I '

• '. 284

STATE OF GUJARAT & ANR . ..

v. .. ·. PATEL CHATURBHAl NARSIBHAI & ORS.

Jamiar)' 21, 1975

 R C J H R KHANNA AND P. K. OoswAMr, JJ.]

[A. N.

AY, • • , • • . . , .

A mrmlrd bv Lm!tl AcqulsiltOII (Gujarat Um{icario" B Land Acqmsft1on ct, as3a t>ctions '39, 40 ami 41 and Land Acquisition o11d .Amc~1dmem) Ac!l9f~1;1 1.! 4-Acqtdsitloll of la11d for a company-£11quiry (Con.lpmw:s) .Rctlt>s, 196·1 pp/i erioll by compma• ro Golemment for acquisition by Collector m uspccl 0 a t b 1 d. . of land-Land owtze-r, if tmitfctl to " lear • . . .

1 1960 there was a r.; qucst by the responJ-.:nt }aroda Industrial- De:•elopmcnt

ralio~ (the compnny) ro the State for ncqumng Jan~ _f9r expansaon of th~ Corp I c t r the romp"'nv Tht: Special Lnnd AcqUJsltton Officer, Baroda, JndusltJa .r.:.stn c o '-' " 1 • h 1 d d l C ex ressed the opinion that th~: acquiition w; tS ncce~ .. ary ns t e an .was a JO nmg

p . . d 1 d r the Cump•tn\' :mJ th It \\'US the only lund nvntlable. There the occuple . aynbyotiJ~ Stat' (j;, crn1 .. nt mdcr Rule 4 of the Lnnd Acqui-; ition wa5 an enqu1r 40 • • ~; • h 'fi t' ·•"t d 4 (Companies) Rules. The c:nquiry \\Wi h::1d pnor to t e nou ca ton u .. e .March, 1961.

There was an asret:ment between the State Govrnment and the Company.

Tbi5 ugrcement was aher the Swre Go\'crnment had g1ven consent to the ocqui, i

lion. lhe notifiication under s. 4 ws. however, cnncellcd on 28 September, 19$6.

D On 29 5-ptembcr, J)l56, thc:re was n fresh notification under s. 4 of the Act.

Subsequent to t1tat nolltic::aion there was nn enqt1iry under s. S~A of the Act. The

respondent, \iz.. the ownc:r of th.: lunJ Jiled oh)tctinn~. There wn.s n report on J l Decemb.!r, 1968 on that enquir~· liiHkr ~. 5-A of the Act thut the land sought to b: acquired was sit4b:(' tu: th~ comp; wy and w::e<J not in excess o( its require men~ •

On January lit ! %9 there Wil"i ~~ nolifkution unJer ~. 6 of the t\cl. Along ?tith the notifle1tion unJt:r s. 6 ot :he Act an asrcement dated 13 January. 1969 E. . f?etween the cornplny anJ the Sto.t~ n~ conlemplatc:J in s. 41 of th: Act wa~ putr

}shed on 18 Junuary, l')fj~ .

Tit.: ,·<!sp.:mt.lcnt land owner challenB!!d the notifications undur ss. 4 :tnd 6 a( the Ac~. The Hih Courr ullowed 1he petition.

Thi~ appe:tl has b;:en prdencJ by c;:rtJ{kate {!ra n!d by the High Court.

On behalf of the Sl;.!e it wa~ co t , j •.I 11 h holding that the notHkMico ud~!r •n e6n cf :1t t e i1gh Colt; l wns wrong in

- The enquiry under r. 4 ;~ n 1 : . _ . 0 t , Act '"M bad for th~e reason,. not t'tl d b h . . n lh sll.llllHithe enqutry nd the owner of rh .. l'lnJ is F en 1 e lo : l!ard m th 't •nqir\' s, d h . . " • Act is subjecthe und h t'orm~, f "0 th · h , co~ I! sarnf<•C!!on u ndcr ~. 4 of he coorJuctl!d Ulllcr r 4 rhiru th n

c. l\t~ 0 th•!. rcpun puruant to an enqmry of the Comj):my. u'nd: lht"rcfoe. : enqth•rr un.:1c.r r. 4 is to dtcrmine thl! bonnlide& fleard. Fourth. ofh:r the rnc 11

1r;·:'c eq rr~ the o~ nr ot the lund need not be not inue n notifkation under ~ ~! r. . 1o; m:tJ.i! th: Govrnmt:nt mJy or may person concerned , jz. th~ 0 , n~ f Flflh. If o ~Ot1ficul1on under s. 4 i~ isued the of le ,.t.ct to mal>e bjcctio~~. r Fi ~f .JuhJ Will l!:t Hn Oflf'or!Un!tr unJc~ S: 5-A c:nquuy.fn uerci-, c or execu!ive ow fli.l > • t. c enqt.ury. undc, or r. 4 .t'i a preflmm:uy !Ill opmron for or :!i<airnc, t the i .. u; n er. f TtJsli~'1Q !-IIrv ''for c<JIII!ctm: datn to form G mg d:ua the que1tion of \'iol;, tin" iJ g 0 . 'Lott ~~.af10n. In uh cnqurry for collccl• • ny riG•th of th-: land owner doe' not arise.

Rl!jecting the cont.:nlion• und di. n ; .· • a.

HEJ 0 Th ' 1 '"tng t, e llflf'ltul ; • : e enquiry ll!''ll..lcr r 4 h • iu~~:t; 1~;~0~·:'crs t~; r 't.! Co; nna~ .. ,?h'~~ ~~ ... ~}~~

1fo11ctor h ro ubn1ir a rrort . price nod tuh k 0"1 y,.h ' .t 1; . per'lon~ inh:r~~~~d ~.;• •fi!roson:Jbl~ C!fTort1 to Bet :>uch ot the land h' h o_r OJ\C: .ule:J. Th"' per'lon er~ 0 on rnrmnt of ra'ionablc: h:111 to how h 'f 11 a• rroo\ed lo b: u.~:quirc-d. , ThleCtcrJ th.:rein ttr~ the ow'1r!l II ow f b le c:omn; ny made neoti&t' eompnny n~ .such nn enamry orrs 0 t e lnd are .. therdort. tOiitltd 10 10" .. ' wirh the owners ot the Jand. The P P se of protnt or d•rro\'ing the rcanub? .. heard ur such an enquiry tor the

e effort'S of the company to get such

land by neaotiation. The contention on behalf of the Stale that the owners of the land wil aet an opportunity when an enquiry is made under s. 5-A of the Act is equally unsound. S. 17 of the Act provides that the appropriate Government may direct that the provjsions'of s. 5-A shall not apply, and if it does so direct a declaration may be made under s. 6 at any time after the publication of the notification under s. 4 of the Act. Therefore the enquiry under s. 5-A may not be held.

[287 H-288] · ·

The nature of objections under rules framed in pursuance of the power~ conferred by s. 55 of the Act shows that the matters which are to be enquired into under r. 4, and in particular, that the Company made all efforts to get such land by negotiation with the persons interested thereon on payment of price and such efforts failed is not one of the objections which can be preferred in an enquiry ·

under s. 5-A. It is true that in the present case there was an enquiry under s. S-A of the Act but the enquiry was also before the agreement between the State and the Company under s. 41 of th~ Act and without any enquiry under s. 40 of the Act to enable the Government to give its consent. In view of the Gujarat Amendment Act, 1963, deleting the words "either of the report of the Collector under s.

S-A of sub-s. (2) or" in sections 40 and 41 of the Act, the enquiry under s. 5-A is not an enquiry within the meaning of s. 40 of the Act. [288 E-Gt 28!> B-F]

R. L. Arora v. State of U.P. [1962] 2 Supp. S.C.R. 149, referred to.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1508 of 1971.

From the Judgment and Order dated the 30th March 1971, of the Gujarat High Court in Spl. C. Appln. No. 622 of 1969.

R. H. Dhebar and M. N. Shroff, fr the appellants.

(. N. Shroff, for respondent Nos. 1R3.

M. C. Bhandare and Urmila Sirur, for respondent no. 4.

The Judgment of the Court was delivered by

R~Y, C.J. This appeal by certificate raises the question whether the notifications dated 29 September. 1965 and 18 January, 196? issued under sections 4 and 6 respectively of the Land Acquisition Act hereinafter referred to as the Act are lawful.

In 1960 there was a request by the respondent Baroda Indtrial ' Development Corporation hereinafter referred to as the Company to the State for acquiring land for expansion of the Industrial Estate of the Company. The Special Land Acquisition Officer, Baroda e:t pressed the opinion that the acquisition \Yas necessary as the land was

adjoining the occupied land of the Company and that was the only land available.

On 4 MarchJ 1961 there was a notification under section 4 of the Act. On 22 August, 1961 there was an agreement between the State Government and the Company in accordance with the provisions contained in section 41 of the Act.

It may be stated here that the decision of this Court in R. L .

Arora v. State of U.P.(li) was that in case of acquisition for a Com pany, the Government could give its C9nsent if the acquisition was

nee<Jed for the construction of some work which was likely to prove useful to the public.

(1) [1962] 2 Supp. S.C.R. 149.

4-423SCI!75

SUPREME COURT R.EI'O.RTS [1975] 3 s.c.l.

In 1962 Section 40 of the Act was amended to the effect tlai the Government could not give consent to the acquisition of land for a company unless the Government was satisfied by holding au enquiry

as fully mentioned in the section.

In the context of the decision of this' Court in Arora's case (supra) the Central Government in 1963 in exercise of powers conferred by section 55 of the Act made rules for the guidance of the State Governments known as the Land Acquisition (Companies) Rules, 1963 hereinafter referr~ to as the Companies Acquisition Rules.

Rule 4 of the Companies Acquisition Rules provids that wheJtJ.ever a Company makes an application to the appropriate Government for acquisition of any land, that Goverent shall .direct the Collector to submit a report on the matters mentioned therem. Those matters are ( 1) that the Q:>mpany has made its best endeavour to find out lands in the locality suitable for the purpose of the acquisition; (2) that the company has made all reasonable efforts to get such lands by negotiation with the persons interested therein on payment of reasonable price and such efforts have failed; (3) that the land proposed to be acquired is suitable for the purpose; ( 4) that the area of land, pro, posed to be acquired is not excessive; ( 5) that the Company is in a position to utilise the land expeditiously; and ( 6) where the land proposed to be acquired is good agricultural land, that no alternative suitable site can be found so as to avoid acquisition of that land.

Sub-rule (2) of Rule 4 aforesaid further provides that the Collector shall, after giving the Company a reasonable opportunity to make any representation in this behalf, bold an enquiry into the matters referred to above. The Collector under sub-rule (3) of Rule 4 aforesaid shall submit a nport to the appropriate Government. Sub-rule ( 4) of Rule 4 aforesaid provides that no declaration shall be made by the appropriate Government under section 6 of the Act unless ( i) the appropriate Government has consulted the committee and has considered the report under this Rule and the report, if any, submitted under Section 5A of the Act; and (li) the agreement under section 41 of the Act has been executed by the Company.

. Gujarat Act 20 of 1965 came into effect on 9 July, 1965. By section 18 of the Gujarat Act called the Land Acquisition (Gujarat Uni- 1kation and Amendment) Act, section 39 of the Act was amended.

he result o~ the amenGmnt of. section 39 of the Act is that the provisiOns of sect10n.s 4 to 3 7 mcluslVe of the Act cannot be put into force unless the pr1~VIous consent of .the appropriate Government is obtained :.md unless tbe Company has executed an agreement mentioned in sec tions foll0wing section 39 of the Act.

In the presnt case there was an enquiry by the State Government

uner Rule 4 of .the Land Acquisition (Companies) Rules. The enq.mry was held prror to the notification dated 4 March, 1961 under'sectlon 4 of the Act. On 22 August, 1961 there was an agreement between the State Government and the Company. This agreement was after the State Government had given consent to the acquisition.

4 November, 1961. the notification under section 4 of the Act was corrected with regard. to the survey numbers. The notification under section 4 of the Act dated 4 March/4 November, 1961 was however cancelled on 28 September, 1965.

On 29 September, 1965 there was a fresh notification under sec-· tion 4 of the Act. Subsequent to that notification there was an enquiry under section 5-A of the Act. The respondent, viz., the owner of the land filed objections. There was a report on 11 December, 1968 on that enquiry under section 5-A of the Act that the land sought to be

acquird was suitable for the company and was nor in excess of the mquirements.

On 18 January, 1969 there was a notification under section 6 of the Act. Along with the notification under section 6 of the Act an agreement dated 13 January 1969 between the company and the State as contemplated in section 41 of the Act was published on 18 J nnu:-ry

1969. .

The respondent land owner challenged the notification dated 29 September, 1965 under section 4 of the Act as well as 1he notification under section 6 of the Act dated 18 January, 1969. The High Court accepted the contention of the re.spondet that the enquiry cotemplat cd under rule 4 of the Land Acquisition (Companies) Rules had not

been held lawfully, and, therefore, the notification under section 6 of the Act was illegal. The reason given by the High Court was that the enquiry under rule 4 contemplated giving opportunity to the owner of the land to make effective representation against the proposed acquisition. The High Court held that the enquiry under rule 4 was bad because no opportunity had been given to the owners of the land.

On behalf of the State it was contended that the High Court was wrong in holding that the notification under section 6 of the Act was bad br these reasons. The enquiry under rule 4 is an administrative enquiry and the owner of the land is not entitled to be heard in that enquiry. Second, the satisfaction under section 4 of the Act is subjective and is formed on the basis of the report pursuant to an enquiry conducted under rule 4. Third, the enquiry under rule 4 is to deter- . mine the bonafides of the Company, and, therefore, in such enquiry the owner of the land need not be heard. Fourth, after the report under rule 4 is made the Government may or may not issue a notification under section 4. Fifth, if a notification under section 4 is issued the person concerned viz, the owner of the land will get an opportunity under section 5-A of the Act to make objection. Finally, the enquiry under Rule 4 is a preliminary enquiry in exercise of executive power.

This enquiry is for collecting data to form an opinion for or against the issuing of notification. In such enquiry for collecting data the qtrcstion of violating any rights of the land owner does not arise.

The contention of the State that the enquiry under rule 4 is administrative and that the owner of the land is not entitled to be given an opportunity to be heard at the enquiry cannot be accepted for these reasons. The enquiry under rule 4 shows that the Collector is to submit a rctport among other matters that the Company bas made all

SUPREME COURT REPORTS [1975.1 3 s.c.R.

reasonable efforts to get such lands by negotiation with the persons interested therein on payment of reasonable price and such efforts have failed. The persons iterested therein are the owners of the lap.d which is proposed to be acquired. The Company at such an enquiry has to show that the company made negotiations with the owners of the land. The ow11ers of the land are, therefore, entitled to be heard at such an enquiry for the purpose of proving or disproving the reasonable efforts of the company to get suc4 land by negotiation. The contention on behalf of the State that the owners of the land will get an opportunity when an <mquiry is mde under section S~A of the Act is equally unsound. Section 17 of the Act provides that the appmpriate Government may direct that the provisions of section 5-A shall not apply, and if it does so direct a declaration may be made. under section 6 at any time after the publication of the notification under section 4 of the Act. Therefore, the enquiry under section 5~A may not he held.

There is another reason why the enquiry under rule 4 should be in the presence oi the. owners of the land, Reference may be made to

th~ Rules for the guidance of officers in dealing with objections under secjon 5-A of the Act. These rules are made in exe.rcise of the powers conferred by section 55 of the Act. Under these Rules it is stated that the objections _?re of the following nature : (i) the notified purpose is not genuinely or properly a public purpose; (ii) the land notified is not suitable for the purpose for which it is notified; (iii) the Jand is not so well suited as other land; (iv) the area proposed :is excessive; (v) the objectors' land has been selected maliciously or vexatiou:; ly; (vi) the acquisition will destroy or impair the amenity of historical or artistic monuments and places of public resort; will tke away imponant public right of way or other convenieoes. or will desecrate religious buildings, graveyard and the like. The nature of objections under these rules shows that the matters which are to be enquired into under rule 4, and in particular, that the Company made all efforts to get such land by negotiation with the persons interested thereon on payment of price and such efforts failed is not one of the objections which can be preferred in an enquiry under section 5-A. It is true that in the present case there was an enquiry under section S~A of the Act but the enquiry was also before the agreement between the State and the Company under section 41 of the Act and without any enquiry under section 40 of the Act to enable the Government to give its consent.

The respondent put in the forefront the contention that the agreement between the Company and the State under section 41 of the Act i u the present case, dated 13 January, 1969. a:1d t>ublishe.d on 1 S January 1969 was subsequent to the notification under sectiot1 4 of the Act, dated 29 September, "1965 and therefore the said notification wns in violation of the provisions contained in section 39 of the Act and therefore invalid.

The f; and Acquisition .(Gujarat Unification and Amendment) Act, 1963 w]uch amended section 39 of the Central Act enacted that the provisions of sections 4 to 37 inclusive of the Act shall not be put in

(?TJJARAT v. CHATURBHAI (Ray, C.J.) 289

force in order to acquire land for any Company, unless there is pre vious consent of the State Government or the Company shall have executed the agreement. On behalf of the State it was said that the agre~~ ment in the year 1961 would suffice. This is only to be stated to be rejected because the notification under section 4 o'f. the Act was cancelled by the State on 28 September, 1965. Thereafter fresh proceedings started. FUrther, the agreement in the year 1961 did not survive, because a fresh agreement was made on 18 January, 1969, which was pubHshed on 18 J anl)ary 1969.

The provisions contained in sections 38 to 41 of the Act indicate that the provisions of sections 4 to 3 7 of th_e Act cannot be applied to acquire land for any company unless the State Government gives previous consent threto and the oompany executes n agreement with the State as mentioned in section 41 of the Act. .Second1 section 40 of the Act indicates that the. State Government cannot give consent unless there is an enquiry as provided in that section. It is IWticeable that

any enquiry under section 5-A of the Act is not an enquiry within the meaning of section 40 of the Act. The reason is that the Gujarat.

Amendment Act 1963 being Gujarat Act No. 20 of 1965 deleted the words "either on the report of the Collector under section 5-A subsection (2) or" from section 40 of the principal Act.

Similarly, in section 41 of the Act as a result of the Gujarat Amendment Act the words "either on the reP<>rt of the Collector under section 5-A subsection (2) or'' were 'deleted. The effect of th~ deletion of those words by the Gujarat Amendment Act is that the enquiry under section 5-A is not an enquiry within the meaning of section 40 ()f the Act.

In the present case, the enquiry under rule 4 of the Land Acquisi~ tion (Companies) Rules was held before the notifications under sections 4 and 6 of the Act were issued in the year 1965. The enquiry pursuant to the notifications in the year 1961 and previous to the fresh notifications in '1965 is of no effect in law for two principal reasons.

First, the 1961 notification was cancelled, and, therefore, all steps taken thereunder became ineffective.

Second, the enquiry under rule 4 in 1961 was held without giving opportunity to the land owner rcspon~ dent, and, therefore, the enquiry is invalid in law.

The affidavit evidence on behalf of the Government was thnr an enquiry was held under section 40 of the Act in the month of July, 1965 and there was a report on 25 August, 1965. The nquiry under section 40 of the Act is equally of no avail for similar r.:::.bous why the enquiry Under Rule 4 in 1961 is of no effect in law.

290 ltUPREME COURT REPORTS [1975] ~~ s.c.R.

For tht-:se reason~, wr, hold that the aisition proceedings are vitiated. There was no. compliance with the provisions of se!; tion 39 of the Act. There was no prior agreement between the State and the Company before provisions contained in sections 4 to 37 were put into force. The. enquiry under section SA of the Act in the pr~ent case~ does not satisfy the provisions contained in_ rule 4 of the Companies Acquisition Rules. The owners of the land are entitled to opportunity of being heard in an enquiry under rule 4 and enquky under section 40 of the Act. No such. opportunity was given to the owners.

The appeal, therefore, fails and is dismissd. The State will pay costs to Respondents No. 1, 2 and 3.

V.M.K. Appeal dismissed.