Amarnath
Ashram Trust Society & ANR Vs. The Governor of Uttar Pradesh & Ors
[1997] INSC 894 (3
December 1997)
G.T.
NANAVATI, G.B. PATTANAIK
ACT:
HEADNOTE:
THE
3RD DAY OF DECEMBER, 1997 Present:
Hon'ble
Mr. Justice G.T. Nanavati Hon'ble Mr. Justice G.B.Pattanaik R.F. Rohtagi, Sr.Adv.,
R.B.Misra and E.C. Agarwala, Advs. with him for the Respondents.
The
following Judgment of the court was delivered:
WITH
WRIT
PETITION @ NO. 716 OF 1996 NANAVATI, J.
Leave
granted.
Heard
learned counsel for both the sides.
The
appellant is a society registered under the Society Registration Act, 1860. It
is running a public school at Mathura in the
name if Amar Nath Vidya Ashram. The school is duly recognised by the Central
Board of Secondary Education, New Delhi. It
is challenging in this appeal the judgment and order passed by the High Court
in Civil Misc.
Writ
Petition No. 16241 of 1992.
The
appellant wants land adjacent to its school building for the purpose of a
playground for its students.
The
land belongs to respondent No.5 So it tried to obtain it from respondent No.5
by offering a price higher than its market value but did not succeed. it,
therefore, moved the State Government to acquire that land for it. The
Government agreed and issued Notification under section 4 of the Land
Acquisition Act on 1.8.1986 notifying its intention to acquire that land for a
public purpose namely "playground of students of Amar Nath Vidya Ashram
(Public School), Mathura". Thereafter, inquiries under
section 5-A and under Rule 4 of the Land Acquisition (Company) Rules, 1963 were
made. The Government also entered into an agreement with the appellant as
required by section 40(1) of the Act on 11.8.1987. it then issued a Declaration
under section on 4.9.1987 mentioning fact that the report made under sub-rule
(4) of Rule 4 of the Land Acquisition (Company) Rules, 1964 was considered by
the Government that the Land Acquisition Committee constituted under Rule 3 of
the said Rules was consulted, that the agreement entered between the appellant
and the Governor was duly published that the Governor was duly published that
the Governor was satisfied that the land mentioned in the schedule is needed
for construction of a playground for students of Amar Nath Vidya Ashram (Public
School), Mathura by the Amar Nath Ashram Trust, Mathura.
This
acquisition of land was challenged by the owner by a writ petition filed in the
Allahabad High Court. An interim order was passed directing the parties to
maintain status quo as regards possession. During the pendency of the said
petition, on 1.5.1992, the Government denotified the land from acquisition in
exercise of its power under section 48 of the Land Acquisition Act. The
appellant challenged that Notification by filing a writ petition in the High
Court.
The
petition filed by the appellant and the one filed by the owner were heard
together. The petition filed by the owner was dismissed as infructuous and the
petition filed by the appellant was dismissed on the ground that the decision
of the Sate Government to withdraw from the acquisition for the reason that the
acquisition having been proclaimed as one for a public purpose a par of cost of
acquisition was required to be borne by the state and as no such provision was
made, it was not likely to be sustained if challenged, cannot be said to be
contrary or illegal.
Mr.
R.F. Nariman, senior advocate, appearing for the appellants, submitted that
when acquisition is under part VII, i.e, when loan is acquired for a company
and when all the formalities have been completed including execution of an
agreement fro payment of cost of the acquisition and Section 6 notification has
also been issued, it sis not open to the Government to withdraw from such
acquisition without the consent of the company for which the land has been acquired.
He submitted that the power vested in the Government to withdraw from
acquisition is not absolute and is fettered by implicit restrictions and hence
it is justiciable. He further submitted that in this case the State Government
decided to withdraw from the acquisition under a misconception of law that as
the acquisition at the stage of section 4 notification was proclaimed to be for
a public purpose, at least a part of the cost of acquisition was required to be
borne by the State or was required to be paid out of the public funds or public
revenue; and, therefore, the decision taken by it was vitiated and ought to
have been quashed by the High Court. On the other hand, the learned counsel
appearing for the State of Uttar Pradesh submitted that the State is under no
obligation to give any reason for withdrawing from the acquisition and when it
is shown that the power was exercised bona fide it is not open to the Court to
invalidate such an action even if the reason given by the State is found to be
erroneous. he submitted that section 48 contains no words of limitation as
regards the exercise of power and the only limitation put upon the power of the
State Government is that it can excise that power till possession of the land
sought to be acquired is taken and not thereafter. he also submitted that if as
a result of withdrawal from acquisition any damage is suffered by any party
then be can be paid damages for the loss caused to him, and that there is one
more reason why the decision of Government to withdraw from acquisition cannot
be interfered with by the court of law.
It is
now well established that if the cost of acquisition is borne either wholly or
partly by the Government, the acquisition can be said to be for a public
purpose within the meaning of the Act. But if the cost is entirely borne by the
company then it is an acquisition for a company under part VII pf the Act. It
was so held by this Court in Pandit Jhandu Lal vs. The State of Punjab (1961
(2) SCR 459). This decision was relied upon by the learned counsel for the
State to support his contentions but it is difficult to appreciate how it
supports him. it is held in that case it is not correct to say that no
acquisition for a company for a public purpose can be made except under part
VII of the Act. In that case a part of the cost was to be borne by the
Government and, therefore, it was held that it was not necessary to comply with
the provisions of part VII of the Act. Admittedly, in the present case the
entire cost of acquisition is to be borne by the appellant society and,
therefore, it is an acquisitions for a company and not for a public purpose.
That is also born out by the notification issued under section 6 of the Act
which stated "that the land mentioned in the schedule below is needed for
the construction of play-ground for students of Amar Nath Vidya Ashram (public
school), Mathura in district Mathura by the Amar Nath Ashram Trust, Mathura"
Therefore, simply because in the notification issued under section 4 of the Act
it was stated that the land was needed for a public purpose, namely, for a
play-ground for students of Amar Nath Vidya Ashram (public school), Mathura, it
cannot be said that the acquisition is for a public purpose and not under
Chapter VII for the appellant-society in view of subsequent events and the
declaration made under Section 6. The learned counsel for the State also relied
upon the decision of this Court in Srinivasa Cooperative House Building Society
Ltd.
court
has held that though there is "no provision in the Act to say that when a
land is required for a company, it may also be for a public purpose. However,
the even acquisition for a company, unless utilisation of the land so
acquisition for a company, unless utilisation of the land so acquired is
integrally connected with public use, resort to the compulsory acquisition
under Chapter VII cannot be had". it was submitted on the basis of this
observation that even in case of an acquisition for a company an element of
public purpose has to be there and if for that reason it was believed by the
Government that it was necessary for it to make substantial contribution from
public revenue so as to avoid the charge of colorable exercise of powers, the
decision of the Government to withdraw from the acquisition cannot be said to
be arbitrary or illegal. The aforesaid observation was made by this Court in
the context of requirement of Section 40 of the Act and they cannot be
construed to mean that no land cannot be acquired by the State Government
without making substantial contribution towards the cost of acquisition. We
cannot read something more in the said observation than what they were intended
to convey. The provisions of part VII and particularly the provisions regarding
payment of the entire costs f the acquisition would otherwise become redundant.
As the
acquisition in this case was for the appellant- society which is running a
school, it was an acquisition for a company and as disclosed by the agreement
the entire cost of the acquisition was to be borne by the appellant-society.
The
declaration made under section 6 clearly referred to the inquiry made under
rule 4 of the Land Acquisition (Companies) Rules, 1963 and the agreement
entered into between the appellant-society and the state. Moreover, it was not
pleaded by the State before the High Court that the acquisition in this case
was for a public purpose and not under Chapter VII of the Act. Therefore, it is
really not open to the counsel for the State to raise a contention which is
contrary to the case, pleaded before the High Court, it was stated on behalf of
the State that the acquisition was for a registered society and as such it was
covered within the meaning of Company as defined by section 3(E)(ii) of the
Land Acquisition Act and that the purpose of acquisition was covered under
section 40(I)(b) of the Act because acquisition for play-ground of students of
a school is a purpose which is likely to prove useful to the public.
On the
question of giving reasons the learned counsel of the State heavily relied upon
the decision of this Court in Special Land Acquisition Officer, Bombay vs. Godrej
and Boyce (1988 (1) SCR 590). In that case this Court examined the nature and
extent of the power of the Government to withdraw from acquisition after
issuance of notification under section 4 of the Act. In that case the Sate
Government had passed an order under section 48 of the act withdrawing the
lands of Godrej and Boyce from acquisition. The owner the thereupon challenged
the withdrawal order as mala fide and prayed for quashing of the same. The writ
petition was allowed by a single Judge of the High Court and his decision was
affirmed by a Division Bench. In an appeal filed by the state this Court held
that under the scheme of the Act neither the notification under section 4 not
the declaration under section 6, not the notice under section 9 is sufficient
to divest the original owner of, or other person interested in, the land of his
rights therein. Section 16 makes it clear beyond doubt that the title of the
land vests in the Government only when possession is taken by the Government
and till that point of time, the land continues to be with the original owner
and he is also free to deal with the land just as he likes. So long as the
possession is not taken over, the mere fact of a notification issued under
section 4 or a declaration under section 6, does not divest the owner of his
rights in the land just as he likes. So long as the possession is not taken
over, the mere fact of a notification issued under section 4 or a declaration
under section 6, does not divest the owner of his rights in the land to take
care of its and conger on the State Government any right whatsoever to
interfere with the ownership of the land or safeguard the interests of the
owner. Section 48 gives liberty to the State Government to withdraw from the
acquisition at any stage before the possession of the land is taken by it. By
such withdrawal, no irreparable prejudice is caused to the owner of the land
and, if at all the owner has suffered any damage in consequence of the
acquisition proceedings or incurred costs in relation thereto, he will be
compensated therefore under section 48(2) of the Act. This Court further
observed that the State can be permitted to exercise its power to withdraw
unilaterally. It further observed that having regard to the scheme of the Act
it is difficult to see why the state Government should at all be compelled to
give any cogent reasons for its decision not to go ahead with the acquisition
of any land. it is well settled in the field of specific performance of
contracts that no person will be compelled to acquire any land, as breach of
contract can always be compensated for by damages. That is also the principle
of section 48(2) of the Act. In that case the Court found that the withdrawal
was bona fide and was justified in view of the facts and circumstances of the
case. That was a case where the decision of the Government to withdraw from
acquisition was challenged by the owner of the land on the ground that the
withdrawal was mala fide and it was bad because no show cause notice was served
to the company before the withdrawal order was passed. It was in that context
that this Court made the above quoted observations. That was not a case where
proceedings were initiated to acquire land for a company under part VII of the
Act. Therefore, it is not an authority laying down the proposition that in all
cases where power is exercised under section 48 of the Act it is open to the
State Government to act unilaterally and that it can withdraw from acquisition
without giving any reason or for any reason whatsoever.
In an
acquisition under part VII of the Act, position of the company or the body for
which the land is acquired is quire different from that of the owner of the
land. As a result of withdrawal from the acquisition whereas the owner of land
is ordinarily not likely to suffer any prejudice or irreparable loss, the
company for whose benefit the land was to be acquire, may suffer substantial
loss.
However,
it is not necessary to go into this larger question whether in such a case the
state Government can withdraw from acquisition without the consent of the
company as the justification given by the Government is otherwise not
sustainable. As stated earlier the reason given by the Government for
withdrawing from the acquisition is that as no part of the cost of acquisition
was to be born by the Government the acquisition could not have been sustained
as for a public purpose. We have already pointed out that in this case the acquisition
was not for a public purpose but it was an acquisition for a company under
Chapter VII of the Act. In respect of an acquisition for a company under
Chapter VII of the Act law does not require that the State should also bear
some cost of the acquisition to make it an acquisition for public use. Thus the
decision of the Government to withdraw from acquisition was based upon
misconception of the correct legal position. Such a decision has to be regarded
as arbitrary and not bona fide.
Particularly
in a case where as a result of a decision taken by the Government other party
is likely to be prejudicially affected, the Government has to exercise its
power bona fide and not arbitrarily. Even though section 48 of the Act confers
upon the state wide discretion it does not permit it to act in an arbitrary
manner Though the State cannot be compelled to acquire land compulsorily for a
company its decision to withdraw from acquisition can be challenged on the
ground that power has been exercised mala fide or in an arbitrary manner.
Therefore, we cannot accept the submission of the learned counsel for the State
that the discretion of the State Government in this behalf is absolute and not justiciable
at all.
We,
therefore, allow this appeal and quash the impugned order dated 16.4.1996.
However, we make it clear that it will be open to the State Government to
reconsider this question of withdrawal from acquisition and take an appropriate
decision in accordance with law. In view of the facts and circumstances of the
case, there shall be no order as to costs.
Writ
Petition C No. 716 of 1996 As we are allowing the appeal the learned counsel
for the petitioner does not press the writ petition at this stage and reserves
his right to challenge the validity of section 48 if such an occasion arises in
future. The writ petition is, therefore, dismissed as not pressed.
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