Case: Srinivasa Coop. House Building Society Ltd Vs. Madam Gurumurthy Sastry

Revenues, or some fund controlled or managed by a local authority. On the other hand, in the case of an acquisition for a company, the compensation has to be paid by the company. In such a case there can be an agreement under Section 41 for transfer of the land acquired by the Government to the company on payment of the cost of acquisition, as also other matters. The agreement contemplated by Section 41 is to be entered into between the company and the appropriate Government only after the latter is satisfied about the purpose of the proposed acquisition, and subject to the condition precedent that the previous consent of the appropriate Government has been given to the acquisition. Section 6 is in terms, made subject to the provisions of Part VII of the Act. The declaration for acquisition for a company shall not be made unless the compensation to be awarded for the property is to be paid by a company. In the case of an acquisition for a company simpliciter, the declaration cannot be made without satisfying the requirements of Part VII. But that does not necessarily mean that an acquisition for a company for a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. In other words, the essential condition for acquisition is for a public purpose and that the cost of acquisition should be borne, wholly or in part, out of public funds. Hence an acquisition for a company may also be made for a public purpose, within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. If, on the other hand, the acquisition, for a company is to be made at the cost entirely of the company itself, such an acquisition comes under the provisions of Part VII. In that case the Government have sponsored the Housing Scheme and substantial amount has been extended on the scheme out of the Government revenue in the form of subsidies and loans. The acquisition was also for the construction of the quarters for the workmen under the Government sponsoring Housing Scheme for industrial workers. Under those circumstances it was held that the acquisition for the company was for public purpose. We may make it clear at once that a token contribution from public revenue, under all circumstances cannot be considered to be colourable exercise of power. Each case must furnish its backdrop whether the acquisition is for public purpose or for a private purpose. The facts and circumstances must carefully be scrutinised to reach a finding. 13. This Court in Virupaxappa Veerappa Kadampur v. State of Mysore, AIR 1963 SC 849 construing Section 161(1) of the Police Act and the words (under the colour of duty) interpreted to include acts done under the cloak of duty, even though not by virtue of the duty, when the police officer prepares a false panchnama or a false report, he is clearly using the existence of his legal duty as a cloak for his corrupt action or as a veil of his falsehood. The acts thus done in dereliction of his duty must be held to have been done under colour of the duty. In Strouds Judicial Dictionary, "Colour of office" was defined as is always taken in the worst part, and signifies an act evil done by the countenance of an office, and it bears a dissembling face of the right of the office, whereas the office is but a veil to the falsehood, and the thing is grounded upon vice, and the office is as a shadow to it. In Blacks Law Dictionary, "under color of any law" of a State include not only acts done by State officials within the bounds on limits of their lawful authority, but also acts done without and beyond the bounds of their lawful authority; provided that, in order for unlawful acts of an official to be done under colour of any law, the unlawful acts must be done while such official is purporting or pretending to act in the performance of his official duties; that is to say, the unlawful acts must consist in an abuse or misuse of power which is possessed by the official only because he is an official; and the unlawful acts must be of such a nature or character, and be committed under such circumstances, that they would not have occurred but for the fact that the person committing them was an official then and there exercising his official powers outside the bounds of lawful authority. It would thus be clear that when an act is done by the State under colour of authority of law it must be for the lawful purpose envisaged under the Act. If the purpose, namely, public purpose envisaged under the Act is not served then the exercise of the power of the declaration under Section 6 must be held to be colourable exercise of the power, though not with evil motive. It is seen that the appellant is a private society and it is not for any of the purposes under Section 40(1)(a) or under Section 3(e) of the Act. It is for the transfer of the acquired land to the members of the society who are now as per the record placed in this Court appear to be Advocates, Chartered Accountants, Businessmen and alleged to be possessed of more than one house. The Government does not appear to have bestowed its thought to these aspects while considering the report under Section 5-A in this perspective before accepting the report and contributing a sum of Rs 100 each from the public exchequer within the teeth of Sections 40; 41; 44-A and 44-B of the Act. Thus it must be held that the acquisition and declaration published under Section 6 is a colourable exercise of the power.

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

Explanation:
0[ds]It is to serve the general interest of the community as opposed to the particular interest of the individual. Public purpose broadly speaking would include the purpose in which the general interest of the society as opposed to the particular interest of the individual is directly and vitally concerned. Generally the executive would be the best judge to determine whether or not the impugned purpose is a public purpose. Yet it is not beyond the purview of judicial scrutiny. The interest of a section of the society may be public purpose when it is benefited by the acquisition. The acquisition in question must indicate that it was towards the welfare of the people and not to benefit a private individual or group of individuals joined collectively. Therefore, acquisition for anything which is not for a public purpose cannot be done compulsorily. Admittedly, there is no group housing scheme approved by the State Government. On the other hand, housing schemes are being executed by the A.P. Housing Board under the Act. We are not concerned with the public purpose as amended under the 1984plain reading of the fascicule of these provisions clearly indicates the distinction, statute has envisaged, namely, acquisition for a public purpose and acquisition for a private purpose. Even the acquisition for a company, unless utilisation of the land so acquired is integrally connected with public use, resort to the compulsory acquisition under Chapter VII cannot be had. Even when Chapter VII was invoked, the requirements of Section 40 and Section 41 are mandatory and shall be strictly complied with. It is clearly discernible from scheme of the acquisition in Chapter VII that the land can be acquired for the erection offor workmen employed by the company or for the provisions of amenities directly connected therewith or 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 is needed for the construction of some work which is likely to prove useful to the public. Notwithstanding anything contained in the Act, i.e., despite the compliance with Chapter VII, DO land should be acquired under Chapter VII except for the purpose mentioned in clause (a) of subsection (1) of Section 40, for a private company which is not a Government company and that such company shall not be entitled after the acquisition under Chapter VII to transfer the said land or any part thereof by sale, mortgage, gift, lease or otherwise except with the previous sanction of the appropriate Government. The object therefore, appears to be that the land acquired under Chapter VII shall always remain to serve the public purpose, beneficial to the public, It is not open to the Government to waive any of the provisions in Part VII. The provisions contained therein have mandatory operation. The object of Sectionsappears to be that they intend to safeguard public interest. The company acquiring the land for a public purpose in Chapter VII may, after the acquisition has become final, divert the land for private profit motive, defeating the purported public purpose for which the acquisition was made. The Government company obviously does not alienate such property for private gain since the profits merge into public fund. While the private company could get acquisition but thereafter become free to dispose of the property. Therefore, the acquisition for a private company get limited only for purposes envisaged under Section 40(1)(a) and thereby the public purposes envisaged therein get safeguarded and protected. The dominant purpose of public utility pervades the provisions in Chapter VII of thedeclaration for acquisition for a company shall not be made unless the compensation to be awarded for the property is to be paid by a company. In the case of an acquisition for a company simpliciter, the declaration cannot be made without satisfying the requirements of Part VII. But that does not necessarily mean that an acquisition for a company for a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. In other words, the essential condition for acquisition is for a public purpose and that the cost of acquisition should be borne, wholly or in part, out of public funds. Hence an acquisition for a company may also be made for a public purpose, within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. If, on the other hand, the acquisition, for a company is to be made at the cost entirely of the company itself, such an acquisition comes under the provisions of Part VII. In that case the Government have sponsored the Housing Scheme and substantial amount has been extended on the scheme out of the Government revenue in the form of subsidies and loans. The acquisition was also for the construction of the quarters for the workmen under the Government sponsoring Housing Scheme for industrial workers. Under those circumstances it was held that the acquisition for the company was for public purpose. We may make it clear at once that a token contribution from public revenue, under all circumstances cannot be considered to be colourable exercise of power. Each case must furnish its backdrop whether the acquisition is for public purpose or for a private purpose. The facts and circumstances must carefully be scrutinised to reach awould thus be clear that when an act is done by the State under colour of authority of law it must be for the lawful purpose envisaged under the Act. If the purpose, namely, public purpose envisaged under the Act is not served then the exercise of the power of the declaration under Section 6 must be held to be colourable exercise of the power, though not with evil motive. It is seen that the appellant is a private society and it is not for any of the purposes under Section 40(1)(a) or under Section 3(e) of the Act. It is for the transfer of the acquired land to the members of the society who are now as per the record placed in this Court appear to be Advocates, Chartered Accountants, Businessmen and alleged to be possessed of more than one house. The Government does not appear to have bestowed its thought to these aspects while considering the report under Sectionin this perspective before accepting the report and contributing a sum of Rs 100 each from the public exchequer within the teeth of Sections 40; 41;of the Act. Thus it must be held that the acquisition and declaration published under Section 6 is a colourable exercise of the power.