1. Land acquisition for a labour colony under the Land Acquisition Act, 1894, challenged for non-compliance with Part VII procedures regarding acquisitions for companies. (Para 2 , 3 )
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1960 Supreme(SC) 281
SUPREME COURT OF INDIA
16th November, 1960
B.P. SINHA, C.J.I., J.L. KAPUR, P.B. GAJENDRAGADKAR, K. SUBBA RAO AND K.N. WANCHOO, JJ.
Pandit Jhandu Lal and others, Appellants
Versus
The State of Punjab and another, Respondents; The Attorney-General for India, Intervener.
Civil Appeal No. 4 of 1960.
Advocates Appeared
Mr. C. B. Aggarwala, Senior Advocate, (M/s. Daya Swarup Nehra and R. S. Gheba, Advocates, with him), for Appellants; Mr. S. M. Sikri, Advocate-General for the State of Punjab and Mr. N. S. Bindra, Senior Advocate, (Mr. D. Gupta, Advocate, with them), for Respondent No. 1.
Mr. C. K. Daphatary, Solicitor-General of India (Mr. S. N. Andley, Advocate of M/s. Rajinder Narain and Co. with him), for Respondent No. 2 Mr. C. K. Daphtary, Solicitor-General of India, (Mr. T. M. Sen, Advocate, with him), for Intervener.
Advocates:
C.B.AGARWAL, C.K.DAFTARY, D.GUTPA, DAYA SVARUP NEHRA, N.S.BINDRA, R.S.GHEBA, RAJINDAR NARAIN, S.M.Sikri, S.N.ANDLEY, T.M.SEN
C.B.AGARWAL, C.K.DAFTARY, D.GUTPA, DAYA SVARUP NEHRA, N.S.BINDRA, R.S.GHEBA, RAJINDAR NARAIN, S.M.Sikri, S.N.ANDLEY, T.M.SEN
Acquisition for a company for a public purpose, where compensation is paid wholly or partly from public funds, is an acquisition for a public purpose and does not require compliance with the procedural requirements of Part VII of the Land Acquisition Act, 1894.
Headnote:(A) Land Acquisition Act, 1894 - Sections 4, 6, 17, 39-41 and Part VII - Constitution of India - Article 31 - Acquisition of land for a company for a public purpose - Whether compliance with Part VII is mandatory when compensation is paid partly from public funds - Construction of labour colonies under a Government-sponsored Housing Scheme held to be a public purpose - If the cost of acquisition is borne wholly or in part out of public funds, the acquisition is for a public purpose and not for a company simpliciter - In such cases, the procedure prescribed under Part VII of the Act is not necessary. (Paras 5, 7, 8)
(B) Public Purpose - Acquisition of a site for building residential houses for industrial labour constitutes a public purpose. (Paras 5, 7)
Facts of the case:
Land was acquired under the Land Acquisition Act for the construction of a labour colony under a Government-sponsored housing scheme for industrial workers. The acquired land was to be used by a co-operative society. The owners challenged the acquisition on the grounds that the mandatory procedure under Part VII of the Act, which governs acquisitions for companies, was not followed, as the land was being acquired for the benefit of a company.
Findings of Court:
The court found that the construction of labour colonies under a Government-sponsored scheme is a work of public utility and thus a public purpose. Since a substantial portion of the compensation was to be met through public funds in the form of subsidies and loans, the acquisition was not for a company simpliciter.
Issues: Whether the acquisition proceedings were vitiated due to non-compliance with the requirements of Part VII of the Land Acquisition Act when the land was acquired for a company for a public purpose and funded partly by the government.
Ratio Decidendi: The Land Acquisition Act distinguishes between acquisitions for a public purpose (funded by the government) and acquisitions for a company (funded by the company). If an acquisition for a company is for a public purpose and the cost is borne wholly or partly by public funds, it is treated as an acquisition for a public purpose. Consequently, the specific procedural requirements of Part VII, which apply to acquisitions for a company simpliciter where the company bears the entire cost, are not applicable.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether acquisition proceedings for a company are void if the procedure prescribed under Part VII of the Land Acquisition Act is not followed. (Para 3 )
3. The court found the acquisition served a public purpose and was funded partly by public revenues, distinguishing it from acquisitions for companies simpliciter. (Para 4 , 5 , 6 , 7 )
4. Acquisition for a company for a public purpose funded wholly or partly by public revenues does not require compliance with Part VII of the Land Acquisition Act. (Para 8 )
5. Appeal dismissed with costs. (Para 9 )
6. When does Part VII of the Land Acquisition Act apply to acquisitions for a company?
Part VII applies when land is acquired for a company and the compensation is borne entirely by the company itself. (Para 8 )
7. Is the construction of labour colonies under a Government-sponsored Housing Scheme considered a public purpose?
Yes, the construction of labour colonies under a Government-sponsored Housing Scheme is categorized as a work of public utility and constitutes a public purpose. (Para 7 )
8. Does an acquisition for a company require Part VII procedure if public funds are used for compensation?
No, if the acquisition for a company is for a public purpose and the cost of acquisition is met wholly or partly by public funds, the procedure under Part VII is not necessary. (Para 8 )
Judgment
SINHA, C.J.I. : This appeal, by special leave granted on May 29, 1959, is directed against the decision of the Letters Patent Bench (G. D. Khosla, C. J., and Dulat, J.) dated January 28, 1959*, affirming that of the learned single Judge (Bhishan Narain J.) dated February 17, 1958, whereby he dismissed the appellants Writ Petition under Art. 226 of the Constitution.
2. It appears that the appellants are the owners of, what is said to be, agricultural land, measuring about 86 bighas odd, in village Munda Majra, Tehsil Jagadhari, in the district of Ambala. On October 27, 1954, the Additional District Magistrate of Ambala ordered the land aforesaid to be requisitioned under the Punjab Requisitioning and Acquisition of Immoveable Property Act (XI of 1953) for the construction of houses by members of the Thapar Industries Co-operative Housing Society Ltd., Yamuna Nagar. Possession of the land was taken on November 5, 1954. The appellants at once, instituted a suit on November 14, 1954, in the Court of the Subordinate Judge, Jagadhari, challenging the requisition proceedings. The suit was ultimately decreed by the Court on June 21, 1955, and possession of the property in question was restored to the petitioners. On May 27, 1955, the first respondent, i.e.,the State of Punjab, through the Secretary, Labour Department, issued a notification under S. 4 of the Land Acquisition Act (1 of 1894) (which hereinafter will be referred to as the Act). The notification, under S. 4 is in these terms-
"No. 4850-S-LP-55/14144. Whereas it appears to the Governor of Punjab that land in the locality hereunder specified is likely to be needed by the Government for a public purpose, namely, for the construction of a Labour Colony under the Government sponsored Housing Scheme for the Industrial Workers of the Thapar Industrial Workers Co-operative Housing Society Limited, Jamna Nagar (District Ambala), it is hereby notified that the land described in the specifications below is likely to be required for the above purpose.
This notification is made under the provisions of Section 4 read with section 17 of the Land Acquisition Act, 1894, as amended by the Land Acquisition (Punjab Amendment) Act, 1953, to all to whom it may concern and the Collector shall cause public notice of the substance of this notification to be given at convenient places in the said locality;
In exercise of the powers conferred by the aforesaid sections, the Governor of the Punjab is pleased to authorise the President of the above said Society with the members and servants to enter upon and survey any land in the locality and do all other acts required or permitted by that section.
Further in exercise of the powers conferred by sub-section (4) of Section 17 of the said Act the Governor of Punjab is pleased to direct that, on the grounds of urgency, the provisions of Section 5 (a) of the said Act, shall not apply in regard to this Acquisition".
3. Later, the same day, another notification, under S. 6 of the Act, was issued. This notification, under S. 6, states that it appeared to the Governor of Punjab that the land is required to be taken by Government for a public purpose, namely, for the construction of a Labour Colony under the Government sponsored Housing Scheme for the Industrial Workers of the Thapar Industrial Workers Co-operative Housing Society Limited (which is the second respondent in this case). It also says that under the provisions of S. 7 of the Act, the Collector, Ambala, is directed to take order for the acquisition of the land. The Patwari effected delivery of possession of the lands in question to the second respondent on August 21, 1955. Even before the delivery of possession had been effected, the appellants promptly instituted their suit on August 20, 1955, in the Court of the Subordinate Judge Class I, Jagadhari, for a perpetual injunction restraining the second respondent from entering upon or taking possession of the land in question, or making any construc
