Holding

The acquisition proceedings are valid, must be completed, compensation must be fixed under the Land Acquisition Act, and the acquired land must be utilized for the purpose for which it was acquired, setting aside the High Court’s contrary directions.

Summary

The Tulsi Co‑operative Housing Society had agreed to buy 24 acres of land but the State of Andhra Pradesh, under the Land Acquisition Act, 1894, acquired 18.03 acres for a HUDCO housing project, invoking the urgency clause and dispensing with a Section 5A enquiry. The Society and the landowner challenged the acquisition and the cancellation of exemptions granted under the Urban Land (Ceiling & Regulations) Act, 1976, filing writ petitions that were dismissed and later appealed. The Supreme Court examined whether the acquisition proceedings were valid, whether the High Court could lawfully fix compensation and limit it, whether the Ceiling Act provisions overrode the acquisition, and whether a settlement had been conclusively reached with the Government. The Court held that the acquisition was valid, the land must be used for the purpose for which it was acquired, compensation must be determined according to the Acquisition Act, and the High Court’s directions were set aside. The appeals were disposed with directions to revive the acquisition, fix compensation per the Act, and nominate a committee to distribute the land equitably.

Issues considered

Validity of the acquisition proceedings under the Land Acquisition Act, 1894
Whether the High Court had jurisdiction to fix and limit compensation
Effect of the Urban Land (Ceiling & Regulations) Act, 1976 on the acquisition
Whether a concluded compromise existed between the Society, the Government and BAW Society
Whether the land must be utilized for the purpose for which it was acquired
Validity of the cancellation of exemption under the Ceiling Act

Legislation cited

Andhra Pradesh High Court Ruless. Rule 24
Code of Civil Procedure, 1908s. Order 23 Rule 3
Indian Contract Acts. 13
Land Acquisition Act, 1894s. 17(4), s. 4(1), s. 5A, s. 6, s. 9
Urban Land (Ceiling & Regulations) Act, 1976s. 20, s. 6

Subjects

land acquisitionurban land ceilingcompensationsettlementjurisdictionexemptionpublic purpose

Judgment

A TULSI CO-OPERATIVE HOUSING SOCIETY, HYDERABAD ETC.
v.
STATE OF A.P. AND ORS. ETC. ETC.

SEPTEMBER 14, 1999

B [A.S. ANAND C.J., K.T. THOMAS AND M. SRINIVASAN JJ.]

Land Acquisition-Land Acquisition Act, 1894-Section 4 (1), 6,
17(4)-Agreement fo'"r purchase of 24 acres of land by appellant society-
Notification u/s. 4(1) of Land Acquisition Act for acquiring 18 acres out of
C subject matter for a Housing Project-Proceedings under acquisition for
benefit of a Welfare Society-Writ Petitions filed by landowner and appellant
soc'iety dismissed-Suggestions made by this Court during pendency of SLP
for effecting a settlement between parties-No concluded compromise-High
court on remand dismissing the petitions-Validity of acquisition proceedings
D upheld-Lands to be utilised for the purposes for which they were acquired-
Government may nominate a suitable committee comprising at least Secretaries
to the Government for carrying out objects of the acquisition in an appropriate
manner-Directions issued.

Acquisition proceedings-Writ Petitions-Acquisition proceedings
E upheld-Whether High Court hadjurisdiction tofzx: the compensation merely
because proceedings had been pending for long-Held, No-High Court
could not usurp the functions of hierarchy of authorities constituted under
-
the Act-Once acquisition proceedings have been held to be valid, prescribed
procedure in the Act for fuing compensation payable to land owners should
F have been followed-The fact that proceedings have been for long would not
justify the court to exceed its jurisdiction.
/

Land Ceiling-Urban land (Ceiling and Regulations) Act, 1976-
Section 20-Land Acquisition Act, 1894-Sections 4(1), 6-Acquisition of
land in June 1975 by Notification issued uls.4 (1)-Land Ceiling Act came
G into force !Jn 17.2.1976-Provisions of Ceiling Act not inv<?ked as the
compensation was decided to be paid under provisions of Acquisition Act-
Held, High Court was not justified in holding that provisions of Ceiling Act
were overriding-Question ofright of Government to proceed under provisions
of the Ceiling Act, once the land had vested in the Government under the
H Acquisition Act, left open.
354
- TULSI CO-OPERATIVE HOUSING SOCIETY v. ST-A TE 355
The Appellant-Society entered into an agreement with the Appellattt- A
land owner for purchase of 24 acres of land for construction of house and
paid in advance as well, in April 1975. In June 1975, the State issued a 4
(1) Notification for acquiring an extent of 18.03 acres of the subject area for
HUDCO under the Land Acquisition Act, 1894, invoking the urgency clause
under Section 17(4) and dispensed with the enquiry under Section SA. The B
land was acquired at the instance of Municipal Corporation of Hyderabad.
The Urban Land Ceiling Act, 1976 came into force in February 1976. The
Appellant-Society and he land owner filed applications in May 1976 and June
1977 for exemption from the provisions of the Act of 1976. The Government
issued a Notification under Section 6 of the Act of 1894 in April 1978. The
application for exemption under the Act of 1976 was rejected in October C
1978 and a fresh application filed in December 1978. While it was pending
proceedings under Sec. 9 of the Act of 1894 were taken by the Government.
A partial exemption was granted to the Appellant under the Act of 1976 after
which another application was moved and all the lands were exempted in
September 1980.
D
The Appellant-Society and the land owner challenged the notifications
by filing two writ petitions. The Writ Petitions were dismissed and writ
appeals were filed in High Court. The Government took possession of the
lands. The beneficiary of the acquisition also got impleaded in the writ
proceedings. The writ appeals were heard by a Full Bench which allowed the E
same and acquisition was quashed. The beneficiary BAW society filed appeals
before Supreme Court.

The exemption granted under the Ceiling Act was cancelled in June
1983 and writ petitions were filed by the land owner and the society.
F
While hearing the appeals filed by the beneficiary, the Court adjourned
the matter for exploring the possibilities of settlement by way of sharing the
land. Later, the Court held that the acquisition proceedings were valid and
that the decision of the full Bench cannot be sustained .
... .
In the same order, the Court took notice of the terms of settlement
G
between the two societies and deferred the matter for the consent of the
Government. While it was pending decision, the writ petition filed by the land
owner against the cancellation of exemption under the Act of 1976 was
dismissed. The land owner filed an SLP, the writ petition field by the Society
was also withdrawn before the Supreme Court. Both the cases under the Act H
356 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A of 1976 were taken up alongwith appeal filed by beneficiary of land acquisition.
Since the State. did not'(lccept the compromise this Court remanded all the
cases back to the High Court for adjudication. This Court directed that if
the High Court is of the opinion that the matter should be settled and the
entire land of the owners amounting to 18 acres and 3 gunthas should be
divided between the fwo Societies, it will be free to do so if Government also
B agrees thereto and that the hearing of the writ petitions as against acquisition
would depend upon the fate of the settlement. After remand the High Court
dismissed the two writ appeals under the Acquisition Act and disposed the
two writ petitions under the Ceiling Act. According to the High Court, the
land acquisition proceedings shall revive and be completed expeditiously as
C possible, that the compensation payable to the owners shall be limited to the
sum already fixed that the Appellant Society is at liberty to work out its
rights vis-a-vis the land owners and that the applications field under Section
20 of the Land Ceiling Act shall be disposed of by the Government.

The three appeals were filed by Society and owner and the Government
D contending that the High has failed to decide the crucial question arising in
the case though the case was remanded for his purpose, that the memo of
compromise estabilshed that the Government had also agreed to the
compromise whereby the lands were to be divided into two halves; that though
there was no express agreement on the part of the Government it should be
held that there was a concluded compromise to which the Government was
E
a party by implication, that applying principles of doctrine of legitimate
expectation the Court should not allow the Government to go back upon the
concluded agreement, that the cancellation of exemption under the Ceiling
Act is unsustainable and bad with reference to the extent of 5 acres of land
which did not form part of the subject matter of acquisition under the Act
F of 1894 and that the land acquired under the Acquisition Act should be
distributed equitably between BAW Society and the Appellant Society. The
Appellant land owner contended that the direction given by the High Court
to restrict the compensation amount to the money received is unsustainable,
that the validity of the acquisition proceedings having been upheld, the Court
. "'
G has no Jurisdiction to fix the compensation ignoring the specific procedure
prescribed in the Acquisition Act, that the High Court a.rrived at the figure
arbitrarily on a wrong premise that there were some special equities in
favour of the members of the BAW Society and the price of the land should
be fixed at Rs. 25 per sq. yd., that there was no material before the fligh
Court for fixing the market value of the land on the date of notification under
H Section 4 (1) of the Acquisition Act and that in any event, the parties had
TULSI CO-OPERATIVE HOUSING SOCIETY v. STA TE 357
no opportunity to place the· relevant evidence before the Court to enable it A
to fix the market value.
The BAW Society contended that the proceedings for acquisition were
exclusively for the benefit of the member of the said Society and they had
deposited the price of the land demanded by the Municipal Corporation
several years ago, and that the lands could not be given to any person other B
than the member of the said society. The Government contended that the
lands should be utilised for public purposes other than those for which they
acquired and that they should be kept as water tank and utilised as such.
Disposing the appeals, the Court

- HELD : 1. The observations of this Court in earlier orders show that
there was no concluded c~mpromise. If a compromise was to be effected it
was only to be brought into existence after the said order of this Court and
C

only if the Government consented thereto. The Government did not express
any consent after the said order of this Court and vehemently opposed the
settlement between parties. The contention that there was a concluded D
compromise to which the Government was party is untenable in view of the
observations in the order of remand. The view expressed by the High Court
in this regard is correct and there was no necessity for the High Court to
decide the question whether there was a complete concluded compromise.

- (365-H; 366-A-B]
2. There is no justification whatsoever to interfere with the conclusion
E
of the High Court upholding the cancellation of exemption and dismissing
the writ petitions filed by the land owner and the 'Society. The reasoning of
the High Court in this respect is affirmed. [366-G]

3. The contention put forward by the Society that the High Court has F
exceeded its jurisdiction in giving a direction confirming the benefit of the
acquisition proceedings to the 374 members of the BAW Society is justified.
[367-A]
4. The contention by the Government that the land should be permitted
to be utilised for purposes other than those for which it was acquired is G
untenable. Once the acquisition is upheld, it has to follow that the land have
to be utilised for the purpose for which they acquired. Direction No. 1 issued

- by the High Court is substituted with a direction that the land acquired under
the Acquisition Act should be properly utilised by the Government in order
to achieve the purpose for which they were acquired. The Government may
nominate a suitable committee comprising atleast three secretaries to the H
358 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A Government for the purpose of carrying out the objects for the acquisition
in an appropriate manner. [367-D-E)

5. The reasons given by the High Court for taking up the task of fixing
the compensation upon itself are unsustainable. Once the proceedings under
the Acquisition Act have been held to be valid, the prescribed procedure in
B the Act for fixing the compensation payable to the land owner should have
been followed and the High Court could not usurp the functions of the
hierarchy. The fact that the proceeding have been pending for long could not
justify the court to exceed its jurisdiction. The question whether there are
special equities in favour of the members of the BAW Society and weather
C such equities would be relevant at the time of fixing the market value of the
land under the provisions of the Acquisition Act are matters to be decided
by the concerned authorities in accordance with the procedure prescribed in
the Act. The conclusion of the High Court fixing the compensation for the
land and the direction that the land owners are not entitled to anything more
has to be upset. [368-C-D)
D
6. The conclusion of the High Court that the provisions of the Ceiling
Act were not excluded by the acquisition proceeding and that they were over-
riding is set aside. [369-E)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6986-
E 6987 of 1994 Etc.
From the Judgment and Order dated 21.11. 92 of the Andhra Pradesh
High Court in W.A. No. 170/82 and W.P. No. 6500of1983.

With Civil Appeal Nos. 6988-91 of 1994.
F
From the Judgment and Order dated 21.11.92 of the Andhra Pradesh
High Court in W.P. No. 170-71/82 and W.P. Nos. 6500 and 5498of1983.

And Civil Appeal Nos. 6992-93 of 1994.
.f
G From the Judgment and Order dated 21.l l.92 of A.P. High Court in W.
P. No. 5498 and W.A. No. 171of1982.

Gopal Subramaniam, D.D. Thakur, M. S.K. Shastri, P.A. Choudhary, J.
Ramamurthy, L. Narasimha Reddy, P. Venkat Reddy, N. Sudhakaran, D.N.
...
Mishra, G. Prabhakar, K. Ram Kumar, Ramesh N. Keshwani, Y. Subba Rao, and
H Vimal Dave for the appearing parties.
fULSI CO-OPERATIVE HOUSING SOCIETY v. ST A TE [SRINIVASAN, J.] 359

The Judgment of the Court was delivered by A
SRINIVASAN, J. There are three sets of appeals. Civil Appeal Nos.
6986-87 of 1994 are filed by Tulsi Co-operative Housing Society, Hyderabad
(hereinafter referred to as the 'Society'). Civil Appeal Nos. 6988-6991 of 1994
ar~ by the State of Andhra Pradesh (hereinafter referred to as the
'Government'). Civil Appeal Nos. 6992-6993 of 1994 are by Syed Azam B
(hereinafter referred to as the 'landowner').

~. 2. The Society entered into an agi:eement in April 1975 with the land
owner for purchase of an extent of 24 acres of land and paid in advance a
sum of Rs. 20,000. In June 1975, the Govt. issued a Notification under Section C
4 (I) of the Land Acquisition Act (hereinafter referred to as 'Acquisition Act')
for acquiring an extent of 18.03 acres out of the subject-matter of these
proceedings for purposes of Housing Project under HUDCO Scheme. The
Notification included an extent of 2 acres belonging to another person with
which we are not concerned. The Government also invoked urgency clause
under Section 17 (4) of the Acquisition Act and dispensed with enquiry under D
Section 5A of the said Act. The acquisition proceedings were at the instance
of Municipal Corporation of Hyderabad. The Urban Land (Ceiling &
Regulations) Act, 1976 (hereinafter referred to as the 'Ceiling Act') came into
force on 17.2.1976. The land owner and the Society filed an application in May
1976 for grant of exemption from the provisions of the Ceiling Act under E
Section 20(l)(b) of the said Act. It was followed by a similar application in
June 1977. In April 1978 the Government issued a Notification under Section
6 of the Acquisition Act. In October 1978 the applications for exemption filed
under the Ceiling Act were rejected. Towards the end of August 1979 further
proceedings under Section 9 of the Acquisition Act were taken by the
Government. Meanwhile, a fresh application for exemption under the Ceiling F
Act was filed in December 1978. That was partly granted by the Government
to the extent of 14000 sq. mtrs. of land. Another application was filed in May
1980 for grant of exemption of all the lands from the provisions of the Ceiling
Act. That was granted in September 1980 in GOMS No. 4093.

'3. The Notifications under the Acquisition Act were·challenged in two
G
writ petitions - one by the Society and the other by the land owner. By interim

- orders passed by the High Court, further proceedings were stayed. However,
on 28.1.1982 both the writ petitions were dismissed. Two appeals were filed.
The miscellaneous petition for stay of further proceedings in acquisition
pending the appeals was dismissed by Division Bench on 4.2.82. The H
360 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A Government toGk possession of the lands on 12.2.1982.
4. It should be mentioned here that the proceedings under the Acquisition
Act were for the benefit of Bagh Amverpet Welfare Society (hereinafter to be
referred to as 'BA W Society'). The said BA W Society got impleaded as party
B in the writ petitions in which the acquisition proceedings were challenged.
The writ appeals were referred to a Full Bench which allowed the same by
judgment dated 2.8.83. The acquisition proceedings were quashed. Aggrieved
by the said judgment BA W Society obtained Special Leave and filed Civil
Appeal Nos. 5784-85 of 1983. c,

C 5. In June, 1983 the Government cancelled the exemption granted under
the Ceiling Act by GOMS No. 5964. The landowner and the Society filed writ
petitions 5498 and 6500 of 1983.

6. The Civil Appeals filed by BA W Society came up for hearing on
7.8.85 and the following order was passed :
D
"Mr. P.P. Rao commenced his arguments at 12.45 P.M. and argued till
1:00 P.M. Thereafter Court asked Mr. Divan to raise preliminary
objections and Shri Divan argued from 2.00 P.M. to 2.25 P.M. Thereafter
Mr. P.P. Rao resumed his arguments.

E After hearing him for a shortwhile the Court adjourned the matter
to 16.8.85 in order to enable the parties to explore the possibility of
a settlement on the basis that a part of the land sought to be acquired
is released from acquisition and members of Bagh Amverpet Society
may be able to build on a part of the land and owners may also keep
some part of the land. We would request the concerned officer of the
F Municipal Corporation of Hyderabad to take initiative in this matter
for bringing the parties at the negotiating table and help them so that
on the above basis or on any other basis which may be acceptable
to the parties so that settlement may be arrived at".

G 7. When the matters came up again on August 23, 1988 this court
passed an order holding that the Acquisition proceedings- were valid and the
Writ Petitions filed by the landowner and the society challenging the same
were rightly dismissed by the Civil Judge. This court held that the appellate
judgment of the Full Bench of the High Court could not be sustained and the
Acquisition proceedings had to be revived. In the same order, the court
H referred to the suggestions made on the earlier occasion on 7.8.1985 for
TULSI CO-OPERATIVE HOUSING SOCIETY v. STA TE [SRINIVASAN, J.] 361
effecting a settlement between the parties and set out the subsequent events A
in the following words :

"Pursuant to the view expressed by the court, the two societies have
filed terms of settlement, which are on record. The State Government
of Andhra Pradesh which also has filed independent appeals against
the same appellate judgment of the High Court has agreed to accept B
the terms of settl~ment and their counsel states that fact to us in
Court.

While other terms are acceptable, one of the terms regarding the
valuation of the land to be determined by Government requires
alteration. Learned counsel for the appellant too has agreed to offer C
at the rate of Rs. 3 lacs per acre and that term is acceptable to the writ
petitioners respondents as also the landowner. In view of the fact the·
parties have agreed to the said amount of Rs. 3 lacs per acre as the
value of the land, under acquisition, the terms in the settlement for
fixation of the compensation shall be substituted by the offer made D
by Mr. Iyer for the appellant. All parties agree to these terms being
altered by us. Mr. Iyer has further agreed that the entire amount of
compensation for 9 acres and 1-1/2 gunthas, which under the terms
of settlement would be available to the appellants shall be paid at the
rate of Rs. 3 lacs per acre (all liabilities included) within three months
hence. Failing payment of this amount within the time undertaken, E
interest at 15% payable on the amount shall be payable.

This order shall not be effective until counsel for the State of Andhra
Pradesh takes instructions and files a memorandum within a week from
today that Government including the Urban Ceiling authorities accept
this arrangement. After the State indicates its ratification, the matter F
shall be placed for further directions on 3 1st August, 1988 in the
Chamber for further directions".

8. The matter was posted on 31.8.1988 and the Court passed the
following order :
G
"When we made the order on 23rd August, 1988, the letter of Secretary,
Housing, Municipal Administration and Urban Development Deptt.
Govt. of Andhra Pradesh dated 15.2.88 was not placed before us. We
find, that letter specifically refers to the proceedings before this Court
and the terms of compromise and indicate Government's reaction and
response thereto. Counsel for the parties suggest that we should H
362 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A
-
modify our direction of August 23, 1988, taking the compromise terms
on record and proceed to dispose of the dispute. Mr. TVSN Chari who
has just appeared on behalf of Govt. of Andhra Pradesh says that he
may be given one week's time to obtain instructions from the Govt.
In these circumstances, we adjourn the appeals to 13th September,
1988 to be taken up in Chamber at 1.30 p.m."
B
9. In the meanwhile, the Writ Petition filed by the land owner challenging
the cancellation of exemption granted under the Ceiling Act was dismissed
by the High Court on 30.6.1988. He filed S.L.P. (C) No. 1679 of 1989 in this
Court. The other Writ Petition filed by the Society namely Writ Petition (C)
C No. 6500 of 1983 was withdrawn to this Court to be heard along with Civil
Appeal Nos. 5784-85of1983 and S.L.P (C) No. 1679of1989. That was taken
on file as Transfer Case No. 29of1989. All the matters were heard together
and the final order was passed on 17. 8.1990 after setting out the facts and
extracting the relevant portions of the earlier order dated 7.8.1985, the court
said:
D
"This Court, however, gave time to the counsel for the State of
Andhra Pradesh to take instructions as to the application of the Urban
Land Ceiling Act as exemption granted under Section 20 had been
withdrawn in June, 1983. The State of Andhra Pradesh thereafter did
not accept the compromise by taking the stand that proceedings
E under the Urban Land Ceiling Act were pending and in view of the
fact that there was no exemption, the property was liable to vest in
Government under the Act as surplus land".

Again after extracting a portion of the Order dated 23 .8.1988 the
Court said thus :
F
"This order virtually disposed of the appeals but as the parties
were negotiating a settlement the Court did not record a formal disposal
of the disputes.
If the settlement does not fructify, the effect of our decision that
the acquisition proceedings are to revive, would be that the claim to
G
the land by Tulsi Cooperative Housing Society would come to an end.
In that event, at the most that Society would only be entitled to such
compensation as may be awardable in law. If the acquisition proceeds
the Bagh Amverpet Welfare Society and the Municipal Corporation
would have to work out their mutual rights. Apart from these, the two
H writ petitions challenging the withdrawal of the exemption by order
/ TULSICO-OPERATIVEHOUSINGSOCIETYv. STAtE [SRINIVASAN,J.] 363

- dated 23.6.1983 would also have to be disposed of on the merits. The
owner's application has been dismissed upon the High Court taking
the view that the matter was before this Court and, therefore, the High
A

Court would not entertain the ·dispute. The challenge by Tulsi
Cooperative Housing Society against the said withdrawal was before
the High Court for adjudication. In view of the fact that the owner's
writ petition was dismissed not on merits but on other considerations, B
we are of the view that the said dismissal should be vacated and that
writ petition should be heard along with Writ Petition No. 6500/83 as
a common question arises for determination. We, therefore, set aside
the order of the High Court dated 13th of June, 1988, and direct that
the said writ petition shall be disposed of afresh on merits. C
We are of the view that the entire litigation should go back to the
High Court for appropriate disposal. The transferred writ petition,
therefore, shall also go back to the High Court and shall be dealt with
as Writ Petition No. 6500of1983. The J;wo petitions challenging the
withdrawal of exemption shall be clubbed together and be heard. The D
proposals undertaken relating to a settlement in regard to the 18 acres
and 3 gunthas of land may be considered by the High Court in the
light of all relevant material and circumstances. If the High Court is
of the opinion that the matter should be settled and the entire land
of the owners amounting to 18 acres and 3 gunthas should be divided E
between the two Societies, it will be free to do so if Government also
agrees thereto. Since that arrangement would be with the consent of
the State Government it would in such an event be open to the High
Court to nullify the acquisition. The observations which we have
made at different stages during the pendency of the proceedings in
this Court may not be taken to be expression of opinion on t~e merits F
and the High Court ..yould be free to deal with the matter in its own
discretion and in accordance with law.

In the event of the settlement not coming through the acquisition
proceedings would continue under the law and be concluded by the G
Land Acquisition Officer in accordance with law. In the event ·of the
acquisition working out, the two writ petitions against the withdrawal
of exemption would not be s~stainable as the land would vest in
Government as a result of acquisition. It would be open to the
Government of the acquiring authority to take into account the effect
of the laws of urban ceiling. H
364 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A The civil appeals are remitted to the High Court limited to the
consideration of the proposals for settlement in the light of the
observations hereinabove. Otherwise, they must be taken to have
been concluded in this Court on our finding t~at acquisition
-
proceedings are valid and shall be entitled to continue. The special
leave petition of Azam is disposed of with a direc~ion that the writ
B petition in the High Court shall be re-heard. The transferred writ
petition is remitted to the High Court to be disposed Of as Writ
Petition No. 6500 of 1983. The hearing of the writ petition would
depend upon the fate of the settlement as indicated above".

C 10. After remand, the High Court by its judgment dated 21.11.1992
dismissed the two Writ Appeals under the Acquisition Act and disposed of
the two writ petitions under the Ceiling Act with the following directions:

"(I) The Land Acquisition proceedings covered by the Sec. 4(1)
notification issued in G.0.Rt. No. 68 dated 4.6.75 in respect of Ac.18-
D 03 gunthas of land shall revive and be completed as expeditiously as
possible preferably within three months from today, the beneficiaries
being the 374 members of the Bagh Amverpet Welfare Association
who have already remitted a total sum of Rs. 40,20,649.04.

(2) The compensation amount the land owners are entitled to shall
E be limited only to Rs.25,49, 131.75 and nothing more.

(3) Mis. Tulsi Co-operative Housing Society is at liberty to work out
its rights vis-a-vis the land owners.

(4) The applications filed under Sec. 20 of the U.L.C. Act seeking
exemptions from the operation of the Act and now pending with the
F Government since 1976 shall be disposed of as indicated supra".

11. Aggrieved by the said judgment, the Society has filed Civil Appeal
Nos. 6986-87of1994. The Government has filed Civil Appeal Nos. 6988-91 of
1994 while the Land Owner has filed Civil Appeal Nos. 6992-93of1994. All
G the above appeals were heard together.

12. Mr. D.D. Thakur, the learned senior counsel for the Society contended
that the High Court has failed to decide the crucial question arising in this
case, though this Court remanded the matter for that purpose. According to
him the facts and circumstances of the case proved a complete concluded
H tripartite compromise among the Society, the Government and BA W Society.
TULSI CO-OPERATIVE HOUSING SOCIETY v. STA TE [SRINIVASAN, J.] 365
He took us through some of the documents which came into existence after A
this Court passed the Order dated 7.8.85 and adjourned the matter for effecting
a settlement. He also relied upon the memo of compromise and the petition
filed in this Court by BAW Society for granting sanction to the compromise
arrived at between the parties. It was contended that the records established
that the Government had also agreed to the said compromise whereby the B
lands which were the subject-matter of the acquisition were to be divided into
two halves, one to be taken by the Society and the other by the BAW Society.
He argued that even if this Court holds that there was no express agreement
on the part of the Government, the same could be inferred from the available
records. Hence it should be held that there was a concluded compromise to
which the Government was a party by implication. Learned counsel also C
invoked the doctrine of legitimate expectation and contended that the same
should be applied in the present case and the Court should not allow the
Government to go back upon the concluded agreement.

13. We are unable to accept any of the aforesaid contentions. The Order
passed by this Court on 17.8.90 is itself sufficient to negative the above D
arguments. In fact, the said order precludes the Society from contending that
there was a concluded compromise. If there was such a compromise it ought
to have been pressed into service before this Court and if the same had been
accepted, there would have been no necessity for a remand. On the other
hand, the following observation in the Order of this Court shows clearly that E
there was no concluded compromise and this Court proceeded only on that
footing:

"If the High Court is of the opinion that the matter should be settled
and the entire land of owners amounting to 18 acres and 3 gunthas should
be divided between the two societies, it will be free to do so if Government F
also agrees thereto".

The next sentence in the order of this Court reads as follows:-

"Since that arrangement would be with the consent of the State
Government it would in such an event b~ open to the High Court to G
nullify the acquisition".
14. The above two observations show that if a compromise was to be
effected it was only to be brought into existence after the said order of this
Court and only if the Government consented thereto. Admittedly, the
Government did not express any consent after the said order of this Court and H
366 SUPREME COURT REPORTS (1999] SUPP. 2 S.C.R.

A on the other hand, vehemently opposed the proposed settlement between the
parties. The contention that there was a concluded compromise to which the
Government was party is untenable in view of the aforesaid observations in
the order of remand made by this Court on 17.8.90. We have no hesitation
at all to hold that the view expressed by the High Court in this regard is
B correct and there was no necessity for .the High Court to decide to the
question whether there was a complete concluded compromise.

15. In view of the said position we consider it unnecessary to deal with
the contention of learned counsel based on the provisions of Order 23 Rule
3 C.P.C. and Rule 24 of the Andhra Pradesh High Court Rules. Nor is it
C necessary to refer to Section 13 of the Contract Act relied on by the learned
counsel. There is also no warrant in this case to invoke the doctrine of
legitimate expectation.

16. The learned counsel for the Society contended that in any event the
sale in favour of the Society of an extent of 5 acres of land comprising lands
D other than the subject- niatter of the acquisition proceedings was valid and
should be upheld. That question is wholly extraneous to the present
proceedings and does not arise for our consideration. In these proceedings
we are concerned only with the validity of the acquisition proceedings and
the validity of the order of the Government cancelling the exemption granted ·
under the provisions of the Ceiling Act.
E
17. Learned counsel contended that the cancellation of exemption under
the Ceiling Act was unsustainable and at any rate it was bad with reference
to the extent of 5 acres of land which did not form part of the subject-matter
of acquisition under the Acquisition Act. There is no merit in this contention.
F The High Court has considered in detail the question whether the cancellation
of exemption under the Ceiling Act was valid or not. The High Court has
found that there was ample justification for cancellation of the exemption. It
has been found that the land-owner as well as the Society had violated the
conditions subject to which exemption was granted. As the High Court has
dealt with the matter at length and upheld the cancellation of exemption, it
G is unnecessary for us to repeat the reasoning of the High Court. We do not
find any justification whatsoever to interfere with the conclusion of the High
Court that the cancellation of exemption was valid and that the writ petitions
filed by the land-owner and the Society were liable to be dismissed.

18. The next contention of learned counsel for the Society was that the
H land acquired under the Acquisition Act should be distributed equitabl~ not
TULSI CO-OPERATIVE HOUSING SOCIETY v. STA TE [SRINIVASAN, J.] 367

merely among the members of BA W Society but also among the members of A
the appellant Society. He took exception to the direction contained in the
judgment of the High Court that the beneficiaries of the proceedings were 374
members of the BA W Society who had already remitted a total amount of
Rs.40,20,649.04. This particular contention urged by the learned counsel is
also supported by learned counsel for the State Government which has filed B
Civil Appeal Nos. 6988-91/94. In fact, learned Senior Counsel Mr. P.A.
Chaudhary appearing for the Government raised a contention that the lands
acquired should be utilised for public purposes other than those for which
the lands were acquired. He argued that the lands should be kept as water
tank and be utilised as such.
c
19. While we find justification in the contention put forward by the
learned counsel for the Society that the High Court has exceeded its jurisdiction .
in giving a direction confining the benefit of the acquisition proceedings to
the 374 members of the BAW Society, we are unable to accept the extreme
contention urged by the learned senior advocate for the Government that the
land should be permitted to be utilised for purposes other than those for D
which it was acquired. Once we uphold the validity of the proceedings for
acquisition under the Acquisition Act, it has to follow that the lands have
to be utilised for the purposes for which they were acquired. We would set
aside Direction No. I contained in the penultimate para of the judgment of
the High Court and substitute it with a direction that the lands acquired under E
the Acquisition Act should be properly utilised by the Government in order
to achieve the purpose for which they were acquired. The Government may
nominate a suitable Committee comprising at least three Secretaries to the
Government for the purpose of carrying out the objects of the acquisition in
an appropriate manner.
F
20. Mr. Gopal Subramaniam, learned senior counsel for the land owner
addressed his arguments against Direction No. 2 given by the High Court in
the impugned judgment. By the said direction the High Court has held that
the compensation amount to which the land owner is entitled shall be limited
only to Rs. 25,49, 131.75 and nothing more. Learned counsel submitted that the G
validity of the acquisition proceedings having been upheld, the Court has no
jurisdiction to fix the compensation ignoring the specific procedure prescribed
in the Acquisition Act. It was also his contention that the High Court arrived
at the figure arbitrarily on a wrong premise that there were some special
equities in favour of the members of the BA W Society and the price of the
land should be fixed at Rs. 25 per sq. yd. It was pointed out by him that there Hr
368 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A was no material. before the High Court for fixing the market value of the land
on the date of the notification under Section 4(1) of the Acquisition Act and
in any event, the parties had· no opportunity to place the relevant evidence
before the Court to enable it to fix the market value.

21. In our view, the conten~tion is well founded and unanswerable. Once
B the proceedings under the Acquisition Act have been held to be valid, the
prescribed procedure in the Act for fixing the compensation payable to the
land owner should have been followed and the High Court could not usurp
the functions of the hierarchy of authorities constituted under the Act. The
two reasons given by the High Court for taking up the task of fixing the
C compensation upon itself are that the litigation should not be allowed to drag
on any further and that there are special equities in favour of the members
of the BAW Society. Neither reason is sustainable. The fact that the proceedings
have been pending for long would not justify the Court to exceed its jurisdiction.
The question whether there are special equities in favour of the members of
the BA W Society and whether such equities would be relevant at the time
D of fixing the market value of the land under the provisions of the Acquisition
Act are matters to be decided by the concerned authorities in accordance with
the procedure prescribed in the Act. Hence the conclusion of the High Court
fixing the compensation for the land at Rs.25,49,131.75 and the direction that
· the land owners are not entitled to anything more has to be upset.
E
22. Learned counsel also pointed out the facts and circumstances in the
case which speak against the contentions urged by Mr. D.D. Thakur. It is
unnecessary for us to refer to them as we have already dealt with the said
contentions and found that they are not sustainable.

F 23. Mr. Gopal Subramaniam next contended that the High Court is wrong
in holding that the Government can proceed under the provisions of the
Ceiling Act as the latter are over-riding and will have effect notwithstanding
any other provision of law. According to him once the land had vested in the
Government under the provisions of the Acquisition Act, before vesting
G under the Ceiling Act could take place, there is no question of withdrawing
the proceedings under the Acquisition Act and proceeding further under the
provisions of the Ceiling Act. It was coll-tended that the High Court has mis-
understood the ruling of this Court in Dattatraya Shankarbhat Ambalgi and
Ors. v. State of Maharashtra and Ors., AIR ( 1989) Supreme Court 1796 and
pointed out that in the said case, the land had vested in the Government
H under the Ceiling Act pursuant to the final statement under Section 9 of the
TULSICO-OPERATIVEHOUSINGSOCIETYv. STATE [SRINIVASAN,J.] 369
said Act. It was submitted that in the present case such stage under the A
Ceiling Act had not reached. There is considerable force in this contention
of the learned counsel. But it is unnecessary for us to pronounce on the said
contention in view of the categoric statement made by the learned senior
advocate for the Government that he has obtained written instructions from
the Government that the compensation in the present case would be paid
under the provisions of the Acquisition Act and the provisions of the Ceiling B
Act would not be invoked therefore.

24. As a matter of fact, the judgment of the High Court appears to be
somewhat inconsistent in this respect. The High Court has upheld the
cancellation of exemption under the Ceiling Act and dismissed the writ petitions C
filed by the land-owner and the Society. The High Court has also upheld the
validity of the land acquisition proceedings and has gone to. the extent of
holding that the beneficiaries of the acquisition _were 374 members of the
BA W Society. The High Court has further held that the compensation amount
payable to the land owners shall be limited to Rs.25,49, 131.75. In that situation,
there was no necessity for the High Court to express its opinion that the D
provisions of the Ceiling Act were not excluded by the acquisition proceedings
and that they were over-riding. The conclusion of the High Court on that
question is wholly unnecessary for the purpose of this case and we set aside
the same. We . make it clear that we do not express any opinion on the
question of law in the present case in view of the statement made by the E
learned senior advocate for the Government and recorded as above.

25. The High Court has chosen to issue a direction which is Direction
No.4 that the applications filed under Section 20 of the Ceiling Act seeking
exemption from the operation of the Act and pending with the Government
since 1976 shall be disposed of as indicated in the judgment. We do not F
understand how such a direction could be issued in the present case which
is between the concerned parties. The direction relates obviously to parties
who were not before the Court in the present case. It is for the Government
to consider applications for exemption and dispose of the same in accordance
with law.
G
26. We have already adverted to the contention put forward by learned
senior counsel for the Government in C.A. Nos. 6988-91/94 and said that it
was not possible to accept the extreme contention. Learned counsel for the
BA W Society urged that the proceedings for acquisition were exclusively for
the benefit of the members of the said society and they had deposited the H
370 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A price of the land as demanded by the Municipal Corporation several years
back. It was argued that the lands could not be given to any person other
than the members of the said Society. Even in the order passed by this Court
on 17.8.1990 remanding the matter to the High Court, it was made clear that
if the acquisition proceeded, the BA W Society and the Municipal Corporation
B would work out their mutual rights. Hence, it is unnecessary for us to express
any opinion on the claim made by the BA W Society. As observed already by
us the Government shall take appropriate proceedings by appointing a suitable
Committee to utilise the lands acquired appropriately for the purposes for
which they were acquired.

C 27. In the result, the Civil Appeals are disposed of with the following
directions:

(I) The directions contained in the judgment of the High Court are set
aside;

(II) The land acquisition proceedings covered by the Notification under
D
Section 4(1) of the Acquisition Act issued in G.O. Rt. No. 68 dated 4.6.75 in
respect of 18 acres 03 guthas of land stand revived and shall be completed
as expeditiously as possible within a period of three months from today;

(III) The concerned authorities constituted under Acquisition Act shall
E decide the compensation payable to the land owner in accordance with the
provisions of the Act.;

.(IV) The Government shall nominate a Committee comprising at least

F
three Secretaries to the Government for distributing the acquired land equitably
among deserving persons in order to carry out the purposes of the acquisition
and to balance the equities between various persons whether they belong to
•
one or the other society or are not members of either society.;

(V) Mis. Tulsi Cooperative Housing Society is at liberty to work out its
rights as against the land owner in appropriate proceedings;

G (VI) Applications under Section 20 of the Ceiling Ac;t seeking exemption
from the operation of the Act said to be pending with the Government since
1976 shall be disposed of in accordance with law as expeditiously as possible
and preferably within a period of three months from today.

V.M. Appeals disposed of.