JUDGMENT

1. This appeal is directed against order dated 09.09.1997 by which the Division Bench of the Allahabad High Court dismissed the writ petition filed by the appellant for quashing the acquisition of its land.

2. The appellant purchased the land comprised in Khasra No.262 of village Central Hope Town, Tehsil and District Dehradun by registered sale deed dated 19.10.1984 for setting up an industrial unit. Its name was mutated in the revenue records on 25.01.1985.

3. The Government of Uttar Pradesh issued notification dated 8.5.1985 under Section 4(1) read with Section 17(1) of the Land Acquisition Act, 1894 (for short, 'the Act') for the acquisition of over 250 acres land including the land purchased by the appellant for planned development of industrial area in District Dehradun through the agency of Uttar Pradesh State Industrial Development Corporation (UPSIDC). The declaration under Section 6 was issued on 09.05.1985. Special Land Acquisition Collector, Dehradun passed award dated 22.11.1986. He took cognizance of the fact that industries were existing on some portions of Khasra Nos. 235 to 238 and 262 of which possession had not been taken and observed:

"On the date of possession on dated 17.3.86, the factories Everest Gas Cylinders Pvt.Ltd. and Garg Wollen Pvt. Ltd. were found constructed and in the initial stage of production and located on Khasra Numbers 235, 236, 237, 238 and 262 area respectively 0.56 acre, 0.63 acre, 0.38 acre, 0.65 acre and 3.65 acres; that on the land of Khasra No.262, one tin covered room was found constructed for the Textile Mill of Babu Lal Jain. Since, the time and constructions of the construction of these factories was a matter of dispute on 17.3.86, an area of 5.47 acre was reduced from the total area of 251.38 acres and possession was taken on the reduced area of 245-91 acres and was handed over to the acquiring body. Notices were also issued to the factory owners but they failed to report as to when and in what circumstances, their factories were constructed. It appears that the aforesaid factories were constructed after the issue of Section 4 notification and in that eventuality, the compensation for the construction does not become payable. Because, the construction of the factories would have been done after proper sanction and after taking loans etc.; and more so since heavy machinery has already been installed and the production is in preliminary stage; and since in these proceedings the acquiring body has also the same purpose of developing industrial plots and leasing the same for establishing industrial units, it has been discussed with the acquiring body, such acquired land shall be leased to the owners of the constructed factories, absorb the factories in its regulated area and shall decide the dispute of standing factories by mutual arrangement at its own level. Therefore, after leaving aside the constructed areas, the compensation for the land of the areas 0.56, 0.63, 0.33, 0.25 and 3.65, i.e. total 5.47 acres from Khasra No.235, 236, 237, 238 and 262 respectively, whose possession have not been handed over to the acquiring department yet, will be payable to the land-owners."

(as contained in the paper book)

The appellant challenged the acquisition proceedings in Writ Petition No. 2500/1988. In paragraphs 4 to 6 and 12 to 17 of the writ petition, the appellant averred as under:

“4. That for constructing the said factory and installing machines therein the petitioner had taken a loan of Rs. 21.70 lakhs from U.P. Financial Corporation. The petitioner started the construction of the aforesaid building in the year 1984 with the help of the aforesaid loan.

5. That the Superintending Engineer, Dehradun sanctioned an electrical power connection of 70 horse power to the petitioner on 29.3.1985.

6. That by 26.1.1985 the petitioner had incurred expenses to the tune of Rs. 2,29,888/- as is clear from the report of the Chartered Accountant dated 30-1-1985 a true copy whereof is be