Civil Appeal No 2063 of 1970
From the Judgment and Order dated 26 2 1970 of Punjab and Haryana High Court in LPA No 28369
O P Sharma and M section Dhillon for the Appellant
section K Mehra P N Puri E M section Anam and M K Dua for Respondents Nos 1 3
K J John for Respondent No 4
The Judgment of the Court was delivered by BAHARUL ISLAM J
This appeal by the State of Punjab and two others namely the Collector Rupar District and the Sub Divisional Officer Civil cum Land Acquisition Collector Rupar is on a certificate granted by a Division Bench of the High Court of Punjab and Haryana in respect of its judgment in a Letters Patent Appeal holding the acquisition of the land in question to be bad in law on the grounds that the Food Corporation of India for which the Land in question was sought to be acquired was not a Company within the meaning of section 3e of the Land Acquisition Act that the land had also not been acquired for a public purpose and that the State could acquire the land under that Act only for a public purpose or for the purpose of a Company
The material facts of the case may be stated thus Nine biswas of the disputed land situated within the municipal area of Morinda in the District of Rupar was owned by respondent No 1 Raja Ram Respondents No 2 and 3 are Raja Ram s sons
The State of Punjab issued a notification dated December 17 1968 under section 4 read with section 17 of the Land Acquisition Act of 1894 hereinafter called the LA Act
The notification related to 15 different plots of land including the land of the present acquisition proceedings
The material portion of the notification is as follows Whereas it appears to the President of India that the land is likely to be needed by Government at public expense for a public purpose namely for the construction of godowns for storage of food grains at Morinda it is hereby notified that the land in the locality described below is likely to be required for the above purpose      Further in exercise of the powers conferred by the said Act the President of India is pleased to direct that the action under Section 17 shall be taken in this case on the 714 grounds of urgency and provisions of Section 5 A shall not apply in regard to this acquisition
 On the same day another notification under Sections 6 and 7 read with Section 172c of the LA Act was issued
The material portion of this notification runs thus Whereas the President of India is satisfied that the land specified below is needed by Government at the public expense for a public purpose namely for the construction of godowns for storage of food grains at Morinda it is hereby declared that the land described in the specification below is required for the aforesaid purpose
This declaration is made under the provisions of Section 6 of the Land Acquisition Act 1894    3
Against the aforesaid notification a writ petition was filed by respondents No 1 to 3
The writ petition was heard by a single Judge of the High Court and was dismissed
The learned Single Judge inter alia found that the provisions of Part VII of the LA Act relating to the acquisition of land for Companies were not applicable to the present case as the Food Corporation of India hereinafter called the Corporation was a department of Government and not a Company within the meaning of Section 3e of the LA Act although undoubtedly according to the learned Judge there was no manner of doubt about the fact that the land in dispute was in fact being acquired for the Corporation and that the purpose for which the land had been acquired was a public purpose
Against the aforesaid Order of the learned Single Judge a Letters Patent Appeal being LPA No 1283 of 1969 was filed by respondents No 1 to 3 before the Division Bench that allowed the appeal and quashed the land acquisition proceedings as stated earlier
With respect we find it difficult to agree with the learned division bench when it held that the Corporation was not a Company within the meaning of section 3e of the LA Act which runs thus 3
In this Act unless there is something repugnant in the subject or context e the expression Company means a Company registered under the Indian Companies Act 1882 or under the English Companies Act 1862 to 1890 or incorporated by an Act of Parliament of the United Kingdom or by an Indian law or by Royal Charter or Letters Patent and includes a 715 society registered under the societies Registration Act 1860 and a registered society within the meaning of the or any other law relating to co operative societies for the time being in force in any State
 The section mentions in unmistakable terms that a company incorporated by an Indian law would be a Company  for the purposes of the LA Act
Now the corporation was admittedly created by section 3 of the Food Corporation Act 1964 hereinafter called the FC Act
That section states  3
1 With effect from such date as the Central Government may by notification in the Official Gazette specify in this behalf the Central Government shall establish for the purposes of this Act a Corporation known as the Food Corporation of India
2 The Corporation shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power subject to the provisions of this Act to acquire hold and dispose of property and to contract and may by that name sue and be sued
 Sub section 2 which we need hardly say is an Indian law clothes the Corporation with the attributes of a company
It cannot therefore be contended with any plausibility that the Corporation is not a Company  within the meaning of the definition of that term appearing in clause e of section 3 of the LA Act
Learned counsel for the appellant then urged that the Corporation is a Government department
We are unable to accept this submission also
A Government department has to be an organisation which is not only completely controlled and financed by the Government but has also no identity of its own
The money earned by such a department goes to the exchequer of the Government and losses incurred by the department are losses of the Government
The Corporation on the other hand is an autonomous body capable of acquiring holding and disposing of property and having the power to contract
It may also sue or be sued by its own name and the Government does not figure in any litigation to which it is a party
It is true that its original share capital is provided by the Central Government section 5 of the FC Act and that 11 out of the 12 members of its Board of Directors are appointed by that Government section 7 of the FC Act but then these factors may at the most lead to the conclusion about which we express no final opinion that the Corporation is an agency or instrumentality of the Central Government
In this connection we may cite 716 with advantage the following observations of this Court in Ramana Dayaram Shetty vs The International Authority of India and Ors A Corporation may be created in one of two ways
It may be either established by statute or incorporated under a law such as the or the 
Where a corporation is wholly controlled by government not only in its policy making but also in carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation there can be no doubt that it would be an instrumentality or agency of Government
But ordinarily where a corporation is established by statute it is autonomous in its working subject only to a provision often times made that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters
So also a Corporation incorporated under law is managed by a Board of Directors or committee of management in accordance with the provisions of the statute under which it is incorporated
When does such a corporation become an instrumentality or agency of Government  Is the holding of the entire share capital of the Corporation by Government enough or is it necessary that in addition there should be a certain amount of direct control exercised by Government and if so what should be the nature of such control Should the functions which the Corporation is charged to carry out possess any particular characteristic or feature or is the nature of the functions immaterial  Now one thing is clear that if the entire share capital of the Corporation is held by Government it would be a long way towards indicating that the Corporation is an instrumentality or agency of Government
But as is quite often the case the Corporation established by statute may have no share or shareholders in which case it would be a relevant factor to consider whether the administration is in the hands of a Board of Directors appointed by Government though this consideration also may not be determinative because even where the directors are appointed by Government they may be completely free from governmental control in the discharge of their functions
 Even the conclusion however that the Corporation is an agency or instrumentality of the Central Government does not lead to the further inference that the Corporation is a Government department
The reason is that the FC Act has given the Corporation an individuality apart 717 from that of the Government
In any case the Corporation cannot be divested of its character as a Company  within the meaning of the definition in clause e of section 3 of the LA Act for it completely fulfils the requirements of that clause as held by us above
The Corporation being a Company  compliance with the provisions of Chapter VII of the LA Act had to be made in order to lawfully acquire any land for its purpose
It is not denied that such compliance is completely lacking in the present case
As a result of the foregoing discussion it must be held that the land in dispute has not been acquired in accordance with law although our reasons in that behalf are different from those forming the basis of impugned judgment
This appeal is thus found to be without merit and is dismissed but with no order as to costs
SR Appeal dismissed


Summary:
Dismissing the State appeal on certificate the Court  HELD 1 The acquisition of land for the Food Corporation of India is not in accordance with law for the reason that compliance with the provisions of Chapter VII of the Land Acquisition Act had not been made
717 A B 2 The Food Corporation of India is a Company within the meaning of the term appearing in clause e of section 3 of the Land Acquisition Act 1894
Section 3 e mentions in unmistakable terms that a company incorporated by an Indian law would be a Company for the purposes of the Land Acquisition Act
The Corporation was admittedly created by section 3 of the Food Corporation Act 1964
Sub section 2 of section 3 of the Food Corporation Act 1964 is an Indian Law and clothes the Corporation with the attributes of a company
715A E 3 A Government department has to be an organisation which is not only completely controlled and financed by the Government but has also no identity of its own
The money earned by such a department goes to the exchequer of the Government and losses incurred by the department are losses of the Government
The Corporation on the other hand is an autonomous body capable of acquiring holding and disposing of property and having the power to contract
It may also sue or be sued by its own name and the Government does not figure in any litigation to which it is a party
It is true that its original share capital is provided by the Central Government and that 11 out of the 12 members of its Board of Directors are appointed by the Central Government but then these factors may at the most lead to the conclusion that the Corporation is an agency or instrumentality of the Central Government
715E H Even the conclusion however that the Corporation is an agency or instrumentality of the Central Government does not lead to the further inference that the Corporation is a Government department
The reason is that the Food Corporation Act has given the Corporation an individuality apart from that of the Government
In any case the Corporation cannot be divested of its character as a Company within the meaning of the definition in clause e of section 3 of the Land Acquisition Act for it completely fulfils the requirements of that clause
716G H 717A B Ramana Dayaram Shetty vs The International Authority of India and Ors  applied