* THE HON’BLE Ms. JUSTICE G. ROHINI + WRIT PETITION No.19941 of 2008 and WRIT PETITION No.28012 of 2008 % 16/09/2010 # 1. K. Somaraju and 2 others. … Petitioners Vs. $ 1. State of A.P. rep. By its Principal Secretary Revenue Department, Secretariat, Hyderabad., And 4 others. .. Respondents < Gist > Head Note: ! Counsel for the petitioner s : Sri Ch. Dhanamjaya ^ Counsel for the respondents 1 to 4: Govt. Pleader for Land Acquisition Counsel for the 5th respondent : Sri Vedula Venkata Ramana Cases referred : [1] AIR 1952 SC 252 2 AIR 1963 SC 151 3 (2007) 1 SCC 641 4 (2008) 9 SCC 552 5 AIR 1965 SC 427 6 (2008) 1 SCC 728 7 (2003) 10 SCC 626 8 (2010) 7 SCC 129 9 (1975) 4 SCC 285 10 1998 (9) Supreme 361 11(2005) 7 SCC 627 12AIR 2010 SC 1664 13 (2010) 5 SCC 590 THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.19941 of 2008 and WRIT PETITION No.28012 of 2008 Dated: 16.09.2010 Between: In W.P.No.19941 of 2008: 1. K. Somaraju and 2 others. … Petitioners And 1. State of A.P. rep. By its Principal Secretary Revenue Department, Secretariat, Hyderabad., And 4 others. .. Respondents In W.P.No.28012 of 2008: 1. Chandaka Venkata Subba Rao and 9 others.… Petitioners And 1. State of A.P. rep. By its Principal Secretary Revenue Department, Secretariat, Hyderabad., And 5 others. .. Respondents THE HON’BLE Ms. JUSTICE G. ROHINI WRIT PETITION No.19941 of 2008 and WRIT PETITION No.28012 of 2008 COMMON ORDER : These two writ petitions are filed seeking a declaration that the proceedings initiated under the Land Acquisition Act, 1894 (for short, ’the Act’) for acquiring the lands of the petitioners situated in Moolapet and Ponnada Villages of U. Kothapalli Mandal, and K. Perumallapuram Village of Thondangi Mandal in East Godavari District for Special Economic Zone (for Refinery and other Industries and later stage for future requirement) are arbitrary and illegal. The petitioners in W.P.No.19941 of 2008 claim to be the absolute owners and possessors of the different extents of land situated in Sy.No.45/1 of Moolapet Village and Sy.No.367 of Ponnada Village of U. Kothapalli Mandal, E.G. District. By notifications dated 29.12.2005 and 1.1.2006 published under Section 4 (1) of the Land Acquisition Act, 1894 their lands were sought to be acquired for a public purpose to wit., for Special Economic Zone (for Refinery and other Industries and later stage for future requirement). The lands of the petitioners in W.P.No.28012 of 2008 situated in R.S.Nos.619, 621, 622, 623, 705/4, 705/5, 706/1, 708/1, 707/1 and 709/1 of K. Perumallapuram Village, Thondangi Mandal, are also sought to be acquired for the same purpose under two notifications dated 5.1.2006. Pursuant to the notification dated 1.1.2006 relating to the lands in Ponnada Village and the notifications dated 5.1.2006 relating to the lands in K. Perumallapuram Village, the enquiry under Section 5-A of the Act was conducted and the objections raised by the petitioners were rejected. So far as the notification dated 29.12.2005 relating to the lands in Moolapet Village though the urgency clause under Section 17 (4) of the Land Acquisition Act was invoked and the enquiry under Section 5-A of the Act was dispensed with, subsequently by virtue of the orders passed by this Court in different writ petitions directing to conduct enquiry, notices under Section 5-A were issued and the objections raised by the petitioners 1 and 2 in W.P.No.19941 of 2008 were rejected. Thereafter the declarations under Section 6 of the Act were made on 28.10.2006 and 27.12.2006, the award enquiry was held and the award was also passed on 8.2.2008 determining the compensation to which the claimants were entitled to. The main contention in the writ petitions is that the formation of Special Economic Zone as contemplated under Special Economic Zones Act, 2005 (for short, ‘SEZ Act’) is not a public purpose so as to enable the State to acquire the private property in exercise of the power of eminent domain. It is contended that as per the provisions of the SEZ Act, the Government can recognize or notify a particular area as a Special Economic Zone to pave way for the entrepreneur to purchase a land for commercial or industrial activity, but it does not provide for any acquisition of land by the State for that purpose. Even assuming that the formation of Special Economic Zone amounts to public purpose, it is contended that under the impugned notifications the land was sought to be acquired for transferring the same to various companies through a private limited company called Kakinada Special Economic Zone Private Company Limited. Thus, according to the petitioners, the acquisition under the impugned notifications is for a company and therefore, the procedure laid down in Part-VII of the Land Acquisition Act, 1894 is required to be followed. Since the impugned acquisition was not in accordance with Part-VII of the Act, it is contended in the writ petitions that the entire proceedings are vitiated and are liable to be set aside on that ground alone. In the counter-affidavit filed on behalf of the Special Deputy Collector (Land Acquisition), it is explained that the lands of the petitioners are acquired for public purpose namely for establishment of industries through Kakinada Special Economic Zone, a developer under the SEZ Act, 2005 but not for a private company. It is also explained that the lands were sought to be acquired in furtherance of a scheme approved by the Central Government for (a) generation of additional economic activity; (b) promotion of exports of goods and services; (c) promotion of investment from domestic and foreign sources; (d) creation of employment opportunities; (e) development of infrastructure facilities and maintenance of sovereignty and integrity of India. In the light of the above objects, the impugned acquisition for the purpose of setting up of Special Economic Zone is well within the power of the Sovereign State and the acquisition is not for the benefit of a private company. In the counter-affidavit filed on behalf of Kakinada SEZ, it is stated that in pursuance of the policy decision of the Government of India, the State of Andhra Pradesh issued G.O.Ms.No.151, (Industries & Commerce Department) dated 9.4.2002 approving the policy for SEZ in the State and enunciating a policy by name A.P. SEZ Policy in its executive power under Article 162 of the Constitution of India. The formation of SEZ and the connected regulatory mechanism have been detailed in the said policy. The Kakinada SEZ is a Special Purpose Vehicle (SPV) 100% subsidiary company of M/s. Kakinada Seaports Limited which had applied to the State Government proposing to establish a port based multi product SEZ at Kakinada vide letter dated 28.2.2002. The State Government issued G.O.Ms.No.186, dated 23.4.2002 approving the proposal and requesting the Government of India for its approval. The Government of India by letter dated 27.11.2002 granted approval “in principle” for setting up the port based SEZ at Kakinada. Thereafter, the State Government had initiated proceedings for acquisition of a contiguous land of about 10,000 acres at Kakinada for the SEZ which is situated at 30 kms. away from Kakinada Deep Water port. During the period from 2005 to 2007 the State Government had issued various notifications under Section 4 (1) of the Act in respect of 7,800 acres and the balance was procured by purchasing from the land owners. Thus it is contended that the impugned notification was for the public purpose of SEZ and not for the Kakinada SEZ Private Limited. Having regard to the rival contentions noticed above, the question that requires consideration is whether the impugned acquisition is for a public purpose or it is for a company. As could be seen from the language of Sections 4 and 6 of the Act, the State in exercise of the power of eminent domain may acquire the land if such land is needed ‘for any public purpose’ or ‘for a company’. The expression “public purpose” has been defined under Section 3 (f) and the expression “company” has been defined under Section 3 (e) of the Act as under : “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 land-less 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; ( v i ) 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 (21 of 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 time 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; (viii) the provision of any premises or building, for locating a public office, but does not include acquisition of land for Companies (emphasis supplied). 3(e). the expression "Company" means- (i) a company has defined in S.3 of the Companies Act, 1956, other than a Government company referred to in clause (cc)-, ( i i ) 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, other than a society referred to in clause (cc); (iii) a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State, other than a co-operative society referred to in clause (cc).” It has been held by the Courts in a catena of decisions that the expression “public purpose” is of very wide amplitude and is incapable of precise and comprehensive definition. As held in the STATE OF BIHAR v. KAMESHWAR SINGH[1] the public purpose can only be defined by a process of judicial inclusion and exclusion and the point to be determined in each case is whether the acquisition is in the general interest of the community as distinguished from the private interest of an individual. In SOMAWANTI v. STATE OF PUNJAB[2] it was observed that public purpose is bound to vary with the times and the prevailing conditions in a given locality and therefore it would not be a practical proposition even to attempt a comprehensive definition of it. After reviewing all the relevant decisions in a recent decision in DAULAT SINGH SURANA v. FIRST LAND ACQUISITION COLLECTOR[3] while observing that the concept is not static but changes with the passage of time needs and requirements of the community, the Supreme Court held as under : “Pubic purpose is bound to vary with times and prevailing conditions in the community or locality and, therefore, the legislature has left it to the State (Government) to decide what is public purpose and also to declare the need of a given land for the purpose. The legislature has left the discretion to the Government regarding public purpose. The Government has the sole and absolute discretion in the matter.” From the ratio laid down in the above decisions, it is clear that the acquisition which is aimed to promote the welfare of the community as distinct from the benefit conferred upon an individual can be held to be for a public purpose. As noticed above, the power of eminent domain can also be exercised for acquisition for companies. Part-VII of the Act specifically deals with the acquisition of land for companies. Section 39 in Part-VII of the Act provides that the provisions of Sections 6 to 16 and Sections 18 to 37 shall not be put in force for acquisition of land for any company unless with the previous consent of the appropriate Government after being satisfied that the acquisition is needed for any of the purposes specified in sub-section (1) of Section 40 and on execution of an agreement between the company and the appropriate Government with regard to the matters specified in Section 41. For proper appreciation of the scheme of Part-VII, it is necessary to refer to Sections 39 to 41 which read as under : “39. Previous consent of appropriate Government and execution of agreement necessary:- The provisions of sections 6 to 16 (both inclusive) and sections 18 to 37 (both inclusive)] shall not be put in force in order to acquire land for any company, unless with the previous consent of the appropriate Government; nor unless the Company shall have executed the agreement hereinafter mentioned. 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 5A, sub- section (2), or by an enquiry held as hereinafter provided,- (a) that the purpose of the acquisition is to obtain land for the erection of dwelling houses for workmen 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. (2) Such enquiry shall be held by such officer and at such time and place as the appropriate Government shall appoint. ( 3 ) Such officer may summon and enforce the attendance of witnesses and compel the production of documents by the same means and, as far as possible, in the same manner as is provided by the Code of Civil Procedure, 1908 (5 of 1908) in the case of a Civil Court. 41. Agreement with appropriate Government:- If the appropriate Government is satisfied after considering the report, if any, of the Collector under section 5A, sub- section (2), or on the report of the officer making an inquiry under section 40 that the proposed acquisition is for any of the purposes referred to in clause (a) or clause (aa) or clause (b) of sub-section (1) of section 40, it shall require the Company to enter into an agreement with the appropriate Government, providing to the satisfaction of the appropriate Government for the following matters, namely :- (1) the payment to the appropriate Government of the cost of the acquisition; (2) the transfer, on such payment, of the land to the Company; (3) the terms on which the land shall be held by the Company; (4) where the acquisition is for the purpose of erecting dwelling houses or the provision of amenities connected therewith, the time within which, the conditions on which and the manner in which the dwelling houses or amenities shall be erected or provided; (4A) where the acquisition is for the construction of any 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, the time within which, and the conditions on which; the building or work shall be constructed or executed; and (5) where the acquisition is for the construction of any other work, the time within which and the conditions on which the work shall be executed and maintained and the terms on which the public shall be entitled to use the work.” There can be no dispute that the above noticed procedure provided in Part-VII is mandatory if the land sought to be acquired is for a company. Coming to the case on hand, it is pleaded in the writ petitions that a Private Limited Company by name Kakinada Special Economic Zone Private Limited had opened its office at Kakinada and its employees had pressurized and coerced many of the farmers in the locality to sell their lands to the said Company. It is alleged that in respect of those lands which the farmers were not willing to sell, the impugned proceedings were initiated for compulsory acquisition invoking the provisions of the Land Acquisition Act. It is further alleged that under the impugned notifications the land is sought to be acquired for transferring the same to various companies through Kakinada Special Economic Zone Private Limited. Thus it is contended that the land sought to be acquired by the Government is for a private company and therefore the procedure laid down in Part- VII of the Land Acquisition Act is required to be followed. While denying the said allegations, it is contended on behalf of the respondents that the acquisition of the land under the impugned notifications is not for the company attracting Part-VII of the Act but it is for a public purpose of formation of Kakinada SEZ under the provisions of the SEZ Act, 2005 for the development of foreign exchange through promotion of import-export transactions. The SEZ Act, 2005 has been enacted to provide for the establishment, development and management of the Special Economic Zones for promotion of exports and for matters connected therewith or incidental thereto. Section 3 of SEZ Act, 2005 provides that a Special Economic Zone may be established either jointly or severally by the Central Government, State Government or any person for manufacture of goods or rendering services or for both or as a Free Trade and Warehousing Zone. As could be seen from the procedure prescribed under Section 3, any person who intends to set up a Special Economic Zone, may after identifying the area make a proposal to the State Government concerned or directly to the Board of Approval constituted under Section 8 (1) of the SEZ Act, 2005 for the purpose of setting up the Special Economic Zone. After receiving the approval from the Board, the concurrence of the State Government as well as the Central Government shall be obtained. Every person whose proposal has been approved by the Board and who has been granted Letter of Approval by the Central Government under Section 3 (10) shall be the Developer within the meaning of Section 2(g) of the SEZ Act, 2005 and any person who or a State Government which intends to provide any infrastructure facilities in the identified area after entering into an agreement with the Developer make a proposal for the same to the Board for its approval. As per Section 4 of SEZ Act, 2005, the Developer shall, after the grant of Letter of Approval by the Central Government, submit the exact particulars of the identified area to the Central Government and thereupon the Government has to notify the identified area as a Special Economic Zone. Section 53 of the SEZ Act, 2005 provides that a Special Economic Zone shall on and from the appointed day be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations. The authorized operations have been enumerated under Section 4 (2) and Section 15 (9) which include the operations authorized in the Letter of Approval. The relevant provisions of the SEZ Act, 2005 may be extracted hereunder: S.2(d) "Authority" means a Special Economic Zone Authority constituted under sub-sec. (1) of Sec. 31; S.2(g) "Developer" means a person who, or a State Government which, has been granted by the Central Government a letter of approval under sub-sec. (10) of Sec. 3 and includes an Authority and a Co-Developer; S. 2(za) "Special Economic Zone" means each Special Economic Zone notified under the proviso to sub-sec. (4) of Sec. 3 and sub-sec. (1) of Sec. 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone; S. 3. Procedure for making proposal to establish Special Economic Zone:- (1) A Special Economic Zone may be established under this Act, either jointly or severally by the Central Government, State Government, or any person for manufacture of goods or rendering services or for both or as a Free Trade and Warehousing Zone. ( 2 ) Any person, who intends to set up a Special Economic Zone, may, after identifying the area, making a proposal to the State Government concerned for the purpose of setting up the Special Economic Zone. (3) Notwithstanding anything contained in sub-sec. (2), any person, who intends to set up a Special Economic Zone, may, after identifying the area, at his option, make a proposal directly to the Board for the purpose of setting up the Special Economic Zone; Provided that where such a proposal has been received directly from a person under sub-section, the Board may grant approval and after receipt of such approval, the person concerned shall obtain the concurrence of the State Government within the period, as may be prescribed. (4) In case a State Government intends to set up a Special Economic Zone, it may after identifying the area, forward the proposal directly to the Board for the purpose of setting up the Special Economic Zone; Provided that the Central Government may-- (a) after consulting the State Government concerned; (b) without referring the proposal for setting up the Special Economic Zone to the Board; and (c) after identifying the area; suo motu set up and notify the Special Economic Zone. (5) Every proposal under sub-sections (2) to (4) shall be made in such form and manner containing such particulars as may be prescribed. ( 6 ) The State Government may, on receipt of the proposal made under sub-sec. (2), forward the same together with its recommendations to the Board within such period as may be prescribed; (7) Without prejudice to the provisions contained in sub-sec. (8), the Board may, after receipt of the proposal under sub-sections (2) to (4), approve the proposal subject to such terms and conditions as it may deem fit to impose, or modify or reject the proposal. ( 8 ) The Central Government, may prescribe the following requirements for establishment of a Special Economic Zone, namely:-- (a) the minimum area of land and other terms and conditions subject to which the Board shall approve, modify or reject any proposal received by it under sub- sections (2) to (4); and (b ) the terms and conditions, subject to which the Developer shall undertake the authorised operations and his obligations and entitlements: Provided that different minimum area of land and other terms and conditions referred to in clause (a) may be prescribed by the Central Government for a class or classes of Special Economic Zones. (9) If the Board, (a ) approves without any modification the proposal received under sub-sections (2) to (4), it shall communicate the same to the Central Government; (b) approves with modifications the proposal received under sub-sections (2) to (4), it shall, communicate such modifications to the person or the State Government concerned and if such modifications have been accepted by such person or State Government, the Board shall communicate the approval to the Central Government; ( c ) rejects the proposal received under sub- sections (2) to (4), it shall record the reasons therefor and communicate the rejection to the Central Government which shall intimate to the State Government or the person concerned. (10) The Central Government shall, on receipt of communication under clause