State of Gujarat & Ors Vs. Ambalal
Haiderbhai  INSC 113 (14 April 1976)
SINGH, JASWANT SINGH, JASWANT RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
CITATION: 1976 AIR 2002 1976 SCR 33 1976 SCC
CITATOR INFO :
RF 1978 SC 515 (7)
Land Acquisition (Companies) Rules
1963-Enquiry under R. 4 whether compliance with principles of natural justice
The appellant initiated proceedings under the
Land Acquisition Act, 1894, for acquiring the lands of the respondents for the
Sardarnagar Co-operative Industrial Society Ltd., in order to establish an
industrial estate for small scale industries. A notification was issued under
s. 4 of the Act after following the provisions of Part VII of the Act, and in
due course the final notification under s. 6 of the Act was issued. The
respondents challenged both the notifications before the High Court, under Art.
226 of the Constitution on the ground that at the enquiry held by the Special
Land Acquisition Officer, Baroda, under R. 4 of the Land Acquisition
(Companies) Rules 1963, they had not been heard in accordance with the
principles of natural justice.
The High Court allowed the writ petitions.
The question for decision before this Court was whether the enquiry under Rule
4 requires compliance with the rules of natural justice.
Dismissing the appeals, the Court, ^
HELD: In conducting the enquiry, the
Collector has, in the interest of fair play, to observe the principles of
natural justice by affording the persons interested in the land a reasonable
opportunity of being heard and of adducing material before the Collector to
refute the allegations of the company. [37 C-D] State of Gujarat and Anr. v.
Patel Chaturbhai Narsibhai
Suresh Koshy George v. The University of
Kerala and Ors.  1 SCR 317 and A. K. Kraipak & Ors. v. Union of India
and Ors. 1 SCR 457 referred to.
& CIVIL APPELLATE JURISDICTION : Civil
Appeals Nos. 967 to 969 of 1971.
Appeals by Special Leave from the Judgment
and Order dated April 17/18, 1970 of the Gujarat High Court in Special Civil
Applications Nos. 116,, 1621 and 1622 of 1967.
D. V. Patel, M. C. Bhandare, M. N. Shroff for
the Appellants in all the appeals.
1. N. Shroff for Respondents Rr. 1 and 2 in
967 and R 1 in CAs. 968-969.
P. H. Parekh and Miss Manju Jetley for
Respondent 3 in 967, R. 2 in 968, 969.
34 The Judgment of the Court was delivered by
JASWANT SINGH, J.-These three appeals Nos. 967 to 969 of 1971 by special leave
which are directed against the common judgment of the High Court of Gujarat
dated April 17/18, 1970 in Special Civil Application Nos. 116 of 1967, 1621 of
1967 and 1622 of 1967 arise thus:
Proceedings under the Land Acquisition Act,
1894, (hereinafter referred to as 'the Act') for acquisition of certain lands
in villages Sayajipuri, Bapow and Savad, District Baroda, Taluka Baroda were
initiated by the Government of Gujarat at the instance of Sardarnagar Co-
operative Industrial Society Limited registered under the Gujarat Co-operative
Societies Act 1961 (hereinafter referred to as 'the Company') for the purpose
of establishing an industrial estate for small scale industries. The
acquisition being for the Company a notification was issued under section 4 of
the Act on July 2, 1964 after following the provisions of Part VII of the Act.
An agreement under section 41 of the Act between the State Government and the
Company was entered into on April 2, 1965 and was published on October 15,
1966. The final notification under section 6 of the Act was issued on October
18, 1966. The owners of the aforesaid lands who are contesting respondents
herein challenged the aforesaid notifications issued under section 4 and 6 of
the Act by filing petitions under Article 226 of the Constitution of India
inter alia on the ground that the provisions of the Rule 4 of the Land
Acquisition (Companies) Rules, 1963 (hereinafter referred to as 'the Rules')
made by the Central Government in exercise of the powers conferred under
section 55 of the Act, which by virtue of Rule 1(2) of the Rules apply to
acquisition of land for all companies under Part VII of the Act, have not been
complied with particularly as they had not been given a right to be heard in
accordance with the principles of natural justice at the enquiry held by
Special Land Acquisition Officer, Baroda, appellant No. 2 herein. The plea
raised by the owners of land found favour with the High Court which allowed the
petitions set aside the notification under section 6 of the Act, and issued a
mandamus commanding appellant No. 2 to complete the statutory enquiry under
Rule 4 of the Rules in accordance with the principle of natural justice.
The short but important question which we are
called upon to decide in these appeals is whether the enquiry under Rule 4 of
the Rules requires compliance with the rules of natural justice.
As observed by this Court in Suresh Koshy
George v. The University of Kerala & Ors.(1) and reiterated in A. K. Kraipak
& Ors. v. Union of India & Ors.(2) rules of natural justice are not
rules embodied 35 always expressly in a statute or in rules framed there under.
They may be implied from the nature of the
duty to be performed under a statute. What particular rule of natural justice
should be implied and what its content should be for a given case must depend
to a great extent on the facts and circumstances of that case, the frame-work
of the law under which the enquiry is held, and the constitution and nature of
duties of the Tribunal or the body of persons appointed for that purpose. Let
us, therefore, advert to the provisions of Rule 4 of the Rules which requires
the appropriate Government to be satisfied with regard to certain matters
before initiating acquisition proceedings.
The rule is in these terms :- "4.
Appropriate Government to be satisfied with regard to certain matters before
initiating acquisition proceedings.- (1) Whenever a Company makes an
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:- (i) that the Company has made its best endeavour to find out
lands in the locality suitable for the purpose of the acquisition;
(ii) that the Company has made all reasonable
efforts to get such lands by negotiation with the persons interested therein on
payment of reasonable price and such efforts have failed;
(iii)that the land proposed to be acquired is
suitable for the purpose;
(iv) that the area of land proposed to be
acquired is not excessive;
(v) that the Company is in a position to
utilise the land expeditously; and (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.
(2) The Collector shall, after giving the
company a reasonable opportunity to make any representation in this behalf,
hold an enquiry into the matters referred to in sub-rule (1) and while holding
such enquiry he shall,- (i) in any case where the land proposed to be acquired
is agricultural land, consult the Senior Agricultural Officer of the district
whether or not such land is good agricultural land;
36 (ii) determine, having regard to the
provisions of sections 23 and 24 of the Act, the approximate amount of
compensation likely to be payable in respect of the land which, in the opinion
of the Collector, should be acquired for the Company; and (ii) ascertain
whether the Company offered a reasonable price (not being less than the
compensation so determined), to the persons interested in the land proposed to
Explanation.-For the purpose of this rule
"good agricultural land" means any land which, considering the level
of agricultural production and the crop pattern of the area in which it is
situated, is of average or above average productivity and includes a garden or
(3) As soon as may be after holding the
enquiry under sub-rule (2), the Collector shall submit a report to the
appropriate Government and a copy of the same shall be forward by that
Government to the Committee.
(4) No declaration shall be made by the appropriate
Government under section 6 of the Act unless- (i) the appropriate Government
has consulted the Committee and has considered the report submitted under this
rule and the report, if any, submitted under section 5A of the Act;
and (ii) the agreement under section 41 of
the Act has been executed by the Company".
To sum up, sub-rule (1) of the above quoted
rule requires the appropriate Government to which an application is made by a
Company for acquisition of land to direct the Collector to submit a report on
six matters set out therein.
Sub-rule (2) of the said rule re-emphasizes
what is contained in sub-rule (1) by making it obligatory for the Collector to
hold an enquiry into six matters referred to in sub-rule (1). It also makes it
obligatory for the Collector while holding the enquiry (1) to consult the
Senior Agricultural Officer of the District in case the land is agricultural
land, (2) to determine the approximate amount of compensation likely to be
payable in respect of the land in question keeping in view the provisions of
sections 23 and 24 of the Act and (3) to ascertain whether the Company offered
a reasonable price (which is not less than the compensation so determined) to
the persons interested in the land which is proposed to be acquired.
A conjoint reading of sub-rules (1) and (2)
leaves no room for doubt that the enquiry by the Collector, which is meant
inter alia to 37 find out whether all reasonable efforts have been made by the
Company to get the land by negotiation on payment of reasonable price and such
efforts have not fructified and to determine the approximate amount of
compensation likely to be payable in respect of the land keeping in view the
provisions of sections 23 and 24 of the Act, is of vital importance to the
persons interested in the land.
Sub-rule (3) of the rule requires the
Collector to submit his report to the concerned Government which in turn is
required before making a declaration under section 6 of the Act to consider
that report as well as the report, if any, submitted by it under section 5A of
the Act after ascertaining the view of the Committee constituted under Rule 3
of the Rules in regard to the Collector's report under Rule 4 of the Rules.
Although the above mentioned rule is silent
regarding the mode and method of the enquiry to be held by the Collector and
the report of the Collector is of a recommendatory character, yet regard being
had to the legislative history and purpose of the rule, and the mischief sought
to be prevented, we have no hesitation in holding that, in conducting the
enquiry, the Collector has, in the interest of fair play, to observe the
principles of natural justice by affording the persons interested in the land a
reasonable opportunity of being heard and of adducing material before the
Collector to refute the allegations of the Company. The concept of natural
justice which as evident from the observations made in A. K. Kraipak's case
(supra), has undergone a great deal of change in recent years. The dividing
line between an administrative and quasi-judicial function is often blurred.
Our view is reinforced by the following
illuminating observations made by the learned Chief Justice in State of Gujarat
& Anr. v. Patel Chaturbhai Narsibhai & Ors.(1) "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 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 of reasonable price and such efforts have failed.
The persons interested therein are the owners of the land which is proposed to
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 the owners of the land will get an
opportunity when an enquiry is made under section 5-A of the Act is equally
unsound. Section 17 of the Act provides that the appropriate Government may 38
direct that the provisions of section 5-A shall not apply, and if it does so
direct a declaration may be made under section 6 at any time after the
publication of the notification under section 4 of the Act.
Therefore, the enquiry under section 5A may
not be held." For the foregoing reasons, the question is answered in the
affirmative and the appeals are dismissed. The parties are left to bear and pay
their own costs in these appeals.
M.R. Appeals dismissed.