Case: Valjibhai Muljibhai Soneji &amp; Anr Vs. State Of Bombay (Now Gujarat) &amp; Ors

2. The appellants before us were plaintiffs in suits instituted by them before the second Joint Civil Judge (S.D). Ahmedabad, in which they challenged the validity of certain proceedings instituted by the then Government of Bombay for acquiring a piece of land belonging to respondent No. 2 for the purpose of constructing a bus depot required by the State Transport Corporation and for constructing office and other buildings by the said Corporation. The appellants, in addition, sought an injunction restraining the State of Bombay and the State Transport Corporation from proceeding with the acquisition and dispossessing them.The suit was founded on a number of grounds but ultimately when the matter went up to the High Court in second appeal Mr. Rajni Patel who appeared for the appellants based the claim only on three grounds : (1) that the purpose mentioned in the notification under s. 4 of the Land Acquisition Act, 1894, was indefinite or vague and, therefore, the notification was bad; (2) that the proceedings were collusive and were initiated by the State Government for the benefit of the owner of the land, the second respondent; (3) that the State Transport Corporation was not a local authority but merely a company and as the provisions of Part VII of the Land Acquisition Act were not complied with, the acquisition was bad.

Reasoning: .Taking up the last point first, we may point out that no such plea was taken on behalf of the respondents in the trial court. This point was apparently not taken because even before the written statement was filed a notification under s. 6 was in fact made by the State Government. The suits proceeded throughout on the footing that there was no formal defect in regard to their maintainability. In the circumstances we do not think that it would be fair to allow the suits to be defeated merely on such a technical ground.4. Coming to the first point raised on behalf of the appellants it is sufficient to point out that the notification under s. 4 of the Act clearly states that the acquisition is for a public purpose, namely, for State Transport. The notification under s. 6 reiterates this fact and in addition says that the land was needed to be acquired for the purposes of and at the expense of the State Transport Corporation. There is thus a clear declaration of the Government that the purpose of acquisition was a public purpose and as has been consistently held by this Court in a number of cases, including the most recent one, Smt. Somawanti v. The State of Punjab [[1963] 2 S.C.R. 774.], the declaration as to public purpose by the Government is final except where it is a colourable exercise of power. Unless, therefore, it is shown that there was collusion as alleged by the appellants, between the respondents 1 and 3 on the one hand and respondent No. 2 on the other, the notification will have to be regarded as conclusive on the question that the land was required for a public purpose. Thus, even though the land was being acquired for a corporation and not for the State the acquisition must nonetheless be said to be for a public purpose, as has been held in Somawantis case [[1963] 2 S.C.R. 774.], provided that it is not found to be a colourable exercise of power by thequestion whether the acquisition was collusive or mala fide is one of fact and on this point the High Court and the two courts below have come to the conclusion that the appellants have not been able to substantiate their pleas. It is not for this Court to review the evidence in a case where there are concurrent findings of fact, unless there be exceptional reasons, and we find none here. It must, therefore, be held that the notifications of the Government issued under ss. 4 and 6 are conclusive on the question that the land was required for a public purpose.We must, however, point out that before effect can be given to a notification under sub-s. (1) of s. 6 of the Land Acquisition Act the terms of the proviso to that section should be satisfied.The Proviso clearly precludes the Government from making a notification under sub-s. (1) of s. 6 unless the compensation to be awarded for such property (a) is to be paid by a company, or (b) is to come wholly or partly our of (i) public revenues or (ii) some fund controlled or managed by a local authority.It is no doubt true that it has been the appellants case throughout that the State Transport Corporation is a company. It is also a fact that the entire compensation is to come out of the funds of the State Transport Corporation. If, therefore, we accept the contention of the appellants on this point the terms of the proviso will be said to have been satisfied. On the other hand it has been the case of the respondents that the State Transport Corporation is not a company but a local authority. The reason why this contention is raised on behalf of the respondents is that the provisions of Part VII of the Act have not been complied with here and, therefore, if in fact the acquisition is on behalf of a company it will have to be said to be bad on the ground of non-compliance with the provisions of Part VII.It will be clear from these provisions that the old Corporation was recognised as having always had valid legal status and deemed to have been properly incorporated. On the establishment of a Corporation under s. 3 of the Act of 1950 the old Corporation was dissolved. But all action by and transaction with the old Corporation including any action or transaction by which any property or asset etc., was acquired by or for the old Corporation was deemed to have been validly or lawfully taken or done. It is common ground that in consequence of the passing of the Act of 1950 the Bombay Act of 1950 stood impliedly repealed and was in fact expressly repealed by the Bombay Act 29 of 1955. The provisions which we have set out above clearly show that the State Transport Corporation having been incorporated by an Indian law is a Company. Since, however, the compensation to be awarded for the acquisition is to be paid only by the Corporation and no portion of it was paid by the Government, could it be said that the terms of the proviso to sub-s. (1) of s. 6 have been satisfied ? It is contended by the learned Attorney-General on behalf of the respondent that the funds of the Corporation have themselves come out of public revenue inasmuch as they consist of moneys provided by the State of Bombay. Even assuming the funds of the Corporation consist only of the moneys which have been provided by the State of Bombay it is difficult to appreciate how they could be regarded as part of the public revenue. No doubt, the source of the funds would be public revenue but the funds themselves belong to the Corporation and are held by it as its own property. They cannot, therefore, be regarded as public revenue in any sense. It was then said by reference to several provisions of the Act that the Government is entitled to exercise control over the Corporation, that the profits earned by the Corporation would go to the Government, that if the Corporation was wound up all its assets would also go to the Government and that, therefore, the Corporation could be regarded as nothing more than a limb of the Government. Even though that may be so the Corporation is certainly not a department of Government but is a separate legal entity and, therefore, moneys coming out of public revenues whether invested, loaned or granted to it would change their original character and become the funds or assets of the Corporation when they are invested in or transferred or loaned to it. While, therefore, the terms of the proviso could be said to have been satisfied because compensation is to be paid by the Corporation, the acquisition will be bad because the provisions of Part VII of the Land Acquisition Act have not been complied with.It will be clear from the definition that unless it is shown that the State Transport Corporation is an authority and is legally entitled to or entrusted by the Government with control or management of a local fund it cannot be regarded as a local authority. No material has been placed before us from which it could be deduced that the funds of the Corporation can be regarded as local funds. It was no doubt submitted by the learned Attorney-General that the Corporation was furnished with funds by the Government for commencing its business; bus even if that were so, it is difficult to appreciate how that would make the funds of the Corporation localdoubt, that is so. But the definition contained in this Act cannot override the definition contained in the General Clauses Act of 1897 which alone must apply for construing the expression occurring in a Central Act like the Land Acquisition Act unless there is something repugnant in the subject or context. Thought land acquisition is now in the concurrent list and, therefore, the State can legislate, the Bombay Act not having received the Presidents assent, cannot prevail against the meaning of the expression local authority in that Act. No repugnancy is pointed out.In our view the acquisition impugned in this case having been made for the benefit of a Corporation, though for a public purpose, is bad because no part of the compensation is to come out of public revenues and the provisions of Part VII of the Land Acquisition Act have not been complied with.