General Govt. Servants Co-Operative
Housing Society Ltd. Vs. Wahab Uddin & Ors  INSC 52 (2 March 1981)
ISLAM, BAHARUL (J) ISLAM, BAHARUL (J) PATHAK,
R.S. REDDY, O. CHINNAPPA (J)
CITATION: 1981 AIR 866 1981 SCR (3) 46 1981
SCC (2) 352 1981 SCALE (1)630
D 1985 SC 736 (20)
Land Acquisition Act-Sections 4, 5A and
6-Land acquired for a company-Part VII of the Act, if attracted-Requirement of
rule 4 of Land Acquisition (Companies) Rules 1963-If mandatory-"Person
The land in dispute originally belonged to a
person who had migrated to Pakistan. After acquiring the lessee rights in the
land under section 12 of the Displaced Persons (Compensation and
Rehabilitation) Act, 1954 the Central Government sold these rights by auction.
The first respondent purchased a plot of land and a sale certificate was issued
to him. The respondent, however could not get possession of the land as a
result of litigation resorted to by the person in possession of the land. In
the meantime the State Government filed a suit against the Custodian of Evacuee
Property and the auction purchasers for possession;
but the suit and later appeal were dismissed.
Before the respondent obtained possession of
the land a notification under section 4 of the Land Acquisition Act was issued
seeking to acquire the land for construction of residential houses for the
members of the appellant society.
Having had no knowledge of the notification
the respondent did not file any objection under section 5A. After the issue of
notification under section 6 of the Act proceedings relating to determination
of compensation for the lands were started. A notice was served on the
respondent under section 9(3) of the Act calling upon him to prefer his claim
Allowing the respondent's petition impugning
the action of the Government the High Court held that the State Government
could acquire the land only after complying with the provisions of Chapter VII
of the Act and the Land Acquisition (Companies) Rules, 1963 and this not having
been done there was a breach of the principle of natural justice and that
secondly the respondent was a "person interested" within the meaning
of section 3(b) of the Act.
On the question whether the respondent was a
'person interested' and whether the notification issued under section 6 was
HELD: The expression "person
interested" is defined in section 3(b) as including all persons claiming
an interest in compensation to be made on account of acquisition of land under
the Act. That the first respondent had interest in the land in question is
warranted by the following circumstances: (i) a sale certificate had been
issued to him after he purchased the land in auction sale; (ii) the Collector
knew that he had purchased the land for he had himself filed a suit for
ejectment against him from the land and that the suit was dismissed and the
appeal against that order was also dismissed; (iii) the Collector called upon
the respondent to prefer his claim under section 9(3) of the Act which showed
that 47 the Collector had admitted the first respondent's interest in the land;
and (iv) before the High Court the Collector had not denied the respondent's
right to compensation.
Therefore, the first respondent was a
"person interested" within the meaning of section 3(b). [50 F-H]
2. The notification under section 6 is
invalid for non- compliance with rule 4 of the Rules. [54 G] The appellant
society is a "company" within the meaning of section 3(e) of the Act.
When the land was acquired for the purpose of a company, Part VII of the Act is
attracted and the provisions of that Chapter have to be followed. Rule 4 is
mandatory and unless the directions enjoined by this rule are complied with the
notification under section 6 would be invalid. Its compliance precedes the
notification under section 4 as well as compliance of section 6 of the Act. [51
F-G] In the instant case on receipt of the notice under section 9(3) the
respondent objected to the acquisition on the grounds that the land or lessee
rights having been acquired by the Central Government under the provisions of
the Displaced Persons (Compensation and Rehabilitation) Act, 1954 could not be
acquired by the State Government, and that the mandatory procedure for
acquisition of land for private companies had not been followed. No inquiry
report had been submitted by the Collector. The report submitted was under
section 5A and not under rule 4. There had therefore been a failure of justice.
3. The appellant's contention that the first
respondent's claim was barred by limitation under sections 45(f) and 180 of the
Tenancy Act, has no force because there is no evidence to show that the
requirements of the section have been satisfied. That apart, this is a mixed
question of fact and law requiring investigation into facts. Since it had not
been taken before the High Court but sought to be urged for the first time in
this Court, it cannot be allowed to be urged in an appeal by special leave
under Article 136 of the Constitution. [50 C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 2085 of 1978 and 7-8 of 1979.
Appeals by special leave from the Judgment
and Order dated 18.5.1977 of the Allahabad High Court in C.M.W. Nos.
5061/73, 5063/73 and 5080/73.
G.C. Lal, D.B. Vohra and O.P. Tewari for the
Appellants in all the Appeals.
Probir Mitra for R.1 in CAs. 2085/78, 8/79
and RR 1-2 in CA 7/79.
G.N. Dixit, and Sobha Dikshit for RR. 2 to 4
in CA 2085/78 RR 2-4 in CA 8/79 and RR 3&5 in CA 7/79.
E.C. Aggarwala for R.4 in CA 7/79 and R. 3 in
The Judgment of the Court was delivered by
BAHARUL ISLAM, J. The above appeals arise out of land acquisition proceedings
and involve similar questions of fact and the same 48 question of law. This
common judgment, therefore, will dispose of all the three appeals. It will be
sufficient if we refer to the material facts of Civil Appeal No. 2085 of 1978
2. The land involved, belonged to one Imam
Khan as an occupancy tenant. Before the partition of India, he migrated to
Pakistan, whereafter his rights in the lands were declared evacuee property.
Subsequently, in pursuance of a notification issued under Section 12 of the Displaced
Persons (Compensation and Rehabilitation) Act, 1954, the Central Government
acquired the lessee rights. As a result of the notification, these rights
vested in the Central Government free from all encumbrances. The Central
Government thereafter sold these rights by auctions in August/September 1962.
The first Respondent purchased a plot of land for a sum of Rs. 21,700. He
deposited the entire amount with the Managing Officer, Evacuee Property, Agra.
A sale certificate was issued to him on September 12, 1962.
3. It appears that one Ramlal Lamba was in
the possessi on of the land in question. He was asked by the Managing Officer,
Evacuee Property, to vacate the land, and deliver possession to the first
respondent. Instead of delivering possession of the land to the first
respondent Lamba, filed a Writ Petition under Article 226 of the Constitution
in the Punjab High Court at Delhi. The Writ Petition was dismissed on 4.12.69.
He then filed an appeal which was also dismissed on 2.2.70. He then filed a
suit in the Court of the Munsiff Agra, for restraining the Managing Officer,
Evacuee Property, from interfering in his possession. Thus the first respondent
could not get possession of the land.
4. after the auction sale, the State of U. P.
(Respondent No. 2 herein) filed a suit under
Section 171 of U. P. Tenancy Act, 1939 (hereinafter 'the Tenancy Act') against
the Custodian of the Evacuee Property, and the four auction purchasers including
the first respondent, for possession. This suit was dismissed by the Assistant
Collector, 1st Class, on 24.3.69 on the ground that it was not maintainable. An
appeal was filed. This was also dismissed on 24.10.70. Thus before the
petitioner could obtain possession of the land, the Collector of Agra
(Respondent No.3 herein) issued a notification under Section 4 of the Land
Acquisition Act (hereinafter 'the Act') on March 1, 1970, notifying that the
plots in dispute (and several other plots) were intended to be acquired by the
State Government for construction of residential houses for the members of the
General Servants Co-operative Housing Society Ltd., Agra, the appellant 49
before us. The first respondent did not have any knowledge or information of the
said notification under Section 4 of the Act and so he did not, as he could
not, file any objection under section 5A of the Act. The notification under
section 4 was followed by a notification under section 6 of the Act on May 4,
1973. After the said notifications, proceedings relating to determination of
compensation for the lands were started. In that connection the first
Respondent was served with a notice under section 9(3) of the Act, calling upon
him to prefer his claim for compensation. Thereupon the first Respondent filed
objections, but before the objections were disposed of he filed a writ petition
before the High Court of Allahabad.
The High Court allowed the writ petition and
struck down the notification dated 5th May 1973, under Section 6 of the Act.
The High Court held that as the acquisition
was made by the State Government for the benefit of a Co-operative Society, it
could do so only after complying with the provisions of Chapter VII of the Act,
and the Land Acquisition (Companies) Rules, 1963 (hereinafter called 'the
rules'), but as the State Government did not do so, there was a breach of the
principle of natural justice. Repelling the argument of the appellant to the
contrary, the High Court also held that the first respondent was a 'person
interested' within the meaning of section 3 (b) of the Act.
5. Respondents No. 2, 3 and 4 who are
co-respondents appearing through Mr. Dikshit before us have supported the case
of the appellant.
6. The first question for determination is
whether the first respondent is not a 'person interested' within the meaning of
section 3(b) of the L.A. Act and as such he had no locus standi to file the
writ petition before the High Court, as contended by the appellant.
Section 3 (b) of the Act is in the following
terms (material portions only):
"3. In this Act, unless there is
something repugnant in the subject or context:- (a)..............
(b) the expression "person
interested" includes all persons claiming an interest in compensation to
be made on account of the acquisition of land under this Act;
and a person shall be deemed to be interested
in land if he is interested in an easement affecting the land." 50 In
support of the argument the appellant refers to section 45 (f) and section 180
of the Tenancy Act, 1939.
Clause (f) of section 45 provides that the
interest of the tenant shall be extinguished where the tenant has been deprived
of possession and his right to recover possession is barred by limitation. The
limitation provided is for a period of twelve years, for a suit for ejectment
of a person occupying the land without title and for damages-if the land is
contiguous to any other land lawfully occupied by such other person-(a) if such
person has, at the commencement of the Tenancy Act, occupied the land for more
than six years, the period runs from the time the land holders first knew of
the unauthorised occupation. In any other case the period of limitation is six
years. This point which has been urged for the first time before us is a mixed
question of fact and law. It does not appear to have been taken before the High
Court. A mixed question of law and fact needing investigation into facts cannot
be allowed to be urged for the first time in an appeal by special leave under
Art. 136 of the Constitution.
It is true that admittedly the first
respondent was out of possession at the relevant time but there is no evidence
before us to show whether or not the land in question was contiguous to any
other land occupied by the person who is in possession and that his possession
had been lawful. We are therefore not in a position to accept the submission of
the appellant that the first respondent's claim was barred by limitation. On
the contrary there is ample evidence before us to show that the first respondent
had interest in the land in question. We come to this conclusion from the
(I) A sale certificate had been issued to the
first respondent after the purchase of the land in auction sale held in 1962;
(2) the Collector, Agra, knew that the first respondent had purchased the land
in auction, for he had himself filed a suit for ejectment from the land in
question under section 171 of the Tenancy Act against the first respondent, and
that the suit was dismissed by the Assistant Collector 1st Class, on 24th
March, 1969; the appeal preferred against the said order had also been
dismissed by the Commissioner on the 27th of October, 1970; (3) the Collector
issued notice under section 9 (3) of the Act calling upon the first respondent
to prefer his claim, if any for compensation of the land acquired. (This
amounts to an admission of the first respondent's interest in the land by the
Collector) and (4) that in the counter affidavit filed by the Collector, in
reply to the affidavit filed by the first respondent before the High Court 51
the claim of the petitioner to get compensation for the rights acquired by the
Government was not denied by the appellant. We therefore agree with the High
Court that the first respondent was a 'person interested' within the meaning of
clause (b) of section 3 of the Act.
7. The next point urged before us by the
appellants is that the first respondent in fact filed objection which was
inquired into and he was given an opportunity of being heard. The High Court,
therefore, it is contended, was not right in holding that there was a breach of
the principle of natural justice. In our opinion, the real question, as urged
by the first respondent, is not whether there has been any violation of any
principle of natural justice but whether Rule 4 of the Rules has been complied
with by the Collector.
Sub-section (1) of Section 4 of the Act
provides that whenever it appears to the appropriate Government that land in
any locality is needed or is likely to be needed for any public purpose a
notification to that effect shall be published in the official gazette and that
he shall also cause a public notice of the substance of the notification to be
given at convenient places in the said locality.
Section 5A of the Act provides that any
person interested in any land which has been notified under sub- section (1) of
section 4, as being needed or likely to be needed for a public purpose or for a
Company may, within thirty days (twenty-one days according to the U.P.
amendment) after the issue of the
notification object to the acquisition of the land or of any land in the
locality as the case may be. Under section 3 (e), the expression 'Company',
inter alia, includes a society registered under the Societies Registration Act,
1860 and a registered society within the meaning of the Co-operative Societies Act,
1912 or any other law relating to co-operative society for the time being in
force in any State. The appellant-The General Govt. Servants Co-operative
Housing Society Ltd., Agra, is a Company. The appellant has not contended to the
contrary. It is also not disputed that when land is acquired for the purpose of
a company, Part VII of the Act is attracted and the provisions of that chapter
have to be followed.
Rule 4 of the Rules which is material and
falls for our interpretation runs thus:
"4. Appropriate Government to be
satisfied with regard to certain matters before initiating acquisition
proceedings.- (1) Whenever a Company makes an application to the appro- 52
priate 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 land expeditiously; 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 ;
(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 (iii) 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 be acquired.
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 53 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 forwarded 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.' 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 (1) which is for the benefit of the Company. The purpose is to avoid
acquisition of land not suitable for a Company. Clause (ii) of sub-rule (1)
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. 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. Subrule 2 of rule 4 requires the
Collector to give reasonable opportunity to the Company so that the Collector
may hold an 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 (1). 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 Committee constituted under Rule 3 for the purpose of advising 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 of land under Part VII of the Act (Sub-rule (5)
of Rule 3). No declaration shall be made by the 54 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 5A 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
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.
8. In the instant case, as stated earlier,
the first respondent on receipt of the notice under section 9(3) of the Act
submitted a representation. After the representation, a brief written note of
the arguments was also supplied (Annexure 6). The first respondent's
objections, inter alia against the acquisition of the land were: (1) that the
land being that of the Government cannot be legally acquired ; (2) that the
land or lessee rights having been once acquired by the Central Government under
the provisions of the Displaced Persons (Compensation and Rehabilitation) Act,
1954, it cannot be acquired by the State Government ; and (3) that the
proceedings for the acquisition of the land for the appellant were illegal as
the mandatory procedure for acquisition of land for private companies has not
been followed. It was also stated in the representation that no efforts to
purchase the rights of the first respondent by negotiation were made. The
inquiry report submitted by Collector does not show that he applied his mind to
the provisions of rule 4 as stated above, or to the objections of the first respondent.
In fact there was no report under rule 4. The report that was submitted was one
under section 5A of the Act. We have examined this aspect of the matter to see
that although the enquiry was belated and not in accordance with law, there has
been no failure of justice. In our opinion there has been failure of justice.
Agreeing with the finding of the High Court,
although for different reasons, we hold that the notification under section 6
is invalid for non-compliance of rule 4 of the Rules. As a result we dismiss
the appeals with costs.
P.B.R. Appeals dismissed.