REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1780-1781 OF 2009
(Arising out of SLP) Nos.16336-16337 of 2007)
Urmila Roy & Ors. ......Appellants
Versus
M/s. Bengal Peerless Housing Development
Company Ltd. & Ors. ...... Respondents
JUDGMENT
HARJIT SINGH BEDI, J.
1. Leave granted.
2. This judgment will dispose of civil appeals arising out of
judgment dated 2nd July, 2007 rendered by a Division Bench
of the Calcutta High Court.
3. The facts are as under: Appellant Urmila Roy and others
in W.P No.1002 (W) of 2002 were the writ petitioners before
the Single Bench of the Calcutta High Court. As per the facts,
6.78 acres of land had been purchased by them avowedly for
2
putting up an International School, a cultural centre, an I.T.
Park and a Housing Complex and for this purpose they had
been in negotiations with the West Bengal Housing Board
(hereinafter referred to as “The Housing Board”). It appears,
however, that before the project could be finalized, the State
Government issued a Notification under Section 4(1) of the
Land Acquisition Act, 1894 (hereinafter referred to as “the
Act”) on 4th December, 2000 seeking to acquire in all 12.67
acres (including 6.78 acres belonging to the writ petitioners)
for a housing scheme. The land owner appellants were
allegedly given to understand by the Housing Board that in
the event that they did not object to the acquisition, they too
would be permitted to participate in the proposed project. It is
the case of the land owners that on account of this assurance,
they did not raise any serious objection to the acquisition,
where after a declaration under Section 6 (1) of the Act dated
29th November, 2001 has issued and published in the Asian
Age on 4th December, 2001. It is further the case of the land
owners that they realized later that they had been cheated as
the land had been acquired for the development and
3
implementation of a housing scheme by the Housing
Development Co. Ltd. (hereinafter referred to as “The Bengal
Peerless”). The Collector subsequently i.e. on 22nd December,
2003 passed an Award determining the compensation payable
and it is the case of the land owners that they first came to
know of the award on receipt of a notice dated 16th February,
2004 whereby they were informed that as the ownership of the
acquired land could not be ascertained, the compensation had
been deposited with the Reference Court under Section 31(2)
of the Act. The land owners thereupon filed Writ Petition No.
10051(W) of 2004 challenging the acquisition proceedings
pleading inter-alia that the said proceedings had lapsed by
efflux of time under Section 11-A of the Act as the declaration
under Section 6 of the Act had been as published on 29th
November, 2001 and the Award had been made on 22nd
December, 2003. It was also pleaded that the declaration
under Section 6(2) of the Act had not been published in the
manner provided. It was further pleaded that the land had
been acquired under the garb of a public purpose whereas it
was intended to benefit the Bengal Peerless, a private party
4
and an attempt had been made to camouflage the identity of
the beneficiary as it had not been specified in the Notifications
issued under Sections 4 and 6 of the Act and had been
brought out for the first time in the Notification under Section
9 and in this view of the matter, the land owners had been
deprived of their rights to file appropriate objections.
Cumulatively, it was submitted that in view of the facts, the
acquisition itself was a colourable exercise of power at the
instance of the State.
4. These matters were considered by a learned Single Judge
of the Culcutta High Court, who, by his Judgment dated 16th
September, 2003 concluded that the Notifications under
Sections 4 and 6 had been properly published as required by
law, that the land had been acquired for a public purpose, as
detailed in the Notification under Section 4 of the Act and that
the State Government was authorized to entrust the housing
project to a Joint Sector Company to execute the housing
scheme with the sanction of the State Government under
Section 27A of the West Bengal Housing Board Act, 1972
(hereinafter referred to as “the 1972 Act”). The Learned
5
Judge, however, observed that the proposal for the housing
scheme had been initiated by the Bengal Peerless without the
approval of the State Government and the fact that the
entrustment to the Bengal Peerless was in public interest had
not been examined by the State Government, and as the
scheme itself did not disclose the budget or detail adequately
the residential accommodation that was to be constructed for
the low and middle income groups, the scheme itself was
faulty and finally concluded that it appeared from the record
that the intention of the Government was to enable Bengal
Peerless to make huge profits and as such the acquisition was
not for a public purpose and was, therefore, malafide. The
learned Single Judge accordingly allowed the writ petition vide
judgment dated 18th May, 2004.
5. The matter was thereafter taken before a Division Bench
in FMA No. 671 of 2004 (Bengal Peerless Housing
Development Co.Ltd. vs.Urmila Roy & Ors. ), FMA 672 of 2004
(State of West Begal & Ors. Vs.Urmila Roy & three Ors.) and
FMA 790 of 2006 (Smt. Krishna Majumdar & Ors. Vs. State of
West Bengal & Ors.) and was argued at length over several
6
days. The Division Bench by its judgment dated 2nd July
2007, accepted the argument of the Advocate General
appearing for the State appellant based on several judgments
of this Court that a challenge to an acquisition should not be
permitted after the award had been rendered, and that in any
case, the challenge even if permissible, had been made
belatedly. The Division Bench then went on to the facts of the
case and observed that the conclusion of the learned Single
Judge that the whole process of acquisition was malafide, was
based on a misconception, more particularly as several
documents which were relevant had been ignored, that in the
face of these documents, the finding of the learned Single
Judge that the housing scheme had not been prepared with
the approval of the State Government was erroneous, and that
the evidence revealed that a substantial part of the
compensation for the acquired land had been paid by the
Government or its agencies. The Division Bench further
observed that from a perusal of the record that the acquisition
proceedings themselves were transparent in nature and
merely because the name of Bengal Peerless as the ultimate
7
beneficiary had come up for the first time in the Notification
under Section 9 of the Act could not lead to the conclusion
that the acquisition proceedings were a colourable exercise of
power. The Court then examined the purpose behind the
enactment of the 1972 Act and opined that the Housing Board
had been established under governmental control with a view
to alleviating the shortage of housing and in particular
referred to Sections 17 to 21 to highlight that all its members
were appointed by the State Government and the Chairman
was, in fact, the Minister of In-charge of the Housing in the
State Government. The Division Bench also held that Section
27A which had been inserted in the parent act by an
amendment of 1993 was for the specific purpose of
authorizing the Housing Board to entrust the execution of a
housing scheme to a joint sector company if it was felt that it
was unable to perform its duties on account of financial
limitations. The Division Bench then observed that a
Memorandum of Understanding had been signed on 2nd May
1994 providing that the Housing Board and the Bengal
Peerless would have an equal share capital of 49.5% each and
8
the balance 1% would be held by the public and that the
company would be run by a nine member independent Board
of Directors of whom five, including the Chairman, were to be
nominated by the State Government with the result that the
State Government was, in effect, in complete control of the
management of Bengal Peerless. It was finally concluded that
in view of this feature and the fact that as per record a
substantial part of the compensation had been paid out of
public funds by the Housing Board, a State Government
undertaking, it was not open to the land owners to argue that
the land had been acquired to benefit a purely private
company. The Division Bench also relied upon the judgment
in State of Gujarat & Anr vs. Sankalchand Khodidas Patel
(D) (1977) 4 SCC 590 and Pratibha Nema & Ors. Vs. State
of M.P. & Ors. (2003) 10 SCC 626 to draw a distinction
between acquisition for a public purpose and acquisition for a
company and observed that as some part of the compensation
had been paid by the Housing Board, the fact that the
procedure for acquisition for a public purpose had been
adopted was justified on the facts of the case and relying
9
further on Manubhai Jehtalal Patel vs. State of Gujarat
(1983) 4 SCC 553 further held that even a contribution of
Re.1/- from the State Revenues could, in certain
circumstances, be held adequate to hold that the acquisition
was for a public purpose. The Division Bench finally observed
thus:
“From the above it becomes crystal
clear that the contribution to be made by the
State need not be substantial and even a token
contribution of Rs.100 would satisfy the
requirement that the compensation has been
paid out of public funds.”
6. The Division Bench thereafter examined the issue as to
whether the housing scheme had been prepared in
accordance with the provisions of the 1972 Act and once again
differed from the findings of the learned Single Judge that the
provisions had been ignored, as a perusal of the record
revealed that the scheme had been framed by the State
Government pursuant to a meeting held on 17th May 2000 in
the Office of the Secretary Housing in the presence of the
Commissioner and the Land Acquisition Officer of the Housing
Board and the agenda circulated for the meeting established
10
that it had been called to discuss the suitability of the scheme
which had been designed to benefit the weaker sections of
society and others with modest means, as it envisaged the
construction of about 1800 dwelling units of three categories,
namely the low, the middle and the higher income groups and
that at least 50% of the aforesaid units were to be reserved for
the first two groups with the price for the former category
being substantially subsidized and the flats for the middle
income group to be provided on “no profit no loss basis” and,
significantly, it was specified that the price once determined
by the Housing Board before the start of the project would
remain firm and that no escalation on any account was to be
made for any of the dwelling units of any category. The
aforesaid information led the Division Bench to conclude that
the non-escalation Clause in particular, indicated that the
scheme was not motivated by profiteering alone but was in
fact for the benefit of poorer sections, and that if any further
evidence was required to prove the bonafides of Bengal
Peerless, the scheme also provided that distribution of plots
was subject to the reservation of plots as per the policy of the
11
Housing Board and allotments were to be made by a lottery
system and that scheme was to be completed within 5 years
from the date of the commencement of the work. Finally, the
Division Bench observed as under:
“In our opinion, these observations of
the Supreme Court are fully applicable to
the facts and circumstances of the present
case. The facts narrated above make it
abundantly clear that Housing Scheme has
been prepared by the Government, after
due consideration and it could not be said
to have been initiated at the instance of the
Bengal Peerless. Therefore, the learned
Single Judge has erroneously held that the
acquisition proceedings were null and void.”
7. The Division Bench also repelled the argument raised on
behalf of the land owners that as they too were in the process
of setting up a global village in the land the acquisition was
untenable by observing that the letter dated 8th May 2001
written by Urmila Roy respondent on which primary reliance
had been made by the land owners with respect to the
aforesaid plea was not acceptable at this belated stage as the
land owners had not raised any objection to the acquisition of
the land by the State Government, and further that no such
12
plea had not been raised in the writ petition. The Court then
observed that Writ Petition No.10002 (W) of 2002 filed by some
other land owners seeking to challenge the same acquisition
had been dismissed by Justice Chattopadhyay on 16th
September 2003 and the issues raised in the present appeal
had also been raised before the said Judge and had been
repelled and it had been specifically observed that the land
had, indeed, been acquired for a public purpose and not for a
private company, as alleged. The Division Bench, accordingly,
allowed the appeal leading to the present matters before this
Court.
8. The learned counsel for the appellants has raised several
issues before us. It has been submitted that the Bengal
Peerless was not a Corporation within the meaning of Section
3 (cc) of the Act, inasmuch as 51% of the share capital in the
said company was not held by the State Government or any
Central Government or State Government Undertaking as only
49.5% of the shareholding was held by the Housing Board. It
has been submitted that Bengal Peerless was also not a
company within the meaning of section 617 of the Companies
13
Act, 1956 and was therefore a company within the meaning of
Section 3(e) of the Land Acquisition Act, and as such Part VII
of the Act was applicable and not Part II thereof. It has also
been submitted that the housing scheme Annexure P3 was
not a housing scheme, as envisaged under the 1972 Act but
was merely a proposal that too an incomplete one. Reliance
for this submission has been placed on Sections 17,18,19,23
27 and 27(A) of the 1972 Act. As a corollary, it has been
argued that the finding that Bengal Peerless had been
entrusted with the execution of the housing scheme was
incorrect, as no terms and conditions of such entrustment
had been agreed upon as was a pre-requisite for the execution
of a housing project by a Joint Sector Company under section
27-A of the 1972 Act. It has also been urged that the entire
amount of the acquisition money deposited prior to the
publication of the declaration under Section 6 of the Land
Acquisition Act had been paid by Bengal Peerless and no part
thereof had been paid by the Government of West Bengal or
the Housing Board, and further the finding of the Single
Bench as also of the Division Bench of the High Court to the
14
effect that the acquisition proceedings had been set in motion
after the scheme had been duly prepared was incorrect. It has
accordingly been argued that the observation of the Division
Bench in the State of Tamil Nadu vs.L.Krishnan (1996) 1
SCC 250 were not applicable to the facts of the case and that
in any event the Tamil Nadu Act which was under
consideration in that matter did not contain a provision
analogous to Section 27A of the 1972 Act and as a necessary
consequence, even assuming for a moment that a housing
scheme was in fact in existence when the Notification under
Section 4 of the Land Acquisition Act has been issued, the
said scheme had not been formalized in terms of Section 27-A
of the 1972 Act. It has been submitted that from the facts
writ large that the purpose of the acquisition and the
entrustment to the Bengal Peerless of the development of the
project was with the intention of giving huge financial benefits
to the Bengal Peerless which was not a public purpose and
was in any case unacceptable in terms of the purpose of a
housing scheme envisaged under the 1972 Act.
15
9. The arguments of the learned counsel for the appellants
have been controverted by the respondent State of West
Bengal. It has been pointed out that the housing scheme had
been designed in terms of the 1972 Act and all the relevant
provisions had been complied with and that in any case by
virtue of sub-section (2) of Section 17 thereof it was open to
the State Government to entrust the framing and execution of
a Housing scheme to the Housing Board on such terms and
conditions as it think fit, and that the scope of a similar
provision, Section 35 of the Tamil Nadu State Housing Board
Act 1961 had been examined by this Court in L.Krishnan’s
case (supra). It has also been argued that acquisition of the
land for the purpose of the execution of the housing scheme
was a public purpose with little or no element of profiteering
as the bare reading of the scheme would show, and that, in
any case, the middle and lower income groups were to have
subsidized housing on “no profit no loss” basis and to ensure
that the conditions of the scheme were scrupulously observed
the State Government had retained complete control over the
activities of Bengal Peerless. It has also been submitted that
16
as the appellants land owners had not filed objections under
Section 5-A of the Land Acquisition Act, they were precluded
from challenging the acquisition, more particularly after the
award had been rendered.
10. We have heard the learned counsel for the parties and
gone through the record very carefully. We find that three
basic issues arise for consideration in this matter. They are, i)
as to whether Part II or Part VII of the Act is applicable to the
present acquisition proceedings, ii) whether the Housing
Scheme was one that satisfied the requirement of Section 27A
of the 1972 Act and, iii) whether the acquisition and the
Scheme were a colourable exercise of power so as to give
undue benefit to Bengal Peerless. We now take up the three
issues cumulatively.
11. It has been submitted at the very outset that Bengal
Peerless was not a Government Company, as understood by
Section 3(cc) of the Act as the Government did not hold 51% of
the paid-up share of the capital. We find, however, that
Section 3(cc) is to be read along with Section 6 more
17
particularly Explanation 2 appended therewith. The aforesaid
provisions are reproduced hereunder:
“3(cc).the expression “corporation
owned or controlled by the State” means
anybody corporation established by or
under a Central, Provincial or State Act,
and includes a Government company as
defined in Section 617 of the
CompaniesAct,1956 (1 of 1956), a society
registered under the Societies Registration
Act,1860 (21 of 1860), or under any
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 for the
time being in force in any State, being a co-
operative society in which not less than
fifty-one 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.”
Section 6 – Declaration that land is
required for a public purpose.- (1) Subject
to the provisions of Part VII of this Act,
when the Appropriate Government is
satisfied after considering the report, if any,
made under section 5 A, sub-section (2),
that any particular land is needed for a
public purpose, or for a company, a
declaration shall be made to that effect
under the signature of a Secretary to such
Government or of some officer duly
authorized to certify its orders and different
18declarations may be made from time to time
in respect of different parcels of any land
covered by the same notification under
section 4, sub-section (1), irrespective of
whether one report or different reports has
or have been made (wherever required)
under section 5-A, sub-section (2):
[Provided that no declaration in
respect of any particular land covered by a
notification under section 4, sub-section
(1),-
(i) published after the commencement of the
Land Acquisition (Amendment and
Validation) Ordinance, 1967 but before the
commencement of the Land Acquisition
(Amendment) Act,1984 shall be made after
the expiry of three years from the date of
the publication of the notification; or
(ii) published after the commencement of the
Land Acquisition (Amendment) Act, 1984
shall be made after the expiry of one year
from the date of the publication of the
notification :
Provided further that no such declaration
shall be made unless the compensation to
be awarded for such property is to be paid
by a company, or wholly or partly out of
public revenues or some fund controlled or
managed by a local authority.
19
[Explanation 1. – In computing any of
the periods referred to in the first proviso,
the period during which any action or
proceeding to be taken in pursuance of the
notification issued under Section 4, sub-
section (1),is stayed by an order of a Court
shall be excluded.
Explanation 2.- Where the
compensation to be awarded for such
property is to be paid out of the funds of a
corporation owned or controlled by the
State, such compensation shall be deemed
to be compensation paid out of public
revenues].
(2) Every declaration shall be
published in the Official Gazette, [and in
two daily newspapers circulating in the
locality in which the land is situate of which
at least one shall be in the regional
language, and the Collector shall cause
public notice of the substance of such
declaration to be given at convenient places
in the said locality (the last of the date of
such publication and the giving of such
public notice, being hereinafter referred to
as the date of publication of the
declaration), and such declaration shall
state], the district or other territorial
division in which the land is situate, the
purpose for which it is needed, its
approximate area, and where a plan shall
have been made of the land, the place
where such plan may be inspected.
20
(3) The said declaration shall be
conclusive evidence that the land is needed
for a public purpose or for a company, as
the case may be; and, after making such
declaration the Appropriate Government
may acquire the land in a manner
hereinafter appearing.
12. A perusal of the Second proviso and Explanation 2
in particular reveals that if the compensation awarded for the
property is paid substantially out of the funds of a
Corporation owned or controlled by the State, such
compensation will be deemed to be paid out of public funds
and as such would satisfy the test of acquisition for a public
purpose.
13. We see from the record that as per letter issued by
the Land Acquisition Collector on 13th November 2001 to the
Housing Ministry of the State Government, a request had been
made that a sum of Rs.3.00 Crores which represented about
50% of the compensation of the acquired land be deposited.
This memo had been forwarded by the State Government to
the Housing Board and on 23rd November 2001 a sum of
21
Rs.1.70 crores towards compensation had been sent by
Bengal Peerless to the Land Acquisition Collector through the
Housing Board. It appears that on 30th October 2003 the State
Government had requested the Housing Board to make
arrangements for the balance payment of compensation of
about Rs.82,04,138 and by a memorandum of 31st October
2003 the Government of West Bengal had directed the
Housing Board to pay the additional balance compensation
which too was defrayed by an account payee cheque dated
03rd November 2003 drawn on the Bank of Maharashtra. The
account statement of the Bank of Maharashtra was produced
before us for perusal and this statement supports the
argument that the aforesaid amount had, indeed, been paid
from the funds of the Housing Board which is completely
owned and controlled by the State Government. In their
written submissions the appellants have doubted the accuracy
of this statement, by asserting that they had not been able to
verify its contents as it had been produced for the first time in
this Court. We find that even if this objection is accepted and
the statement ruled out of consideration, the other evidence
22
on record does indicate that a substantial part of the
compensation had been paid from Government funds. In
Pratibha Nema case (supra), that is what this Court had to
say:
We may now advert to Section 6. It
provides for a declaration to be made by
the Government or its duly authorized
officer that a particular land is needed for
a public purpose or for a company when
the Government is satisfied after
considering the report, if any, made
under Section 5-A(2). It is explicitly made
clear that such declaration shall be
subject to the provisions of Part VII of the
Act which bears the chapter heading
“Acquisition of Land for Companies”.
Thus, Section 6 reiterates the apparent
distinction between acquisition for a
public purpose and acquisition for a
company. There is an important and
crucial proviso to Section 6 which has a
bearing on the question whether the
acquisition is for a public purpose or for
a company. The second proviso lays
down that”no such declaration shall be
made unless the compensation to be
awarded for such property is to be paid
by a company, or wholly or partly out of
public revenues or some fund controlled
or managed by a local authority”.
23
Explanation 2 then makes it clear that
where the compensation to be awarded is to
be paid out of the funds of a corporation
owned or controlled by the State, such
compensation shall be deemed to be
compensation paid out of public revenues.
Thus, a provision for payment of
compensation, wholly or partly, out of
public revenues or some fund controlled or
managed by a local authority is sine qua
non for making a declaration to the effect
that a particular land is needed for a public
purpose. Even if a public purpose is behind
the acquisition for a company, it shall not
be deemed to be an acquisition for a public
purpose unless at least part of the
compensation is payable out of public
revenues which includes the fund of a local
authority or the funds of a corporation
owned or controlled by the State. However,
it was laid down in Somawanti case that the
notification under Section 6(1) need not
explicitly set out the fact that the
Government had decided to pay a part of
the expenses of the acquisition or even to
state that the Government is prepared to
make a part of contribution to the cost of
acquisition. It was further clarified that the
absence of a provision in the budget in
respect of the cost of acquisition, whole or
part, cannot affect the validity of the
declaration. The majority Judges of the
Constitution Bench also clarified that a
contribution to be made by the State need
not be substantial and even the token
contribution of Rs 100 which was made
in that case satisfied the requirements of
the proviso to Section 6(1). The contribution
of a small fraction of the total probable cost
24
of the acquisition does not necessarily
vitiate the declaration on the ground of
colourable exercise of power, according to
the ruling in the said case. Following
Somawanti, the same approach was adopted
in Jage Ram v. State of Haryana. The
question, whether the contribution of a
nominal amount from the public exchequer
would meet the requirements of the proviso
to Section 6, had again come up for
consideration in Manubhai Jehtalal Patel v.
State of Gujarat. D.A. Desai, J. after
referring to Somawanti, speaking for the
three-Judge Bench observed thus: (SCC p.
555, para 4)
“It is not correct to determine the validity
of acquisition keeping in view the amount of
contribution but the motivation for making
the contribution would help in determining
the bona fides of acquisition. Further in
Malimabu case contribution of Re 1 from the
State revenue was held adequate to hold
that acquisition was for public purpose with
State fund. Therefore, the contribution of Re
1 from public exchequer cannot be dubbed
as illusory so as to invalidate the
acquisition.”
14. In Inderjeet Parekh Vs State of Gujarat in which a
somewhat restricted meaning has been given to the extremely
broad parameters laid down in Pratibha Nema’s case (Supra),
but it has nonetheless been observed that if a reasonable
25
amount of compensation had been drawn out Government
funds, it would satisfy the requirement of a public purpose as
per the Act. In the present case, as already mentioned above,
we find that a substantial part of the compensation has,
indeed, been paid by the State Government or by the Housing
Board which clearly satisfies the test of public purpose. In
this background, we endorse the finding of the Division Bench
that the procedure envisaged in Part II and not in Part VII of
the Act would be applicable. This is precisely what has been
done.
15. The learned Counsel for the Appellants has also
contended that as the housing scheme had not been prepared
in terms of the 1972 Act it had no valid sanction. It has been
highlighted that the entire scheme had been designed to help
Bengal Peerless to make undue profits and the very purpose of
1972 Act had, thus, been frustrated.
16. The learned counsel for the respondent has on the
contrary referred us to Sections 17, 18 and 27A of the 1972
Act to submit that the said Act specifically provided for the
transfer of the acquired land to a Joint Sector Company for
26
the purpose of the execution of the Housing Scheme with the
previous approval of the State Government and that the
scheme had indeed been framed under Sections 17 and 18
and thereafter entrusted for execution to the Bengal Peerless.
It has been submitted that though Bengal Peerless had been
entrusted with the execution of the scheme the overall control
remained with the Housing Board which was, in fact, an
extension of the State Government itself and the State
Government a fortiori retained overall control in the execution
of the scheme. We find merit in this submission. The record
indicates that as a consequence of a Memorandum of
Understanding dated 13th September 1993 a Joint Sector
Company for the execution of the housing scheme had been
created on 20th May 1994 and it was provided that 49.5% of
the shares capital would be held by each of the two i.e. the
Housing Board and Bengal Peerless and the balance 1% would
be held by the public and the company would be run
independently by nine Directors, of whom five including the
Chairman were to be nominated by the State Government. It
is also relevant that the scheme had, in fact, been prepared by
27
the State Government after due deliberation and had been
initiated as per the provisions of the 1972 Act by virtue of a
meeting held on 17th May 2000 in the Office of the Secretary,
Housing Department, the Commissioner of the Housing
Board, the Land Acquisition Collector and several other senior
officials and the proposal had been mooted for the acquisition
of the land for the purpose of a scheme for weaker sections of
society and others with modest incomes. The scheme also
provided for the construction of 1800 dwelling units of various
categories with at least 50% to be earmarked for the lower and
middle income groups with the price subsidized for the former
and all flats for the middle income group to be provided on “no
profit no loss” basis, and for facilities for schools, roads etc.
for the benefit of those who were ultimately to reside in the
dwelling units. Significantly also, the scheme provided that
there would be no escalation on account of any reason
whatsoever for the price charged for the dwelling units and
that the allotment of the dwelling units would be on the basis
of a lottery. Section 18 of the 1972 Act which deals with the
28
matters to be provided for by housing schemes is reproduced
below:
“Sec.18. Matters to be provided for
by housing schemes. – Notwithstanding
anything contained in any other law for the
time being in force, a housing scheme may
provide for all or any of the following
matters, namely :-
(a) the acquisition by purchase,
exchange or otherwise of any property
necessary for the scheme;
(b) the construction and
reconstruction of buildings;
(c) the sale, letting out or exchange of
any property included in the scheme;
(d) roads, drainage, water-supply,
lighting,
schools,hospitals,dispensaries,marketplace
s,parks,playgrounds and open spaces
within a housing scheme;
(e) the reclamation or reservation of
lands for markets, gardens,schools,
dispensaries, hospitals and other amenities
in a housing scheme;
29
(f) the letting out,management and
use, of the Board premises;
(g) accommodation for any class of
inhabitants;
(h) the advancing of money for the
purpose of the scheme;
(i) the collection of such information
and statistics as may be necessary for
successful implementation of the scheme;
(ia) development of any urban or rural
area for successful implementation of
housing schemes and for purposes ancillary
or incidental thereto;
(j) any other matter for which, in the
opinion of the Board or the State
Government, it is expedient to make
provision with a view to providing housing
accommodation and to improving or
developing of any area included in a
housing scheme.”
17. We find that the scheme as laid fully satisfies the tests
laid down in this provision. Sections 17, 27A and 28 of the
1972 Act read as under:
30
” 17. Powers and duties of Board to
undertake housing schemes.-
(i) Subject to the provisions of this Act the
Board may, from time to time, incur
expenditure and undertake works for the
framing and execution of such housing
schemes as it may consider necessary and
such housing schemes may include housing
schemes in relation to lands and buildings
vested in or in the possession of the State
Government.
(2) The State Government may, on such
terms and conditions as it may think fit to
impose, entrust to the Board the framing
and execution of any housing scheme
[,whether provided for by this Act or not,]
and the Board shall thereupon undertake
the framing and execution of such scheme.
(3) The Board may, on such terms and
conditions as may be agreed upon and with
the previous approval of the State
Government, take over for execution any
housing scheme, on behalf of a local
authority or co-operative society, or on
behalf of an employer, for building houses
mainly for the residence of the employees of
such local authority, co-operative society or
employer, as the case may be [or for the
residence of the members of such co-
operative society].
31
27A. Power to entrust existing, or new,
joint sector company with housing
scheme.- Notwithstanding anything
contained in this Act, the Board may, if it
considers it necessary so to do in the public
interest and is satisfied that an existing, or
new, joint sector company is willing to
comply, or has complied, with such terms
and conditions as the State Government
may think fit to impose,entrust, with the
previous approval of the State
Government,any existing, or new, joint
sector company with any housing scheme
for execution, and different existing, or new,
joint sector companies may be so entrusted
with different housing schemes for
execution.
28. Power to acquire.- (1) Where any land
is needed for the purpose of a housing
scheme or for performing any other duties
or functions of the Board, the Board may
enter into an agreement with any person for
the acquisition by purchase, lease or
exchange, of his rights and interests in
such land either wholly or in part, on
payment of an amount proportionate to the
loss or deprivation caused to the enjoyment
of the land.
(2) The Board may also take steps for the
compulsory acquisition of any land or any
interest therein required for the execution of
a housing scheme or for performing any
other duties or functions of the Board and
such acquisition of any land or any interest
therein shall be deemed to be acquisition
for a public purpose within the meaning of
the Land Acquisition Act. ”
32
18. We observe that Section 27-A specifically authorizes the
Housing Board in public interest to entrust a housing scheme
to a Joint Sector Company with the previous approval of the
State Government. We find that there is no warrant for the
proposition that unless a budgetary provision is made by the
Housing Board or that a final scheme is prepared in
accordance with Section 23 of the 1972 Act, no land can be
acquired for the purpose of execution of a housing scheme. It
is significant that Section 17 of the 1972 Act itself gives the
power to the Housing Board to make a scheme and that
Section 27A further authorizes the Board in public interest to
entrust a housing scheme to a Joint Sector Company for
execution and for that purpose Section 28(2) of the Act further
authorizes the Housing Board to take steps for compulsory
acquisition of any land required for the purpose of a housing
scheme. While dealing with Section 35 of the Tamil Nadu
Housing Board Act, 1961 which is akin to Section 17 of the
1972 Act, this is what this Court had to say in L. Krishanan
Case (supra):
33
“……The Housing Board is under an
obligation to carry out certain other
schemes also as are provided in these
sections. Sub-section (2) of Section 35
states that the Government may on such
terms and conditions as they may think fit
to impose, transfer to the Board the
execution of any housing or improvement
scheme not provided for by the Act. On
such transfer, the Board is under obligation
to undertake the execution of such scheme
as if such scheme has been provided for by
the Housing Board Act.”
Para 15. These provisions make it
abundantly clear that the duty of the
Housing Board is not merely the execution
of the housing or improvement scheme
prepared and published by it under the Act
but extends to executing other schemes as
well, as are made over to it or agreed to be
undertaken by it. Now, when Section 35(2)
speaks of transfer to the Board the
execution of any housing or improvement
scheme not provided for by this Act, it
certainly cannot mean a scheme prepared
in accordance with the provisions of the
Housing Board Act. Moreover, while
transferring the scheme to the Housing or
improvement scheme prepared in
accordance with the Housing Board Act.
Here again, the taking over the scheme by
the Housing Board is subject to such terms
and conditions as may be agreed upon by
both. Section 36 indeed discloses that what
is entrusted to the Housing Board is the job
of clearance or improvement of any slum
34
area. The Government while directing the
Board to undertake the clearance or
improvement of a particular area can also
direct the Board to frame and execute “such
housing or improvement scheme under this
Act as the Government may specify” and the
Board is obliged to execute such scheme as
if such scheme is prepared by the Act.”
Para 16. In such circumstances, it
would not be right to contend that unless a
final and effective scheme prepared in
accordance with the provisions of Chapter
VII of the Housing Board Act is in existence,
the Government cannot issue a notification
under section 4 of the Land Acquisition Act
for acquiring the land required for execution
of the schemes by the Housing Board. To
repeat, the Housing Board is obliged to
execute not only the housing or
improvement schemes prepared under the
said Chapter but also certain other schemes
referred to in Sections 35 and 36. For
example the Government may conceive a
particular scheme and ask the Housing
Board to execute on such terms and
conditions as the Government may specify.
In such a situation, there is no question of
preparing a housing or improvement
scheme by the Housing Board in
accordance with the provisions of Housing
Board over again. So far as the scheme
framed by the Government is concerned,
there is no enactment governing it. It can,
therefore, be a scheme as ordinarily
understood. Similar would be the case
where the scheme undertaken by a local
35
authority is made over the Housing Board
by mutual agreement.”
19. In West Bengal Housing Board & Ors. vs. Brijendra
Prasad Gupta & Ors. (1997) 6 SCC 207 while taking an
overall view of the entire matter and also dealing with the
submission that some profit motive could be involved in
favour of a Joint Sector Company executing a housing
scheme, this is what this Court had to say:
“Para 19. In this background it is difficult
for us to accept the submissions of the Writ
Petitioners that the purpose for which the
requisition had been made was not a public
purpose within the meaning of the Act or
that the circumstances of the cases did not
justify the invocation of the provisions of
the Act or that the exercise of powers under
that Act was colourable exercise of power.
Para 25. It is a matter of common
knowledge that there is acute shortage of
housing accommodation both in rural and
urban areas of the country. Since late the
prices of the real estate have sky-rocketed
making it beyond the reach of low income
and middle income people. The State has
duty to perform to give shelter to homeless
people specially to people in the income
group. In the present case the State was
unable to meet this gigantic task. In the
background of shortage of resources which
the State has the legislative enacted the
36
Housing Board Act and constituted the
Housing Board to meet this challenge of
providing houses to the people falling in the
low income group and to others. Again the
Housing Board was unable to meet the
challenge. The Housing Board Act was
amended to bring in the concept of joint
venture in order to tap the resources of the
private sector. Thus a joint venture came
into being as disclosed in the
supplementary affidavit of the State as to
how the process of starting of joint venture
had been gone into and how the Board of
Directors of the joint sector company has
been constituted and how the State and
Housing Board exercise control over this
joint sector enterprise.
26. Simply because there is an element of
profit, it could not make the whole scheme
illegal. A private entrepreneur will certainly
look to some profit but to see that the profit
motive does not lead to exploitation even of
the rich and that the houses are available to
the poor people and to middle class people
at nominal or affordable prices, or even on
no-profit-no-loss basis, the Housing Board
exercises the necessary control. It is
certainly a public purpose to provide
houses to the community especially to poor
people for whom the prices are beyond their
means and they would otherwise never be
able to acquire a house.
37
27. What has been done in the present
case is that the profit earned on sale of flats
of HIG have been pumped in to subsidize
the prices of the houses falling in LIG and
in this there would certainly be an element
of profit both for the Housing Board as well
as the private company in the joint venture
for selling flats of HIG. We fail to see how
public purpose is not being served in the
present case.
28. The Court must shake off its myth
that public purpose is served only if the
State or the Housing Board or the joint
sector company does not earn any profit.
There cannot be any better authority than
the State or the statutory corporation to
supervise or monitor the functions of the
joint venture company. Courts will certainly
step in if the public purpose is sought to be
frustrated.
29. In the present case Directors
appointed by the Housing Board/State on
the Board of Directors of the joint venture
company would certainly see that no
runaway profit is earned and that sale price
of HIG houses is guided by market forces
but there is no exploitation. Every section of
the society needs protection from
exploitation. It is however not possible nor
desirable to lay down any principle as to
how this is to be done.
38
33. We find in the present backdrop the
inability of the State Government and the
Housing Board to meet the challenge to
achieve the target of even constructing
50,000dwelling units in urban areas to
tackle the acute problem of homelessness
for different categories of people particularly
those falling in Lower Income Group (LIG)
and Middle Income Group (MIG); the State
Legislature amending the Housing Board
Act and providing for incorporation of a
joint sector company for executing the
housing scheme on the terms and
conditions to be approved by the
Government; selection of the private
entrepreneur for incorporation of the joint
sector company with the Housing Board;
the constitution of the Board of Directors of
the joint sector company; the control of the
Housing Board and the State Government
over the joint sector company to execute the
scheme of the housing project; control on
the fixation of prices of the flats to be
constructed by the joint sector company;
relevant factors taken into consideration for
execution of the housing project and all
these to tackle the urgent and growing need
of providing shelter to the LIG and MIG
people when it is not possible for those
people to acquire a house of their own with
escalating real estate prices; it cannot be
said that the public purpose is not being
served or the incorporation of the joint
sector company,viz. Bengal Peerless
Housing Development Co.Ltd. and the
execution of the housing project “Anupama”
by this joint sector company, in the given
circumstances, on the land in question
which is part of the bigger piece of land is
39
not in public interest. The Housing Board
acts as regulatory body and the State
Government oversees the housing project
and has also imposed certain terms and
conditions. No ulterior purpose has been
alleged and it cannot be said that the power
exercised by the State authorities are in any
way arbitrary or irrational or there is any
abuse of power. Rather the legal
compulsion of the State and the Housing
Board to get the housing project executed
through a joint sector company is quite
understandable. We also find the impugned
action is within the purview of law and is
valid.”
20. In view of what has been observed above, and in the
background of the present case, it becomes crystal clear that
though the execution of the housing scheme has been
entrusted to a Joint Sector Company, the overall control over
the project has been retained by the Government controlled
Board of Directors, full details of the scheme have been
provided with large provisions for the benefit of the poorer
sections of society, with the allotment of tenements either on a
subsidized price or on “no profit no loss” basis for the low and
middle income groups respectively, allotment by draw of lots
to avoid any arbitrariness and a complete freeze on the price
40
of residential accommodation with no escalation whatsoever
for whatever reason and the provision of facilities for effective
and comfortable living such as schools, roads, sewage etc. We
are, therefore, of the opinion that the housing scheme fully
satisfies the tests laid down by the Supreme Court in the two
cases cited immediately above.
21. There is yet another aspect which needs to be dealt with.
It appears from the record, and it was so pointed out during
the course of arguments, that the appellants had not filed any
objection to the acquisition on the plea that some assurance
had been held out that they too would be allowed to
participate in the housing scheme. This fact has been denied
by the respondents and it has been emphasized that as per
letter dated 8th March 2001 the land-owners had, in fact,
waived their right to challenge the acquisition. This letter is
reproduced hereunder in extenso:
“To Date:8th March 2001
The Special Land Acquisition Officer,
41
South 24 – Parganas, 5th Floor,
New Treasury Buildings,
Alipore,Kolkata – 700027.
Sir,
Re: Barakhola Mouza J.L.No.21 P.S.Kasba
This has reference to your
acquisition notice dated 12.1.2001 for
12.67 acres land in Plot No.125 & 126 of
the subject mouza.
In this connection, I would like to
submit that I am the Power of Attorney
(Registered) holder of the successors of
late Abhay Pada Pain who was the owner
of the aforesaid plots as evident from the
ROR. A copy of the P/A is enclosed for
your kind perusal. Incidentally Plot
No.126 was duly demarcated showing the
vested portions and the retained portions
by the District Authorities as per copy of
the Map enclosed along with a copy of the
Minutes of the meetings held in Chamber
of the then ADM & L.R.O.South 24 –
Parganas on 20.3.1996.
Subsequently 13.56 acres of land
was sold to the following parties and
registered under section 41 on 25.6.1999
of which deed copies are enclosed. Since
the tax has not been assessed, as yet for
value to ascertain additional stamp duty,
42
the same have not been paid so far.
However, enquiries are under way, but in
the meantime Khazna has been paid up –
to – date as per copies of receipts
dt.18.1.2001 enclosed herewith.
The transfers are:-
a) Sri Debabrata Choudhary :
b) Sri Shreekanta Ray : 6.00 acres
c) M/s. Anarean Estate Co.Ltd. :
d) Sri Swadesh Ghosh :
e) Sri Swapan Dey :
f) Smt.Ila Dey : 6.58 acres
g) Sri Saptashi Dey :
h) Smt.Basanti Ghosh :
The aforesaid transferees did not
raise any objection to govt. acquiring. The
land for housing, in face, I had moved an
idea to West Bengal Housing Board and
willing to negotiate along with the
transferees’ price for your acquisition.
Please do let me known for any
further information and clarification /
assistance, a may be required.
Thanking you, I am
Yours faithfully
Sd/-Urmila Ray
Constituted Attorney of
Smt. Lily Paul
43
Smt. Dolly Paul
Smt. Mira Rani
Basu
Enclosed
a) Copies of 8 nos.deed
b) Copy of power of attorney
c) Copy of witness by ADM,DL,LRO
d) Copy of Minutes of meeting dt.
26.3.96
e) Copy of Khana receipts
C 735407 dt.Rs.32,277/-
C 735408 dt.18.1.01 for Rs.2709″
22. It is significant that this letter written by the Attorney
Urmila Roy, on behalf of all the land owners spells out that the
owners had in fact been willing to negotiate the price for the
land at the time when the acquisition were still incomplete as
only the Notification under Section 4 of the Act had, at that
stage, been issued (4th December 2000). It is also significant
that the declaration under Section 6 had been issued on 29th
November 2001 and the award rendered on 27th December
2003. It is, therefore, evident that the land owners had, in
44
fact, acquiesced to the acquisition and cannot now turn
around to say that the acquisition was bad in law.
23. In view of the above findings, we are of the opinion that
no further discussion on the other marginal issues that have
been raised, needs to be made. The appeals are, accordingly,
dismissed.
………………………………J.
(TARUN CHATTERJEE)
……………………………….J.
( HARJIT SINGH BEDI )
New Delhi,
Dated: March 23, 2009