Withdrawal of land acquisition by state must adhere to statutory guidelines and cannot be arbitrary or unfounded.

1 Leave granted.

2 Heard learned counsel for both the sides.

3 The appellant is a society registered under the Society Registration Act, 1860. It is running a public school at Mathura in the name of Amar Nath Vidya Ashram. The school is duly recognised by the Central Board of Secondary Education, New Delhi. It is challenging in this appeal the judgment and order passed by the High Court in Civil Misc. Writ Petition No. 16241 of 1992.

4 The appellant wants land adjacent to its school building for the purpose of a playground for its students. The land belongs to respondent No. 5. So it tried to obtain it from respondent No. 5 by offering a price higher than its market value but did not succeed. It, therefore, moved the State Government to acquire that land for it. The Government agreed and issued Notification under S.4 of the Land Acquisition Act on 1-8-1986 notifying its intention to acquire that land for a public purpose namely "playground of students of Amar Nath Vidya Ashram (Public School), Mathura". Thereafter, inquiries under S.5A and under R.4 of the Land Acquisition (Company) Rules, 1963 were made. The Government also entered into an agreement with the appellant as required by S.40(1) of the Act on 11-8-1987. It then issued a Declaration under S.6 on 4-9-1987 mentioning fact that the report made under sub-r.(4) of R.4 of the Land Acquisition (Company) Rules, 1963 was considered by the Government that the Land Acquisition Committee constituted under R.3 of the said Rules was consulted, that the agreement entered between the appellant and the Governor was duly published that the Governor was satisfied that the land mentioned in the schedule is needed for construction of a playground for students of Amar Nath Vidya Ashram (Public School), Mathura by the Amar Nath Ashram Trust, Mathura. This acquisition of land was challenged by the owner by a writ petition filed in the Allahabad High Court. An interim order was passed directing the parties to maintain status quo as regards possession. During the pendency of the said petition on 1-5-1992, the Government denotified the land from acquisition in exercise of its power under S.48 of the Land Acquisition Act . The appellant challenged that Notification by filing a writ petition in the High Court. The petition filed by the appellant and the one filed by the owner were heard together. The petition filed by the owner was dismissed as infructuous and the petition filed by the appellant was dismissed on the ground that the decision of the State Government to withdraw from the acquisition for the reason that the acquisition having been proclaimed as one for a public purpose a part of cost of acquisition was required to be borne by the State and as no such provision was made, it was not likely to be sustained if challenged, cannot be said to be contrary or illegal.

5 Mr. R. F. Nariman, senior advocate, appearing for the appellants, submitted that when acquisition is under Part VII, i.e., when land is acquired for a company and when all the formalities have been completed including execution of an agreement for payment of cost of the acquisition and S.6 notification has also been issued, it is not open to the Government to withdraw from such acquisition without the consent of the company for which the land has been acquired. He submitted that the power vested in the Government to withdraw from acquisition is not absolute and is fettered by implicit restrictions and hence it is justiciable. He further submitted that in this case the State Government decided to withdrawal from the acquisition under a misconception of law that as the acquisition, at the stage of S.4 notification was proclaimed to be for a public purpose, at least a part of the cost of acquisition was required to be borne by the State or was required to be paid out of the public funds or public revenue; and, therefore, the decision taken by it was vitiated and ought to have been quashed by the High Court. On the other hand,