Case: Shyam Behari And Others Vs. State Of Madhya Pradesh And Others

or for a company, a declaration shall be made to that effect. Further the proviso to S. 6 (1) provides 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. This clearly contemplates two kinds of declarations. In the first place, a declaration may be made that land is required for a public purpose, in which case in view of the proviso, the compensation to be awarded for the property to be acquired must come wholly or partly out of public revenues or some fund controlled or managed by a local authority. No declaration under S. 6 for acquisition of land for a public purpose can be made unless either the whole or part of the compensation for the property to be acquired is to come out of public revenues or some fund controlled or managed by a local authority; see Jhandu Lal v. State of Punjab, 1961-2 SCR 459 (AIR 1961 SC 343 ). In the second place, the declaration under S. 6 may be made that land is needed for a company in which case the entire compensation has to be paid by the company. It is clear therefore that where the entire compensation is to be paid by a company, the notification under S. 6 must contain a declaration that the land is needed for a company. No notification under S. 6 can be made where the entire compensation is to be paid by a company declaring that the acquisition is for a public purpose, for such a declaration requires that either wholly or in part compensation must come out of public revenues or some fund controlled or managed by a local authority. In the present case it is not in dispute that no part of the compensation is to come out of public revenues or some fund controlled or managed by a local authority; on the other hand the whole compensation was to be paid by the company. Therefore the notification under S. 6 if it was to be valid in the circumstances of the present case had to declare that the land was needed for a company. No valid notification under S. 6 could be made in the circumstances of this case declaring that the land was needed for a public purpose, for no part of compensation was to be paid out of public revenues or some fund controlled or managed by a local authority. That is why the High Court felt that the notification under S. 6 declaring that the land was needed for a public purpose would in the circumstances of this case be ineffective. But the High Court went on to hold that the notifications under S. 6 must in substance and in law be deemed to be for acquisition of land for a company in the present case. We are of opinion that this view of the High Court is incorrect. There is nothing in either of the two notifications dated December 3, 1960 and April 19, 1961 to show that the land was needed for a company. The notification of December 3, 1960 says in so many words that it was required for a public purpose, namely, for the construction of buildings for godowns and administrative office. No one reading this notification can possibly think that the land was needed for a company. Similarly the notification of April 19, 1961 says that the land was needed for a public purpose, namely, for the Premier Refractory Factory and work connected therewith. Now the company for which the land in this case was in fact required is the Premier Refractories of India Private Limited, Katni. There is nothing in the notification of April 19, 1961 to show that the land was needed for this company or any other company. All that the notification of April 19, 1961 says is that the land was needed for a public purpose, and the public purpose mentioned there was that the land was required for the Premier Refractory Factory and work connected therewith. The High Court thought that in substance this purpose showed that the land was required for the company mentioned above. But we do not see how, because the purpose specified was for the Primier Refractory factory and work connected therewith, it can be said that the notification declared that the land was needed for the company. It is not impossible for the Government or for a local body to own such a factory and construct works in connection therewith. The mere fact that the public purpose mentioned was for the Premier Refractory Factory and work connected therewith, therefore, cannot mean that the land was needed for a company; as one reads the notification of April 19, 1961 one can only come to the conclusion that the land was needed for a public purpose, namely, for the construction of some work for a factory. There is no mention of any company anywhere in this notification and it cannot necessarily be concluded that the Premier Refractory Factory was a company, for a "factory" is something very different from a "company" and may belong to a company or to Government or to a local body or even to an individual. The mere fact that the public purpose declared in the notification was for the Premier Refractory Factory and work connected therewith cannot therefore lead to the inference that the acquisition was for a company. It follows that when the two notifications declared that the land was needed for a public purpose in a case where no part of the compensation was to come out of public revenues or some fund controlled or managed by a local authority, they were invalid in view of the proviso to S. 6(1) of the Act. All proceedings following on such notifications would be of no effect under the Act.

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

Explanation:
1[ds]Section 6 (1) of the Act requires that whenever any land is needed for a public purpose or for a company, a declaration shall be made to that effect. Further the proviso to S. 6 (1) provides 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. This clearly contemplates two kinds of declarations. In the first place, a declaration may be made that land is required for a public purpose, in which case in view of the proviso, the compensation to be awarded for the property to be acquired must come wholly or partly out of public revenues or some fund controlled or managed by a local authority. No declaration under S. 6 for acquisition of land for a public purpose can be made unless either the whole or part of the compensation for the property to be acquired is to come out of public revenues or some fund controlled or managed by a local authority; see Jhandu Lal v. State of Punjab, 1961-2 SCR 459  (AIR 1961 SC 343 ). In the second place, the declaration under S. 6 may be made that land is needed for a company in which case the entire compensation has to be paid by the company. It is clear therefore that where the entire compensation is to be paid by a company, the notification under S. 6 must contain a declaration that the land is needed for a company. No notification under S. 6 can be made where the entire compensation is to be paid by a company declaring that the acquisition is for a public purpose, for such a declaration requires that either wholly or in part compensation must come out of public revenues or some fund controlled or managed by a local authority. In the present case it is not in dispute that no part of the compensation is to come out of public revenues or some fund controlled or managed by a local authority; on the other hand the whole compensation was to be paid by the company. Therefore the notification under S. 6 if it was to be valid in the circumstances of the present case had to declare that the land was needed for a company. No valid notification under S. 6 could be made in the circumstances of this case declaring that the land was needed for a public purpose, for no part of compensation was to be paid out of public revenues or some fund controlled or managed by a local authority. That is why the High Court felt that the notification under S. 6 declaring that the land was needed for a public purpose would in the circumstances of this case be ineffective. But the High Court went on to hold that the notifications under S. 6 must in substance and in law be deemed to be for acquisition of land for a company in the present case. We are of opinion that this view of the High Court is incorrect. There is nothing in either of the two notifications dated December 3, 1960 and April 19, 1961 to show that the land was needed for a company. The notification of December 3, 1960 says in so many words that it was required for a public purpose, namely, for the construction of buildings for godowns and administrative office. No one reading this notification can possibly think that the land was needed for a company. Similarly the notification of April 19, 1961 says that the land was needed for a public purpose, namely, for the Premier Refractory Factory and work connected therewith. Now the company for which the land in this case was in fact required is the Premier Refractories of India Private Limited, Katni. There is nothing in the notification of April 19, 1961 to show that the land was needed for this company or any other company. All that the notification of April 19, 1961 says is that the land was needed for a public purpose, and the public purpose mentioned there was that the land was required for the Premier Refractory Factory and work connected therewith. The High Court thought that in substance this purpose showed that the land was required for the company mentioned above. But we do not see how, because the purpose specified was for the Primier Refractory factory and work connected therewith, it can be said that the notification declared that the land was needed for the company. It is not impossible for the Government or for a local body to own such a factory and construct works in connection therewith. The mere fact that the public purpose mentioned was for the Premier Refractory Factory and work connected therewith, therefore, cannot mean that the land was needed for a company; as one reads the notification of April 19, 1961 one can only come to the conclusion that the land was needed for a public purpose, namely, for the construction of some work for a factory. There is no mention of any company anywhere in this notification and it cannot necessarily be concluded that the Premier Refractory Factory was a company, for a "factory" is something very different from a "company" and may belong to a company or to Government or to a local body or even to an individual. The mere fact that the public purpose declared in the notification was for the Premier Refractory Factory and work connected therewith cannot therefore lead to the inference that the acquisition was for a company. It follows that when the two notifications declared that the land was needed for a public purpose in a case where no part of the compensation was to come out of public revenues or some fund controlled or managed by a local authority, they were invalid in view of the proviso to S. 6(1) of the Act. All proceedings following on such notifications would be of no effect under the Act.