Holding

The Supreme Court held that the acquisition proceedings must be revived and all pending writ petitions and appeals remitted to the High Court for fresh disposal, with the acquisition to continue if settlement fails.

Summary

The Hyderabad Municipal Corporation, in collaboration with HUDCO, sought to acquire 20.10 acres of land under the Land Acquisition Act, 1894 for a housing project. Tulsi Cooperative Housing Society, claiming a purchase contract with the owners, obtained an exemption under the Urban Land Ceiling Act, which was later withdrawn by the State Government, prompting writ petitions challenging both the acquisition and the withdrawal. The Andhra Pradesh High Court initially upheld the acquisition, but a Full Bench later held the acquisition inoperative, leading Bagh Amberpet Welfare Society to appeal. The Supreme Court revived the acquisition proceedings, directing that if a settlement between the societies fails, the acquisition will continue and the societies must resolve their rights, while also setting aside the High Court’s dismissal of the owners’ petition and remitting all matters back to the High Court for fresh adjudication.

Issues considered

The validity of the land acquisition under Sections 4, 5 and 6 of the Land Acquisition Act, 1894.
Effect of the withdrawal of the exemption granted under the Urban Land Ceiling Act on the acquisition.
Whether the acquisition proceedings should be revived pending settlement between the societies.
The jurisdiction and appropriate disposal of the writ petitions challenging the acquisition and exemption withdrawal.
The rights and compensation entitlements of the societies if the acquisition proceeds.

Legislation cited

Land Acquisition Act, 1894s. 4, s. 5, s. 5A, s. 6
Urban Land Ceiling Acts. 20

Subjects

land acquisitionurban land ceilingexemption withdrawalsettlement negotiationswrit petitioncompensationmunicipal corporationcooperative society

Judgment

BAGH AMBERPET WELFARE SOCIETY
··, ·A
v.
TULSI COOPERATIVE HOUSING SOCIETY AND ORS.

AUGUST 17, 1990

B fRANGANATII MISRA , M.H. KANIA AND
M.N. VENKATACHALIAH , JJ.)
•

-
Land Acquisition Act, 1894: Sections 4, 5 and 6-Acquisition of
land in which two Societies Claiming interest-Settlement of disputes-
Not forthcoming-Matter remitted to High Court.
.--t
c For the purposes of a housing project, some land was acquired by
way of a notification under the Land Acquisition Act. The Respondent
Society claiming that it had entered into a contract with the owners for
purchasing the very property, applied for exemption under the Urban
Ceiling Act. The exemption prayed for was refused initially, but was
D granted later.
--
Both the Respondent Society and the owners of the said land filed
Writ Petitions before the High Court for quashing of the acquisition
proceedings. The acquisition was upheld by Single Judge, but on appeal
by Respondent Society, the Full Bench held the acquisition proceedings
E to be inoperative. Against these orders, the appellant Society which had
entered into an agreement with the Municipal Corporation, and as such
interested in the acquisition, has preferred the appeals.

Meanwhile, the State Government withdrew the exemption
granted under the Urban Ceiling Act. One. of the owners filed a Writ
F Petition before the High Court challenging the withdrawal. The High
Court took note of the fact that the matters were pending in this Court
and dismissed the petition. Aggrieved against the order of dismissal, a
petition for special leave has been filed.

The Respondent Society also moved the High Court by way of a
G Writ Petition challenging the withdrawal of exemption, which was
pending and this Court transferred the same to itself, to be heard with
the pending cases.

On 7.8.1985, this Court gave time to Counsel to consider various
compromise proposals. However, the desired compromise did not come
H through. On 23.8.1988 this Court passed an order holding that the

782
WELFARE SOCIETY v. HOUSING SOCIETY 783

acquisition proceedings have to be revived. However, no formal dis-
A
posal was recorded since a settlement was being negotiated. Even after
about 2 yrs. the settlement did not fructify.

Remitting the matters to the High Court,

HELD: I. If the settlement does not fructify, the etrect of the B
decision that the acquisition proceedings are to -revive, would be that

-
\:-__
.-<_-
the claim to the land by Respondent Society would come to an end. In
that event, _at the most that Society would only be entitled to such
compensation as may be awardable in law. If the acquisition proceeds
the apJ>t:llaot Society and the Municipal Corporation would have to
workout their mutual rights. Apart from these, the two writ petitions
challenging the withdrawal of the exemption by order dated 23.6.1983
c
would also have to be disposed of on merits. In ·view of the fact that the
owner's writ petition was dismissed not on merits but on other consi-
derations, the said dismissal should be vacated and that writ petition
should be beard along with Writ Petition No. 6500 /83 as a common
question arises for determination. The order of the High Court dated D
13th of June, 1988, is set aside and the High Court is directed to dispose
of the Writ Petition afresh on merits. [787B-DI

2. If the High Court is of the opinion that the matter should be
settled and the entire land of the owners amounting to 18 acres and 3
gunthas should be divided between the two Societies, it will be free to do E
so if Government also agrees thereto. Since that arrangement would be
with the consent of the State Government it would in such an event be
open to the High Court to nullify the acquisition. The observations
made at different stages during the pendency of the proceedings in this
Court may not be taken to be expr~ion of opinion on m~rits and the
High Court would be free to deal with the matter on its own discretion F
and in accordance with law. l787F-GI

3. In the event of the settlement not coming through, the acquisi-
tion proceedings would continue under the law and be concluded by the
Land Acquisition Officer in accordance with law. In the event of the
acquisition working out, the two writ petitions against the withdrawal G
of exemption would not be sustainable as the land would vest in Govern- .
ment as a result of acquisition. It would be open to the Government or
the acquiring authority to take into account the effect of the laws of
urban ceiling. [787H; 788A] ·

4. The civil appeals are also remitted to the High Court limited to H
784 SUPREME COURT REPORTS (19901 3 S.C.R.

A the consideration of the proposals for settlement in the light of the
observations made in this Judgment. Otherwise, they must be taken to
have been concluded in this Court on the finding that acquisition pro-
ceedings are valid and shall be entitled to continue. The special leave
petition is disposed of with a direction that the writ petition in the High
Court shall be re-heard. The transferred writ petition remitted to the
B High Court for disposal. 17888-C)

5. Money, if any, in deposit- in the Registry of ibis Court to i:h~
~--/
credit of the parties shall be transferred to the High Court and shall be
subject to such directions as the High Court may issue upon a final
·-
decision of the relevant issues arising in the proceedings. [788D]
c CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 5784-
85 of 1983.
-4'.. - ·· -
From the Judgment and Order dated 2.3.1983 of the Andhra
Pradesh High Court in W .A. Nos. 170 and 171of1982.
D
WITH

Special Leave Petition (Civil) No. 1679 of 1989 and Transfer case
No. 29 of 1989.

E From the Judgment and Order dated 13.6.1988 of the Andhra
Pradesh High Court in Writ Petition No. 5498 of 1983.

T.S. Krishnamurthy Iyer, Dr. V . Gouri Shankar, Meeraj
Kh ayyam, R .N. Keshwani, M. Qamaruddin , P.N . Mishra and Mrs.
M . Qamaruddin for the Appellant.
F
Dr. L.M. Singhvi, S.K. Shashtri, D .N. Mishra and T.V.S.N.
Chari for the Respondents.

C. Sitaramaiah and G. Prabhakar for the State of Andhra
Pradesh .
G
The Judgment of the Court was delivered by

RANGANATH MISRA, J. The appeals are by special leave . The
transferred writ petition by respondent No . l in the Civil Appeals is a
writ petition before the Andhra Pradesh High Court being 6500 of
H 1983 in a connected proceedings. The special leave petitio n is by the
WELFARE SOCIETY v. HOUSING SOCIETY (MISRA, J.l . 785

. owner of some lands which form the subject-matter of acquisition. A
~ .

On 5.6. 1975, io. 10 acres of land located at B~gh Amberpet in
Hyderabad said to be belong to Syed Azam and members of his family
were notified to be acquired under S. 4( 1) of the Land Acquisition Act
for a housing project undertaken by the Hyderabad Municipal Cor:
B
i'O~r!ion ;n collaboration with HUDCO. Enquiry under s. 5A of the
_,I,Act was dispensed with by a separate notification issued along with the
preliminary notification. _On 25.4.1978, notification under S. 6 of the
(" Land Acquisition Act was. made. Tulsi Cooperative Housing Society
' on'the plea that it had entered into a contract of purchasing the very
property from the owners had applied for exemption under the Urban
Land Ceiling Act. On 17.10.1978, prayer for exemption was refused. c
On 11.9.1980 exemption was, however, granted. Thereupon two writ
petitions were filed before the High Court-one by Tulsi Cooperative
--+ Housing Society and the other by· the owners of the property for
quashing of the acquisition proceedings. The learned Single Judge
upheld the acquisition but the writ appeal of Tulsi Cooperative Hous-
ing Society were allowed by a Full Bench of the High Court as a result D
of which .the aajuisition proceedings were held to be inoperative.

Bagh Amberpet Welfare Society had entered into arrangement ·
with the Hyderabad Municipal Corporation for being assigned land for
construction and was; therefore, interested in the acquisition. The civil· .
...+ appeals are by that Society challenging the decision of the Full Bench · E
of the High Court in the two writ appeals filed by Tutsi Cooperative
Housing Society. ·, ·

On 23.6.1983, the exemption which had been granted on ·
·11§ 1980 was withdrawn by the State Government. Syed Azam, one F .
. of the owners, challenged the withdrawal of the exemption by filing a
writ petition before the High Court. The High Court took note of the
->position that the dispute was already pending in this Court and, there-
fore, by its order dated· 13.6.1988, dismissed the petition without
entering into the merits. That has led the o~er to move this Court by
special leave ..
G
Tulsi Cooperative Housing Society also moved the High Court
by filing Writ Petition No. 6500/83 against the withdrawal of the
exemption. That petition was pending adjudication before the High
·._Court and at the instance of the parties this Court directed transfer of
·that case to this Court to be heard along with the pending matters. This
is how Transferred Writ Petition No. 29/89 forms part of this group of
•
litigation.
786 SUPREME COURT REPORTS · [1990J 3 S.C.Rc

On 7 .8.1985, this Court desired that the dispute should be settled
A
amicably and accordingly certain proposals were examined. As r
already noticed, the acquisition was of 20.10 acres of land. 18 acres
and 3 gunthas belonged to the Azam family and at one stage each of
· the -two Cooperative Societies had agreed to take 9 acres and 1-1/2
gunthas thereof. The Secretary to Andhra Pradesh Government in the
B Ur~an Development Department responded _to the settlement by ;it_
saymg: -
"
"Since the compromise is arrived at between both the
aggrieved parties before the Requisitioning Officer based
upon the opportunity given by the Supreme_ Court, the
-State Government need not intervene in regard to la.'ld
c acquisition. Necessary and just orders under the cir-
cumstances of the case may be passed on the basis of the
,
compromise deed filed by both the Societies at the earliest ..l r
po_ssible to enable them to build houses."

D 'This Court, however, gave time to the counsel for the State of Andhra
· Pradesh to take instructions as to the application of the Urban Land
Ceilii\.g Act as exemption granted under s. 20 had been withdrawn in
June, 1983. The State of Andhra Pradesh thereafter did not accept the
compromise. by takirig the stand that proceedings under the Urban
. Land Ceiling Act were pending and in view of the fact that there was
E no exemption, the property was liable to vest in Government under -+,_
the Act as surplus land.

Thi~ Court on August 23, 1988, made an order, the relevant part
-- of which is extracted:

F "We are not impressed by the stand taken by the writ
petitioners that there was justification for -their not ap-
proaching the court for six years after the s. 4(1) notifica·-.::.-
tfon, when they wanted to challenge the denial of the hear- -
ing under S. SA o( the Act and the proceedings itself
_otherwise. We agree with the learned Single Judge that the
G explanation not being acceptable, the writ petition has
been rightly dismissed, On this analysis the appellate judg-
ment of the High Court cannot be sustained and the acqui-
sition proceedings have to be revived."

This order virtually disposed of the appeals but as the parties were
H negotiating a settlement the Court did not record a formal disposal of
the dispute.
WELFARE SOCIETY v. HOUSING SOCIETY [MISRA, J.] 787

If the settlement does not fructify, the effect of our decision that A
the acquisition proceedings are to revive, would be that the claim to
/-. the land by Tulsi Cooperative Housing Society would come to an end.
In that event; at the most that Society would only be entitled to such
compensation as may be awardable in law. If the acquisition proceeds
the Bagh Amberpet Welfare Society and the Municipal Corporation
would have to work out their mutual rights. Apart from these, the two B
writ petitions challenging the withdrawal of the exemption by order
dated 23.6.1983 would also have to be disposed of on the merits. The
·~ owner's application has been dismissed upon the High Court taking
~ · the view that the matter was before this Court and, therefore, the High
Court would not entertain the dispute. The challenge by Tulsi Co-
operative Housing Society against the said withdrawal was before the C
High Court for adjudication. In view of the fact that the owner's writ
petition was dismissed not on merits but on other considerations, we
are of the view that the said dismissal should be vacated and that writ
~- petition should be heard _along with Writ Petition No. 6500/83 as a
common question arises for determination. We, therefore, set aside
the order of _the High Court dated 13th of June, 1986, and direct that D
the said writ petition shall be disposed of afresh on merits.

We are of the view that the entire litigation should go back to the
High Court for appropriate disposal. The transferred writ petition,
therefore, shall also go back to the High Court and shall be dealt with
as Writ Petition No. 6500 of 1983. The two petitions challenging the E
withdrawal of exemption shall be clubbed together and be heard. The
proposals undertaken relating to a settlement in regard to the 18 acres
and 3 gunthas of land may be considered by the High Court in the light
of all relevant material and circumstances. If the High Court is of the
opinion that the matter should be settled and the entire land of the
owners amounting to 18 acres and 3 gunthas should be divided bet- F
ween the two Societies, it will be free to do so if Government also
agrees thereto. Since that arrangement would be with the consent of
the State Government it would in such an event be open to the High
Court to nullify the acquisition. The observations which we have made
at different stages during the pendency of the proceedings in this Court
may not be taken to be expression of opinion on the merits and the G
High Court would be free to deal with the matter in its own discretion
and in accordance with law.

-L In the event of the settlement not coming through the acquisition
proceedings would continue under the law and be concluded by the
Land Acquisition Officer in accordance with law. In the event of the H
788 SUPREME COURT REPORTS [1990] 3 S.C.R.

A acquisition working out, the two writ petitions against the withdrawal
of exemption would not be sustainable as the land would vest in
Government as a result of acquisition. It would be open to the Govern- '""'
ment or the acquiring authority to take into account the effect of the
laws of urban ceiling.

B The civil appeals are remitted to the High Court limited to the
consideration of the proposals for settlement in the light of the obser-
vations hereinabove. Otherwise, they must be taken to have been
concluded in this Court on our finding that acquisition proceedings are .-"'( ....
valid and shall be entitled to continue. The special leave petition of
Azam is disposed of with a direction that the writ petition in the High
Court shall be re-heard. The transferred writ petition is remitted to the
c High Court to be disposed of as Writ Petition No. 6500 of 1983. The
hearing of the writ petitions would depend upon the fate of the settle-
ment as indicated above.

There would be no order for costs in this Court.
D
Money, if any, in deposit in the Registry of this Court to the
credit of the parties shall be transferred to the High Court and shall be
subject to such directions as the High Court may issue upon a final
decision of the relevant issues arising in the proceedings.

G.N. Appeals and Petitions disposed of. >:

I
J. "