2016 Supreme(SC) 674

SUPREME COURT OF INDIA
V. GOPALA GOWDA, ARUN MISHRA, JJ.
KEDAR NATH YADAV – APPELLANT
VERSUS
STATE OF WEST BENGAL & ORS. – RESPONDENTS
Civil Appeal No. 8438 of 2016 (Arising out of SLP (C) No. 8463 of 2008) With Civil Appeal No. 8440 of 2016 (Arising Out of SLP(C) No. 10731 of 2008), Civil Appeal No. 8441 of 2016 (Arising Out of SLP(C) No. 11783 of 2008), Civil Appeal No. 8444 of 2016 (Arising Out of SLP(C) No. 11830 of 2008), Civil Appeal No. 8446 of 2016 (Arising Out of SLP(C) No. 12360 of 2008), Civil Appeal No. 8447 of 2016 (Arising Out of SLP(C) No. 12724 of 2008), Civil Appeal No. 8453 of 2016 Arising Out of SLP(C)no. 25580 of 2016 (Arising Out of SLP(C) ....Cc No. 13645 of 2008 And, Civil Appeal No.8449 of 2016 (Arising Out of SLP(C) No. 22491 of 2008)
Decided On : 31-08-2016

IMPORTANT POINTS
Land can be acquired either for a company, or for a public purpose, but not for both.
Section 4 is of exploratory character. It does not proprio motu result in acquisition and does not require land to be defined or identified but requires locality to be stated so as to file objection u/s 5.
Right to object to acquisition proceeding is a valuable right u/s 5A. Objections have to be considered objectively.
Explanation cannot extend the scope of the proviso.
State can change its stand if earlier action was illegal or suffered from legal malafides or colourable exercise of power.
Court is not bound by affidavits filed by parties.
If acquisition is for public purpose at public expense, Part II will apply. If State views the acquisition not for public purpose and does not bear the cost of acquisition, Part VII will apply.
Doctrine of binding precedent has the merit of promoting certainty and consistency in judicial decisions.
Requirement of section 9 is not mandatory, but the procedure should be followed.
Compliance with Rule 4 of the Land Acquisition (Companies) Rules, 1963 is mandatory.

Headnote:Per V. Gopala Gowda, J.

       (a) Land Acquisition Act, 1894 – Section 39 – Acquisition of land for company – Prior approval of Government and agreement with the company – Mandatory – Land can be acquired either for a company, or for a public purpose, but not for both – Instantly, required agreement not published. (Para 15)

       (2008) 1 SCC 728; (1998) 1 SCC 591 – Relied upon

       (b) Land Acquisition Act, 1894 – Sections 4 and 6 – Public purpose – Instantly acquisition made for TML – Mere mention of public purpose in the notifications, does not in fact make the acquisition one for a public purpose – To make the acquisition one for public purpose, it must be directly useful to the public, and the benefit must not be merely incidental in nature. (Para 16)

       AIR 1962 SC 764 – Relied upon

       (c) General Clauses Act, 1897 – Section 3(31) – Local authority – Definition same as in Acts of 1868 and 1887 – Shall hold good for construing the expression "local authority" occurring in the Land Acquisition Act, 1894 – Interpretation – The entity should be an ‘authority’ legally entitled to or entrusted by the Government with control or management of a local fund – WBIDC not a local authority – Hence instant acquisition is for a company, TML. (Para 17)

       AIR 1963 SC 1890; (1996) 8 SCC 758 – Relied upon

       (2005) 6 SCC 745

       (d) Land Acquisition Act, 1894 – Section 6, Proviso, Explanation 2 – Explanation cannot extend the scope of the proviso – Even where the acquisition of land is for a corporation, provisions of Part VII of the L.A. Act must be complied with. (Para 18, 19)

       (1985) 1 SCC 591; (2011) 10 SCC 608 – Relied upon

       AIR 1994 MP 74; 2010 Supp All. L.J. 1 – Cited with approval

       (1961) 2 SCR 459 : AIR (1961) SC 343; (2003) 10 SCC 626 – Distinguished

       (e) Land Acquisition (Companies) Rules, 1963 – Rule 4 – Mandatory – Its compliance precedes the notification under Section 4 as well as compliance of Section 6 of the Act. (Para 21)

       (2008) 1 SCC 728 – Relied upon

       (f) Land Acquisition Act, 1894 – Section 3(f) – By infusing public revenue cannot make acquisition of land in favour of a company one for public purpose. (Para 30)

       (1961) 2 SCR 459: AIR 1961 SC 343; (1963) 2 SCR 774; (1971) 1 SCC 671; (1975) 4 SCC 285 – Distinguished

       (g) Land Acquisition Act, 1894 – Section 5-A(2) – Objections disposed in mechanical manner – No application of mind – Not valid. (Para 31)

       (2012) 1 SCC 792; (2013) 1 SCC 403 – Relied upon

       (h) Administration of justice – Judicial propriety – Rule of law cannot be sacrificed for furthering political agenda – Does not mean that State cannot change its stand in any circumstances – Change of stand permissible if earlier action illegal or suffering from legal malafides or colourable exercise of power. (Para 47)

       (i) Constitution of India – Article 136 – Court not bound by affidavits filed by parties – Free to examine material on record in order to determine whether the action of the previous state government was in accordance with law or not so as to permit change of stand by the State. (Para 48)

       (1980) 3 SCC 141 – Relied upon

       (j) Land Acquisition Act, 1894 – Section 3(f) (iii), 4 and 6 – WBIDC not making any requisition to Government for acquisition of land – Acquisition not for fulfillment of some scheme of the Corporation or the State Government – Acquisition not attracting section 3(f) (iii), (iv) or (vi) – State Government not depositing public money towards the cost of acquisition of land to initiate the acquisition proceedings, essential requirement for acquisition for public purpose – WBIDC, not a local authority, raising funds and depositing with State government – Requirement of section 6 not satisfied – Instant acquisition not for `public purpose'. (Para 55, 56, 57, 59)

       (2013) 4 SCC 210; (2008) 1 SCC 728 – Relied upon

       (1961) 2 SCR 459 : AIR (1961) SC 343, (1963) 2 SCR 774, (1971) 1 SCC 671; (1975) 4 SCC 285; (2003) 10 SCC 626 – Distinguished

       (k) Land Acquisition Act, 1894 – Section 3(f)(viii) – Land acquisition for Company no longer covered under `public purpose' – Compliance of Part VII mandatory. (Para 58)

       (l) Legal mala fide – Instant acquisition for a company – Procedures u/s 39, 40 and 41 of Part VII of Land Acquisition Act, 1894 not followed – Acquisition sought to be guised as one for `public purpose' under Sections 3(f) (iii), (iv) and (vii) – Improper – Amounts to legal mala fides and colourable exercise of power – Liable to be quashed. (Para 65)

       (1980) 2 SCC 471 : AIR 1980 SC 318; AIR 1964 SC 72; (1999) 3 SCC 422 – Relied upon

       (m) Land Acquisition Act, 1894 – Section 5-A (2) – Notices issued to individual objectors but nor served individually – Notices published in news papers and announced through loudspeakers – Land owners/cultivators could not appear before Land Acquisition Collector – Even in absence of Land owners/cultivators LA Collector ought to consider the objections objectively – LA Collector rejecting the objections without assigning any reason – LA Collector’s report not a valid report in the eyes of law – State government accepting the same mechanically – Not tenable. (Para 68, 70, 71)

       (1975) 4 SCC 298; (2009) 10 SCC 115 – Relied upon

       (n) Land Acquisition Act, 1894 – Section 9 – Issue of notice to land owners after notification u/s 6 for determining market value of the acquired land and awarding compensation – Mandatory for taking possession of the land – Not followed – Previous approval of appropriate government for award not taken – Supplementary awards also passed – Proceedings vitiated. (Para 72, 73, 74)

       Per Arun Mishra, J.

       (o) Land Acquisition Act, 1894 – Section 3(f), 39 and 41 – Acquisition for a company not a public purpose – Acquisition for a corporation owned or controlled by the State would be covered by section 3(f)(iv) – Previous consent of the appropriate Government and execution of agreement necessary for acquiring land for a company – Further, cost of acquisition has to be borne by the company – On the other hand acquisition would be for public purpose if cost of acquisition is borne wholly or partly by the Government – Source of funds to cover the cost of acquisition is the distinguishing feature – Instantly WBIDC, a Government Corporation, bearing cost of acquisition – Compensation paid by it would be out of public revenue – Land acquired for Corporation vests in the Corporation though leased out to a company – Acquisition of land for attracting investment, creating job opportunities and development of the State permissible for public purpose – Welfare State – Eminent domain. (Para 77, 78, 79, 80, 88, 89, 92, 93)

       AIR 1963 SC 151; (1971) 1 SCC 671; (1977) 1 SCC 133; (1966) 3 SCR 885; (2008) 9 SCC 552; (1983) 1 SCC 228; (2010) 10 SCC 282; (1998) 1 SCC 591; (2003) 10 SCC 626 – Relied upon

       67 L Ed 1186 : 262 US 700 (1922); 270 NYP 333 : 105 ALR 905; 291 NY 320; 99 L Ed 27 : 348 US 26; 81 L Ed 2d 186 : 467 US 229 (1984); 162 L Ed 439 : 545 US 469; AIR 1951 SC 41 : 1950 SCR 869; AIR 1968 SC 394 : (1968) 1 SCR 561; (1988) 3 SCC 263; (1996) 10 SCC 150; (2003) 3 SCC 128; AIR 1914 PC 20; AIR 1925 Mad 837; AIR 1952 SC 252; AIR 1955 SC 810; AIR 1956 SC 294; AIR 1955 SC 41; AIR 1966 SC 1788; (1981) 1 SCC 166; (2007) 1 SCC 641; (1977) 4 SCC 471; (2008) 9 SCC 552; AIR 1961 SC 343; AIR 1960 SC 1203; (1962) Supp. 2 SCR 149; (1963) 2 SCR 774; (1975) 1 SCC 824; (1975) 4 SCC 285; (1978) 2 SCC 373; (1983) 4 SCC 553; (1994) 4 SCC 675; (2005) 6 SCC 745; (1995) 2 SCC 442; AIR 1964 SC 1230; (1980) 2 SCC 471; AIR 1967 SC 1081; AIR 1962 SC 764 – Referred

       (p) Land Acquisition Act, 1894 – Part II and Part VII – Acquisition for public purpose at public expense – Part II will apply – If State views the acquisition not for public purpose and does not bear the cost of acquisition, Part VII will apply – Instantly WBIDC involved right from the beginning as the acquiring authority and involved in identification of the land and submitting reports to Government – Acquired land was to vest in WBIDC and it paid the compensation – Apparently acquisition was for WBIDC – Therefore procedure adopted under Part II not impermissible. (Para 94, 96, 98, 99)

       (2008) 1 SCC 728; (2009) 5 SCC 242; (2010) 10 SCC 282 – Relied upon

       AIR 1965 SC 427; (1994) 4 SCC 675; 1960 SC 1203; AIR 1961 SC 343; AIR 1962 SC 764; AIR 1961 GUJ 93; (1975) 4 SCC 285; (1996) 10 SCC 721; (1996) 7 SCC 302; (1997) 6 SCC 207; (2006) 4 SCC 683 – Referred

       (q) Administration of justice – Stare decisis – Binding precedent – Law declared by Supreme Court should be certain, clear and consistent – Doctrine of binding precedent has the merit of promoting certainty and consistency in judicial decisions – A judgment operating as stare decisis should not be unsettled – A decision is binding on co-ordinate Bench. (Para 101)

       (1981) 2 SCC 362; (1989) 2 SCC 754; (1990) 4 SCC 207; (1999) 4 SCC 11; (2005) 2 SCC 673; (2011) 2 SCC 132; (2011) 12 SCC 615; (1989) 2 SCC 754; (1990) 4 SCC 453; (2010) 6 SCC 384; AIR 1965 SC 1636 – Relied upon

       (r) Land Acquisition Act, 1894 – Section 4 – Of exploratory character – Does not proprio motu result in acquisition – Does not require land to be defined or identified but requires locality to be stated so as to file objection under section 5 – Instantly, notification u/s 4 defining the lands to be acquired – A pre-determined decision. (Para 105)

       (s) Land Acquisition Act, 1894 – Section 5A – Objections to acquisition proceedings – A valuable right, but individual notices not contemplated – Objections should be considered objectively – Instantly not done at any stage – Inquiry and report u/s 5 influenced by pre-determined Cabinet decision – Inquiry farce and an eyewash – Proceedings vitiated – Project having been abandoned, the case need not be relegated to the stage of inquiry. (Para 105, 113, 114)

       (2012) 1 SCC 792; (2013) 1 SCC 403; (2013) 16 SCC 660; (2013) 4 SCC 210; (2015) 3 SCC 341; (2014) 3 SCC 203; (2013) 11 SCC 228 – Relied upon

       (2012) 2 SCC 25; (2012) 1 SCC 792; (2014) 3 SCC 203; (2013) 8 SCC 99; (2005) 7 SCC 627 – Referred

       (t) Land Acquisition Act, 1894 – Section 9(1) – Determination of compensation and taking possession – Individual notices are required – Requirement not mandatory, but procedure not followed. (Para 116)

       (u) Constitution of India – Articles 226, 32 – Determination of proper compensation cannot be considered in writ jurisdiction. (Para 117)

       Facts of the case:

       The State of West Bengal formulated an industrial policy to establish automobile industries in the State to cater to the needs of the people and to solve the problem of unemployment in the State. In pursuance of the same, the respondent, Tata Motors Ltd. ("TML"), entered into discussions with the State Government of West Bengal regarding the infrastructural needs of the project.

       The project was looking at a direct investment worth Rs. 650 crores in the plant and machinery and the IT infrastructure by TML, a direct investment by the company in factory building including utilities such as roads, water line, sewage line, power lines drainage and effluent treatment plants etc. to the tune of Rs. 176 crores, a direct investment by TML in a township of approximately 2000 dwelling units of an average area of 1000/- sq. ft. per dwelling unit with complete municipal facilities such as roads, power line, water line, drainage, parks and other municipal facilities at Rs. 150 crores. The record note further mentions an indirect investment by vendors in the vendor park in plant and machinery valued at Rs. 200 crores and a further indirect investment by vendors in factory building including facilities such as roads, power line, water line, drainage, sewage and other municipal facilities amounting to Rs. 90 crores. The employment potential of this project was assessed at 1,800 employees in direct employment by TML and a further 4,700 employees through vendors and service providers.

       The State Government offered following package:

       “1.The State Government will develop the land admeasuring approx. 600 acres and lease it to TML for its own factories as well as for sub-leasing to the vendors for vendor park needed for the project. The entire land will be leased to TML for 30 years at an annual lease rental of Rs. 10 lakhs. This lease can be renewed for further blocks of 30 years at a negotiated lease rental at the option of TML. On each renewal, the lease rental would not be increased by more than 5 times of the lease rental existing on the date of renewal.

       2.The State Government would develop the land and construct the factory building including the facilities such as roads, power line, water line, drainage, sewage, effluent treatment plant, other utilities e.g. Air compressors, standby generators and LPG storage yard, etc. and lease it to the TML at an annual lease rental of Rs. 90 lakhs per annum for 30 years renewable at the option of TML for further blocks of 30 years. At each renewal the lease rental will be negotiated. However, the increase in rental will not be more than 500% at any renewal compared to the rental existing on the date of renewal.

       3.The State Government will construct an integrated township of approximately 2000 dwelling units of an average area of 1000 sq. ft. per dwelling unit, including the facilities such as roads, power line, water line, drainage, sewage, effluent treatment plants, parks, schools, training institutes, shopping complex, etc. and lease it to TML on lease for 30 years on annual lease rental of Rs. 25 lakhs. This lease can be renewed in future at the option of TML for further blocks of 30 years and the increase in lease rental at each renewal would not be more than 5 times the lease rental existing on the date of renewal.

       The township is estimated to cost Rs. 150 crores."

       Proposal approved by the Chief Minister was for acquisition of land comprising of 1053 acres for the Small Car Project of TML and 200 acres of land to cater to the housing and social infrastructure needs of the project.

       The notification under Section 4 (1) of the Land Acquisition Act, 1894 was published in the Calcutta Gazette Extraordinary dated 21.07.2006.

       The Land Acquisition Collector, after disposing objections u/s 5A, subsequently made award of compensation on 25.09.2006. WBIDC then took possession of the land in question, the extent of which was 997 acres. By its letter dated 20.12.2006, WBIDC asked TML to take "permissive possession of 950 acres of land pending finalization of the lease deed and lease terms and conditions." The formal lease deed was executed on 15.03.2007.

       Subsequently, the acquisition proceedings were challenged before the High Court of Calcutta by way of Writ Petitions. By common judgment and order dated 18.01.2008, a Division Bench of the Calcutta High Court, dismissed the Writ Petitions, and upheld the acquisition of land, holding the same to be in the interest of the public and for public purpose. The same was challenged by way of Special Leave Petition before Supreme Court being SLP (Civil) No. 8463 of 2008 and other connected SLPs.

       Even as the above said cases were pending before Supreme Court, the State Government of West Bengal and TML went ahead with the development of the land and setting up of the factory for the `Small Car Project'.

       It was, however, at around that time that the local population started protesting against the acquisition of the land and setting up of the factory. Numerous incidents of blockade, protests and violence were reported in the print and electronic media.

       By letter dated 10.11.2008 addressed to the Director General of Police, West Bengal, TML informed that it is suspending operations as the circumstances were no longer conducive for them to work in a peaceful manner. TML started removing the equipments, machines and other materials from the site from 10.11.2008 onwards. The said plant was then relocated to the State of Gujarat.

       The new Government of West Bengal enacted a legislation on 20.06.2011 titled the `Singur Land Rehabilitation and Development Act, 2011' for taking over the land covered by the lease granted in favour of TML.

       TML challenged the constitutional validity of the said Act by way of Writ Petition before a single Judge of the Calcutta High Court. By judgment and order dated 28.09.2011 the learned single Judge upheld the validity of the said Act. The correctness of the said decision was challenged by way of appeals before a Division Bench of the High Court. By its common judgment and order dated 22.06.2012, the Division Bench allowed the appeals and struck down Sections 2, 4(3), 5 and 6 of the Singur Act, 2011 as unconstitutional as they were in direct conflict with the provisions of the L.A. Act and hence, repugnant to the said Act. It was further held that the entire Singur Act, 2011 itself is void and unconstitutional as the same had not received assent from the President of India.

       By way of order dated 11.05.2016, Supreme Court de-tagged the appeals arising out of SLP (C) No. 23843 of 2012, SLP (C) No. 24269 of 2012 and SLP (C) No. 1881-1911 of 2013, as they deal with the constitutional validity of the Singur Act, 2011.

       The scope of the present appeals is only restricted to deciding the validity of the acquisition of land and the compensation awarded thereafter in favour of the land losers.

       Finding of the Court:

       The acquisition proceedings need to be quashed.

       Result: Appeals allowed