SCA/12943/2006 1/265 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No.12943 of 2006 With SPECIAL CIVIL APPLICATION No.12945 of 2006 To SPECIAL CIVIL APPLICATION No.12989 of 2006 With SPECIAL CIVIL APPLICATION No.17945 of 2006 With SPECIAL CIVIL APPLICATION No.19617 of 2006 To SPECIAL CIVIL APPLICATION No.19626 of 2006 For Approval and Signature: HON'BLE MR.JUSTICE J.M.PANCHAL AND HON'BLE SMT. JUSTICE ABHILASHA KUMARI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the Civil Judge? ========================================================= SHAH KANTILAL DEPAR & OTHERS - PETITIONERS VERSUS RELIANCE INFRASTRUCTURE LIMITED THROUGH MANAGER OR ANY OTHER & ANOTHER - RESPONDENTS ========================================================= Appearance : MR MC BHATT WITH MR RD RAVAL FOR PETITIONERS. MR SN SHELAT & MR KS NANAVATI, SENIOR ADVOCATES WITH MR.KEYUR D. GANDHI, ADVOCATE FOR NANAVATI ASSOCIATES FOR RESPONDENT NO.1. MR MIHIR H. JOSHI, ADDITIONAL ADVOCATE GENERAL WITH MR SS SHAH, GOVERNMENT PLEADER AND MR SIRAJ GORI, ASSISTANT GOVERNMENT PLEADER FOR RESPONDENT NOS.2 TO 4. MR JITENDRA MALKAN, ASSISTANT SOLICITOR GENERAL FOR RESPONDENT NO.5. ========================================================= SCA/12943/2006 2/265 JUDGMENT CORAM : HON'BLE MR.JUSTICE J.M.PANCHAL and HON'BLE SMT. JUSTICE ABHILASHA KUMARI Date : 25-26-27-28-29/09/2006 COMMON ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE J.M.PANCHAL) Rule is issued in each petition. Mr.Keyur D.Gandhi, learned advocate for M/s.Nanavati Associates, waives service of notice on behalf of the respondent No.1 in each petition. Mr.Siraj Gori, learned Assistant Government Pleader, waives service of notice on behalf of the respondent Nos.2 to 4 in each petition. No relief is claimed against the respondent No.5 and, therefore, this Court was of the opinion that it was not necessary to defer hearing of the petitions till the respondent No.5 was duly served with the notice issued earlier in the petitions. However, Mr.Jitendra Malkan, learned Assistant Solicitor General of India submitted on September 22, 2006, that he had informed the Ministry of Finance, Union of India, about the matter and had instructions to state before the Court that the said Ministry is not served with the notice issued in the SCA/12943/2006 3/265 JUDGMENT petitions. It was further mentioned by Mr.Malkan, learned counsel for the Union of India, that he has received instructions from the Ministry of Finance, Union of India, to state that the Union of India is neither necessary nor proper party in the matter and therefore, the Union of India should be deleted from the cause title of the petitions. Mr.M.C.Bhatt, learned Senior Advocate for the petitioners submitted that appropriate steps were taken by the petitioners to serve the respondent No.5 but the respondent No.5 could not be served and having regard to the facts of the case, the respondent No.5 should not be deleted from the cause title of the petitions as urged by Mr.Jitendra Malkan, learned Assistant Solicitor General of India, but should be retained in the cause title of the petitions. On the facts and in the circumstances of the case, this Court is of the opinion that the Union of India, which is impleaded as respondent No.5 right from the beginning should be retained in the cause title of the petitions. Probably, the Union of India is impleaded as one of the respondents in the petitions to enable it to express its views on the points raised by the SCA/12943/2006 4/265 JUDGMENT petitioners namely whether the respondent No.1 - Company is an estate dealer or whether by grant of in-principle approval, inquiry to be made under Rule 4 of the Rules had become mere formality or an eye- wash etc. However, except making statement at the Bar which is noted earlier, Mr.Jitendra Malkan, learned Assistant Solicitor General of India has not addressed the Court on merits of the case. Therefore, the prayer made by Mr.Jitendra Malkan, learned Assistant Solicitor General of India that the respondent No.5 be deleted from the cause title of the petitions is refused. As is evident from the order-sheet, the matters have been heard on different dates at length and in great detail and, therefore, with the consent of the learned advocates for the parties, they are taken up for final disposal today. All the above-numbered petitions involve consideration of common questions of facts and law, and are directed against acquisition proceedings initiated by the State of Gujarat for the respondent No.1, which is a Company incorporated under the provisions of the Companies Act, 1956. The prayers made in all the petitions are common and, therefore, SCA/12943/2006 5/265 JUDGMENT this Court proposes to dispose of all the above- numbered petitions by this common judgment. The Court also proposes to refer to facts mentioned in the main petition i.e. Special Civil Application No.12943 of 2006 for convenience. 2. By filing Special Civil Application No.12943 of 2006 under Article 226 of the Constitution, the petitioners have prayed to issue a writ of mandamus or any other appropriate writ or order to quash; (i) report dated April 29, 2006 forwarded by the Deputy Collector, Jamnagar Division, Jamnagar, to the Collector, Jamnagar under Section 40 of the Land Acquisition Act, 1894 [“the Act” for short] relating to the lands situated at Village Kanalus, Taluka : Lalpur, District : Jamnagar, (ii) report dated April 29, 2006 forwarded by the Deputy Collector, Jamnagar Division, Jamnagar, to the Collector, Jamnagar under Rule 4 of the Land Acquisition (Companies) Rules, 1963 [“the Rules” for short] relating to the lands situated at Village Kanalus, Taluka : Lalpur, District : Jamnagar, (iii) report dated April 29, 2006 forwarded by the Deputy Collector, Jamnagar SCA/12943/2006 6/265 JUDGMENT Division, Jamnagar, to the Collector, Jamnagar under Section 40 of the Act relating to the lands situated at Village Padana, Taluka : Lalpur, District : Jamnagar, (iv) report dated April 29, 2006 submitted by the Deputy Collector, Jamnagar Division, Jamnagar, to the Collector, Jamnagar relating to the lands situated at Village Padana, Taluka : Lalpur, District : Jamnagar under Rule 4 of the Rules, (v) report dated April 29, 2006 forwarded by the Deputy Collector, Jamnagar Division, Jamnagar, to the Collector, Jamnagar under Section 40 of the Act relating to the lands situated at Village Navagam, Taluka : Lalpur, District : Jamnagar, (vi) report dated April 29, 2006 forwarded by the Deputy Collector, Jamnagar Division, Jamnagar, to the Collector, Jamnagar under Rule 4 of the Rules relating to the lands situated at Village Navagam, Taluka: Lalpur, District: Jamnagar, and (vii) three notifications issued by the State Government under Section 4(1) of the Act, relating to the lands situated at Village Navagam, Village Padana and Village Kanalus which were published in the Gujarat Government Gazette Extraordinary on June 2, 2006, SCA/12943/2006 7/265 JUDGMENT mentioning that the lands of Village Navagam, lands of Village Kanalus and the lands of Village Padana of Lalpur Taluka, District : Jamnagar, specified in the Schedule thereto were likely to be needed for the Company i.e. Reliance Infrastructure Limited, Jamnagar for public purpose of setting up of a product specific Special Economic Zone for petroleum and petrochemicals. 3. During the pendency and disposal of the petitions, hearing of objections under Section 5A of the Act was concluded by the respondent No.2 i.e. Deputy Collector, Jamnagar, after which three separate reports relating to the lands of village Navagam, Village Kanalus and village Padana of Lalpur Taluka of District Jamnagar were forwarded by the Deputy Collector, Jamnagar, alongwith three different forwarding letters dated August 29, 2006, to the State Government as required by Section 5A(2) of the Act. On scrutiny of those three reports, the State Government was satisfied that the lands of villages Navagam, Kanalus and Padana of Taluka: Lalpur, District : Jamnagar, specified in the Notifications SCA/12943/2006 8/265 JUDGMENT issued under Section 4 of the Act which were published in the Official Gazette on June 2, 2006, were needed to be acquired at the expenses of the respondent No.1 – Company for the public purpose of setting up of a product specific Special Economic Zone for petroleum and petrochemicals. Therefore, the State Government has made three declarations under Section 6 of the Act for the lands of three villages and published each declaration separately in the Official Gazette on August 30, 2006. The petitioners had, therefore moved draft amendment, seeking permission of the Court to challenge the three reports submitted by the Deputy Collector, Jamnagar, under Section 5A(2) of the Act to the State Government as well as three declarations made under Section 6 of the Act which are published in the Official Gazette on August 30, 2006. The draft amendment was granted by the Court on September 4, 2006, and therefore, now the petitioners have also prayed to quash (a) report dated August 29, 2006, forwarded by the Deputy Collector, Jamnagar, under Section 5A(2) of the Act to the State Government relating to the lands of village Navagam, Taluka: SCA/12943/2006 9/265 JUDGMENT Lalpur, District: Jamnagar, (b) report dated August 29, 2006, forwarded by the Deputy Collector, Jamnagar, under Section 5A(2) of the Act, to the State Government, relating to the lands of village Kanalus, (c) report dated August 29, 2006, forwarded by the Deputy Collector, Jamnagar, under Section 5A(2) of the Act, to the State Government, relating to the lands of village Padana, (d) declaration made under Section 6 of the Act relating to the lands of village Navagam which is published in the Official Gazette on August 30, 2006, (e) declaration made under Section 6 of the Act relating to the lands of village Kanalus which is published in the Official Gazette on August 30, 2006, and (f) declaration made under Section 6 of the Act relating to the lands of village Padana which is published in the Official Gazette on August 30, 2006. 4. The petitioner Nos.1 to 22 are residents of Village Kanalus, Taluka: Lalpur, District: Jamnagar, whereas the petitioner Nos.23 to 42 are residents of Village Padana, Taluka: Lalpur, District: Jamnagar, and the petitioner Nos.43 to 46 are residents of SCA/12943/2006 10/265 JUDGMENT Village Navagam, Taluka : Lalpur, District : Jamnagar. The petitioners own agricultural lands in their respective villages as mentioned in the petition. The respondent No.1 is a Company incorporated under the provisions of the Companies Act, 1956. The Parliament has enacted an Act known as “Special Economic Zones Act, 2005” to provide for establishment, development and management of the special economic zones for promotion of export, and for the matters connected therewith or incidental thereto. The Central Government has made the scheme to develop, operate and maintain special economic zones. The scheme aims at development of integrated world-class infrastructure for exports including carrying out manufacture of goods, rendering of services or in connection therewith, and includes industrial, commercial and social infrastructure. The components of a Special Economic Zone include roads, airports, ports, transport system, generation and distribution of power, telecom, hospitals, hostels, educational institutions, leisure and entertainment units, residential/industrial/ commercial complexes, water supply, sanitation, sewerage and any other SCA/12943/2006 11/265 JUDGMENT facilities required for development of the Zone. As per the scheme envisaged by the Special Economic Zones Act, 2005, the Special Economic Zones have to be developed and managed in the private sector, or jointly by the State Government and a private agency or exclusively by the State Government or their agencies. In case of privately developed zones, investors should be either Indian individuals, NRIs, Indian or foreign companies. The respondent No.1- Company was desirous of developing a Special Economic Zone in line with the Policy of Special Economic Zones announced by the Government of India with a view to augmenting infrastructural facilities for export production. Therefore, the respondent No.1 made an application dated October 4, 2005 to the Industries Commissioner, Government of Gujarat, Gandhinagar indicating its desire to set up a Special Economic Zone at Jamnagar, as Reliance Industries Limited (RIL) wanted to set up a Special Economic Zone in backward rural area of Jamnagar District of Gujarat with modern integrated infrastructure and the development of this project was bound to lead to fast track development of Saurashtra region of Gujarat SCA/12943/2006 12/265 JUDGMENT State and national economy as a whole. In the application, it was mentioned that Special Economic Zone [“SEZ” for short] would be developed by the respondent No.1, which is a subsidiary of RIL and the zone would house Reliance's own proposed Refinery of 30 MMTPA capacity and down-stream petrochemical units. It was also mentioned in the said application that the Refinery would produce a range of products including feed stocks like naphtha, propane/propylene etc. which would be available to other potential down-stream units that could come up in the Zone. The respondent No.1 by addressing the said letter requested the Industries Commissioner to recommend its case to the Ministry of Commerce, Government of India for formal approval of the proposal with the State Government commitments outlined by the Ministry of Commerce in their `in-principle approval' granted for the proposed Zone. The Government of India, Ministry of Commerce and Industry, Department of Commerce vide letter dated October 21, 2005 informed the respondent No.1 that the in-principle approval of the Government for setting up of a product specific SEZ for petroleum and petrochemicals at Jamnagar, SCA/12943/2006 13/265 JUDGMENT Gujarat by the respondent No.1 was granted. After obtaining in-principle approval of the Government of India, the respondent No.1 by letter dated November 10, 2005 proposed to the State Government to initiate proceedings for acquisition of lands situated in Villages Kanalus, Navagam, Kana Chhikari, Dera Chhikari and Padana of Lalpur Taluka, District : Jamnagar for establishment of Special Economic Zone. Along with the said proposal, the respondent No.1 forwarded copy of Memorandum and Articles of Association, copies of Village Forms 7/12 and 8-A relating to the lands situated in the above-mentioned villages, project-report and prescribed form containing necessary particulars with annexures, to the State Government. The Government of India, Ministry of Commerce and Industry, Department of Commerce, vide letter dated December 9, 2005 informed the respondent No.1 that the proposal made by the respondent No.1 vide its letter dated November 7, 2005 for setting up a project specific Special Economic Zone for petroleum and petrochemicals at Jamnagar, Gujarat, was approved by the Government of India. In view of the proposal dated November 10, SCA/12943/2006 14/265 JUDGMENT 2005 made by the respondent No.1 to the State Government to acquire lands from Villages Kanalus etc., the Industries Commissioner by letter dated November 10, 2005 called for certain information and particulars from the respondent No.1. Relevant particulars and informations were sent by the respondent No.1 to the State Government with its forwarding letter dated February 7, 2006. The respondent No.1 addressed another letter dated March 13, 2006 to the Industries Commissioner, Government of Gujarat, Gandhinagar to recommend to the Revenue Department of the State Government and the District Collector, Jamnagar for allotment of government lands and acquisition of private lands. The Industries Commissioner desired to discuss on the requirement of lands for petroleum and petrochemicals, Special Economic Zone at Jamnagar, with the President (COM) and Corporate Affairs of the respondent No.1-Company, and accordingly, the President was requested to remain present on April 1, 2006 in the Chamber of Industries Commissioner to discuss the said subject. By a communication dated April 18, 2006, the District Collector, Jamnagar was informed by the Principal SCA/12943/2006 15/265 JUDGMENT Chief Industrial Adviser about the requirement of lands by the respondent No.1 for setting up petroleum and petrochemical sector specified SEZ at Jamnagar. The Section Officer, Revenue Department, Government of Gujarat by a communication dated December 2, 2005 informed the District Collector, Jamnagar that District Collector was requested by the State Government to submit inquiry report under Section 40 of the Act and Rule-4 of the Rules. 5. The District Collector, Jamnagar, by order dated December 15, 2005 authorized the Deputy Collector, Jamnagar Division, Jamnagar to make inquiry as contemplated by Section 40 of the Act and six matters specified in Rule 4 of the Rules and submit to him the reports relating to the lands of Villages Kanalus, Navagam, Kana Chhikari, Dera Chhikari and Padana of Taluka Lalpur, District: Jamnagar. After receipt of communication dated December 15, 2005, the Deputy Collector, Jamnagar, called for report from the District Agriculture Officer, Jamnagar. The District Agriculture Officer, Jamnagar, submitted his detailed report alongwith SCA/12943/2006 16/265 JUDGMENT forwarding letter dated April 19, 2006, mentioning inter-alia that (1) the lands sought to be acquired were contiguous to Reliance Industries, (2) lands were dry irrigated/ non-irrigated lands on which it was possible to raise crops with the help of rainy water but the fertility of the lands was ordinary and (3) the lands sought to be acquired are adjoining to Reliance Industries Ltd. whereas on one side of the lands to be acquired, a railway line passes and therefore, except the lands sought to be acquired, no other lands in the locality suitable for the purpose of acquisition are available. Pursuant to the authorization granted to him by the District Collector, Jamnagar, the Deputy Collector, Jamnagar Division, Jamnagar conducted inquiry under Section 40 of the Act. Before conducting inquiry, the Deputy Collector, Jamnagar Division, Jamnagar informed the concerned land-owners by serving Registered Post A.D. notices and also in person through Talati. The inquiry relating to lands of Village Kanalus was conducted at 10.00 A.M. on April 12, 2006, regarding which rojkam dated April 12, 2006, was prepared, whereas inquiry in relation to the lands of Village SCA/12943/2006 17/265 JUDGMENT Padana was conducted at Village Padana at 4.00 P.M. on April 18, 2006, and inquiry was conducted relating to the lands of Village Navagam at 4.40 P.M. on April 10, 2006. While conducting inquiry under Section 40 of the Act, the Deputy Collector noticed that (1) the Reliance Infrastructure Limited whose earlier name was Reliance Project Engineering Associates Limited is a public company incorporated under the provisions of the Companies Act, 1956, (2) the Reliance Infrastructure Limited is granted in-principle approval for setting up a product specific SEZ for petroleum and petrochemicals at Lalpur Taluka of District: Jamnagar and Principal Chief Industrial Advisor, by his letter dated April 18, 2006, had recommended to acquire the private lands. After perusing the materials collected during the course of inquiry under Section 40 of the Act, the Deputy Collector, Jamnagar, found that (1) the project was important to the nation from the view point of international trade, (2) in the first phase of the project itself, infrastructure facilities were to be provided at the cost of Rs.5,000 crores over land admeasuring 6000 acres, (3) in the first phase itself SCA/12943/2006 18/265 JUDGMENT different industrial units were to invest Rs.35,000 to Rs.40,000 crores including investment of Rs.25,000 crores by Reliance Industries Limited, (4) because of the project, other units manufacturing petrochemical products would be benefited, (5) in the second phase infrastructure facilities would be made available over the land admeasuring 4000 acres, (6) the infrastructure facilities to be provided include amenities like development of land, roads, buildings, railways, port, water supply, entertainment facilities, multi-media, transport, production facilities, I.T. centre of international standards, etc. (7) after obtaining foreign technology and assistance of experts, modern complex is to be developed, (8) because of the project, direct/ indirect employment avenues for 2,50,000 unemployed persons of the country and the State would be available, (9) the employees associated with the project would be provided residential units with all modern facilities, (10) off-shore financial centre is to be established to assist foreign exporters, (11) as the project is to be established in backward area of Lalpur Taluka, District: Jamnagar, it would help SCA/12943/2006 19/265 JUDGMENT rural progress of the State, and (12) the project is wholly export oriented and would therefore enable the country to earn substantial foreign exchange which would contribute a lot to the financial growth of the country as well as the State and concluded that the acquisition is needed for the construction of work of the Reliance Infrastructure Limited which is taking steps for engaging in work which is for a public purpose. While conducting inquiry under Rule 4 of the Rules, the Deputy Collector noticed relevant features of the project undertaken by the respondent No.1 which were noticed by him at the time of making inquiry under Section 40 of the Act and found that (1) as different infrastructure facilities of international standards were to be provided, the area of the lands proposed to be acquired was the minimum needed for such a project and was not excessive, (2) the Government of India has granted approval for setting up a project specific SEZ for petroleum and petrochemicals at Lalpur Taluka after scrutiny of technical and other aspects and therefore, the SCA/12943/2006 20/265 JUDGMENT acquisition of the private lands of Villages Navagam, Kanalus, Kana Chhikari, Dera Chhikari and Padana and Government lands is suitable for the purpose, (3) during private negotiations, the Reliance Infrastructure Limited offered compensation to the land owners at the rate of Rs.65,000/- per Vigha for Bagayat lands and Rs.53,000/- per Vigha for Jirayat lands over and above price for wells, trees, Kundis (small ditch like a basin), pipelines, buildings, etc. but 54 land owners demanded rate at Rs.3,00,000/- to Rs.6,40,000/- per Vigha and some land owners demanded Rs.400/- per sq.mt. whereas as per Government Jantri, Bagayat lands have value of Rs.1,50,000/- per Hectare (i.e. Rs.24,000/- per Vigha) and Jirayat lands have the value of Rs.1,25,000/- per Hectare (i.e. Rs.20,000/- per Vigha) whereas average sale price of lands in last five years indicates that the value of the lands is at Rs.1,08,653/- per hectare, and therefore, there is no doubt that the Company had made all reasonable efforts to get the lands by negotiation with the persons interested therein on payment of reasonable price and such negotiations had failed, (4) the SCA/12943/2006 21/265 JUDGMENT Company had made its best endeavour to find out lands in the locality for the purpose of the acquisition, (5) in view of the contents of the report of the District Agriculture Officer, Jamnagar, the lands proposed to be acquired were not good agricultural lands and that no alternative suitable site is available so as to avoid the acquisition of the lands in question and (6) the Company is in a position to utilize the lands expeditiously. After making detailed inquiry, the Deputy Collector, Jamnagar Division, Jamnagar forwarded his five reports under Section 40 of the Act and other five reports under Rule 4 of the Rules relating to the lands of five villages of Lalpur Taluka to the District Collector, Jamnagar on April 29, 2006. The District Collector, Jamnagar scrutinized those reports and thereafter sent his own five reports to the State Government on May 15, 2006 including three reports relating to the lands of (1) Village Navagam (2) Village Kanalus and (3) Village Padana, to the State Government. On consideration of those reports, the State Government was satisfied that the lands specified in the reports situated at Villages Kanalus, Padana, Kana Chhikari, SCA/12943/2006 22/265 JUDGMENT Dera Chikkari and Navagam of Lalpur Taluka, District : Jamnagar were likely to be needed for the respondent No.1-Company for public purpose of setting up a product specified Special Economic Zone for petroleum and petrochemicals. Therefore, the State Government issued five different Notifications for five villages under Section 4(1) of the Act, which were separately published in the Gujarat Government Gazette Extraordinary, dated June 2, 2006. As observed earlier, during the pendency of the petitions, five different reports including three reports relating to the lands of Villages Kanalus, Navagam and Padana were forwarded by the Deputy Collector to the State Government, as contemplated by Section 5A(2) of the Act, and five different declarations including three declarations relating to the lands of Villages Kanalus, Navagam and Padana, with which the Court is concerned in the instant petitions, have been made under Section 6 of the Act, which are published