JUDGMENT

N. P. SINGH, J.:—Leave granted.

2. The appellant is a House Building Co-operative Society of the employees of H.M.T. Limited, a Government Company (hereinafter referred to as the Society). The Society was registered for the purpose of acquiring land by purchase, mortgage, lease exchange, gift or otherwise, and to develop the same by construction of roads, drains, parks, play grounds, schools, hospitals, water works, post-office and other amenities, required for a residential housing colony. The Society has been registered under the provisions of Karnataka Co-operative Societies Act.

3. The Society submitted its housing scheme to the State Government on 19-9-1984, for the purpose of acquisition of lands situated at Thindlu and Chikkabettahalli, for 1001 members of the Society. It is the case of the appellant that the Government being fully satisfied with the scheme submitted by the appellant, approved the same by an order dated 7-11-1984 and accorded approval for initiation of acquisition proceeding for the lands. On 17-3-1988 the Society entered into an agreement with the State Government agreeing to the conditions for acquisition, as required by Section 39 and 40 of Part-VII of the Land Acquisition Act (hereinafter referred to as the Act). But on 12-7-1988 a notification under Section 4(1) of the Act was issued proposing to acquire lands for the Society to the extent of 133.33 acres in the aforesaid two villages, saying it was needed for public purpose.

4. The writ petitioners-respondents questioned the validity of the aforesaid notification under Section 4(1) of the Act on several grounds including that the acquisition itself was not for public purpose. During the pendency of the writ application on 11-8-1989 the State Government issued declaration under Section 6(1) of the Act in respect of 99.01 acres of lands in the aforesaid two villages for the appellants Society. On 19-3-1991 awards were made in respect of the aforesaid lands. However, on 18-6-1991 the High Court allowed the writ application and quashed all steps taken in connection with acquisition thereof. According to the High Court, the acquisition was not for allotment to the bona fide members of the Society and as the Society had indulged in commercial venture for sales of sites, the acquisition of the lands under the provision of the Act was a colourable exercise of the power. The High Court was also of the opinion that procedure adopted by the State Government for acquisition of lands for the Society was likely to defeat the schemes under Bangalore Development Authority Act.

5. From the facts of the present case, it appears that on 19-9-1984 the appellant society submitted the housing scheme to the State Government. On 1-2-1985 the appellant society entered into an agreement with M/s. S. R. Constructions, respondent No.1 in which the appellant society was described as First party and M/s. S. R. Constructions as Second party. The relevant parts whereof are as follows :-

"2. WHEREAS THE FIRST PARTY is a registered Housing Building Co-operative Society under the Karnataka Co-operative Societies Act, its main object being to procure lands around Bangalore and forming layouts and sites to cater to the needs of its members by allotting sites for purposes of construction of dwelling houses on the sites and the Second Party is an Architects, Engineers, Builders and Layout Contractors.

3. AND WHEREAS THE SECOND PARTY approached the First Party and offered to assist the First Party to secure lands in Thindlu and Chikkabettahally villages to the extent of 80 Acres approximately as specified in the Annexures to this Agreement and to get the lands acquired in favour of the First Party and further offered to take up the work of layout and formation of sites so formed through the B.D.A. and/or from any other competent authority.

4. AND WHEREAS at on a representation from the FIRST PARTY the SECOND PARTY with his efforts has secured directions from Revenue Secretary, Governm