench set aside that order, holding that the acquisition was a colourable exercise of power and that delay could not defeat a claim of mala‑fide acquisition. The Society appealed to the Supreme Court. The Court held that when an acquisition is found to be totally mala‑fide and not for a public purpose, the defenses of delay and acquiescence are irrelevant and the notification is void, thereby upholding the Division Bench’s decision and dismissing the appeals.

Issues considered

When can the defence of delay and acquiescence be invoked in a writ petition challenging a land acquisition?
Whether a notification issued under Section 4 of the Land Acquisition Act, 1894 can be declared void on the ground of fraud and lack of bona‑fide public purpose?
Does receipt of money or settlement by the respondents bar them from challenging the acquisition?

Legislation cited

Land Acquisition Act, 1894s. 4, s. 5-A, s. 6

Subjects

Land acquisitionMala fide acquisitionColourable exercise of powerDelayAcquiescencePublic purposeCo‑operative housing societyFraud

Judgment

)'

·- THE VYALIKAVAL HOUSE BUILDING CO-OP. SOCIETY BY ITS
SECREfARY
A

v.
V.CHANDRAPPA AND ORS.

FEBRUARY 2, 2007
B
[G.P. MATHURANDA.K. MATHUR,JJ.]

Land Acquisition Act, 1894:

ss. 4, 5-A and 6-Notification acquiring lands-Challenge to resisted c
on ground of delay and acquiescence-Acquisition of some of the lands
quashed being actuated with malafide and fraud-Notification held to be
void-Other land owners filing writ petition after 14 years challenging the
Notification on the basis of the said judgment-Division Bench of High
Court quashing acquisition proceedings-Held, when acquisition has been D
found to be totally mala fide and not for bona fide purpose, grounds ofdelay
' and acquiescence have no substance-View taken by Division Bench of
High Court upheld-Delay/Laches-Acquiescence-Constitution of India,
1950-Article 226.

Certain lands of the respondents were acquired along with that of other E
landowners under a Notification issued on 22.12.1984 under s. 4 of the Land
Acquisition Act, 1894. After the declaration under s. 6 and the award having
been passed, possession of the lands was taken on different dates upto the
year 1992. The respondent landowners filed writ petitions before the High
. ~.-
Court challenging the notification and the award on the ground, inter alia,
that the notification in question had been adversely commented by the High F
Court in the case of Narayana Reddy v. State of Karnataka, ILR 1991 Kar.
2248, holding that the whole acquisition proceedings stood vitiated on account
of fraud and the appellant Society was found to be not bona fide Housing
Society. It was further stated that the delay in filing the writ petition was
irrelevant since the very same notification under which other lands were G
acquired along with the land of the writ petitioners was found to be void. The
11
~ i appellant-Society contested the writ petitions as barred by time being delayed
by 14 years. It was also submitted that the writ petitioners having participated
in the inquiry under s. 5-A of the Act and having received substantial amount

277 H
278 SUPREME COURT REPORTS (2007] 2 S.C.R.

A from the Society were precluded from challenging the proceedings. The ...
Single Judge of the High Court dismissed the writ petitions, but the Division
Bench allowed the writ appeal cif the land owners on the basis of decision in
another writ appeal wherein the entire acquisition proceedings on behalf of
the appellant-Society were held to have been actuated by fraud. It was held
B that the acquisition was colourable exercise of power and therefore, delay could
·not be a good ground to dismiss the writ petitions. Aggrieved the Society filed
the appeals.

Dismissing the appeals, the Court

HELD: 1.1. When the acquisition has been found to be totally mala fide
C and not for bona fide purpose, the grounds of delay and acquiescence in the
instant case have no substance. Issuance of the Notification was malafide
and it was not for public purpose, as has been observed by this Court; and,
therefore, nothing turns on the question of delay and acquiescence. When
acquisition stands vitiated on account of mala fide, nothing remains further.
D [Para 5) (284-F; 285-A)

HM T. House Building Co-operative Society v. Syed Khader & Ors.,
(1995) 2 SCC 677 and H.M T. House Building Co-operative Society v.
M Venkatswamappa & Ors. etc. etc., (1995) 3 SCC 128, relied on.

E 1.2. It may be that the appellant might have tried to settle out the
acquisition but when the whole acquisition emanates from the tainted
notification 11ny settlement on the basis of that notification cannot be validated.
The fact remains that when the basic notification under which the present
land is sought to be acquired stood vitiated then whatever money that the
appellant has paid, is at its own risk. Once the notification goes no benefit
F could be der.ived by the appellant. (Para 6) (284-G; 285-A)

Narayana Reddy v. State of Karnataka, ILR (1991) Kar. 2248, referred
to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2086-2087 of
G 2004.
Ir
From Final Judgments and Orders dated 17-1-2000 and 22-3-2002 of High
Court of Karnat1ka at Banglore in Writ Appeal No. 2294/1999 and R.P. No.
156/2000 in Writ Appeal No. 2294/1999 respectively.

H
y,
VYALIKA VALHOUS EBUILDlNGCO-OP.SOC!ffi' BY ITS SECRETARY r. V.CHANDRA.PPA IA.K. MATIRTR.lj
279

~.,,
S.N. Bhat and Bhagabati Prasad Padhy for the Appellant. A
V.A. Mohta, S.K. Kulkarni, Neelakant Naiyan, Vijay Kumar, Sanjay R.
Hedge, Amit K. Mishra and Shasidhar for the Respondents.

The Judgment of the Court was delivered by
B
A.K. MATHUR, J. I. These appeals are directed against the order
passed by the Division Bench of the Karnataka.High Court at Bangalore in
Writ Appeal No.2294 of 1999 dated 17 .1.2000 whereby the Division Bench of
the High Court has set aside the order dated 11.11.1998 in Writ Petition No.
30622 of 1998 passed by learned Single Judge for the reasons mentioned in
Writ Appeal No. 2188of1998 disposed of by the Division Bench of the High c
Court on 17.1.2000 and the order dated 22.3.2002 passed by the Division
Bench in the Review Petition No.156 of 2000 in W.A.No. 2294 of 1999.
•
2. This case has a chequered history, therefore, in order to deal with it,
it will be necessary to refer to certain facts. A notification was issued on
22.12.1984 under Section 4 of the Land Acquisition Act, I894 (hereinafter to D
be referred to as 'the Act') for acquiring 176 acres and 5 guntas of land in
" Nagavara Village of Bangalore North Taluk. Declaration under Section 6 of the
Act was issued on 21.2.1986 and the award was passed on the basis of the
aforesaid notification on 16.11.1987. It was alleged that the possession of the
land was taken on different dates up to the year I992. It was alleged that E
possession of 31 acres and 21 guntas of land including an area measuring I
acre and 25 guntas situated in Survey No. 78/4 of Nagavara village was taken
on 6.8.1988. Aggrieved against the aforesaid notification and the award private
petitioners filed writ petition assailing the validity thereof on variety of grounds.
It was alleged that this land measuring 8 acres and 2 guntas was owned
'1 jointly by a family comprising 5 brothers, namely; Pattadi Haumanthappa, F
Pattadi Venkateshappa, Pattadi Nannappa, Pattadi Lakshmaiah and Pattadi
Nagappa, all deceased and survived by their legal heirs, who filed the writ
petition. The main grievance of these petitioners was that this notification
was very adversely commented by the Karnataka High Court in the case of
Narayana Reddy. v. Stale ofKarnataka, [!LR 1991 Kar. 2248] and the decision G
of the Division Bench of the Karnataka High Court in Writ Appeal Nos.2336-
.i
2343 of 1997 and connected matters which were disposed of on 5.3 .1998. In
- > that judgment it was held that the whole acquisition proceedings stand
vitiated on account of fraud, the appellant Society was also found to be not
bona fide housing society, therefore, on the basis of the same reasoning the
H
280 SUPREME COURT REPORTS [2007] 2 S.C.R.

A present notification was also challenged and it was urged that the impugned
notification also suffered from same vice of ma/a fide, therefore, it should be
quashed. It was alleged that the delay in approaching the Court was irrelevant
since the validity of the same notification in which other lands were acquired
along with the present land has been found to be void.

B 3. This writ petition was contested by the appellant-society as respondent
and it was alleged that it was hopelessly barred by time being delayed by 14
years and it was also submitted that the writ petitioners had participated in
the inquiry under section SA of the Act and have also received substantial
amount from the appellant-society pursuant to the agreement executed in their
C favour. Learned Single Judge dismissed the writ petition on the ground of
being hopelessly barred by time and the writ petitioners participated in the
proceedings therefore they have acquiesced in the matter. Aggrieved against
this order passed by learned Single Judge, a writ appeal was filed by the
respondents which came to be allowed by the Division Bench for the reasons
mentioned in another writ appeal decided by the same Division Bench headed
D by the Chief Justice of the High Court on 17.1.2000. In that writ appeal the
Division Bench held that the entire acquisition on behalf of the appellant-
society was actuated with fraud as held in Narayana Reddy v. State of I

Karnataka, [!LR 1991 Kar.2248]. In that case it was held as follows :

"As seen from the findings ofG.V.K.Rao Inquiry Report, in respect
E of five respondent societies and the report of the Joint Registrar in
respect of Vualikaval House Building Co-operative Society, these
Societies had indulged in enrolling large number of members illegally
inclusive of ineligible members.and had also indulged in enrolling
large number of bogus members. The only inference that is possible
F from this is that the office bearers of the societies had entered into
unholy alliance with the respective agents for the purpose of making
money, as submitted for the petitioners otherwise, there is no reason
as to why such an Agreement should have been brought about by
the office bearers of the Society and the agents. Unless these persons
had the intention of making huge profits as alleged by the petitioners,
G they would not have indulged in· enrolment of ineligible and bogus
members. The circumstance that without considering all these relevant
materials the Government had accorded its approval, is sufficient to
hold that the agents had prevailed upon the Government to take a
decision to acquire the lands without going into all those relevant
H facts. The irresistible inference flowing from the facts and circumstances
VYALll\.A VAL HOUSE BUILOINGCO-OP.SOCIETY BY ITS SECRETARY r. V.CHANDRAPPA IA.K. MA lHUR,J. I 28 J

of these cases is, whereas the poser conferred under the Land A
Acquisition Act is for acquiring lands for carrying out housing scheme
by a housing society, in each of the cases the acquisition of lands is
not for a bona fide housing scheme but is substantially for the
purpose of enabling the concerned office bearers of respondent-
societies and their agents to indulge in sale of sites in the guise of B
allotment of sites to the Members/ Associate members of the society
to make money as alleged by the petitioners and therefore it is a clear
case of colourable exercise of power. Thus the decision of the
Government to acquire the lands suffers from legal ma/a fides and
therefore the impugned Notifications are liable to be struck down."

In view of aforesaid observation, their Lordships of Division Bench
c
held that since the acquisition was colourale exercise of the power, therefore,
delay cannot be a good ground to dismiss the writ petition. The said judgment
of the Division Bench of the High Court of Karnataka was affirmed by this
Court in Special Leave Petition Nos.(c) ..CC 525-532of1999 and Special Leave
Petition Nos.(c) .. CC 504-522of1999 decided on 14.7.1999 and it was held that D
the appellant-society is a bogus house building society and accordingly, the
order passed by the learned Single Judge was set aside by Division Bench.
Against the order of the Division Bench passed in Writ Appeal No.2294 of
1999 a review petition was filed which was dismissed on 22.3.2002. Hence
both these appeals. -
E
4. Learned counsel for the appellant urged before us that the view taken
by the Division Bench of the High Court is not correct as the Division Bench
should not have condoned the inordinate delay of 14 years and secondly,
learned counsel further submitted that the respondents herein being the
beneficiary had entered into an agreement of sale and had accepted the whole p
amount not to file objections under Section SA of the Act for acquiring the
aforesaid land. Learned counsel for the appellant has emphasized that the
Division Bench has gone wrong in setting aside the order of the learned
Single Judge as the learned Single Judge has discussed the factual controversy
in greater detail.
G
5. As against this, learned counsel for the respondents submitted that
_ 1, there was not one judgment but there are number of judgments in which such
acquisition of land has been set aside. Learned counsel for the respondents
invited our attention to two decisions of this Court in the case of H. MT
House Building Co-operative Society v. Syed Khader & Ors., [1995] 2 SCC H
282 SUPREME COURT REPORTS [2007) 2 S.C.R.

A 677 and HM. T House Building Co-operative Society v. M. Venkatswamappa ~·-
&Ors. etc. etc., (1995] 3 SCC 128 in which similar societies filed Special Leave
Petitions and this Court affirmed the order of the Karnataka High Court and
held that the whole exercise of acquiring the land by various societies including
the present appellant-society was actuated with mala fide and quashed all
B acquisitions. In this connection, a reference may be made to HM. T.House
Building Co-operative Soceity 's case (supra) wherein the similar question
was raised by the Co-operative Society like the appellant herein and in that
context their Lordships framed the question in paragraph 18 of the judgment
which heads as follows:

" 18. Now the question which is to be answered is as to whether
c m view of the definition of "public purpose" introduced by the
aforesaid Amending Act 68 of 1984 in Section 3(f)(vi), is it open to
the appropriate Government to acquire land for cooperative society
for housing scheme without making proper enquiry about the members
of the society and without putting such housing cooperative society
D to term in respect of nature of construction, the area to be allotted to
the members and restrictions on transfer thereof ?"

This question was answered by their Lordships in paragraphs 21 and 22
which reads thus:

E ".... That is why the framers of the Act have required the appropriate
Government to grant prior approval of any housing scheme presented
by any cooperative society before the lands are acquired treating
such requirement and acquisition for public purpose. It is incumbent
on the part of the appropriate Goven:iment while granting approval to
examine different aspects of the matter so that it may serve the public
F interest and not the interest of few who can as well afford to acquire
such lands by negotiation in open market. According to us, the State
Government has not granted the prior approval in terms of Section
3(f)(vi) of the Act to the housing scheme in question. The power
under Section 4( I) and 6( I) of the Act has been exercised for extraneous
G consideration and at the instance of the persons who had no role in
the decision-making process-whether the acquisition of the lands in
)'
question shall be for a public purpose. This itself is enough to vitiate
the whole acquisition proceeding and render the same invalid."

22. In the present case there has been contravention of Section 3(f)
H (vi) of the Act inasmuch as there was no prior approval of the State
VYALIMVALHOUSEBUILDINGCO-OP.SOClffi'BYITSSECRETARYv. V.CHANDRAPPAIA.h.MAlHUR.1.] 283

Government as required by the said section before steps for acquisition A
--.~
of the lands were taken. The report of Shri G.K.V.Rao points out as
to how the appellant-Society admitted large number of persons as
members who cannot be held to be genuine members, the sole object
being to transfer the lands acquired for "public purpose", to outsiders
as part of commercial venture, undertaken by the office-bearer of the
appellant-Society. We are in agreement wit the finding of the High B
Court that the statutory notifications issued under Sections 4( I) and
6( I) of the Act have been issued due to the role played by Mis.
S.R.Constructions, Respondent No. I I. On the materials on record, the
'O
High Court was justified in coming to the conclusion that the
proceedings for acquisition of the lands had not been initiated because c
the State Government was satisfied about the existence of the public
purpose but at the instance of agent who had collected more than a
crore of rupees for getting the lands acquired by the State Government."

Similarly, in H.M T.House Building Cooperative Society, (I 995] 3 SCC 128 in
which the present appellant was one of the societies, which challenged the D
::I
order of the Division Bench of the High Court of Karnataka, their Lordships
dismissed the Special Leave Petit10n following the judgment in HM T. House
" Building Cooperative Society (supra). In paragraph 3 of the judgment while
./ dealing with the facts of this society their Lordships observed that this
society had advertised inviting persons who want to have mansions in the
city of Bangalore and had also given the names and addresses of the
E
representative at Dubai. It was held that on the basis of the aforesaid material
the High Court has rightly come to the conclusion that the society itself was
not bona fide house building society and accordingly, the order passed by
the High Court setting aside the acquisition of the land was upheld by this
Court and the SLP was dismissed. Paragraph 3 reads as follows : F
"3. Lands on basis of the notifications issued under Sections 4( I)
and 6(1) of the Land Acquisition Act, had been acquired for the
petitioner-House Building Society, treating the said acquisition to be
for a public purpose. No order of the State Government as required
by Section 3(f)(vi) granting prior approval for acquisition of the lands G
in question for the housing scheme of the petitioner-society has been
..le.
+ produced. The petitioner-Society had also entered into an agreement
.-·• '\
with the contractor more or less on the same terms and conditions as
was in the case ofHMT House Building Cooperative Society, assuring
that the lands in question shall be acquired on basis of the notification
--;..
H
j
284 SUPREME COURT REPORTS [2007] 2 S.C.R.

A issued by the State Government under Sections 4(1) and 6(1) of the
Act. The High Court in its impugned judgment has given details of
the allegations made against the petitioner-Society regarding collection
of huge amounts from different applicants for site who were not even
members of the Society and how the Society had entered into an
agreement with agents, who with their influence have got the lands
B acquired. The High Court has also referred to an advertisement issued
by the petitioner-Society inviting persons who want to have mansions
in the city of Bangalore. It also gave the name and address of a
representative at Dubai. On basis of the aforesaid materials, the High
Court has come to the conclusion that the society itself was not a
c bona fide House Building Society. The High Court has also recorded
a finding that the notifications under Sections 4( I) and 6( I) of the Act
had been issued at the instance of the agents appointed by the
petitioner-Society, to whom huge amounts had been paid for influencing
the Government to issue the aforesaid notifications. Mr. Ramaswamy,
appearing for the petitioner-Society purported to distinguish this case
D on facts from the case of HMT House Building Cooperative Society.
But according to us, the facts of the present case are similar to the
case of HMT House Building Cooperative Society and there is no
scope to interfere with the order of the High Court, quashing the
notifications under Sections 4( I) and 6( I). Accordingly, the special
E leave petitions filed on behalf of the petitioner-Society are dismissed.
No costs."

Learned counsel for the respondents has also invited our attention that same
notification was set aside by the High Court and the said order of the High
Court was also upheld by this Court by dismissing the S.L.P.(c) No.6196 of
F 1998 on 7.4.1998 and S.L.P.(c) .. CC 495-a498of1999 on 14.7.1999 concerning
the very same appellant society. In this background, when the acquisition has
been found to be totally ma/a fide and not for bona fide purpose, the ground
of delay and acquiescence in the present case has no substance. Learned
counsel for the appellant tried to persuade us that as the amount in question
has been accepted by the respondents, it is not open for them now to wriggle
G out from that agreement. It may be that the appellant might have tried to settle
out the acquisition but when the whole acquisition emanates from the aforesaid
tainted notification any settlement on the basis of that notification cannot be.
validated. The fact remains that wh.·n the basic notification under which the
present land is sought to be acquired stood vitiated then whatever money
H that the appellant has paid, is at its own risk. Once the notification goes no
--t
/'

VYALIKA V.-\LHOUSE l:\UILDING CO-OP.SOClETI' BY ITS SECREfARY i•. \'.Cl IANDRAPPA IA.K ti.·lA 11 IUR.J. I 285

benefit could be derived by the appellant. We are satisfied that issue of A
notification was ma/a fide and it was not for public purpose, as has been
observed by this Court, nothing turns on the question of delay and
acquiescence. Learned Counsel for respondents raised other pleas like decree
for partition was granted among brothers and they were not made parties, we
are not going into those questions when we.are satisfied that when acquisition B
stand vitiated on account of ma/a fide, nothing remains further.

6. In the light of the discussions made above, the view taken by the
.....- Division Bench of the High Court of Kamataka in the impugned judgment is
correct and we uphold the same and dismiss both the appeals. No order as
to costs.
c
RP. Appeals dismissed.