2007 Supreme(SC) 1353

2007(7) Supreme 206
Supreme Court of india
(From Punjab and Haryana High Court)
S.B. Sinha & Harjit Singh Bedi, JJ.
Devinder Singh & Others — Petitioners
versus
State of Punjab & Others — Respondents
Appeal (civil) 4843 of 2007
[Arising out of S.L.P. (Civil) No. 9954 of 2006]
[Arising out of S.L. P. (Civil) No. 10182 of 2006]
Decided on : 12-10-2007

important points
Public purpose does not include acquisition of land for companies.
The L.A. Act contemplates that agricultural lands may not be acquired.
A declaration u/s 6 of the Act is to be made either for a public purpose or for a company, it cannot be for both.
The proper stage of applicability of Rule 4 is Section 6 of the Act and not section 4.
Provisions of a statute even if directory, must be substantially complied with.

Headnote:(a)Land Acquisition Act, 1894 – Section 3(f) – Public purpose does not include acquisition of land for companies – However the Act, being an expropriate legislation, empowers the State to acquire land for purposes other than public purpose – At the same time, the provisions in that behalf must be strictly construed – When the properties of a citizen is being compulsorily acquired by a State in exercise of its power of Eminent Domain, the essential ingredients thereof, namely, existence of a public purpose and payment of compensation are principal requisites therefor – In the case of acquisition of land for a private company, existence of a public purpose being not a requisite criteria, other statutory requirements call for strict compliance, being imperative in character.(Paras 11, 12 and 41)

       (2005) 7 SCC 627; 2007 (8) SCALE 110 – Relied upon.

       (b)Land Acquisition Act, 1894 – Part II and Part VII – Procedures for acquisition of land for a wing of the Government for public purpose are laid down in Part II; whereas the procedures for acquisition at the instance of a company not for public purpose and expenses are not to be borne by State, even in part, are laid down in Part VII – In the latter case, provisions of section 40(1)(a) and 44B shall apply.(Para 15)

       (c)Land Acquisition (Companies) Rules, 1963 – Rule 4 (1) – Applies where acquisition of land is to be made for the company envisaged under Part VII of the Act – Before proceeding with the acquisition of land the State must form an opinion that the lands which are going to be acquired are not good agricultural lands – This is more or less a statutory policy and question of ignoring the same by the State does not arise – Lands in dispute being ‘Shahi’ lands which are indisputably agricultural lands – The Act contemplates that such lands may not be acquired.(Paras 16, 17 and 48)

       (1985) 3 SCC 1 – Relied upon.

       (d)Words and Phrases – Public purpose – Definition of ‘public purpose’ as contained in Section 3(f) of the Act is an inclusive one, therefore, the said definition need not be kept confined to the matters referred to therein – In a case of acquisition for a public company, public purpose is not to be assumed and the point of distinction between acquisition of lands under Part II and Part VII would be the source of funds to cover the cost of acquisition.(Paras 19, 22)

       AIR 1959 SC 781; (2003) 10 SCC 626 – Relied upon.

       (e)Land Acquisition Act, 1894 – Section 6(3) – Conclusive nature of the declaration – well-settled that where an action taken is without jurisdiction, even an order which is conclusive may be subject to judicial review – An order if passed without jurisdiction amounts to colourable exercise of power.(Paras 29 and 32)

       (1969) 2 All ER 274; (1962) Supp 2 SCR 149 – Relied upon.

       AIR 1963 SC 151: 1963 (2) SCR 774 – Distinguished.

       (f)Land Acquisition Act, 1894 – Part II and Part VII – State now asserting the acquisition to be under Part II and High Court’s reliance in its judgment on the proposition that once the Government had contributed any sum towards the cost of the acquisition of land, it was not necessary for the Government to proceed under Part VII of the Act do not go hand in hand – The agreement provides for payment of entire compensation by the company – Therefore State had not formed any opinion with regard to making any contribution at least till the agreement was executed – Still the purported contribution had been made after the writ petitions were filed without explaining the need, logic or rationale thereof.(Paras 34 and 35)

       (g)Land Acquisition Act, 1894 – Part VII – Once the appropriate Government arrives at a decision that the land sought to be acquired is needed for a public purpose covered under Part II, the court would not go behind it – But when an acquisition is made under Part VII, the conditions precedents therefor as contained in the Companies Rules must be satisfied – Ignorance of these would make the acquisition liable to be struck down.(Para 36)

       (h)Land Acquisition Act, 1894 – Section 6 – The State was not only obligated to issue a notification clearly stating as to whether the acquisition is for a public purpose or for the company – A declaration is to be made either for a public purpose or for a company, it cannot be for both.(Paras 38 and 39)

       1964 (6) SCR 636 – Relied upon.

       (i)Land Acquisition (Companies) Rules, 1963 – Rule 4 – Use of the word “shall” not once but twice makes it ordinarily imperative – In view of the Act being an expropriatory legislation, there is no reason as to why it should be held directory.(Para 43)

       AIR 1975 SC 629; (1981) 2 SCC 352; (1985) 2 SCC 152 – Relied upon.

       (j)Land Acquisition (Companies) Rules, 1963 – Rule 4 – The proper stage of applicability of Rule 4 is Section 6 of the Act and not section 4.(Para 50)

       1968 (1) SCR 597; (1994) 4 SCC 675 – Relied upon.

       AIR 1963 SC 151: 1963 (2) SCR 774 – Distinguished.

       (k)Land Acquisition (Companies) Rules, 1963 – Rule 4 – A provision of a statute is either mandatory or directory; and even if it is directory, it should be substantially complied with – It cannot be ignored in its entirety only because the provision is held to be directory and not imperative – Unless the provisions of rule 4 are complied with, jurisdiction under Part VII of the Act cannot be exercised – Impugned judgment cannot be sustained.(Paras 53 and 54)

       Facts of the case:

       Appellants herein are owners of various tracts of agricultural lands situated in Village Chak Gujran, Tehsil and District Hoshiarpur in the State of Punjab. Respondent No. 5, M/s International Tractors Limited, is a Company incorporated under the Companies Act, 1956. It intended to set up a project named ‘Ganesha Project’. It requested the State to acquire lands in question in terms of the provisions of the Land Acquisition Act, 1894. A notification was issued by the State purported to be under Section 4 of the Act.

       The appellants filed their objections in terms of Section 5A of the Act.

       A declaration was issued in terms of Section 6 of the Act and an agreement was entered into by and between the Company and the State on 27.02.2003.

       During the pendency of the said writ petitions, notices in terms of Section 9 of the Act were issued on 31.05.2004. An award was made on 18.02.2005. Allegedly, during the pendency of the said writ petitions, a sum of Rs.100/- was deposited by the State as a token amount for acquisition of the said lands in question. The writ was dismissed.

       Findings of the Court:

       Provisions of rule 4 having not been complied with, exercise of jurisdiction under Part VII of the Act cannot be sustained.

       Result : Appeal allowed.