PETITIONER: H.M.T. HOUSE BUILDING CO-OP. SOCIETY Vs. RESPONDENT: SYED KHADER & ORS. DATE OF JUDGMENT21/02/1995 BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) VERMA, JAGDISH SARAN (J) BHARUCHA S.P. (J) CITATION: 1995 AIR 2244 1995 SCC (2) 677 JT 1995 (2) 543 1995 SCALE (2)58 ACT: HEADNOTE: JUDGMENT:
1. Leave granted.
2 The appellant is a House Building Co-operative
Society of the employees of H.M.T. Limited, a Government
Company (hereinafter referred to as the ‘Society’). The
Society was registered for the purpose of acquiring land by
purchase, mortgage, lease, exchange, gift or otherwise, and
to develop the same by construction of roads, drains, parks,
play grounds, schools, hospitals, waterworks, post-office
and other amenities, required for a residential housing
colony. The Society has been registered under the
provisions of Karnataka Co-operative Societies Act.
3. The Society submitted its housing scheme to the State
Government on 19.9.1984, for the purpose of acquisition
546
of lands situated at Thindlu and Chikkabettahalli, for 1001
members of the, Society. It is the case of the appellant
that the Government being fully satisfied with the scheme
submitted by the appellant approved the same by an order
dated 7.11.1984 and accorded approval for initiation of
acquisition proceeding for the lands. On 17.3.1988 the
Society entered into an agreement with the State Government
agreeing to the conditions for acquisition, as required by
Sections 39 and 40 of Part – VII of the Land Acquisition Act
(hereinafter referred to as the ‘Act’). But on 12.7.1988 a
notification under Section 4(1) of the Act was issued
proposing to acquire lands for the Society to the extent of
133.33 acres in the aforesaid two villages, saying it was
needed for public purpose.
4. The writ petitioners-respondents questioned the validity
of the aforesaid notification under Section 4(1) of the Act
on several grounds including that the acquisition itself was
not for public purpose. During the pendency of the writ
application on II. 8.1989 the State Government issued
declaration under Section 6(1) of the Act in respect of
99.01 acres of land in the aforesaid two villages for the
appellant’s Society, On 19.3.1991 awards were made in
respect of the aforesaid lands. However, on 18.6.1991 the
High Court allowed the writ application and quashed all
steps taken in connection with acquisition thereof According
to the High Court, the acquisition was not for allotment to
the bonafide members of the Society and as the Society had
indulged in commercial venture for sales of sites, the
acquisition of the lands under the provision of the Act was
a colourable exercise of the power, The High Court was also
of the opinion that procedure adopted by the State Gov-
ernment for acquisition of lands for the Society was likely
to defeat the schemes under Bangalore, Development Authority
Act.
5.From the facts of the present case,, it appears that on
19.9.1984 the appellant society submitted the housing scheme
to the State Government. On 1.2.1985 the appellant society
entered into an agreement with M/s S.R. Constructions,
respondent No. 11 in which the appellant society was
described as First party and M/s S.R. Constructions as
Second party. The relevant parts whereof are as follows:-
“2. WHEREAS THE FIRST PARTY is a registered
House Building Co-operative Society under the
Karnataka Co-op. Societies Act, its main
object being to procure lands around Bangalore
and forming layouts and sites to cater to the
needs of its members by alloting sites for
purposes of construction of dwelling houses on
the sites and the Second Party is an
Architects, Engineers, Builders & Layout
Contractors.
3.AND WHEREAS THE SECOND PARTY approached the
First Party and offered to assist the First
Party to secure lands in Thindlu and
Chikkabettahally villages to the extent of 80
Acres approximately as specified in the
Annexures to this Agreement and to get the
lands acquired in favour of the First Party
and further offered to take up the work of
layout and formation of sites so formed
through the B.D.A., and/or from any other
competent authority.
4 AND WHEREAS at on a representation from the
FIRST PARTY the SECOND PARTY with his efforts
has secured directions from Revenue Secretary,
Government of Karnataka addressed to
547
the Special D. C, Bangalore to issue Notification under Sec.
4(1) of Land Acquisition Act in favour of the First Party
Society vide No. RD.257 AQB 84 dated 7.11.1984.
The Second Party shall secure to the First Party lands at
Thindlu and Chikkabettahally to an extent of 80 acres as
specified in the annexures to this agreement to begin with
and such further extent as the First Party may require and
shall arrange for agreements to be executed between the
owners of such lands and the First Party within a period of
2-3 months from this day to facilitate the acquisition of
lands in favour of the First Party. The Second Party hereby
agrees strictly to conform and act according to the terms of
this agreement.
The Second Party who has already entered into sale agreement
with the owners of land (the details of the land fully
described in the schedule to this agreement) has agreed to
negotiate and ensure the acquisition of the land in favour
of First Party.
The First Party after inspection of the lands and
discussions with the Second Party has agreed to have the
lands from -the owners acquired for the First Party subject
to the other Services to be rendered by the Second Party as
agreed to hereinafter.
NOW THIS AGREEMENT spells out the terms and conditions,
rights. Powers, obligations and liabilities of the parties
to this agreement.
1. It is agreed that the Second Party shall carry out the
following works for the First Party in respect of the lands
to be acquired for the First Party.
2. It is agreed that in respect of the lands to be
acquired for the First Party the Second Party shall
undertake to do the following:
(a) To get Notification u/s 4(1) of the Land Acquisition
Act issued for acquisition of the required extent of land
mentioned in the annexure for the First Party in Thindlu and
Chikkabettahally Villages, in one continuous plot and enter
into necessary agreements with the owners of the land
confirming that the lands are free from encumbrance and that
there are no claim on the lands and that they have no
objection for the acquisition proceedings in respect of the
land;
(b) To get the Notification as required under Section 4(i)
to be issued within 3 months from the date of agreement with
land owners.
(c) To get the Enquiry as required under Section 5(1) of
the Land Acquisition Act by proper authorities completed
within 34 months from the date of agreement with land
owners;
(d) To get the Notification as required u/s 6(1) of the
Land Acquisition Act within 10 months from the date of the
Agreement;
(e) To secure possession of the land from the land owners
to the FirstParty after all the formalities of acquisition
are completed and orders passed acquiring the lands for the
First Party within 12 months from the date of the agreement;
(f) To get the layout plan approved and sanctioned and also
permission to execute the civil portion of the layout work
comprising of formation of roads, drains culverts etc., by
the B.D.A. within 2 months from the date of securing
possession of lands;
548
(g) Executing the civil portion of the lay-
out work comprising of formation of roads,
drain, culverts etc,, as specified by the
B.D.A. according to the sanctioned plan
specifications and under supervision of the
B.D.A. 8 months of the sanction of layout plan
and receipt of work order from the B.D.A. for
the layout work;
(h) Securing the permission from
B.D.A.to execute the layout work under their
supervision and the layout comprising of
laying of water supplying sewerage lines and
chip carpeting which is agreed to be completed
within 6 months after the completion of civil
portion layout;
(i)Executing and doing all other acts, and
things necessary for forming full fledged
layout of residential building sites on the
lands required complete in all respects fit
and ready for construction of houses on the
completion of civil portion of lay out works;
(j)To get all the sites released from the
B.D.A or any other competent authority within
two months of completion of layout works.
3. The second party has agrred and
undertaken to take up the above mentioned
works and has agreed to carry out the works
within 245 months time from the date of this
agreement subject to any delay caused at the
B.D.A and other authorities in procuring the
land, sanctioning or issuing layout plan and
work order.
4. First first party agrees to pay to the
second party amount calculated at Rs. 112/-
per Sq. Yard based an the actual sital area
(inclusive of the cost of the land acquired
and the compensation payable thereto either
under the award or any enhanced compensation
under any proceedings, security fee and
amounts payable to the B.D.A. towards supervi-
sion charges, chip carpeting, tree planting,
maintenance etc., amount and sewerage mains
within the layout amount payable to K.E.B. for
electricity and the cost of layout to be
deposited with B.D.A.) excluding the cost of
the area to be left for roads, drains and the
civic amenities according to the layout plan
approved by B.D.A.
………………… [Emphasis supplied]
6. In the schedule of the said agreement, the details of the
lands, which have been acquired and which am subject matter
of controversy. have been given.
7. It further appears that agreements were also executed
in favour of the appellant society by the land holders
some of whom are writ petitioners – respondents, agreeing
to sell their lands to the appellant society or to their
nominee. In such agreements, the land holders said that the
terms and conditions of the entered into between M/s S.R.
Construtions and the appellant society won totally agreeable
to them including the terms of payment and time limit They
also to receive the sale consideration through M/s S.R.
Constructions (respondent No. 11) and admitted to have
received advance an behalf of the appellant society from M/S
S.R. Constructions. They further agreed that if the
Government intended to acquire the land for the housing pur-
pose of the appellant society, they will agree to give
consent to notifications under Sections 4(1) and 6(1) of the
Act.
8.Before the High Court, on behalf of the writ petitioners,
it was pointed that responded No.11, M/S S.R. Construc-
549
tions had played dubious role of a middle man. The said
respondent entered into agreement with the land holders for
sale of their lands by negotiation, At the same time it
entered into an agreement with the appellant society to get
notifications under Sections 4(1) and 6(1) issued by the ap-
propriate Government acquiring those lands through the
procedure prescribed under the Act. In this process, the
said respondent No. II has influenced the exercise of
statutory power by the appropriate Government, for the huge
amount paid by the appellant society to the said respondent
as consideration for the same. In this background,
according to the writ petitioners, it cannot be held that
the appropriate Government has exercised its own independent
discretion, that the lands in question were needed for any
public purpose. In other words, the exercise of the statu-
tory power under Sections 4(1) and 6(1) of the Act is not
based on objective considerations of the materials, on the
basis of which the appropriate Government could have formed
an opinion that the lands of the writ petitioners were
required for public purpose and because of that it was
necessary to acquire the same.
9. The High Court came to the conclusion, on this question.
“The agents of each of these societies had
been paid heavy amounts in consideration of
which they were required, to influence the
Government and to get the preliminary and the
final notifications acquiring large extent of
lands from the Government. The decision of
the Government to acquire the lands was
brought about by the influence of such agents
and”carriers” between the Government and the
society concerned and therefore such a
decision is liable to be set aside on the
ground that it is a case of colourable ex-
ercise of power and suffers from legal mala
hides, in that, though the acquisition is
stated to be for public purpose, in reality,
the acquisition is substantially not for the
purpose of bona fide housing schemes.
10.From the judgment of the High Court, it further appears
that not only the acquisition of lands in favour of seven
Housing Co-operative Societies, who were respondents to the
different Writ Petitions, but also the acquisition of lands
in favour of more than one hundred housing societies, which
had sprung up within the Bangalore Metropolitan Planning
Area the matter of public debate and criticism. As a result
of which a statutory enquiry under Section 64 of the
Karnataka Co-operative Societies Act was directed by the
Registrar of Co-operative Societies. me enquiry was held by
Shri G.V.K.Rao, the Controller of Weights and Measures, who
submitted his Report in respect of different housing
societies including the appellant Society. ‘The said Report
was produced before the High Court. in the Report, it has
been pointed out that most predominant irregularities
committed by many of the Societies was in respect of
admission on members. In many cases the committees of
management did not consider the applications for membership
and there was no proper resolutions specifying the persons
who were admitted as members of the society. There was no
record on which date the said members were admitted by the
different Housing Co-operative Societies. It was also said
in the Report that the societies admitted persons. who were
not eligible to become members. In respect of the appellant
society, it was said in the Report, which has been referred
to by the High Court in its judgment that
550
membership was open to any person above 18 years of age and
it left scope for admitting non-employees of HMT as members.
From the scrutiny of the applications, it transpired that
many ‘who had been admitted as members, were neither employ-
ees of the HMT nor residents within the jurisdiction of the
Society. It was also pointed out that the appellant had
entered into an agreement with the Estate Agent S.R.
Constructions and had paid a total amount of Rs.92,52,938/-
to the said agent and Rs.35 lakhs to special Land Acquisi-
tion Officer. The conclusion in respect of the appellant
society in the Report is as follows:-
“The Society has admitted large number of persons who are
neither employees of HMT nor residents of the jurisdiction
of the Society. All of them are to be removed from the
rolls of the Society. The Society grants the membership
without collecting the sufficient share amount and in many
cases only the single share was taken by the members,
whereas it was necessary for members to take atleast five
shares. The committee solely responsible for these
irregularities. Secondly, the Society made huge advances to
the agents without commensurate amount of guarantee or
security and without any work being done by the agents.
There is atleast Rs.1.6 crores which has been advanced to
the agents without any work.The committee in general and the
Hon. Secretary of the Society in particular is responsible
for these irregularities”.
Taking into consideration all the facts and the
circumstances of the case including the report of
Mr.G.V.K.Rao, the High Court observed.
“Before concluding, it is necessary to observe that as
pointed out in the report of G.V.K. Rao, it is on account of
unlimited territorial jurisdiction and vague provisions as
to who could become members and associate members and also
as to what are the rights of associate members, it has been
possible for many of the societies to manipulate membership
in such a way as to enroll all those who are desirous of
purchasing sites as also those who do not possess the
territorial or other qualification as members”.
It was said that it was necessary that the Government should
frame rules for according previous approval for acquisition
of lands for the housing co-operative societies inter alia
prescribing the essential requirements of a housing scheme
and also prescribing the procedure for inquiry and report to
aid the Government to come to the conclusion as to whether
the previous approval should be given for any scheme
prepared by any of the house building societies which
requires the Government to acquire any land for carrying out
any such scheme.
11. By Land Acquisition (Amendment) Act, 1984 (Act 68 of
1984) several amendments have been introduced in the said
Act including in the definition “corporation owned or
controlled by the State”, “Company” and “public purpose”.
The aforesaid amendments came into force with effect from
24.9.1984. Section 3(cc) defines the expression “corporation
owned or controlled by the State” :
“3(cc) – the expression “corporation owned or controlled by
the State” means any body corporate established by or
under a Central. Provincialor State Act. and includes a
Government company as defined in Section 617of the
Companies Act, 1956, a society registeredunder the
Societies Act, 1860, orunder any
551
corresponding law for the time being in
force, in a State, being a society established
or administered by Government and a co-
operative society within the meaning of any
law relating to co-operative societies fix the
time being in force in any State, being a co-
operative society in which not less than
fifty-one per centum of the paidup share
capital is held by the Central Government or
by any State Government ,or Governments, or
partly by the Central Government and partly by
one or more State Governments.
12. The expression ‘Company’ has been defined in Section
3(e) of the Act.
“3(e)- the expression “Company” means-
(i) a Company as defined in Section 3 of the
Companies Act, 1956, other than a Government
company referred to in clause (cc);
(ii)a society registered under the Societies
Registration Act, 1860, or under any
corresponding law for the time being in forc
e
in a State, other than a society referred to
in clause (cc);
(iii)a cooperative society within the meaning
of any law relating to cooperative societies
for the time being in force in any State,
other than a co-operative society referred to
in clause (cc).”
133. The expression “public purpose” has been
defined in Section 3(f) of the Act.
“3(f)- the expression “public purpose ”
includes –
(i) the provision of village-sites, or the
extension, planned development or improvement
of existing village-sites;
(ii)the provision of land for town or rural
planning;
(iii)the provision of land for planned
development of land from public funds in
pursuance of any scheme or policy of
Government and subsequent disposal thereof in
whole or in part by lease, assignment or
outright sale with the object of securing
further development as planned;
(iv)the provision of land for a corporation
owned or controlled by the State;
(v) the provision of land for residential
purposes to the poor or landless or to persons
residing in areas affected by natural
calamities, or to persons displaced or
affected by reason of the implementation of
any scheme undertaken by Government any local
authority or a corporation owned or controlled
by the State;
(vi) the provision of land for
carrying out any educational, housing, health
or slum clearance scheme sponsored by
Government or by any authority established by
Government for carrying out any such scheme,
or with the. prior approval of the appropriate
Government, by a local authority, or a society
registered under the Societies Registration
Act, 1860, or under any corresponding law for
the time being in force in a State, or a co-
operative society within the meaning of any
law relating to co-operative societies for the
Wm.being in force in any State;
(vii)the provision of land for any other
scheme of development sponsored by Government,
or, with the prior approval of the appropriate
Government, by a local authority;
552
(viii)the provision of any premises or
building for locating a public office,
but does not include acquisition of land for
Companies.”
14. There is no dispute that the Society with which we are
concerned shall not be covered by the expression
“corporation owned or controlled by the State”, because the
said expression shall include a co-operative society, being
a co-operative society in which not less than 51 per centum
of the paid-up share capital is held by the Central
Government, or by any State Government or Governments, or
partly by the Central Government and partly by one or more
State Governments.
15. The substituted definition of the expression “Company”
in Section 3(e)(iii) will certainly include the appellant
society. The substituted definition of the expression
“Company” shall include cooperative society, within the
meaning of any law relating to cooperative societies other
than those referred to in clause (cc) of Section 3 of the
Act. Such co-operative society shall be deemed to be a com-
pany, to which provisions of Chapter VII relating to
acquisition of land for company shall be applicable.
16. In view of the substituted definition of the expression
“public purpose”, in Section 3(f)(vi), the provision for
carrying out any housing scheme sponsored by die Government
or by any authority established by Government for carrying
out any such scheme shall be deemed to be a “public
purpose”. It further says that the provision of land for
carrying out any housing scheme with prior approval of the
State Government by a cooperative society within the meaning
of any law relating to co-operative societies for the time
being in force in any State, shall be deemed to be a “public
purpose”. As such for any housing co-operative society
lands can be acquired by the appropriate Government,
treating the same as acquisition for the public purpose.
But, in that event, there has to be a prior approval of such
scheme by the appropriate Government. When the lands arc
acquired for any co-operative society with prior approval of
the scheme by the State Government, there is no question of
application of the provisions of Part _ VII of the Act.
Such acquisition shall be on the mode of acquisition by the
appropriate Government for any public purpose.
17. If lands arc acquired for any cooperative society
treating it to be a company within the meaning of Section
3(e), then in view of Section 39 of the. Act the provisions
of Sections 6 to 16 and Sections 18 to 37 shall not be put
in force unless there is previous consent of the appropriate
Government, and the co-operative society has executed an
agreement. The consent required under Section 39 of the Act
has to be given by die appropriate Government only after the
conditions mentioned in Section 40 arc fulfilled. Sub-
section (1) of Section 40, of the Act prescribes the
conditions:
“40. Previous enquiry. –
(1)Such consent shall not be given unless the
appropriate Government be satisfied, either on
the report of the Collector under Section 5-A
,
Subsection (2), or by an enquiry held as
hereinafter provided,-
(a) that the purpose of the acquisition is
to obtain land for the erection or dwelling
houses for workmen
553
employed by the Company or for the provision
of amenities directly connected therewith, or
(aa) that such acquisition is needed for the
construction of some building or work for a
Company which is engaged or is taking steps
for engaging itself in any industry or work
which is for a public purpose, or
(b) that such acquisition is needed for the
construction of some work, and that such work
is likely to prove useful to, the public.”
18. In view of sub-section (1) of Section 40, before giving
a consent the appropriate Government has to be satisfied
that the purpose of acquisition is for any of the purposes
mentioned in clauses (a), (aa) and (b) of the said Section.
Clause (a) clearly links the object of acquisition for the
erection of dwelling houses for workmen employed by the
Company or to provide amenities directly connected there-
with. Clause (aa) requires that such acquisition is needed
for the construction of some building or work for a Company
which is engaged itself in any industry or work which is for
a public purpose. Similarly, clause (b) also requires that
acquisition should be for the construction of some work,
which is likely to prove useful to the public. Section 44-A
of the Act,is relevant:
“44-A. Restriction an transfer, etc. -No
Company for which any land is acquired under
this Part shall be entitled to transfer the
said land or any part thereof by sale,
mortgage, gift, lease or otherwise except with
the previous sanction of the appropriate
Government.
19. In view of Section 44-A, no company/co-operativel
society for which the land has been acquired under the said
Part – VII shall be entitled to transfer the said land or
any part thereof by sale, mortgage, gift, lease or otherwise
except with the previous sanction of the appropriate Govern-
ment. It need not be pointed out that the framers of the
Act have put several conditions and restrictions in respect
of acquisition of land for a- company/co-operative society
if the lands are acquired under Part – VII of the Act.
20. Now the question which is to be answered is as to
whether in view of the definition of “public purpose”
introduced by the aforesaid amending Act 68 of 1984 in
Section 3(f)(vi), is it open to the appropriate Government
to acquire land for cooperative society for housing scheme
withOut making proper enquiry about the members of the
Society and without putting such housing co-operative
society to term in respect of nature of construction, the
area to be alloted to the members and restrictions on
transfer thereof?
21. According to us, in Section 3(f)(vi) the expression
“housing” has been.used along with educational and health
schemes. As such the housing scheme contemplated by Section
3(f)(vi) shall be such housing scheme which shall serve the
maximum number of members of the society. Such housing
scheme should prove to be useful to the public. That is why
the Parliament while introducing a new definition of “public
purpose”, said that any scheme submitted by any cooperative
society relating to housing, must receive prior approval of
the appropriate Government and then only the acquisition of
the land for such scheme can be held to be for public
purpose. If requirement of Section
554
3(f)(vi) is not strictly enforced, every housing co-
operative society shall approach the appropriate Government
for acquisition by applying Section 3(f)(vi) instead of
pursuing the acquisition under Part VII of the Act which has
become more rigorous and restrictive. In this background,
it has to be held that the prior approval, required by
Section 3(f)(vi), of the appropriate Government is not just
a formality; it is a condition precedent to the exercise of
the power of acquisition by the appropriate Government for a
housing scheme of a co-operative society.
22. In the present case, a hybrid procedure appears to have
been followed. Initially, the appellant society through
M/s. S.R. Constructions purported to acquire the lands by
negotiation and sale by the land holders. Then from terms
of the agreement dated 17.3.1988, it appears that the
procedure prescribed in Part – VII was to be followed and
the lands were to be acquired at the cost of the appellant
society treating it to be a “company”. The allegation made
on behalf of the appellant society that the housing scheme
had been approved by the appropriate Government on 7.11.1984
shall not be deemed to be a prior approval within the
meaning of Section 3(f)(vi) but an order giving previous
consent as required by Section 39 of Part VII of the Act.
In the agreement dated 17.3.1988 it has been specifically
stated “And whereas the Government having caused inquiry to
be made in conformity .with the provisions of the said Act
and being satisfied as a result of such inquiry that the
acquisition of the said land is needed for the purpose
referred to above has consented to the provisions of the
said Act being in force in order to acquire the said land
for the benefit of the society members to enter in the
agreement hereinafter contained with the Government”.
[emphasis supplied] But, ultimately, the lands have been
acquired on behalf of the appropriate Government treating
the requirement of the appellant society as for a public
purpose within the meaning of Section 3(f)(vi), It is
surprising as to how respondent M/s S.R. Constructions en-
tered into agreement with the appellant society assuring it
that the lands, details of which were given in the agreement
itself, shall be acquired by the State Government by
following the procedure of Sections 4(1) and 6(1) and for
this, more than one crore of rupees was paid to M/s. S.R.
Constructions (respondent No. 11).
23.Mr. G,. Ramaswami, learned senior counsel appearing on
behalf of the appellant, submitted that merely because the
appellant society had entered into an agreement with
respondent No. 11, M/s S.R.Constructions in which the latter
for the consideration paid to it had assured that the lands
in question shall be acquired by the State Government, no
adverse inference should be drawn because that may amount to
a tall claim made on behalf of M/s S.R. Constructions in the
agreements He pointed out that the notifications under
Sections 4(1) and 6(1) have been issued beyond the time
stipulated in the agreement and as such, it should be held
that the State Government has exercised its statutory power
for acquisition of the lands in normal course, only after
taking all facts and circumstances into consideration.
There is no dispute that in terms of agreement dated
1.2.1985 payments have been made by the appellant society to
M/s S.R. Constructions. This circumstance alone goes a long
way to support the contention of the writ petitioners that
their lands have
555
not been acquired in normal course or for any public
purpose. In spite of the repeated query, the learned
counsel appearing for the appellant society could not point
out or produce any order of the State Government under
Section 3(f)(vi) of the Act granting prior approval and
prescribing conditions and restrictions in respect of the
use of the lands which were to be acquired for a public
purpose. There is no restriction or bar on the part of the
appellant society on carving out the size of the plots or
the manner of allotment or in respect of construction over
the same. That is why the framers of the Act have required
the appropriate Government to grant prior approval of any
housing scheme presented by any cooperative society before
the lands are acquired treating such requirement and
acquisition for public purpose. It is incumbent on part of
the appropriate government while granting approval to
examine different aspects of the matter so that it may serve
the public interest and not the interest of few who can as
well afford to acquire such lands by negotiation in open
market. According to us, the State Government has not
granted the prior approval in terms of Section 3(f) of the
Act to the housing scheme in question. The power under
Sections 4(1) and 6(1) of the Act has been exercised for
extraneous consideration and at the instance of the persons,
who had no role in the decision making process – whether the
acquisition of the lands in question shall be for a public
purpose. This itself is enough to vitiate the whole
acquisition proceeding and render the same as invalid.
24. In the present case there has been contravention of
Section 3(f) (vi) of the Act in as much as there was no
prior approval of the State Government as required by the
said Section before steps for acquisition of the lands were
taken. The report of Shri G.K.V. Rao points out as to how
the appellant society admitted large number of persons as
members who cannot be held to be genuine members, the sole
object being to transfer the lands acquired for ‘public
purpose’, to outsiders as part of commercial venture,
undertaken by the office bearer of the appellant society.
We are in agreement with the finding of the High Court that
the statutory notifications issued under Sections 4(1) and
6(1) of the Act have been issued due to the role played by
M/s S.R. Constructions, respondent No. 11. On the materials
on record, High Court was justified in coming to the
conclusion that the proceedings for acquisition of the lands
had not been initiated because the State Government was
satisfied about the existence of the public purpose but at
the instance of agent who had collected more than a crore of
rupees for getting the lands acquired by the State Gov-
ernment.
25. The appeals arc accordingly dismissed. But in the
circumstances of the case there shall be no orders as to
costs.
26. We direct that as a result of quashing of the land
acquisition proceedings including the notifications as
aforesaid, the possession of the lands shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
On restoration of the possession to the land owners they
shall refund the amounts received by them as compensation or
otherwise in respect of their lands. The appellant, the
respondents and the State Government including all concerned
authorities/persons shall implement the afore-
556
said directions at an early date.
H.M.T. House Building Co-operative Society
v.
M. Venkataswamappa & Ors.
SPECIAL LEAVE PETITION (C) NOS.
1155057 OF 1991
WITH
(SLP (Civil) Nos. 12104-07, 12600-03, 1315080, 18297-300,
13114, 13339, 12032-37, 12535-37 of 1991 and… /92 (CC
16194/92).
27. connected Appeal Nos. 301 119 of 1994 (arising out of
S.L.P.(C) Nos. 11482-90 of 1991) H.M.T. House Building Co-
op. Society v. Syed Khader & Ors, have already been
disposed of by a reasoned judgment. The reasons given for
dismissing the said appeals are equally applicable in the
facts and circumstances or the present case. Accordingly,
these special leave petitions filed on behalf of the same
House Building Co-operative Society are dismissed. No
costs.
28. In the appeals arising out of SLP (C) Nos. 11482-90
of 1991, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in
respect of their lands. We issue a similar direction even
in this case. The petitioner, the respondents and the State
Government including all concerned authorities/persons shall
implement the aforesaid directions at an early date.
Vyalikaval House Building Co-operative Society Ltd.
v.
Narayana Reddy and Ors. etc. etc,
SPECIAL LEAVE PETITION(C)NOS. 12104 07, 12600-03, 13150-80,
18297-300 OF 1991.
29. Lands on basis of the notifications issued under
Sections 4(1) and 6(1) of the Land Acquisition Act, had been
acquired for the petitioner-House Building Society, treating
the said acquisition to be for a public purpose. No order
of the State Government as required by Section 3(f)(vi)
granting prior approval for acquisition of the lands in
question for the housing scheme of the petitioner-society
has been produced. The petitioner society had also entered
into an agreement with the contractor more or less on the
same terms and conditions as was in the case of H.M.T. House
Building Co-operative Society, assuring that the lands in
question shall be acquired on basis of the notifications
issued by the State Government under Sections 4(1) and 6(1)
of the Act. The High Court in its impugned judgment has
given details of the allegations made against the petitioner
society regarding collection of huge amounts from different
applicants for site who were not even members of the society
and how the society had entered into an agreement with
agents, who with their influence have got the Ian& acquired.
The High Court has also referred to an
557
advertisement issued by the petitioner society inviting
persons who want to have mansions in the city of Bangalore.
It also gave the name and address of a representative at
Dubai. On basis of the aforesaid materials, the High Court
has come to the conclusion that the Society itself was not a
bona fide House Building Society. The High Court has also
recorded a finding that the notifications under Sections
4(1) and 6(1) of the Act had been issued at the instance of
the agents appointed by the petitioner society, to whom huge
amounts had been paid for influencing the Government to
issue the aforesaid notifications. Mr. Ramaswamy, appearing
for the petitioner society purported to distinguish this
case on facts from the case of H.M.T.House Building Co-
operative Society. But according to us, the facts of the
present case are similar to the case of H.M.T.House Building
Co-operative Society and there is no scope to interfere with
the order of the High Court, quashing the notifications
under Sections 4(1) and 6(1). Accordingly, the special
leave petitions filed on behalf of the petitioner society
are dismissed. No costs.
30. In the appeals arising out of SLP(C) Nos. 11482-90
of 1991, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in re-
spect of their lands. We issue a similar direction even in
this case. The petitioner, the respondents and the State
Government including all concerned authorities/ persons
shall implement the aforesaid directions at an early date.
Amarjyothi House Building Co-operative Society Lid.,
V.
State of Karnataka & Ors. etc
SPECIAL LEAVE PETITION (C) NOS. 13114 AND 13339 OF 1991
31. These special leave petitions have been filed on behalf
of the petitioner Amar jyothi House Building Co-operative
Society Ltd.for setting aside the judgment of the High
Court, quashing the notifications under Sections 4(1) and
6(1) of the Land Acquisition Act, acquiring lands for the
petitioner society. From the judgment of the High Court, it
appears that this society also had entered into an agreement
with a developer who had assured to get the lands in
question acquired in accordance with the provisions of the
Act. Petitioner society paid huge amount to the said
developer for the said object. In this case also there is
no order of the State Government, granting prior approval
for acquisition of the lands in question, as required by
Section 3(f)(vi)of the Act. The High Court has also
referred to the Report of Mr. G.V.K. Rao, about the bogus
members. According to the finding, the Society had admitted
4,050 bogus members. As such, there is no scope for taking
a view contrary one which we have taken while disposing of
the appeals (arising out of S.L.P(C)Nos. 11482-90 of 1991)
filed on behalf of the H.M.T. House Building
558
Co-operative Society. These special leave petitions are
accordingly dismissed. No costs.
32. In the appeals arising out of SLP (C) Nos. 11482-90
of 199 1, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in re-
spect of their lands. We issue a similar direction even in
this case. The petitioner, the respondents and the State
Government including all concerned authorities/persons shall
implement the aforesaid directions at an early date.
The Bangalore City Chickpet House
Building Co-operative Society Ltd.,
v.
Venkamma @ Venkatamma & ors.
SPECIAL LEAVE PETITION(C) NOS 1203237 OF 1991
33. These special leave petitions have been filed for
setting aside the judgment of the High Court, quashing the
notifications under Sections 4(1) and 6(1) of the Land
Acquisition Act, on the ground that the said notifications
had been issued at the instance of the agents, appointed by
the petitioner society. The High Court has also referred to
the agreement entered into by the petitioner and the said
middle-man, who had undertaken to get the lands in question
acquired. The agent had undertaken in the agreement to
manage all concerned “at all levels”. No order granting
prior approval by the, State Government for the acquisition
of the lands, as required by Section 3(f)(vi) of the Act has
been produced. According to us, the facts of the present
case are no way different from that of the H.M.T.House
Building Co-operative Society, which has been disposed of by
a reasoned judgment. That judgment fully covers the present
special leave petitions also. Accordingly, the special
leave petitions are dismissed. No costs.
34. In the appeals arising out of SLP (C) Nos. 11482-90
of 1991, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in re-
spect of their lands. We issue a similar direction even in
this case. The petitioner, the respondents and the State
Government including all concerned authorities/persons shall
implement the aforesaid directions at an early date.
REMCO (BHEL) House Building Co-op. Society Ltd.
v.
Sri Neelakantaiah & Ors.
559
SPECIAL LEAVE PETITION (C) NOS. 12535-37 OF 1991
35. These special leave petitions have been filed against
the judgment of the High Court, quashing the notifications
under Section 4(1) and 6(1) of the Land Acquisition Act, on
the ground that the notifications had been issued at the
instance of the agent, appointed by the petitioner society.
The learned counsel, appearing for the petitioner, could not
point out as to how the facts of the present case are dif-
ferent from the facts of the H.M.T. House Building Society,
so far this aspect is concerned. He has, however, pointed
out that in the present case, an order had been issued by
the State Government granting prior approval. In this
connection, reference was made to an order dated 9.8.1984 by
which it is said that the Government had granted prior
approval for the acquisition of the lands in question.
According to us, an order dated 9.8.1984 cannot be an order
under Section 3(f)(vi) because the definition of ‘public
purpose’ which was introduced by Act 68 of 1984 came in
force with effect from 24.9.1984. As such there was no
occasion for the State Government to exercise power under
Section 3(f)(vi) on 9.8.1984. Any such order must be in
terms of Section 39 read with Section 40 of Part VII of the
Act, which part is applicable when acquisition of land is
made for companies. It is surprising as to how the present
House Building Co-op. Society was being treated even as a
company on 9.8.1984, because the new definition of company
was also introduced in Section 3(e) with effect from
24.9.1984. Accordingly, there is no merit in these special
leave petitions, which are dismissed. No costs.
36. In the appeals arising out of SLP(C) Nos. 11482-90 of
1991, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in re-
spect of their lands. We issue a similar direction even in
this case. The petitioner, the respondents and the State
Government including all concerned authorities/persons shall
implement the aforesaid directions at an early date.
State of Karnataka and Ors.
V.
Narayana Reddy and Ors.
SPECIAL LEAVE PETITION (C) No. 58245920 OF 1992
37. The special leave petition has been filed on behalf of
the State of Karnataka against the same judgment of the High
Court, quashing the notifications under Sections 4(1) and
6(1) of the Land Acquisition Act, acquiring lands for
different House Building Co-operative Societies. The State
of Karnataka has purported to justify the issuance of those
notifications. Whether the lands in question had been
acquired in accordance with law has been examined in detail
in the case of H.M.T. House Building Co-operative Society.
In view of the reasons given in the said judgment, the
special leave petition has to be
560
dismissed, The application for condonation of delay in
filing the special leave petition is also dismissed. No
cost.
38. In the appeals arising out of SLP (C) Nos. 11482-90
of 1991, after the dismissal of the appeals a direction has
been given that as a result of the quashing of the land
acquisition proceedings including the notifications in
question, the possession of the land shall be restored to
the respective land owners irrespective of the fact whether
they had challenged the acquisition of their lands or not.
A further direction has been given that on restoration of
the possession to the land owners, they shall refund the
amounts received by them as compensation or otherwise in re-
spect of their lands. We issue a similar direction even in
this case. The petitioners and the respondents including
all concerned authorities/persons shall implement the
aforesaid directions at an early date.
Bank Officers & officials House Building Co-operative
Society Ltd.
v.
Sanjeevappa and Om
Civil Appeal Nos. 3020-24 of 1995(Arising out of
S.L.P(C)Nos. 12530-34 of 1991)
AND
The Bank Officers and officials House House Building Co-
operative Society Ltd.
v.
N.Jayarama& On.
Civil Appeal Nos. 3025 of 1995
(Arising out of S.L.P(C)Nos. 13189 of 1991)
39. Leave granted.
40. On behalf of the appellant society, it was pointed out
that in these cases, the appellant society had not entered
into any agreement with any agent or contractor as had been
done in other cases referred to above. It was also pointed
out that some of the land holders in the present case had
filed writ applications, which had been dismissed by the
High Court. Special Leave Petitions against the order of
the High Court have also been dismissed by this Court. It
was urged that in this background the High Court should not
have quashed the notifications under Sections 4(1) and 6(1)
of the Land Acquisition Act, so far the acquisition for the
appellant society is concerned. The stand taken on behalf
of the appellants, in these appeals was not challenged on
behalf of the respondents. The special feature of the
present case as already pointed out above is that the ap-
pellant society had not entered into any agreement with any
agent or contractor to get the lands acquired. It was not
stated that there was no prior approval of the appropriate
Government to the scheme in question. According to us, the
facts of the present case are different from the others,
which have been disposed of by this Court. Accordingly, the
appeals arc allowed and the judgment of the High Court so
far it relates to the appellant society, is set aside. No
costs.
562