PETITIONER: AMARNATH ASHRAM TRUST SOCIETY AND ANR. Vs. RESPONDENT: THE GOVERNOR OF UTTAR PRADESH & ORS. DATE OF JUDGMENT: 03/12/1997 BENCH: G.T. NANAVATI, G.B. PATTANAIK ACT: HEADNOTE: JUDGMENT:
THE 3RD DAY OF DECEMBER, 1997
Present:
Hon’ble Mr. Justice G.T. Nanavati
Hon’ble Mr. Justice G.B.Pattanaik
R.F. Rohtagi, Sr.Adv., R.B.Misra and E.C. Agarwala, Advs.
with him for the Respondents.
J U D G M E N T
The following Judgment of the court was delivered:
WITH
WRIT PETITION @ NO. 716 OF 1996
NANAVATI, J.
Leave granted.
Heard learned counsel for both the sides.
The appellant is a society registered under the Society
Registration Act, 1860. It is running a public school at
Mathura in the name if 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.
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 section 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 section 5-A and under
Rule 4 of the Land Acquisition (Company) Rules, 1963 were
made. The Government also entered into an agreement with
the appellant as required by section 40(1) of the Act on
11.8.1987. it then issued a Declaration under section on
4.9.1987 mentioning fact that the report made under sub-rule
(4) of Rule 4 of the Land Acquisition (Company) Rules, 1964
was considered by the Government that the Land Acquisition
Committee constituted under Rule 3 of the said Rules was
consulted, that the agreement entered between the appellant
and the Governor was duly published that 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 section 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 Sate Government to withdraw from the acquisition for the
reason that the acquisition having been proclaimed as one
for a public purpose a par 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.
Mr. R.F. Nariman, senior advocate, appearing for the
appellants, submitted that when acquisition is under part
VII, i.e, when loan is acquired for a company and when all
the formalities have been completed including execution of
an agreement fro payment of cost of the acquisition and
Section 6 notification has also been issued, it sis 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 withdraw from the acquisition
under a misconception of law that as the acquisition at the
stage of section 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,
the learned counsel appearing for the State of Uttar Pradesh
submitted that the State is under no obligation to give any
reason for withdrawing from the acquisition and when it is
shown that the power was exercised bona fide it is not open
to the Court to invalidate such an action even if the reason
given by the State is found to be erroneous. he submitted
that section 48 contains no words of limitation as regards
the exercise of power and the only limitation put upon the
power of the State Government is that it can excise that
power till possession of the land sought to be acquired is
taken and not thereafter. he also submitted that if as a
result of withdrawal from acquisition any damage is suffered
by any party then be can be paid damages for the loss caused
to him, and that there is one more reason why the decision
of Government to withdraw from acquisition cannot be
interfered with by the court of law.
It is now well established that if the cost of
acquisition is borne either wholly or partly by the
Government, the acquisition can be said to be for a public
purpose within the meaning of the Act. But if the cost is
entirely borne by the company then it is an acquisition for
a company under part VII pf the Act. It was so held by this
Court in Pandit Jhandu Lal vs. The State of Punjab (1961
(2) SCR 459). This decision was relied upon by the learned
counsel for the State to support his contentions but it is
difficult to appreciate how it supports him. it is held in
that case it is not correct to say that no acquisition for a
company for a public purpose can be made except under part
VII of the Act. In that case a part of the cost was to be
borne by the Government and, therefore, it was held that it
was not necessary to comply with the provisions of part VII
of the Act. Admittedly, in the present case the entire cost
of acquisition is to be borne by the appellant society and,
therefore, it is an acquisitions for a company and not for a
public purpose. That is also born out by the notification
issued under section 6 of the Act which stated “that the
land mentioned in the schedule below is needed for the
construction of play-ground for students of Amar Nath Vidya
Ashram (public school), Mathura in district Mathura by the
Amar Nath Ashram Trust, Mathura” Therefore, simply because
in the notification issued under section 4 of the Act it was
stated that the land was needed for a public purpose,
namely, for a play-ground for students of Amar Nath Vidya
Ashram (public school), Mathura, it cannot be said that the
acquisition is for a public purpose and not under Chapter
VII for the appellant-society in view of subsequent events
and the declaration made under Section 6. The learned
counsel for the State also relied upon the decision of this
Court in Srinivasa Cooperative House Building Society Ltd.
Vs. Madam Gurumurthy Sastry (1994 (4) SCC 675), wherein this
court has held that though there is “no provision in the Act
to say that when a land is required for a company, it may
also be for a public purpose. However, the even acquisition
for a company, unless utilisation of the land so acquisition
for a company, unless utilisation of the land so acquired is
integrally connected with public use, resort to the
compulsory acquisition under Chapter VII cannot be had”. it
was submitted on the basis of this observation that even in
case of an acquisition for a company an element of public
purpose has to be there and if for that reason it was
believed by the Government that it was necessary for it to
make substantial contribution from public revenue so as to
avoid the charge of colorable exercise of powers, the
decision of the Government to withdraw from the acquisition
cannot be said to be arbitrary or illegal. The aforesaid
observation was made by this Court in the context of
requirement of Section 40 of the Act and they cannot be
construed to mean that no land cannot be acquired by the
State Government without making substantial contribution
towards the cost of acquisition. We cannot read something
more in the said observation than what they were intended to
convey. The provisions of part VII and particularly the
provisions regarding payment of the entire costs f the
acquisition would otherwise become redundant.
As the acquisition in this case was for the appellant-
society which is running a school, it was an acquisition for
a company and as disclosed by the agreement the entire cost
of the acquisition was to be borne by the appellant-society.
The declaration made under section 6 clearly referred to the
inquiry made under rule 4 of the Land Acquisition
(Companies) Rules, 1963 and the agreement entered into
between the appellant-society and the state. Moreover, it
was not pleaded by the State before the High Court that the
acquisition in this case was for a public purpose and not
under Chapter VII of the Act. Therefore, it is really not
open to the counsel for the State to raise a contention
which is contrary to the case, pleaded before the High
Court, it was stated on behalf of the State that the
acquisition was for a registered society and as such it was
covered within the meaning of Company as defined by section
3(E)(ii) of the Land Acquisition Act and that the purpose of
acquisition was covered under section 40(I)(b) of the Act
because acquisition for play-ground of students of a school
is a purpose which is likely to prove useful to the public.
On the question of giving reasons the learned counsel
of the State heavily relied upon the decision of this Court
in Special Land Acquisition Officer, Bombay vs. Godrej and
Boyce (1988 (1) SCR 590). In that case this Court examined
the nature and extent of the power of the Government to
withdraw from acquisition after issuance of notification
under section 4 of the Act. In that case the Sate
Government had passed an order under section 48 of the
act withdrawing the lands of Godrej and Boyce from
acquisition. The owner the thereupon challenged the
withdrawal order as mala fide and prayed for quashing of the
same. The writ petition was allowed by a single Judge of
the High Court and his decision was affirmed by a Division
Bench. In an appeal filed by the state this Court held that
under the scheme of the Act neither the notification under
section 4 not the declaration under section 6, not the
notice under section 9 is sufficient to divest the original
owner of, or other person interested in, the land of his
rights therein. Section 16 makes it clear beyond doubt that
the title of the land vests in the Government only when
possession is taken by the Government and till that point of
time, the land continues to be with the original owner and
he is also free to deal with the land just as he likes. So
long as the possession is not taken over, the mere fact of a
notification issued under section 4 or a declaration under
section 6, does not divest the owner of his rights in the
land just as he likes. So long as the possession is not
taken over, the mere fact of a notification issued under
section 4 or a declaration under section 6, does not divest
the owner of his rights in the land to take care of its and
conger on the State Government any right whatsoever to
interfere with the ownership of the land or safeguard the
interests of the owner. Section 48 gives liberty to the
State Government to withdraw from the acquisition at any
stage before the possession of the land is taken by it. By
such withdrawal, no irreparable prejudice is caused to the
owner of the land and, if at all the owner has suffered any
damage in consequence of the acquisition proceedings or
incurred costs in relation thereto, he will be compensated
therefore under section 48(2) of the Act. This Court
further observed that the State can be permitted to exercise
its power to withdraw unilaterally. It further observed that
having regard to the scheme of the Act it is difficult to
see why the state Government should at all be compelled to
give any cogent reasons for its decision not to go ahead
with the acquisition of any land. it is well settled in the
field of specific performance of contracts that no person
will be compelled to acquire any land, as breach of contract
can always be compensated for by damages. That is also the
principle of section 48(2) of the Act. In that case the
Court found that the withdrawal was bona fide and was
justified in view of the facts and circumstances of the
case. That was a case where the decision of the Government
to withdraw from acquisition was challenged by the owner of
the land on the ground that the withdrawal was mala fide and
it was bad because no show cause notice was served to the
company before the withdrawal order was passed. It was in
that context that this Court made the above quoted
observations. That was not a case where proceedings were
initiated to acquire land for a company under part VII of
the Act. Therefore, it is not an authority laying down the
proposition that in all cases where power is exercised under
section 48 of the Act it is open to the State Government to
act unilaterally and that it can withdraw from acquisition
without giving any reason or for any reason whatsoever.
In an acquisition under part VII of the Act, position
of the company or the body for which the land is acquired is
quire different from that of the owner of the land. As a
result of withdrawal from the acquisition whereas the owner
of land is ordinarily not likely to suffer any prejudice or
irreparable loss, the company for whose benefit the land was
to be acquire, may suffer substantial loss.
However, it is not necessary to go into this larger
question whether in such a case the state Government can
withdraw from acquisition without the consent of the company
as the justification given by the Government is otherwise
not sustainable. As stated earlier the reason given by the
Government for withdrawing from the acquisition is that as
no part of the cost of acquisition was to be born by the
Government the acquisition could not have been sustained as
for a public purpose. We have already pointed out that in
this case the acquisition was not for a public purpose but
it was an acquisition for a company under Chapter VII of the
Act. In respect of an acquisition for a company under
Chapter VII of the Act law does not require that the State
should also bear some cost of the acquisition to make it an
acquisition for public use. Thus the decision of the
Government to withdraw from acquisition was based upon
misconception of the correct legal position. Such a
decision has to be regarded as arbitrary and not bona fide.
Particularly in a case where as a result of a decision taken
by the Government other party is likely to be prejudicially
affected, the Government has to exercise its power bona fide
and not arbitrarily. Even though section 48 of the Act
confers upon the state wide discretion it does not permit it
to act in an arbitrary manner Though the State cannot be
compelled to acquire land compulsorily for a company its
decision to withdraw from acquisition can be challenged on
the ground that power has been exercised mala fide or in an
arbitrary manner. Therefore, we cannot accept the
submission of the learned counsel for the State that the
discretion of the State Government in this behalf is
absolute and not justiciable at all.
We, therefore, allow this appeal and quash the impugned
order dated 16.4.1996. However, we make it clear that it
will be open to the State Government to reconsider this
question of withdrawal from acquisition and take an
appropriate decision in accordance with law. In view of the
facts and circumstances of the case, there shall be no order
as to costs.
Writ Petition C No. 716 of 1996
As we are allowing the appeal the learned counsel for
the petitioner does not press the writ petition at this
stage and reserves his right to challenge the validity of
section 48 if such an occasion arises in future. The writ
petition is, therefore, dismissed as not pressed.