Case: H.M.T. House Building Co-Op. Society Vs. Syed Khader

appropriate Government is not just a formality; it is a condition precedent to the exercise of the power of acquisition by the appropriate Government for a housing scheme of a co-operative society.22. In the present case, a hybrid procedure appears to have been followed. Initially, the appellant society through M/s. S. R. Constructions purported to acquire the lands by negotiation and sale by the land holders. Then from terms of the agreement dated 17-3-1988, it appears that the procedure prescribed in Part-VII was to be followed and the lands were to be acquired at the cost of the appellant society treating it to be a "company". The allegation made on behalf of the appellant society that the housing scheme had been approved by the appropriate Government on 7-11-1984 shall not be deemed to be a prior approval within the meaning of Section 3(f)(vi) but an order giving previous consent as required by Section 39 of Part-VII of the Act. In the agreement dated 17-3-1988 it has been specifically stated "And whereas the Government having caused inquiry to be made in conformity with the provisions of the said Act and being satisfied as a result of such inquiry that the acquisition of the said land is needed for the purpose referred to above has consented to the provisions of the said act being in force in order to acquire the said land for the benefit of the society members to enter in the agreement hereinafter contained with the Government". (emphasis supplied)But, ultimately, the lands have been acquired on behalf of the appropriate Government treating the requirement of the appellant society as for a public purpose within the meaning of Section 3(f)(vi). It is surprising as to how respondent M/s. S. R. Constructions entered into agreement with the appellant society assuring it that the lands, details of which were given in the agreement itself, shall be acquired by the State Government by following the procedure of Sections 4(1) and 6(1) and for this, more than one crore of rupees was paid to M/s. S. R. Constructions (respondent No.11). 23. Mr. G. Ramaswami, learned senior counsel appearing on behalf of the appellant, submitted that merely because the appellant society had entered into an agreement with respondent No.11, M/s. S. R. Constructions in which the latter for the consideration paid to it had assured that the lands in question shall be acquired by the State Government, no adverse inference should be drawn because that may amount to a tall claim made on behalf of M/s. S. R. Constructions in the agreement. He pointed out that the notifications under Section 4(1) and 6(1) have been issued beyond the time stipulated in the agreement and as such, it should be held that the State Government has exercised its statutory power for acquisition of the lands in normal course, only after taking all facts and circumstances into consideration. There is no dispute that in terms of agreement dated 1-2-1985 payments have been made by the appellant society to M/s. S. R. Constructions. This circumstances alone goes a long way to support the contention of the writ petitioners that their lands have not been acquired in normal course or for any public purpose. In spite of the repeated query, the learned counsel appearing for the appellant society could not point out or produce any order of the State Government under Section 3(f)(vi) of the Act granting prior approval and prescribing conditions and restrictions in respect of the use of the lands which were to be acquired for a public purpose. There is no restriction or bar on the part of the appellant society on carving out the size of the plots or the manner of allotment or in respect of construction over the same. That is why the framers of the Act have required the appropriate Government to grant prior approval of any housing scheme presented by any co-operative society before the lands are acquired treating such requirement and acquisition for public purpose. It is incumbent on part of the appropriate Government while granting approval to examine different aspects of the matter so that it may serve the public interest and not the interest of few who can as well afford to acquire such lands by negotiation in open market. According to us, the State Government has not granted the prior approval in terms of Section 3(f)(vi) of the Act to the housing scheme in question. The power under Sections 4(1) and 6(1) of the Act has been exercised for extraneous consideration and at the instance of the persons, who had no role in the decision making process - whether the acquisition of the lands in question shall be for a public purpose. This itself is enough to vitiate the whole acquisition proceeding and render the same as invalid.24. In the present case there has been contravention of Section 3(f)(vi) of the Act inasmuch as there was no prior approval of the State Government as required by the said Section before steps for acquisition of the lands were taken. The report of Shri G.K.V. Rao points out as to how the appellant society admitted large number of persons as members who cannot be held to be genuine members, the sole object being to transfer the lands acquired for public purpose to outsiders as part of commercial venture, undertaken by the officer bearer of the appellant society. We are in agreement with the finding of the High Court that the statutory notifications issued under Section 4(1) and 6(1) of the Act have been issued due to the role played by M/s. S. R. Constructions, respondent No.11. On the materials on record High Court was justified in coming to the conclusion that the proceedings for acquisition of the lands had not been initiated because the State Government was satisfied about the existence of the public purpose but at the instance of agent who had collected more than a crore of rupees for getting the lands acquired by the State Government.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]10. From the judgment of the High Court, it further appears that not only the acquisition of lands in favour of seven Housing Co-operative Societies, who were respondents to the different Writ Petitions, but also the acquisition of lands in favour of more than one hundred housing societies, which had sprung up within the Bangalore Metropolitan Planning Area became the matter of public debate and criticism. As a result of which a statutory enquiry under Section 64 of the Karnataka Co-operative Societies Act was directed by the Registered of Co-operative Societies. The enquiry was held by Shri G.V.K. Rao, the Controller of Weights and Measures, who submitted his Report in respect of different housing societies including the appellant Society. The said Report was produced before the High Court. In the Report, it has been pointed out that most predominant irregularities committed by many of the Societies was in respect of admission of members. In many cases, the committees of management did not consider the applications for membership and there was no proper resolutions specifying the persons who were admitted as members of the Society. There was no record on which date the said members were admitted by the different Housing Co-operative Societies. It was also said in the Report that the societies admitted persons, who were not eligible to become members. In respect of the appellant society, it was said in the Report, which has been referred to by the High Court in its judgment that membership was open to any person above 18 years of age and it left scope for admitting non-employees of HMT as members. From the scrutiny of the applications, it transpired that many who had been admitted as members, were neither employees of the HMT nor residents within the jurisdiction of the Society. It was also pointed out that the appellant had entered into an agreement with the Estate Agent S.R. Constructions and had paid a total amount of Rs.92,52,938/- to the said agent and Rs.35 lakhs to special Land Acquisitionwas said that it was necessary that the Government should frame rules for according previous approval for acquisition of lands for the housing co-operative societies inter alia prescribing the essential requirements of a housing scheme and also prescribing the procedure for inquiry and report to aid the Government to come to the conclusion as to whether the previous approval should be given for any scheme prepared by any of the house building societies which requires the Government to acquire any land for carrying out any such scheme.There is no dispute that the Society with which we are concerned shall not be covered by the expression "corporation owned or controlled by the State", because the said expression shall include a co-operative society, being a co-operative society in which not less than 51 per centum of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments.15. The substituted definition of the expression "Company" in Section 3(e)(iii) will certainly include the appellant society. The substituted definition of the expression "Company" shall include co-operative society, within the meaning of any law relating to co-operative societies other than those referred to in Clause (cc) of Section 3 of the Act. Such co-operative society shall be deemed to be a company, to which provisions of Chapter VII relating to acquisition of land for company shall be applicable.16. In view of the substituted definition of the expression "public purpose", in Section 3(f)(vi), the provision for carrying out any housing scheme sponsored by the Government or by any authority established by Government for carrying out any such scheme shall be deemed to be a "public purpose". It further says that the provision of land for carrying out any housing scheme with prior approval of the State Government by a co-operative society within the meaning of any law relating to co-operative societies for the time being in force in any State, shall be deemed to be a "public purpose". As such for any housing co-operative society lands can be acquired by the appropriate Government, treating the same as acquisition for the public purpose. But, in that event, there has to be a prior approval of such scheme by the appropriate Government. When the lands are acquired for any co-operative society with prior approval of the scheme by the State Government, there is no question of application of the provisions of Part-VII of the Act. Such acquisition shall be on the mode of acquisition by the appropriate Government for any public purpose.17. If lands are acquired for any co-operative society treating it to be a company within the meaning of Section 3(e), then in view of Section 39 of the Act the provisions of Section 6 to 16 and Section 18 to 37 shall not be put in force unless there is previous consent of the appropriate Government, and the co-operative society has executed an agreement. The consent required under Section 39 of the Act has to be given by the appropriate Government only after the conditions mentioned in Section 40 are fulfilled.According to us, in Section 3(f)(vi) the expression "housing" has been used along with educational and health schemes. As such the housing scheme contemplated by Section 3(f)(vi) shall be such housing scheme which shall serve the maximum number of members of the society. Such housing scheme should prove to be useful to the public. That is why the Parliament while introducing a new definition of "public purpose", said that any scheme submitted by any co-operative society relating to housing, must receive prior approval of the appropriate Government and then only the acquisition of the land for such scheme can be held to be for public purpose. If requirement of Section 3(f)(vi) is not strictly enforced, every housing co-operative society shall approach the appropriate Government for acquisition by applying Section 3(f)(vi) instead of pursuing the acquisition under Part VII of the Act which has become more rigorous and restrictive. In this background, it has to be held that the prior approval, required by Section 3(f)(vi), of the appropriate Government is not just a formality; it is a condition precedent to the exercise of the power of acquisition by the appropriate Government for a housing scheme of a co-operative society.22. In the present case, a hybrid procedure appears to have been followed. Initially, the appellant society through M/s. S. R. Constructions purported to acquire the lands by negotiation and sale by the land holders. Then from terms of the agreement dated 17-3-1988, it appears that the procedure prescribed in Part-VII was to be followed and the lands were to be acquired at the cost of the appellant society treating it to be a "company". The allegation made on behalf of the appellant society that the housing scheme had been approved by the appropriate Government on 7-11-1984 shall not be deemed to be a prior approval within the meaning of Section 3(f)(vi) but an order giving previous consent as required by Section 39 of Part-VII of the Act. In the agreement dated 17-3-1988 it has been specifically stated "And whereas the Government having caused inquiry to be made in conformity with the provisions of the said Act and being satisfied as a result of such inquiry that the acquisition of the said land is needed for the purpose referred to above has consented to the provisions of the said act being in force in order to acquire the said land for the benefit of the society members to enter in the agreement hereinafter contained with the Government". (emphasis supplied)But, ultimately, the lands have been acquired on behalf of the appropriate Government treating the requirement of the appellant society as for a public purpose within the meaning of Section 3(f)(vi). It is surprising as to how respondent M/s. S. R. Constructions entered into agreement with the appellant society assuring it that the lands, details of which were given in the agreement itself, shall be acquired by the State Government by following the procedure of Sections 4(1) and 6(1) and for this, more than one crore of rupees was paid to M/s. S. R. Constructions (respondentis no dispute that in terms of agreement dated 1-2-1985 payments have been made by the appellant society to M/s. S. R. Constructions. This circumstances alone goes a long way to support the contention of the writ petitioners that their lands have not been acquired in normal course or for any public purpose. In spite of the repeated query, the learned counsel appearing for the appellant society could not point out or produce any order of the State Government under Section 3(f)(vi) of the Act granting prior approval and prescribing conditions and restrictions in respect of the use of the lands which were to be acquired for a public purpose. There is no restriction or bar on the part of the appellant society on carving out the size of the plots or the manner of allotment or in respect of construction over the same. That is why the framers of the Act have required the appropriate Government to grant prior approval of any housing scheme presented by any co-operative society before the lands are acquired treating such requirement and acquisition for public purpose. It is incumbent on part of the appropriate Government while granting approval to examine different aspects of the matter so that it may serve the public interest and not the interest of few who can as well afford to acquire such lands by negotiation in open market. According to us, the State Government has not granted the prior approval in terms of Section 3(f)(vi) of the Act to the housing scheme in question. The power under Sections 4(1) and 6(1) of the Act has been exercised for extraneous consideration and at the instance of the persons, who had no role in the decision making process - whether the acquisition of the lands in question shall be for a public purpose. This itself is enough to vitiate the whole acquisition proceeding and render the same as invalid.24. In the present case there has been contravention of Section 3(f)(vi) of the Act inasmuch as there was no prior approval of the State Government as required by the said Section before steps for acquisition of the lands were taken. The report of Shri G.K.V. Rao points out as to how the appellant society admitted large number of persons as members who cannot be held to be genuine members, the sole object being to transfer the lands acquired for public purpose to outsiders as part of commercial venture, undertaken by the officer bearer of the appellant society. We are in agreement with the finding of the High Court that the statutory notifications issued under Section 4(1) and 6(1) of the Act have been issued due to the role played by M/s. S. R. Constructions, respondent No.11. On the materials on record High Court was justified in coming to the conclusion that the proceedings for acquisition of the lands had not been initiated because the State Government was satisfied about the existence of the public purpose but at the instance of agent who had collected more than a crore of rupees for getting the lands acquired by the StateHouse Building Co-operative Society Ltd. v. Narayana Reddy and Ors. etc. etc.SPECIAL LEAVE PETITION (C) NOS. 12104-07, 12600-03, 13150-80, 18297-300 OFaccording to us, the facts of the present case are similar to the case of H.M.T. House Building Co-operative Society and there is no scope to interfere with the order of the High Court, quashing the notifications under Sections 4(1) andHousing Building Co-operative Society Ltd. v. State of Karnataka and Ors. etc.SPECIAL LEAVE PETITION (C) NOS. 13114 AND 13339 OFto the finding, the Society had admitted 4,050 bogus members. As such, there is no scope for taking a view ontrary one which we have taken while disposing of the appeals Nos.3011-19/95 (arising out of S.L.P. (C) Nos. 11482-90 of 1991) filed on behalf of the H.M.T. House Building Co-operativee City Chickpet House Building Co-operative Society Ltd. v. Venkamma @ Venkatamma & Ors.SPECIAL LEAVE PETITION (C) NOS. 12032-37 OFto us, the facts of the present case are no way different from that of the H.M.T. House Building Co-operative Society, which has been disposed of by a reasoned(BHEL) House Building Co-op. Society Ltd. v. Sri Neelakantaiah & Ors.) House Building Co-op. Society Ltd. v. Sri Neelakantaiah &Ors.SPECIAL LEAVE PETITION (C) NOS.ng to us, an order dated 9-8-1984 cannot be an order under Section 3(f)(vi) because the definition of public purpose which was introduced by Act 68 of 1984 came in force with effect from 24-9-1984. As such there was no occasion for the State Government to exercise power under Section 3(f)(vi) on 9-8-1984. Any such order must be in terms of Section 39 read with Section 40 of Part VII of the Act, which part is applicable when acquisition of land is made for companies. It is surprising as to how the present House Building Co-op. Society was being treated even as a company on 9-8-1984, because the new definition of company was also introduced in Section 3(e) with effect from