Case: Urmila Roy  Vs. M/S Bengal Peerless Hng.Devt.Co.Ltd.&amp;Ors

Appellant Urmila Roy and others in W.P No.1002 (W) of 2002 were the writ petitioners before the Single Bench of the Calcutta High Court. As per the facts, 6.78 acres of land had been purchased by them avowedly for putting up an International School, a cultural centre, an I.T. Park and a Housing Complex and for this purpose they had been in negotiations with the West Bengal Housing Board (hereinafter referred to as "The Housing Board"). It appears, however, that before the project could be finalized, the State Government issued a Notification under Section 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to as "the Act") on 4th December, 2000 seeking to acquire in all 12.67 acres (including 6.78 acres belonging to the writ petitioners) for a housing scheme. The land owner appellants were allegedly given to understand by the Housing Board that in the event that they did not object to the acquisition, they too would be permitted to participate in the proposed project. It is the case of the land owners that on account of this assurance, they did not raise any serious objection to the acquisition, where after a declaration under Section 6 (1) of the Act dated 29th November, 2001 has issued and published in the Asian Age on 4th December, 2001. It is further the case of the land owners that they realized later that they had been cheated as the land had been acquired for the development and implementation of a housing scheme by the Housing Development Co. Ltd. (hereinafter referred to as "The Bengal Peerless"). The Collector subsequently i.e. on 22nd December, 2003 passed an Award determining the compensation payable and it is the case of the land owners that they first came to know of the award on receipt of a notice dated 16th February, 2004 whereby they were informed that as the ownership of the acquired land could not be ascertained, the compensation had been deposited with the Reference Court under Section 31(2) of the Act.The land owners thereupon filed Writ Petition No.10051(W) of 2004 challenging the acquisition proceedings pleading inter-alia that the said proceedings had lapsed by efflux of time under Section 11-A of the Act as the declaration under Section 6 of the Act had been as published on 29th November, 2001 and the Award had been made on 22nd December, 2003. It was also pleaded that the declaration under Section 6(2) of the Act had not been published in the manner provided. It was further pleaded that the land had been acquired under the garb of a public purpose whereas it was intended to benefit the Bengal Peerless, a private party and an attempt had been made to camouflage the identity of the beneficiary as it had not been specified in the Notifications issued under Sections 4 and 6 of the Act and had been brought out for the first time in the Notification under Section 9 and in this view of the matter, the land owners had been deprived of their rights to file appropriate objections. Cumulatively, it was submitted that in view of the facts, the acquisition itself was a colourable exercise of power at the instance of the State.e matters were considered by a learned Single Judge of the Calcutta High Court, who, by his Judgment dated 16th September, 2003 concluded that the Notifications under Sections 4 and 6 had been properly published as required by law, that the land had been acquired for a public purpose, as detailed in the Notification under Section 4 of the Act and that the State Government was authorized to entrust the housing project to a Joint Sector Company to execute the housing scheme with the sanction of the State Government under Section 27A of the West Bengal Housing Board Act, 1972 (hereinafter referred to as "the 1972 Act"). The Learned Judge, however, observed that the proposal for the housing scheme had been initiated by the Bengal Peerless without the approval of the State Government and the fact that the entrustment to the Bengal Peerless was in public interest had not been examined by the State Government, and as the scheme itself did not disclose the budget or detail adequately the residential accommodation that was to be constructed for the low and middle income groups, the scheme itself was faulty and finally concluded that it appeared from the record that the intention of the Government was to enable Bengal Peerless to make huge profits and as such the acquisition was not for a public purpose and was, therefore, malafide. The learned Single Judge accordingly allowed the writ petition vide judgment dated 18th May, 2004.5. The matter was thereafter taken before a Division Bench in FMA No. 671 of 2004 (Bengal Peerless Housing Development Co. Ltd. vs. Urmila Roy & Ors.), FMA 672 of 2004 (State of West Bengal & Ors. Vs.Urmila Roy & three Ors.) and FMA 790 of 2006 (Smt. Krishna Majumdar & Ors. Vs. State of West Bengal & Ors.) and was argued at length over several days. The Division Bench by its judgment dated 2nd July 2007, accepted the argument of the Advocate General appearing for the State appellant based on several judgments of this Court that a challenge to an acquisition should not be permitted after the award had been rendered, and that in any case, the challenge even if permissible, had been made belatedly. The Division Bench then went on to the facts of the case and observed that the conclusion of the learned Single Judge that the whole process of acquisition was malafide, was based on a misconception, more particularly as several documents which were relevant had been ignored, that in the face of these documents, the finding of the learned Single Judge that the housing scheme had not been prepared with the approval of the State Government was erroneous, and that the evidence revealed that a substantial part of the compensation for the acquired land had been paid by the Government or its agencies. The Division Bench further observed that from a perusal of the record that the acquisition proceedings themselves were transparent in nature and merely because the name of Bengal Peerless as the ultimate beneficiary had come up for the first time in the Notification under Section 9 of the Act could not lead to the conclusion that the acquisition proceedings were a colourable exercise of power. The Court then examined the purpose behind the enactment of the 1972 Act and opined that the Housing Board had been established under governmental control with a view to alleviating the shortage of housing and in particular referred to Sections 17 to 21 to highlight that all its members were appointed by the State Government and the Chairman was, in fact, the Minister of In-charge of the Housing in the State Government. The Division Bench also held that Section 27A which had been inserted in the parent act by an amendment of 1993 was for the specific purpose of authorizing the Housing Board to entrust the execution of a housing scheme to a joint sector company if it was felt that it was unable to perform its duties on account of financial limitations. The Division Bench then observed that a Memorandum of Understanding had been signed on 2nd May 1994 providing that the Housing Board and the Bengal Peerless would have an equal share capital of 49.5% each and the balance 1% would be held by the public and that the company would be run by a nine member independent Board of Directors of whom five, including the Chairman, were to be nominated by the State Government with the result that the State Government was, in effect, in complete control of the management of Bengal Peerless. It was finally concluded that in view of this feature and the fact that as per record a substantial part of the compensation had been paid out of public funds by the Housing Board, a State Government undertaking, it was not open to the land owners to argue that the land had been acquired to benefit a purely private company. The Division Bench also relied upon the judgment in State of Gujarat & Anr vs. Sankalchand Khodidas Patel (D) (1977) 4 SCC 590  and Pratibha Nema & Ors. Vs. State of M.P. & Ors. (2003) 10 SCC 626  to draw a distinction between acquisition for a public purpose and acquisition for a company and observed that as some part of the compensation had been paid by the Housing Board, the fact that the procedure for acquisition for a public purpose had been adopted was justified on the facts of the case and relying further on Manubhai Jehtalal Patel vs. State of Gujarat (1983) 4 SCC 553  further held that even a contribution of Re.1/- from the State Revenues could, in certain circumstances, be held adequate to hold that the acquisition was for a public purpose. The Division Bench finally observedthe above it becomes crystal clear that the contribution to be made by the State need not be substantial and even a token contribution of Rs.100 would satisfy the requirement that the compensation has been paid out of public funds.The Division Bench thereafter examined the issue as to whether the housing scheme had been prepared in accordance with the provisions of the 1972 Act and once again differed from the findings of the learned Single Judge that the provisions had been ignored, as a perusal of the record revealed that the scheme had been framed by the State Government pursuant to a meeting held on 17th May 2000 in the Office of the Secretary Housing in the presence of the Commissioner and the Land Acquisition Officer of the Housing Board and the agenda circulated for the meeting established that it had been called to discuss the suitability of the scheme which had been designed to benefit the weaker sections of society and others with modest means, as it envisaged the construction of about 1800 dwelling units of three categories, namely the low, the middle and the higher income groups and that at least 50% of the aforesaid units were to be reserved for the first two groups with the price for the former category being substantially subsidized and the flats for the middle income group to be provided on "no profit no loss basis" and, significantly, it was specified that the price once determined by the Housing Board before the start of the project would remain firm and that no escalation on any account was to be made for any of the dwelling units of any category. The aforesaid information led the Division Bench to conclude that the non-escalation Clause in particular, indicated that the scheme was not motivated by profiteering alone but was in fact for the benefit of poorer sections, and that if any further evidence was required to prove the bonafides of Bengal Peerless, the scheme also provided that distribution of plots was subject to the reservation of plots as per the policy of the Housing Board and allotments were to be made by a lottery system and that scheme was to be completed within 5 years from the date of the commencement of the work. Finally, the Division Bench observed asour opinion, these observations of the Supreme Court are fully applicable to the facts and circumstances of the present case. The facts narrated above make it abundantly clear that Housing Scheme has been prepared by the Government, after due consideration and it could not be said to have been initiated at the instance of the Bengal Peerless. Therefore, the learned Single Judge has erroneously held that the acquisition proceedings were null and void.The Division Bench also repelled the argument raised on behalf of the land owners that as they too were in the process of setting up a global village in the land the acquisition was untenable by observing that the letter dated 8th May 2001 written by Urmila Roy respondent on which primary reliance had been made by the land owners with respect to the aforesaid plea was not acceptable at this belated stage as the land owners had not raised any objection to the acquisition of the land by the State Government, and further that no such plea had not been raised in the writ petition. The Court then observed that Writ Petition No.10002 (W) of 2002 filed by some other land owners seeking to challenge the same acquisition had been dismissed by Justice Chattopadhyay on 16th September 2003 and the issues raised in the present appeal had also been raised before the said Judge and had been repelled and it had been specifically observed that the land had, indeed, been acquired for a public purpose and not for a private company, as alleged. The Division Bench, accordingly, allowed the appeal leading to the present matters before this Court.

Court's reasoning:
The learned counsel for the respondent has on the contrary referred us to Sections 17, 18 and 27A of the 1972 Act to submit that the said Act specifically provided for the transfer of the acquired land to a Joint Sector Company for the purpose of the execution of the Housing Scheme with the previous approval of the State Government and that the scheme had indeed been framed under Sections 17 and 18 and thereafter entrusted for execution to the Bengal Peerless. It has been submitted that though Bengal Peerless had been entrusted with the execution of the scheme the overall control remained with the Housing Board which was, in fact, an extension of the State Government itself and the State Government a fortiori retained overall control in the execution of the scheme.We find merit in this submission. The record indicates that as a consequence of a Memorandum of Understanding dated 13th September 1993 a Joint Sector Company for the execution of the housing scheme had been created on 20th May 1994 and it was provided that 49.5% of the shares capital would be held by each of the two i.e. the Housing Board and Bengal Peerless and the balance 1% would be held by the public and the company would be run independently by nine Directors, of whom five including the Chairman were to be nominated by the State Government. It is also relevant that the scheme had, in fact, been prepared by the State Government after due deliberation and had been initiated as per the provisions of the 1972 Act by virtue of a meeting held on 17th May 2000 in the Office of the Secretary, Housing Department, the Commissioner of the Housing Board, the Land Acquisition Collector and several other senior officials and the proposal had been mooted for the acquisition of the land for the purpose of a scheme for weaker sections of society and others with modest incomes. The scheme also provided for the construction of 1800 dwelling units of various categories with at least 50% to be earmarked for the lower and middle income groups with the price subsidized for the former and all flats for the middle income group to be provided on "no profit no loss" basis, and for facilities for schools, roads etc. for the benefit of those who were ultimately to reside in the dwelling units. Significantly also, the scheme provided that there would be no escalation on account of any reason whatsoever for the price charged for the dwelling units and that the allotment of the dwelling units would be on the basis of a lottery.We observe that Sectionspecifically authorizes the Housing Board in public interest to entrust a housing scheme to a Joint Sector Company with the previous approval of the State Government. We find that there is no warrant for the proposition that unless a budgetary provision is made by the Housing Board or that a final scheme is prepared in accordance with Section 23 of the 1972 Act, no land can be acquired for the purpose of execution of a housing scheme. It is significant that Section 17 of the 1972 Act itself gives the power to the Housing Board to make a scheme and that Section 27A further authorizes the Board in public interest to entrust a housing scheme to a Joint Sector Company for execution and for that purpose Section 28(2) of the Act further authorizes the Housing Board to take steps for compulsory acquisition of any land required for the purpose of a housing scheme.In view of what has been observed above, and in the background of the present case, it becomes crystal clear that though the execution of the housing scheme has been entrusted to a Joint Sector Company, the overall control over the project has been retained by the Government controlled Board of Directors, full details of the scheme have been provided with large provisions for the benefit of the poorer sections of society, with the allotment of tenements either on a subsidized price or on "no profit no loss" basis for the low and middle income groups respectively, allotment by draw of lots to avoid any arbitrariness and a complete freeze on the price of residential accommodation with no escalation whatsoever for whatever reason and the provision of facilities for effective and comfortable living such as schools, roads, sewage etc. We are, therefore, of the opinion that the housing scheme fully satisfies the tests laid down by the Supreme Court in the two cases cited immediately above.21. There is yet another aspect which needs to be dealt with. It appears from the record, and it was so pointed out during the course of arguments, that the appellants had not filed any objection to the acquisition on the plea that some assurance had been held out that they too would be allowed to participate in the housing scheme. This fact has been denied by the respondents and it has been emphasized that as per letter dated 8th March 2001 thehad, in fact, waived their right to challenge the acquisition.It is significant that this letter written by the Attorney Urmila Roy, on behalf of all the land owners spells out that the owners had in fact been willing to negotiate the price for the land at the time when the acquisition were still incomplete as only the Notification under Section 4 of the Act had, at that stage, been issued (4th December 2000). It is also significant that the declaration under Section 6 had been issued on 29th November 2001 and the award rendered on 27th December 2003. It is, therefore, evident that the land owners had, in fact, acquiesced to the acquisition and cannot now turn around to say that the acquisition was bad in law.