Case: M/S Usha Stud &amp; Agr.Farms P.Ltd Vs. State Of Haryana

By notification dated 13.11.1981 issued under Section 4(1), the State Government proposed the acquisition of 1005.30 acres land of three villages, namely, Mullahera, Dundahera and Daulatpur Nasirabad (Carterpur) for the development of Sectors 21, 22, 23 and 23A of Gurgaon. The appellants, whose land measuring 52.74 acres situated in village Daulatpur Nasirabad (Carterpur) was included in the notification, filed objections under Section 5-A(1). The Land Acquisition Collector submitted report under Section 5-A(2) and recommended the acquisition of 702.37 acres land. As regards theland, the Land Acquisition Collector opined that Stud Farm cannot be allowed to remain in the residential zone and, therefore, the entire land may be acquired except the portion on which residential building had been constructed. The State Government accepted the recommendations of the Land Acquisition Collector and issued five separate declarations under Section 6(1). For 91.98 acres land of village Daulatpur Nasirabad (Carterpur), the declaration was published in the Official Gazette dated 15.11.1984.3. The appellants challenged the acquisition of their land in Writ Petition No.5623/1984 which was dismissed by the High Court along with other similar petitions.4. The appellants then filed Special Leave Petition (C) No.2302/1986. During the pendency of the matter before this Court, the State Government released the land belonging to M/s. Jawala Textiles Ltd., M/s. Rani Shaver Poultry Farm Ltd., M/s. Enfilco Ltd., M/s. Indo Swiss Time Limited and M/s. Omega Commercial (Pvt.) Ltd.5. On 13.7.1986, the Chief Town Planner, Haryana submitted a note for release of theland subject to the condition that they should withdraw the Special Leave Petition. The appellants did the needful. Thereafter, the Commissioner and Secretary, Town and Country Planning Department sent communication dated 21.8.1986 to the appellants incorporating therein the terms on which the land was released. As a sequel to this, agreement dated 8.6.1987 was executed between the appellants and Haryana Urban Development Authority (HUDA) for release of 47.74 acres land.6. In furtherance of the agreement, the appellants deposited Rs.1,00,000/- which, according to them, were towards the first instalment of the development charges. However, before the other terms of agreement could be acted upon, the State Government issued fresh notification dated 7.12.1988 under Section 4(1) for the acquisition of 55.10 acres land including the land owned by the appellants. They filed detailed objections dated 4.1.1989, the salient features of whichthey had established Stud Farm on the acquired land by spending substantial amount for breeding, rearing and exporting horses and were doing other activities like animal husbandry, agriculture, horticulture, nursery and dairy farming;(ii) they had grown 5,000 trees on the land and also constructedclass buildings worth several crores of rupees;(iii) the purpose of acquisition was vague;(iv) the notification issued under Section 4(1) was not published in two newspapers and was not affixed in the vicinity of the acquired land, and(v) the decision of the State Government to acquire their land was discriminatory and violative of Article 14 of the Constitution.Land Acquisition Collector, Urban Estate, Gurgaon submitted report dated 17.11.1989 with the recommendation that the land of the appellants may not be notified because the same had already been released from acquisition. Similar recommendation was made by the Chief Town and Country Planner. However, the State Government did not accept their recommendations and issued a declaration under Section 6(1), which was published in the Official Gazette dated 6.12.1989.8. The appellants challenged notifications dated 7.12.1988 and 6.12.1989 in Writ Petition Nos. 3820-3823/1991. During the pendency of those petitions, the Land Acquisition Collector passed award dated 5.12.1991, which was followed by supplementary award dated 25.8.1993. Thereupon, the appellants filed Writ Petition Nos. 1152-1155/1994 and prayed for quashing of the awards.9. While the writ petitions filed by them were pending, the appellants made an application to the competent authority for permission to use the acquired land for group housing. The Additional Director, Urban Estates recommended the release of 37.906 acres land in favour of the appellants but no final decision was taken in the matter apparently because the writ petitions filed by them were pending.10. M/s. Rani Shaver Poultry Farm Ltd., M/s. Indo Swiss Time Ltd., and M/s. Kanodia Petro Products Ltd., successor of M/s. Jawala Textile Mills, whose lands were acquired in 1981 but were released by the State Government and were re-acquired vide notification dated 11.9.1990 filed Writ Petition Nos. 11679/1993, 10456/1993 and 3942/1992 for quashing the same. After receiving the notices issued by the High Court, the State Government/HUDA executed separate agreements with them and released substantial portion of their land. As a sequel to this, the writ petitions were dismissed as withdrawn. However, the writ petition filed by M/s. Enfilco Ltd. Was dismissed by the High Court. When the matter was carried to this Court (Civil Appeal No.4359/1994) an agreement was executed between HUDA and M/s. Enfilco Ltd. and major portion of its land was released.11. In the writ petitions filed by them, the appellants highlighted the discrimination practiced against them. They pleaded that the Stud Farm established by them is covered by the termdefined in Section 2(1) of the Punjab Scheduled Roads and Controlled Areas (Restriction of Unregulated Development) Act, 1963 (for short, ‘the 1963and they had raised constructions in consonance with the provisions of that Act. The appellants further pleaded that even though the Land Acquisition Officer and the Chief Town Planner had recommended the release of their land, the State Government arbitrarily issued the declaration under Section 6(1) by wrongly assuming that the entire land was lying vacant.12. In the counter affidavits filed on behalf of the respondents, it was averred that the objections filed by the appellants were duly considered and final decision to acquire their land was taken by the highest political functionary of the State, i.e., the Chief Minister. It was further averred that the construction made by the appellants was contrary to the provisions of the 1963 Act because they had not obtained permission from the competent authority. The respondents also pleaded that rearing and breeding of horses is a commercial activity, which could not have been undertaken by the appellants without obtaining sanction from the competent authority for change of land use.13. The Division Bench of the High Court rejected the contentions raised on behalf of the appellants and dismissed the writ petitions. While dealing with the question whether the acquisition of theland was vitiated due to violation of Section 5-A(2), the Division Bench observed asregards the contention of the counsel for the petitioners that since the Land Acquisition Collector has not made any recommendation in his report while considering the objections filed by the petitioners under Section 5-A of the Act, the same only requires to be noted and rejected for the simple reason that the Collector is not the competent authority to decide the objections under Section 5-A of the Act raised by the land owners against the acquisition. He is required to submit his report as it existed on the spot as he is required to enquire into the objections, record the statements of the parties, inspect the sites and send his report to the State Government. Along with his report he may make recommendation or may not do so because it has no bearing as the competent authority to take decision on the objections is the State Government. Thus, for the failure to make any recommendation by the Collector, acquisition proceedings cannot be quashed on the ground that it violates the procedure or deny the rights conferred on the land owners under Section 5-A of the Act.The Division Bench of the High Court also negatived theplea of discrimination in the followingground of discrimination has been raised by the petitioners alleging that in an earlier acquisition in the year 1981, petitioners and other similarly placed Companies, namely, M/s Rani Shaver Poultry Farm, M/s Omega Commercial Pvt. Ltd., Anand Purifier (now M/s Enfilco Ltd.), Indo Swiss Time Ltd., M/s Jawala Textile Mills, had challenged the said acquisition by filing independent writ petitions. These writ petitions were dismissed and during the pendency of the Special Leave Petitions before the Supreme Court, an agreement was entered into and the land of the petitioners as also these Companies were released from acquisition. Thereafter, while notification for acquisition of the land of the petitioners was issued, land of other companies was not re-acquired. This objection was raised under Section 5-A of the Act, which led to the issuance of the notifications for acquiring the land of other companies also. As the petitioners challenged, similarly other companies also challenged the notifications. During the pendency of the writ petitions, agreements were entered into between these companies and respondents and on the basis of these agreements, writ petitions were withdrawn by these companies as their lands stood released from acquisition except that in the case of M/s Enfilco. This contention of the petitioners can also not be accepted as it is not in dispute that the acquisition, through which the lands of these companies were acquired, was different from the notifications issued for acquisition of the land of the petitioners. The judgments relied upon by the counsel for the petitioners in the case of Hari Ram and another (supra), M/s Aggarwal Paper Board and Allied Industries (supra), Chandu Singh (supra) and Anil Kakkar (supra) would not be applicable to the facts of the present case for the reason that in those cases, the land, which was being acquired and discrimination qua which was raised by the land owners, was the same whereas the notifications for acquisition are different in the present

Court's reasoning:
14. It must be borne in mind that the proceedings under the LA Act are based on the principle of eminent domain and Section 5-A is the only protection available to a person whose lands are sought to be acquired. It is a minimal safeguard afforded to him by law to protect himself from arbitrary acquisition by pointing out to the authority concerned, inter alia, that the important ingredient, namely,is absent in the proposed acquisition or the acquisition is mala fide. The LA Act being an expropriatory legislation, its provisions will have to be strictly construed.15. Hearing contemplated under Section 5-A(2) is necessary to enable the Collector to deal effectively with the objections raised against the proposed acquisition and make a report. The report of the Collector referred to in this provision is not an empty formality because it is required to be placed before the appropriate Government together with therecommendations and the record of the case. It is only upon receipt of the said report that the Government can take a final decision on the objections. It is pertinent to note that declaration under Section 6 has to be made only after the appropriate Government is satisfied on the consideration of the report, if any, made by the Collector under Section 5-A(2). As said by this Court in Hindustan Petroleum Corpn. Ltd., the appropriate Government while issuing declaration under Section 6 of the LA Act is required to apply its mind not only to the objections filed by the owner of the land in question, but also to the report which is submitted by the Collector upon making such further inquiry thereon as he thinks necessary and also the recommendations made by him in that behalf.16. Sub-section (3) of Section 6 of the LA Act makes a declaration under Section 6 conclusive evidence that the land is needed for a public purpose. Formation of opinion by the appropriate Government as regards the public purpose must be preceded by application of mind as regards consideration of relevant factors and rejection of irrelevant ones. It is, therefore, that the hearing contemplated under Section 5-A and the report made by the Land Acquisition Officer and his recommendations assume importance. It is implicit in this provision that before making declaration under Section 6 of the LA Act, the State Government must have the benefit of a report containing recommendations of the Collector submitted under Section 5-A(2) of the LA Act. The recommendations must indicate objective application of mind.The ratio of the aforesaid judgments is that Section 5-A(2), which represents statutory embodiment of the rule of audi alteram partem, gives an opportunity to the objector to make an endeavour to convince the Collector that his land is not required for the public purpose specified in the notification issued under Section 4(1) or that there are other valid reasons for not acquiring the same. That section also makes it obligatory for the Collector to submit report(s) to the appropriate Government containing his recommendations on the objections, together with the record of the proceedings held by him so that the Government may take appropriate decision on the objections. Section 6(1) provides that if the appropriate Government is satisfied, after considering the report, if any, made by the Collector under Section 5-A(2) that particular land is needed for the specified public purpose then a declaration should be made. This necessarily implies that the State Government is required to apply mind to the report of the Collector and take final decision on the objections filed by the landowners and other interested persons. Then and then only, a declaration can be made under Section 6(1).34. As a sequel to the above discussion, we hold that the decision taken at the level of the Chief Minister was not in consonance with the scheme of Section 5-A(2) read with Section 6(1). We further hold that the Staterefusal to release theland resulted in violation of their right to equality granted under Article 14 of the Constitution.