Case: H.M.T. Ltd. rep. by its Deputy General Manager and Anr Vs. Mudappa and Ors

These two appeals arise out of the judgment and order dated September 8, 1998 passed by learned Single Judge of the High Court of Karnataka in Writ Petition No. 5580 of 1998 and confirmed by the Division Bench in Writ Appeal Nos. 5051-5052 of 1998 on October 28,the impugned order, the High Court upheld the contention of the original petitioners and quashed notification dated November 13, 1997 issued by the State of Karnataka under sub-section (1) of Section 28 of the Karnataka Industrial Areas Development Act, 1966 (hereinafter referred to as "the Act"). To appreciate the controversy raised in the appeals, it is necessary to state relevant facts. The respondents are heirs and legal representatives of deceased Akkahonnamma who died somewhere in the year 1993. She was the owner of land bearing Survey No. 113/3 admeasuring 2 acres, 37 gunthas situated in Devarayapatna, Tumkur Taluk. In the year 1978, the Industrial Area Development Board, Karnataka (Board for short) acquired 120 acres of land of different survey numbers situated in Devarayapatna for the purpose of establishing a Watch Factory, namely, H.M.T. Ltd. (appellant herein). The land admeasuring 1 acre, 38 gunthas out of 2 acres, 37 gunthas of Survey No. 113/3 owned by the respondents was also acquired in the acquisition proceedings. The remaining land to the extent of 39 gunthas was not acquired. It was, however, the case of the respondents that the General Manager, H.M.T. took possession of the entire area of 2 acres, 37 gunthas even though he was entitled to take possession of land only of 1 acre, 38 gunthas. He thereby unauthorisedly took over possession of 39 gunthas of land. A request was, therefore, made to the General Manager, H.M.T. to return possession of 39 gunthas to the owners. He, however, refused to hand over possession. By a communication dated July 20, 1984, the Board called upon the owners of the land to show cause as to why the actual extent of acquired land should not be continued to be occupied by the H.M.T. The owners did not oblige the Board and filed a suit against the authorities, being O.S. No. 341 of 1985 for declaration of title and also for possession of land. The suit was decreed by the Trial Court. An appeal filed against the said decree came to be dismissed by the First Appellate Court. The said order was not challenged and the decree became final. Execution proceedings had been initiated by the owners and by an order dated June 13, 1997, the Executing Court directed H.M.T. to hand over actual and peaceful possession of the land to the owners. The order passed by the Executing Court was challenged by the H.M.T. by filing a revision which came to be allowed and the matter was remanded to the Executing Court with a direction to the Executing Court to afford an opportunity to H.M.T. of hearing and to pass an appropriate order in accordance with law. Meanwhile, however, H.M.T. appears to have requested the State Government to acquire land and a notification under sub-section (1) of Section 28 of the Act for proposed acquisition of land for public purpose, viz. for developing industry came to be issued on November 13, 1997 which was published in Official Gazette on December 11, 1997. The owners of the land came to know about the issuance of notification and they invoked the jurisdiction of the High Court of Karnataka under Article 226 of the Constitution by filing a Writ Petition. It was alleged that the notification had been issued mala fide in order to deprive the owners of their rights to recover possession and to defeat the decree passed by a court of competent jurisdiction. A prayer was made for quashing and setting aside the notification, directing the authorities to hand over possession of 39 gunthas of land of Survey No. 113/3 to the owners in view of the decree passed by a competent court which had become final. Before the learned Single Judge, it was contended on behalf of the appellants (respondents before the High Court) that the petition was premature and was liable to be rejected at the threshold as the Notification was merely a preliminary notification and final declaration was yet to be made after considering the objections, if any, to be filed by the owners of the land. It was also submitted that the owners had failed to even prima facie satisfy the Court that the action was mala fide and the power was exercised for colourable or collateral purpose. The land was sought to be acquired for public purpose, namely, for developing industry through Board and allegation of legal mala fide was baseless. It was also urged that Civil Court had reserved the liberty to acquire the land in accordance with law. But even otherwise, the decree passed by a court could not take away power of the State. Moreover, the land was covered by the provisions of the Official Secrets Act, 1923 having declared it as prohibitedlearned Single Judge described the case as one of exploitation of statutory provisions to defeat the just rights of an individual decreed by the law Courts, in the name of public purpose and held that the power had been exercised by the authorities mala fide and the action was liable to be quashed and set aside. The Court noted that the respondents had no right, title or interest in the land in question and yet it continued to retain possession of the land for about 18 years. It refused to vacate the property though request was made by the owners. When the suit was decreed, appeal was dismissed and no further action was taken, the decree had become final. In spite of decree in favour of the owners, possession was never returned to successful plaintiffs and they were constrained to take out execution proceedings. When warrant for possession was issued, instead of obeying the decree of the court and handing over possession of land, the Company requested the Board to initiate proceedings for acquisition of land under the Act and notification under Section 28(1) was issued. It was also observed that neither a notification under sub-section (3) of Section 1 nor under sub-section (1) of Section 3 was issued by the State in accordance with law and the land was sought to be acquired. The Court, no doubt, noted that such notifications were issued, but all the three notifications, i.e., notification under sub-section (3) of Section 1, sub-section (1) of Section 3 and sub-section (1) of Section 28 were issued on one and the same day. They were also published simultaneously on December 11, 1997 in the Official Gazette. Such an action, in the opinion of learned Single Judge, was in mala fide exercise of power to deprive the owners of the land who got decree for possession in their favour. The action was, therefore, bad in law. Accordingly, the petition was allowed and the notification under sub-section (1) of Section 28 was quashed. Being aggrieved by the order passed by the Single Judge, intra-court appeals were filed by the appellants which were dismissed by a Division Bench of the Court by a cryptic order observing that the notification had been issued in violation of the provisions of the Act and to deprive the writ petitioners of fruits of the decree obtained bythe matter came up before this Court, notice was issued on March 15, 1999. It appears that there was some talk of settlement. Record reflects that the matter was adjourned from time to time to explore possibility of settlement, if any, but settlement could not be arrived at and on December 1, 2000, leave was granted. We have heard the learned advocates for the parties.

Reasoning:
7. In our considered view, however, this approach is neither legal nor permissible. Passing of a decree by a competent court is one thing and exercise of statutory power by the authority is altogether a different thing. It is possible in a given case to come to a conclusion on the basis of evidence produced and materials placed on record to conclude that the action has been taken mala fide or for a collateral purpose or in colourable exercise of power. But, in our opinion, issuance of preliminary notification after a decree by a court of law would not ipso facto make it vulnerable and exercise of power mala fide. To us, therefore, the authorities were right in raising a preliminary objection that the petition was premature as by issuance of notification under(1) of Section 28 of theAct, an intention was declared by the State to acquire the land for public purpose i.e. for developing industry. To appreciate the contention of the appellants, we may reproduce the section which readsreading of the above provision makes it abundantly clear that if in the opinion of the State Government any land is required for purpose of development by the Board, a notification of its intention to acquire the land can be issued for acquisition of such land. The notification was accordingly issued on November 13, 1997.(2) of Section 28 then requires the State Government to serve notice upon the owner or occupier of the land and all such persons known or believed to be interested therein to show cause why the land should not be acquired.(3) casts an obligation on the State Government to consider the objections of the owner, occupier or other person interested in land and to pass such order as it deems fit after affording an opportunity of being heard. If it is satisfied that any land should be acquired, a declaration can be made under(4) which shall be notified in Official Gazette.8. The scheme of Section 28 is thus similar to the scheme of acquisition of land under the Land Acquisition Act, 1894 under which such preliminary notification is issued, opportunity of being heard is afforded to the persons interested in the land and only thereafter final notification can be issued. At the stage of raising objections against acquisition, it is open to the respondents herein to raise all contentions. In spite of such objections, if final notification is issued by the State, it is open to them to take appropriate proceedings or to invoke jurisdiction of the High Court under Article 226 of the Constitution.9. Unfortunately, however, the High Court entertained the petition and quashed the preliminary notification overrulingobjection as to maintainability of petition raised by the State and the appellants herein. The High Court was also not right in coming to the conclusion thatsince a decree was passed by a competenton under the Actcould have been issued by theThe power exercised by the State was statutory in nature and irrespective of a decree in favour of the owners, such notification could be issued. A situation similar to one before us had arisen in State of Andhra Pradesh & Ors. v. Govardhanlal Pitti, (2003) 4 SCC 739. In Govardhanlal, a school building belonging to G was in the possession of the State as a tenant. An order of eviction was passed and the State was directed to hand over possession of property to G within a particular period. The State then took out proceedings under the Land Acquisition Act, 1894 for acquiring the property for public purpose, namely, for a school. G challenged the proceedings as mala fide. The High Court upheld the contention observing that there was malice in law inasmuch as the proceedings were initiated to scuttle a valid decree passed by a competent court. The State approached this Court. Allowing the appeal and setting aside the order of the High Court, this Court held that the school was there since 1954 and was catering to the educational needs of children residing in the heart of the city. It could not, therefore, be contended that there was no genuine public purpose. Exercise of power under the Act in the facts and circumstances, therefore, could not be held malawas observed that where malice was attributed to the State, it could not be a case of malice in fact, or personalor spite on the part of the State. It could only be malice in law, i.e. legal mala fide. The State, if it wishes to acquire land, could exercise its power bona fide for statutory purpose and for none other. It was observed that it was only because of the decree passed in favour of the owner that the proceedings for acquisition were necessary and hence, notification was issued. Such an action could not be held mala fide. In the instant case also, the record reveals that in 1978 itself, the possession of the entire land of Survey No. 113/3 had been taken over by the appellants albeit part of it illegally (to the extent of 39 gunthas). It was only because of the decree passed in favour of the owners of the land that the appellants realized that an appropriate action in consonance with law was to acquire the land and hence, a request was made to the State to take anunder the Act anda notification was issued. Such act cannot be said to be illegal, particularly when the notification was preliminary in nature and opportunity under the Act was to be afforded to the owners of being heard. The High Court, in our considered opinion, was wrong and had committed an error of law in entertaining the petition and in allowing it at the stage of issuance of notification under(1) of Sectionis on record that notifications under(3) of Section 1 and) of Section3 were issued by the State. The learned Single Judge, however, observed that it is only after the Executing Court directed theto deliver possession of the property that the latter persuaded the State to issue such notifications. He also found fault with the State Authorities in not producing material for the perusal of the Court for the alleged expansion of the industry. The learned Judge noted that it was not the case of thein execution proceedings that the land was needed for development of industry and, therefore, a decision was taken to acquire the land. According to the learned Single Judge, the land was situated in one corner of the area and was lying vacant. In our opinion, the approach of the learned Single Judge could not be said to be legal or in consonance with law. The State authorities were not required to produce material for perusal of the Court as to expansion of industrial area or development of industry. It was also not expected of theto contend before the Executing Court that the land was required for expansion of the industry. The reason weighed with the learned Single Judge, therefore, in our opinion, could not be made basis for quashing the notification.The order passed by the learned Single Judge could not have been upheld by the Division Bench. Unfortunately however, the Division Bench confirmed the order of the Single Judge without considering all aspects of the matter. The said order also, therefore, deserves to be set aside.15. For the foregoing reasons, the appeals deserve to be allowed and are, accordingly, allowed. The order passed by the learned Single Judge and confirmed by the Division Bench is set aside. The authorities are at liberty to take appropriate proceedings in accordance with law on the basis of notification under) of Section28 of theAct. It goes without saying that all proceedings will have to be undertaken in accordance with Section28 of theAct and it is open to the owners to raise all contentions that under the notification of 1978, the acquisition was to the extent of 1 acre, 38 gunthas of land but the appellants took over possession of additional 39 gunthas of land; that in spite of request and prayer, possession of 39 gunthas of land was never restored to them; that they were required to file suit for possession; that a decree was passed in their favour which was confirmed by the appellate court which had become final; that even thereafter, execution proceedings were taken out wherein direction was issued to the appellants to hand over possession of the land to them, and at that stage, the notification under Section 28(1) was issued. As and when such objections will be taken, an appropriate order would be passed by the authorities in accordance with law. All contentions of the parties are kept open.