Holding

The Supreme Court held that the acquisition complied with Rules 3 and 4, notice under Section 9 was served, possession had been taken, and the State cannot withdraw under Section 48 without a gazette notification and a hearing, thereby setting aside the High Court’s order.

Summary

The Gujarat High Court set aside the acquisition of land in Surat for Larsen & Toubro Ltd.'s employee housing scheme, holding that the State had not complied with Rules 3 and 4 of the Land Acquisition (Companies) Rules, 1963 and that no notice under Section 9 of the Land Acquisition Act, 1894 had been served. The Supreme Court found that the State had duly constituted the Land Acquisition Committee, complied with the statutory rules, and that the petitioners themselves admitted receipt of the Section 9 notices. It also held that actual possession of the land had been taken by L&T Ltd., as evidenced by the Panchanama and revenue records, and that the High Court could not substitute itself for a revenue court. Regarding the State's withdrawal from acquisition, the Court ruled that a withdrawal under Section 48 requires a gazette notification and an opportunity to be heard, which the State had not provided. Consequently, the Supreme Court set aside the High Court’s judgment, quashed the Yadi memos effecting withdrawal, and directed the State to complete the acquisition.

Issues considered

Whether the Gujarat High Court correctly held that Rules 3 and 4 of the Land Acquisition (Companies) Rules, 1963 were not complied with.
Whether notice under Section 9 of the Land Acquisition Act, 1894 was served on the land owners.
Whether actual physical possession of the land was taken by Larsen & Toubro Ltd.
Whether the State Government could withdraw from acquisition under Section 48 without a gazette notification and without hearing the company.
Whether the writ petitions were barred by delay (aches) under the Supreme Court’s jurisprudence.
Whether the Yadi memos dated 11‑April‑1991 and 3‑May‑1991 were valid instruments of withdrawal.

Legislation cited

Companies Act, 1956s. 3
General Clauses Act, 1897s. 21
Land Acquisition Act, 1894s. 38, s. 39, s. 4, s. 40, s. 41, s. 42, s. 48, s. 6, s. 9
Land Acquisition (Companies) Rules, 1963s. Rule 3, s. Rule 4

Subjects

Land acquisitionCompaniesSection 48 withdrawalNotice under Section 9PossessionDelay and lachesRules 3 and 4 complianceGazette notificationPublic purpose

Judgment

MIS LARSEN AND TOUBRO LTD. A
v.
STATE OF GUJARAT AND ORS.

MARCH 18, 1998

[SUJATA V. MANOHAR, D.P. WADHWA, JJ.] B

Land Acquisition Act 1894-Part VII--'Section 4,6,9, 38-42, 48-Land
Acquisition (Companies) Rules 1963-Rules 3,4 -Acquisition for housing
scheme of a Company challenged by land owners-State showing compliance
of mandatory requirements by filing Affidavits-High Court holding Rules 3 C
& 4 not complied with-Order of High Court quashing acquisition set
aside-Held, in the absence of any a/legation it cannot be said that statutory
requirements not fulfilled

Section 9-Notice to person interested-Specific admission by D
Petitioners about receipt of notice-Held, Order of High Court that no
notices given, incorrect-Acquisition upheld

Sections 39-42, 48-Withdrawal of notification by State Government-
After taking possession of lands-Held not legal~Held, opportunity to be
given to Company to show cause against withdrawal from acquisition. E
Constitution of India, Arts. 226, 227-Challenge to notification of
acquisition made after inordinate delay-Held, the writ petition is barred by
latches.

_'f
The State of Gujarat acquired lands of certain private owners in District F
Surat for the purpose of the housing scheme of the Appellant's employees
under Pat VII-Land Acquisition Act, 1894. The Respondents, private owners
challenged the acquisition by filing two writ petitions on the ground that the
State Government acted without any authority of law and in purported exercise
of the powers conferred upon it by committing fraud on the statute and by G
the colourable exercise of the said power and also without application of
mind. The land owners therefore sought quashing of the notification under
Section 4 and declaration under Section 6 of the Land Acquisition Act, 1894.
In the third group of matters the State Government withdrew its notification
and released the lands of the owners. This action of the State Government
was challenged by the Appellant before the High Court and all the three H
339
'1
\

340 SUPREME COURT REPORTS [1998] 2 S.C.R.

A petitions were disposed of by a common judgment. The High Court allowed
the petitions filed by land owners and set aside the acquisition on the ground
I
that the State Government has not complied with the mandatory requirements >-
under Rules 3 and 4 of the Land Acquisition (Companies) Rules, 1963 and
also on the ground that no notice 1rns served on the persons in possession
under Section 9 of the Land Acquisition Act, 1894. The High Court dismissed
B the petition of the Appellant on the ground that the withdrawal by the State
Government is justified.

On appeal before this Court the Appellant contended that the High
Court should have dismissed the petition of the land owners on ground of

c !aches, that a notification under Section 4 has to be challenged within a
reasonable time and for any petitioner to contend that it was challenged
immediately after possession of the land was taken over was not relevant
circumstance, that the Petitioners themselves admitted the receipt of notices
under Section 9 and that it is difficult to appreciate how the High Court held
that there was no notices under Section 9.
D
In the matter of withdrawal of notification by the State Government that .w::
Appellants contended that in respect of Survey Nos. 41/2 the possession of
the land had already been taken by them and any action under Section 48
(I) of the Act would be bad in law, that there was no notification issued under
Section 48 of the Act making withdrawal from acquisition and it is justiciable,
E that there cannot be any unilateral withdrawal and there has to be bona fide
exercise of power in case the State Government decides to withdraw from
acquisition before possession is taken over, that the observation of the High
Court that it would be open to the Appellant to lay its claim and sue the State
Government for damages if any suffered by it on account of the action of the
F State Government in withdrawing from the acquisition was objectionable, ..-;,_
that the observation of the High Court that the land was in reality not needed
by the Appellant was incorrect, that as per the report of the Surat Urban
Development Authority all the lands which were subject matter of acquisition
in all the three Writ Petitions satisfied only 45% need for housing of the
employees, that there was no ground for the State Government to withdraw
G from acquisition when proceeding for acquisition had been initiated in 1986,
that the lands proposed to be withdrawn were such that the planning of the
Appellant Housing Colony would go haywire and that they had been denied
opportunity of being heard before decision was taken by the State Government
withdrawing from acquisition. The Respondents contended that Section 48
H of the Act did not contemplate issue of any notification and withdrawal from
('

LARSEN AND TOUBRO LTD. v. STATE 341
the acquisition could be by order simplicitor, that Section 4 & 6 talked of A
notifications being issued under those provisions but there was no such
--<, mandate in Section 48, that when statute did not require to issue any
notification for withdrawal from the acquisition, reference to Section 21 of
the General Clauses Act was not correct, that Section 21 expressly referred
to the powers being given to issue notifications etc. under an Act or
regulations and under this that power included that power to withdraw or B
rescind any notification in the similar fashion, that when Section 48 did not
empower the State Government to issue any notification and it could not be
read into the provisions that withdrawal had to be issued by a notification.

Allowing the Appeal, the Court
c
HELD : I. In the absence of any allegation that Rule 3 oflalid Acquisition
(Companies) Rules had not been complied and there being no particulars in
respect of non-compliance of Rule 4 also, it is difficult to see as to how the
High Court could have reached the finding that the statutory requirements
contained in these rules were not fulfilled before issuance of notification D
under Section 4 and declaration under Section 6 of the Act of 1894.

1.2. The finding of the High Court that it was not possible on the basis
of the material on record to hold that there was compliance with the Rules
3 & 4 is unsustainable. The High Court failed to take note of the affidavits E
of the officials of the Appellant giving details and placing on record documents
to show compliance with the requirements of Rules. The State has more then
justified Its stand that there has been compliance not only with Rule 4 bat
with Rule 3 as well, though there was ao challenge to Rule 3 and the
averments regarding non-compliance with Rule 4 were sketchy and without
any particulars whatsoever. F

1.3. In view of the specific admission by the Writ Petitioners themselves
it is difficult to appreciate the finding of the High Court that no notices
under Section 9 of the Act had been issued to the Petitioners.

2.1. The finding of the High Court that possession of the land (subject
G
matter ofS.C.A. 5149/89) had not been handed over by the State Government
to the Appellant is not correct. The High Court could not covert itself into
a revenue court and hold that inspite of the panchnama and revenue records
actual physical possession of the acquired land had not been handed over to
the acquiring body. The High Court has not correctly analysed the judgments H
. ·'SUPREME COURT .REPORTS ·~ ,.,...[1998] 2 S.c.R:
•• • . - _, - - '•- . ' I j '- - • ;, ,, '
A of this Court to come to the conclusion that actual physical possession of the
land was not takeO:over by thC State.-_.-,,;; ·i-;«•- .. •. ,.;~;-. ·~":·: ~ ~i·,d;;, ;:i,;_, ~

· 'Ba/mukand Khatri Educational and Industrial· Trust.• 'Amritsarv ;'State·
of Ptmjab, )1996) 4 SCC 212; Ba/want fl/araya11 Bagde v; Af.B.· Bhagwat &:
Ors.,. )1976) 1 S~C. 700 and Tamil Nadu HousingBoardv; 'A Viswam (Dead)•
B ·- '• sec:
byLRs.;;)1996l8 . 259, relied on; ... ". ,,., ••••·. ;''"" ! • • • ""·'"'""
, ,- ,, - ; 1_;( °'. __ii ; . ,, ••;! I : ,, •', " ; '· .; '. • ~' •:; ,·, !' j ,f"
. 3. ,The,Writ Petitio(\ is barred, by fatches.as,well.,." 'c :•" ,,,

" ,: .- • . -' : .. . •-. ·-1; ; (· ,; ''"''-"·:i:i.' :, 1,; '~;,,·,i '-,~·; -.,;, •: 1:n !·,,.:
4.1. A notification in the Omcial Gazette is required to be issued if
the State Government decides to withdraw, from the. acquisition under.Section
C · 48 of the Act of 1894, of any land of which possession °has not been taken.
An o~Tier 11eed .not be given .any notic~ of.the intention o~the State G0v,ernment
to withdraw from the acquisition and the.State Government is at liberty to 1
d~so: In th~ ~se of a Compau'y opportu~ity has to.be give~ to it to show ~ause;
against any orde,rwhich th_e State,Government proposes to make "ithdrawing !
D; from the .acquisition. )365:,A~C). :, ,;:,.:," '"" ".,. ; , ,, ,.;, "' i·. "''·'""'
···,;; ·· i ·.;:; ., J '"·'' _.,,; .-.~·-,::.- ··,.·iL:1~1.!1 i,,1.,; _•._-i;··\\-,. ·r:i.i;;:~
4.2 A declaration under Section 6 of the Act is made by notification
only after formalities under Part VII of the.Act which contains Sections 39-
r
42 ha~e been' co;n'plied a'~ii''·lth~
• ,,.._' • <: ';' ._ .... " "
r~p~rl .i'r th~! ..c~i1ea~r'
... '/ .·t
- ~.,.
1£n'.J~~ se~iion.•. 5-A
,, ,; -, . . . ,.,,,1 ;.'"
·~:: ,. -..
(2) ~,.i.~ ~ .-.~

of'!'the'!.:'-;:;;'.
Act is·,;:before the State Government who consents to acquire the land
•'' .,. ,, '"•'':' •' •• l 1"'-' _, f _.,:~ ,\,.; ~":
_ .. ;. ,.,._ ..... ,! . . . . . , ; , 1-
E' on-'"<i':
its satisfaction that it is needed for the Company. A valuable right, thus
'.l'" -•'·' "1 .,.,. ,,_· ,,~;:;,:-:
__ ;.;•,_ ;-··:.;.- .• ·:.-.,: '··"· • " " ' · ; ;, • : ""·- ,,.. ." '~··
accru.s·
''. ;1
io the company to
;,_;··: " ' : .• , •• -_. :·.
oppose the proposed
-- ; 1 !1-: ,,,
decision of the State .
'•, '. ·p: • . ', .. ""''<:,,:;!: ...• _.,._,,,_.
!\•,-,.,;·~' ~'-'

Government withdrawing from acquisition. The State Government ma1 have .
· ,.; ' ' " " ' ' . 1-'lf' • \'I ., ·;_,,,;,-'1•11« •-• " · . ' : ' ' · " • • - ' " ' ; ; , : " •'!•>0•:
1 " ~I<., •,i . •'f
sound reasons to
,... ,,.,,_. . ·.:withdraw
.,, ·-· :' '.
froni'•.:: acquisition butthose must be,,made
•.:' ,, •'-). : ..'""' .. ;
to the ~ompany which may, have equally sound reasons or perhaps mo,re
--
known .
' -,;~,.-: ~ .. ,:· ....
which . .;;ight persuad~, ihe Staie Govern'in~nt to reye;~ .. it~ d~cisio;; •.
F ' withdrawing from acquisition. The memo ofwithdra\;.~1 ~r:i'cq~i;itl~~'i;sued ·
without
. ~
notice to;-,---Appellants
• · - . :.l ~ )~-
.
are thus not legal. )365-H; 366-A-BJ ·-·
~:
• . __ ; ; «l _''.. ,_,,: • . . . ! , : ,, ", ...... ,. ;- ' ' ' •
, .

·:· CIVIL APELLATE·JURISDICTION':'Civil Appeal NoS'.' 1672
1998 Etc. .,_' '-l' ;:_-- ,r; ,;.; "' ~ -...~;':-' ;-_.,-•.-·: ::";~ ,,' ;_ ),, :... ::, i'._,-~f'. ',t_,,\;'
or''
G from the Judgment and Order dated 27.2.97 of th~ Gujarat High Court
in Special
. ' . Civil
'
Application
·' No.
-
5171
. __ ,of) 991.. ,.,
·--' ;.; ; ; "' ""' .. "
)
· · Bhimrao N.'Naik, S.K: Dholakia, R.P. Bhatt; Haiish N.' Salve, Bh.U:at
Sanga~ N.ICNeeraj, Ms: H: Wahi, Ms: S. Hazai'ika,'M.N: Shroff, Ms:Truiuj.i"
Sheel, Ms: Meenakshf Arora and l.M .. Naitavati. and Associates' (NP) for the '
H ·appearing parties:·· ... ".;· ... ·,, • "·" "" '"" ' , , .. , "" ·::-•:
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA, J.] 343
The Judgment of the Court was <lei ivered by A
D.P. WADHW A, J. Leave granted.
All these five appeals arise out of a common judgment dated February
27, 1997 ofa Division Bench of the Gujarat High Court in three Special Civil
Applications (SCA) Nos. 1568/87, 5149/89 and 5171/91 whereby the High
Court set aside the acquisition of land for Mis. Larsen and Toubro Ltd. ('L&T B
Ltd.' for short) under the provisions of the Land Acquisition Act, I 894 (for
short, 'the Act') comprised in SCAs 1568/87 and 5149/89 and dismissed the
challenge of L&T Ltd. in SCA 5171/91 for withdrawal from acquisition by the
State Government under Section 48 of the Act. In all these matters, different
notifications under Section 4 of the Act were issued as it appeared to the
State Government that lands specified in these notifications which were under C
challenge in these matters were likely to be needed for the purpose of a
housing colony of the L&T Ltd. "which was engaged in Engineering
Manufactures Industries which was for a public purpose". All the lands are
situated in Village Mandalla, Taluk Choryasi, District Surat. In SCA 1568/1987
acquisition was set aside on the ground that there was no compliance with
the provisions of Rules 3 and 4 of the Land Acquisition (Companies) Rules, D
.)( 1963 ('Rules' for short). In SCA 5149/89 acquisition was set aside not only
on the ground of non-compliance with the Rules 3 and 4 of the Rules but also
that petitioners therein were not served with notice under Section 9 of the Act
before passing of the award. In SCA 5171 High Court held that the decision
of the State Government for withdrawal from acquisition under Section 48 of E
the Act was neither illegal for ultra vires though the same would be enforceable
only on the issuing of notification under Section 48 of the Act. In this case,
High Court also held that actual physical possession of the land had not been
delivered to the acquiring body L&T Ltd. Against the order passed in SCA
1568/87 both L&T Ltd. and the State Government have filed special leave
petition Nos. 11957/97 and 12986/97 respectively. Against the order in SCA F
5149/89 again both L&T Ltd. and the State Government have filed special
leave petitions respectively bearing Nos. 11900/97 and 14637/97. Against the
order in SCA 5171/91 it is only the L&T Ltd. who is aggrieved and has filed
special leave petition No. 11778/97. In this State Government is supporting its
action for withdrawal from acquisition.
Under the Act, land can be acquired for a company as well. "Company"
G
means a company as defined in Sectio~ 3 of the Companies Act, 1956.
Petitioner is such a company. Under Section 4 of the Act whenever it appears
to the appropriate Government that land in any locality is needed or is likely
to be needed for any public purpose or for a company, a notification to that
effect shall be published and a public notice also to be given in the said H
·,,-I·/~- '--.,

SUPREME COURT REPORTS ···--(1998] 2 S.C.R.

A locality. Undor Section 5-A any person interested in any land notified under
Section 4 can object to the acquisition of the land or of.any land in the
locality, as the case may be. Procedure is prescribed as to how objections are
to be heard by the Collector and his making the report to the Government.
Under Section 6 when the appropriate Government is satisfied after considering
B the report, if any; made under Section 5-A that any land is needed for a public
purpose, or fo~ ~Company, a declaration shall be made to that effect. Part VII
of the Act deals with acquisition of land for companies. Under Section 39
falling in Part VII, the provisions of Sections 6 to 16 and Sections 18 to 37
shall not be put in force in order to acquire land for any Company unless with
the previous consent of the appropriate Govenment and not unless the
C Company shall have executed the agreement as prescribed. Under Section 40
an enquiry is to be made before the appropriate_ Government consents to
acquisition of land for the Company. This Section, in relevant part, is as
under:

"40. Previous enquiry.· (I) Such consent shall not be given unless the
D appropriate Government be satisfied, either on the report of the
Collector under Section 5-A, sub-section (2), or by an enquiry held as
hereinafter provided-

(a) that the purpose of the acquisition to obtain land for. the
erection of dwelling houses for workmen employed by the Company
E or· for the provision of amenities directly connected therewith, or

(aa)

(b) "
Such enquiry shall be held by such officer and at such time and place
F as the appropriate Government shall appoint. Under Section 41 if the appropriate
Government is satisfied after considering the report of the Collector under
Section 5-A and on the report under Section 40 that the proposed acquisition
is for the_ purpose mentioned in Section 40 it shall require the company to
enter into an agreement providing for the following matters, namely :-
G
"(I) the payment to the appropriate Government of the cost of the
~ acquisition;
...-

(2) the transfer, on such payment, of the land to the Company;

H (3) the terms on which the land shall be held by the Company;

_,
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA, J.) 345
(4) where the acquisition for the purpose of erecting dwelling houses A
or the provision of amenities connected therewith, the time within
which, the conditions on which and the manner in which the dwelling
houses or amenities shall be erected or provided;"

Under Section 42 every such agreement shall be published in the Official
Gazette and shall thereupon have the same effect as if it had formed part of B
the Act. Under Section 55 of the Act powers have been conferred on the
approopriate Government and on the Central Goverment to make rules. This
Section, in relevant part, is as under :

"55. Power to make rules.- (I) The appropriate Government shall
havde power to make rules consistent with this Act for the guidance C
of officers in all matters connected with its enforcement, and may from
time to time alter and add to the rules so made :

Provided that the power to make rules for carrying out the purposes
of Part Vil of this Act shall be exercisable by the Central Government
and such rules may be made for the guidance of the State Governments D
and the officers of the Central Government and of the State
Governments :

Provided further .................................. .

In exercise of the powers so conferred under Section 55 of the Act, the E
Central Government has framed Rules called "the Land Acquisition
(Companies) Rules, 1963.

; Arguments have proceeded on the basis that Rules 3 and 4 of the
aforesaid Rules are mandatory. High Court has held that Rules 3 and 4 have F
been violated. We may set out Rules 3 and 4 which are as under :

"3. Land Acquisition Committee. - (I) For the purpose of advising the
appropriate Government in relation to acquisition of land under Part
VII of the Act the appropriate Government shall, by notification in the
Official Gazette, constitute a Committee to be called the Land G
Acquisition Committee.

(2) The Committee shall consist of -

(i) the Secretaries tothe Government of the Depatiments of
Revenue, Agriculture and Industries or such other officers of H
346 SUPREME COURT REPORTS [ 1998] 2 S.C.R.

A eacli of the said Departments as the ,appropriate Government
may appoint; and

(ii) su~h other members as the appropriate Government may
appoint, for such term as that Government may, by order, specify.

(J} The appropriate Government shall appoint one of the members of
B the Committee to be its Chairman.

(4) The Committee shall regulate its own procedure.
,._

(5) It shall be duty of the Committee to advise the appropriate
Government on all matters relating to or arising out of acquisition of
c land under Part Vil of the Act, on which it is consulted and to tender
its advice within one month from the date on which it is consulted:

Provided that the apropriate Government may on a request being
made in this behalf by the Committee and for sufficient reasons extend
the said period to a further period not exceeding two months.
D
4. Appropriate Government to be satisfied with regard to certain ""
matters before initiating acquisition proceedings.- (!) Whenever a
Company makes an applicaiton to the appropriate Government for
acquisition of any land, that Government shall direct the Collector to
submit a report to it on the following matters, namely-
E
(i) that the company has made its best endeavour to find out lands
in the locality suitable for the purpose of acquisition;

(ii) that the company has made all reasonable efforts to get such
\
lands by negotiations with the persons interested therein on
F payment of n:asonable price and such efforts have failed;

(iii) that the land proposed to be acquired is suitable for the purpose;

(iv) that the area of land proposed to be acquired is not excessive;

G (v) that the company is in a position to utilise the land expeditiously;
and

(vi) where the land proposed to be acquired is good agricultural
land, that no alternative suitable site can be found so as to avoid
H acquisition of that land.
LARSEN AND TOUBRO LTD. v. STATE [D.P. WAOHWA, .I.] 347
(2) The Collector shall, after giving the company a reasonable A
opportunity to make any representation in this behalf, hold an inquiry
into the matters referred to in sub-rule (I) and while holding such
enquiry' he shall-

(i) in any case where the land proposed to be acquired is agricultural
land consult the Senior Agricultural Officer of the district whether B
or not such land is good agricultural land;

(ii) determine, having regard to the provisions of Section 23 and 24
of the Act, the approximate amount of compensation likely to be
payable in respect of the land, which, in the opinion of the C
Collector, should be acquired for the Company; and

(iii) ascertain whether the company offered a reasonable price (not
being less than the compensation so determined), to the persons
interested in the land proposed to be acquired.
D
Explanation : For the purpose of this rule "good agricultural land"
means any land which, -:onsidering the level of agricultural production
and the crop pattern of the area in which it is situated, is of average
or above average productivity and includes a garden or grove land.

(3) As soon as may be after holding the enquiry under sub-rule (2) E
the Collector shall submit the report to the appropriate Government
and a copy of the same shall be forwarded by the Government to the
Committee.

(4) No declaration shall be made by the apropriate Government under
Section 6 of the Act unless- F
(i) .the appropriate Government has consulted the Committee and
has considered the report submitted under this rule and the
report, if any, submitted under Section 5A of the Act; and

(ii) the agreement under Section 41 of the Act has been executed G
by the company."

We may also reproduced s~ction 9 which reads as under :

"9. Notice to persons interested. (I) the Collector shall then cause
public notice to be given at convenient places on or near the land to H
348 SUPREME COURT REPORTS [1998] 2 S.C.R.

A be taken, stating that the government intends to take p:issession of
the land, and that claims to compensation for all interests in such land
may be to him.

(2) Such notice shall state the particulars of the land so needed,
and shall require all persons interested in the land to appear personally
B or by agent before the Collector at a time and place therin mentioned
(such time not being earlier than fifteen days after the date of
publication of the notice), and to state the nature of the respective
interests in the land and the amount and particulars of their claims to
compensation for such interests, and their objections (if any) to the
measurements made under Section 8. The Collector may if any case
c
requires such statement to be made in writing and signed by the party
or his agent.

(3) The Collector shall also serve notice to the same effect on the
occupier (if any) of such land and on all such persons known or
D believed to be interested therein, or to be entitled to act for persons
so interested, as reside or have agents authorized to receive service
on their behalf, within the revenue district in which the land is situate.

(4) In case any person so interested reside elsewhere, and has no
such agent, the notice shall be sent to him by post in a letter addressed
E to his last known residence, address or place of business and registered
under Sections 28 and 29 of the indian Post Office Act, 1898."

In first special leave petition No. 12986/97, land situated in Survey No.
40, Village Mandalla, Taluk Choryasi in District Surat was subject matter of
acquisition. Mis. Mangal Park Cooperative Housing Society, respondent No. I
F challenged the action of the State Government in acquiring the land by
issuing notification and declaration under Section 4 and 6 of the Act on the
ground that it act~d "without any authority of law and in purported exercise
of the powers conferred upon it by committing fraud on the statute and by
the colourable exercise of the said power and also without application of
mind". First respondent, therefore, sought quashing of the notification under
G Section 4 and declaration under Section 6 of the Act. In whole body of the
petition before the High Court it was never stated that provisions of Rule 3
had been contravened. It was submitted that provisions of Sections 4 to 37
of the Act could not be put into operation to acquire land for a company
unless with the previous consent of the State Government nor before the
H company had executed an agreemert as mentioned in Section 41 of the Act.
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADl-IWA, .I.] 349

It was then submitted that in this case neither the consent of the State A
Government was obtained nor the company seemed to have executed
agreement as provided in Section 37 read with Section 41 of the Act before
issuance of the notificatio under Section 4 and declaration under Section 6
of the Act. Rule 4 was quoted and with reference to it was contended that
statutory requirements contained in the said Rule had not been fulfilled before B
issuance of the impugned notificaiton and declaration and also that L&T Ltd.
made no efforts to purchase land by negotiation nor the competent authority
had held any enquiry as contemplated by Rule 4. It was also alleged that
under Section 42 the agreement entered into, if any, between the State
Government and L&T Ltd. was required to be published in the official gazette
and that no such agreement to the knowledge of the petitioner was published C
in any gazette. In the counter affidavits filed in the High Court both L&T Ltd.
and State Government denied the allegations so made by the petitioner, the
first respondent herein.

In the absence of any allegation that Rule 3 had not been complied and
there being no particulars in respect of non-compliance of Rule 4 also, it is D
difficult to see as to how the High Court could have reached the finding that
statutory requirements contained in these Rules were not fulfilled before
issuance of notification under Section 4 and c!eclaration under Section 6 of
the Act. High Court did not give any reason as to how it reached the
conclusion that Rules 3 and 4 had not been complied in the face of the record E
of the case. Rather, it returned a finding which is unsustainable that it was
"not possible on the basis of the material on record to hold that there was
compliance with the Rules 3 and 4''. In the affidavit filed by Mr. S.M. Vankar,
Under Secretary, Government of Gujarat, Department of Revenue it was stated
that as per the requirement of Rule 3, a Committee had been constituted by
the State Government which consisted of(!) Secretary, Revenue Department F
(Land Acquisition), (2) Joint Commissioner of Industries, (3} Deputy Secretary,
Agricultural Department (4) past M.L.A., (5) Member and (6) President ofZila
Panchayat. In this affidavit it was also stakd that the Assistant Collector,
Surat prepared a detailed report which he submitted to the Collector in
consonance with the relevant Rule5, which was forwarded by the Collector G
and placed before the aforesaid Committee. Deputy Secretary, who was Ex-
Officio Member Secretary of the Committee addressed a letter to all the
members in this connection and along with that letter he circulated a note in
connection with the acquisition of the land in quest10n. President of the
District Panchayat and a Member of the Committee also submitted a separate H
350 SUPREME COURT REPORTS [1998] 2 S.C.R.

A report to the Deputy Secretary, Revenue Department. The Committee thereafter
met and discussed the matter and recommended acquisition of land for L&T
Ltd. to the Government. In this view of the matter it is difficult to understand
as to how the High Court said that there was no compliance with Rule 3 by
the State Government when as a matter of fact, as noted above, there was no
B mention of non-compliance with Rule 3 in whole body of the writ petition.
High Court, in our opinion, failed to take note of the affidavit of Mr. Y.S.
Trivedi, Senior Manager, L&T Ltd. and that of Mr. R.S. Bohora, Manager of
the L&T Ltd. giving details and placing on record documents to show
compliance with the requirements of Rule 4. We do not think it is necessary
for us to set out in any ddail as to how requirements of Rule 4 have been
C complied when in presence of the relevant record it was difficult for the
respondent to contend otherwise. It was conceded that there was no specific
avennent relating to Rule 3. Even otherwise, we find that stipulations contained
in Rule 3 were fully observed. As regards non-compliance of Rule 4 it was
submitted that there was no independent report of the collector. 1 hat is also
not correct. It is not necessary for the Collector personally to examine all the
D details himself. He can certainly call for the report from the Assistant Collector
as the circumstances of a case may demand and act on the same. As a matter ..
·

of fact only two contentions had been raised by the petitioners before the
High Court and that were that the land belonging to a cooperative housing
society which itself was a public purpose could not be subject to acquisition
E and that Rule 4 had not been complied. There were, however, no particulars
stated in the petition as to how it could be so said. It is not enough to allege
that a particular Rule or any provision has not been complied. It is a requirement
of good pleading to give details, i.e., particulars as to why it is alleged that
there is non-compliance with a statutory requirement. Ordinarily, no notice
can be taken on such an allegation which is devoid any particular. No issue
F can be raised on a plea foundation of which is lacking. Even where Rule Nisi
is issued, it is not always for the department to justify its action when the
Court finds that a plea has been advanced without any substance, though
ordinarily department may have to place its full cards before the Court. In the
present case, hoV\ever, we find that the State has more than justified its stand
G that there has beep compliance not only with Rule 4 but with Rule 3 as well,
though there was no challenge to Rule 3 and the avennents regarding non-
compliance with Rule 4 were sketchy and without any particulars whatsoever,
High Court was, therefore, not right in quashing the acquisition proceedings
in SCA 1568/87.

H In Special leave petition No. 11900/97 (arising out of SCA 5149/89), it
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA, J.] 351
was submitted by Mr. Naik, learned counsel for the appellant L&T Ltd. that A
the writ petition should have been dismissed by the High Court on the
ground of !aches. In this case notification under Section 4 was issued on
January 23, 1986, declaration under Section 6 on February 10, 1987, notices
under Section 9 issued on January 27, 1989 and possession of the land taken
over on July 5, 1989 and the writ petition was filed on July 19, 1989. Mr. Naik
said in view of the law laid down by this court notification under Section 4 B
has to be challenged within a reasonable time and for any petitioner to
contend that it was challenged immediately after possession of the land was
taken over was not a relevant circumstance to be taken into consideration.
He criticised the judgment of the High Court holding that no notices under
Section 9 of the Act had been served upon the petitioners. He referr~d to C
averments made in the writ petition itself wherein petitioners themselves
admitted that two separate notices under Section 9 were served upon them
as different portions of Survey No. 41/2 which were on the two sides of the
canal were acquired. These petitioners further stated that as soon as the
notices were served on them they made an application to the Deputy Collector
and Special Land Acquisition Officer concerned stating that the land was D
being acquired contrary to law and that the decision of the Government was
illegal. It was also stated in the writ petition that various other points were
also made in the representation to the Deputy Collector and Special Land
Acquisition Officer. In view of specific admission by the petitioners themselves
it is difficult to appreciate how the High Court could say that no notices under E
Section 9 of the Act has been issued to the petitioners. Mr. Naik further
pointed out that there was no occasion for the High Court also to hold that
there was non-compliance of Rules 3 and 4 when it was not the case of the
petitioners anywhere.

Nevertheless L&T Ltd. and the State Government filed affidavits showing F
absolute compliance with Rules 3 and 4. The fact that there was certainly no
allegation of non-compliance with Rules 3 and 4 in the writ petition has been
admitted by learned counsel for the respondents I to 4.

High Court held that actual physical possession of the land subject
matter of the acquisition proceeding was not handed over to the appellant G
while it was the contention of the appellant as well as the State Government
that possession of the land was handed over to L&T Ltd. on July 5, 1989.
At the time the possession was taken over a Panchanama was prepared duly
witnessed by two farmers of the Village Magdalla and singed by the Circle
Officer evidencing handing over of possession and also by M.H. Adhikari an H
352 SUPREME COURT REPORTS (1998] 2 S.C.R.

A officer of the L&T Ltd. for taking over possession. The possession receipt
of the same date duly signed by the Circle Officer and the officer of the L&T
Ltd. was given. L&T Ltd. thus took possession of the land in presence of the
panchas. Panchanama recites that both the witnesses (Panchas) had been
intimated in advance by Mamlatdar. Choryasi and that possession of the
B concerned land that day taken over in their presence by the Circle Officer and
that the land was an open spot and there was no construction or crops grown
therein. Possession of the land was taken over along with the trees standing
thereon. As noted above, possession was thereafter delivered to the
representative of the L&T Ltd. at that time itself. In the High Court it was
contended that no actual physical possession of the land had been taken.
C The petitioners filed affidavits of the Panchas who had signed the Panchanama.
In these affidavits they stated that they were called to the office of the
Panchayat and that their signatures were obtained on blank papers and that
they had not gone to the site and that neither the landlord was present not
the actual possession was delivered to the acquiring body. Read with these
affidavits High Court noticed from the recitation in the Panchanama that it
D was nowhere mentioned that the panchas had gone to the site from the office
of the Panchayat. It was not disputed that in the revenue records it was L&T
Ltd. who was shown in possession of the land. Affidavits of the Panchas filed
in the High Court which contained statements contrary to what was recorded
in the Panchanama and against the revenue entries are quite meaningless and
E in our opinion High Court unnecessarily put undue reliance on the same. High
Court could not convert itself into a revenue court and hold that in spite of
the Panchanama and the revenue records actual physical possession of the
acquired land had not been handed over to the acquiring body. High Court;
in our opinion, has not correctly analysed the two judgments of this Court
in Balmokand Khatri Educational and Industrial Trust, Amritsar v. State of
p Punjab, (1996] 4 SCC 212, and Ba/want Narayan Bhagde v. MD. Bhagwat
and Ors., [ 1976] l SCC 700, to come to the conclusion that actu.al physical
possession of the land was not taken over by the State.

In Ba/want Narayan Bhagde v. M.D. Bhagwat & Ors., [1975] Supp.
SCR 250 = I SCC 700, a three Judge Bench of this Court was considering the
G question of taking possession of the acquired land under the Act. Bhagwati,
J. (as he then was) delivered judgment for himself and A.C. Gupta, J. He said
he agreed with the conclusion reached by Untwalia, J. (who was the third
Judge) as also with the reasoning on which the conclusion was based. He,
however, said that a separate judgment was being written as he felt that it was
H not necessary to consider the question of delivery of "symbolical" and
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA, J.] 353
"actual" possession as provided in Rules 35, 26, 95 and 96 of order XX! of A
the Code of Civil Procedure as that was not necessary for the disposal of the
appeal before the Court. Bhagwati, J. said as under:

"There can be no question of taking 'symbolical' possession in the
sense understood by judicial decisions under the code of civil
Procedure. Nor would possession merely on paper be enough. What B
the Act contemplates as a necessary condition of vesting of the land
in the Government is the taking of actual possession of the land. How
such possession may be taken would depend on the nature of the
land. Such possession would have to be taken as the nature of the
land admits of. There can be no hard and fast rule laying down what C
act would be sufficient to constitute taking of possession of land. We
should not, therefore, be taken as laying down an absolute and
inviolable rule that merely going on the spot and making a declaration
by beat of drum or otherwise would be sufficient to constitute taking
of possession of land in every case. But here, in our opinion, since
the land was lying fallow and there was no crop on it at the material D
time, the act of he Tehsildar in going on the spot and inspecting the
land for the purpose of determining what part was waste and arable
and should, therefore, be taken possession of and determining its
extent, was sufficient to constitute taking of possession. It appears
that the appellant was not present when this was done by the Tehsildar, E
but the presence of the owner or the occupant of the !and is not
necessary to effectuate the taking of possession. It is also not strictly
necessary as a matter of legal requirement that notice should be given
to the owner or the occupant of the land that possession would be
taken at a particular time, though it may be desirable where possible,
-r to give such notice before possession is taken by the authorities, as F
that would eliminate the possibility of any fraudulent or collusive
transaction of taking of mere paper possession, without the occupant
or the owner ever coming to know of it."
In Tamil Nadu Housing board v. A. Viswam (Dead) by LRs., (1996] 8
sec 259 the issue whether the land in question was taken possession of in G
proceedings under the Act. It is not necessary for us to refer to the facts of
that case. We find the following statement of law relevant to the controversy
in the present case:
"It is settled law by series of judgments of this Court that one of the
accepted modes of taking possession of the acquired land is recording H
354 SUPREME COURT REPORTS (1998] 2 S.C.R.
A of a memorandum of Panchanama by the LAO in the presence of
witnesses winged by him/them and that would constitute takina
possession of the land as it would be impossible to take physical"
possession of the acquirelil land. It is common knowledge that in some
cases the owner/interested person may not cooperate in taking
possession of the land."
B
In Bafmokand Khatri Educational and Industrial Trust, Amritsar v.
State of Punjab & Ors., [ 1996] 4 SCC 212, this Court again considered the
same very question of taking possession of land and said as under:

"It is seen that the entire gamut of the acquisition proceedings stood
C completed by 17.4.1976 by which date possession of the land had
been taken. No doubt, Shri Parekh has contended that the appellant
still retained their possession. It is now well-settled legal position that
it is difficult to take physical possession of the land under compulsory
acquisition. The normal mode of taking possession is drafting the
Panchanama in the presence of Panchas and taking possession and
D giving delivery to the beneficiaries is accepted mode of taking
possession of the land. Subsequent thereto, the retention of possession
would tantamount only to illegal or unlawful possession."

It is strange that State Government itself have gone back on the
E Panchanama prepared on July 5, 1987; It has brought on record an affidavit
sworn in August 1996 of Mr. D.J. Parmar, Deputy Secretary, Department of
Revenue of the State Government wherein it is mentioned that the only
requirement of Section 48 of the Act is that the Government can withdraw
from acquisition when possession of the land has not been taken. He deposes
that the State Government had duly verified the fact and that it was an
F admitted fact that the Government had not taken possession of the land
bearing Survey Nos. 39and41/2. He said the Government got verified the fact
regarding possession of land in Survey No. 41 /2 and that it had deputed an
Under secretary, Revenue Department who after verifying the position at the
site along with the Deputy Collector, Surat and Mamlatdar, Surat, had drawn
G 11p a Panchanama dated July 4, 1991 regarding actual physical possession of
the land and as a matter of fact he noticed that whatever land L&T Ltd. had
acquired in Magdalla and possession taken had been fenced while land of
Survey No.41 /2 has no fancing and that the same was in possession of the
original owners. Mr. Parmar therefore, justified the stand of the State
Government in withdrawing from the acquisition. Panchanama mentioned in
H the affidavit of Mr. Pannar admits there is no construction and it is an open
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA. l.] 355

land. It is certainly diabolical to contend on the basis of Panchanama prepared A
on July 4, 1991 to say that possession of the land was not handed over to
L&T Ltd. on July 5, 1989. In view of the pendency of the proceeding in the
High Court at that time and in the face of the interim order when High Court
was seized of the matter it is difficult to appreciate how it was proper for the
State Government to depute its officers to find out as to who were in possession
of the land in question and then to justify its action under Section 48 of the B
Act There is on record a Jetter dated April 12, 1990 addressed by the
Assistant Collector. Choryasi Prant to the Government advocate giving his
comments on the affidavit of the petitioner (Respondent No.I) in SCA 5149/
89. He sent his comments as under:

"On 05-07-1989 Circle Officer, Athwa has because of no occupant
c
remaining present, took possession in presence of Panchas and
delivered to representative of Larsen and Toubro company. By a
Notice No. JMNNashi-1346/89 of 30th June, 1989 issued by Mamlatdar,
Choryasi Shri Chhimabhai Limas informed in the matter of taking over
of possession on 5th July, 1989 at noon 1200 hrs. A copy of the said D
notice is enclosed herewith. Circle officer Athwa has taken possession
making 09 out a Panchanama in presence of residents of village
Magdalla. When possession was taken the land in question was open
at site. There was no construction or crop in it Reference to that is
made in Panchanama. Thus the statement made by Petitioner that
there was a standing crop in it is false and in copy of 7/12 of 1989- E
90 in village From No. 7/12 the name of Larsen and Toubro Company
has been .recorded as occupant. Accordingly the statement of the
petitioner that possession has not been given is false. On 04-03-1990
Sarpanch has certified that the land in question is under cultivation.
But on record of village From 7/12 the name Larsen and Toubro
Company is going on hence the certificate of 4th March 1990 of F
Sarpanch is false. This land is under Revenue Survey No. and Oram
Panchayat that is Sarpanch has no authority to give certificate
concerned record of Revenue Survey No. Thus the certificate of
Sarpanch is false. Panchakayas of Circle Officer dated 5th July 1989
is enclosed."
G
The Assistant Collector also stated in his comments that all the
acquisition formalities were completed and hence Section 48 of the Act would
not apply. Assistant Collector is the person on the spot to verify to the facts
when possession was delivered. After the aforesaid clear and unambiguous
stand of the State Government it would appear there was rethinking in the H
356 SUPREME COURT REPORTS [: 998] 2 S.C.R.

A State Government and a case was sought to be made out to justify that since
no possession was taken over, action under Section 48 of the Act would
acquire validity.

That apart the question of having taken possession of land would be
B more relevant in the case where the State is withdrawing from acquisition
proceedings under Section 48 of the Act. Finding of the High Court that
possession of the land subject matter of SCA 5149/89 had not been handed
over by the State Government to L&T Ltd. is not correct. Other findings of
the High Court that notices under Section 9 of the Act had not been served
upon the petitioners and that there was no compliance with Rules 3 and 4 of
C the Rules are also not correct. As noted above State Government is also
aggrieved by the order allowing SCA 5149/89 whereby High Court quashed
the notification under Section 4 and declaration under Section 6 of the Act.
In this SCA 5149/89 State Government supported the stand of the L&T Ltd.
and also in this appeal. It has also stated that the possession of the land
subject matter of the writ petition was taken over and delivered to L&T Ltd.
D on July 5, 1989.

Mr. Naik also submitted that it was not the requirement of law to issue
notices to interested parties und.er Section 9 of the Act and he referred to a
few decisions of this Court. In view of the fact, however, that there was no
E complaint of notices under Section 9 not having been served on the
respondents, this question does not arise for consideration in this case.

This Court has repeatedly held that writ petition challenging the
notifications issued under Section 4 and 6 of the Act is liable to be dismissed
on the ground of delay and !aches if challenge is not made within a reasonable
F time. This Court has said that the petitioner cannot sit on the fence and allow
the State to complete the acquisition proceedings on the basis that notification
under Section 4 and the declaration under Section 6 were valid and then to
attack the notifications on the grounds which were available to him at the time
when these were published as otherwise it would be putting premium on
G dilatory tactics. Writ petition (SCA 5149/89) is thus barred by !aches as well.
Special leave petition No. 11778/97 arises out SCA No. 5171/91 which ...... .
was filed by the L&T Ltd. in the High Court. In the writ petition L&T Ltd.
had prayed for quashing of the action of the State Government in withdrawing
land under survey Nos. 39, 41/2 and 44/2 of village Magdalla from acquisition
H under Section 48(1) of the Act of which acquisition was for the purpose of
LARSEN AND TOUBRO LTD. v. STA TE [D.P. WADHWA, J.] 357

housing colony for L&T Ltd. and sought a direction to the State Government A
and Special Land Acquisition Officer, respondents I and 2 herein, to complete
the acquisition proceedings after notifications under Section 4 and under
Section 6 which had been issued. There are as many as 13 respondents in
this appeal, respondents 3 to 13 being the persons whose land the State
Government has withdrawn from acquisition under Section 48 of the Act. B
Appellant admits that in respect of lands comprising in survey Nos. 39 and
4412 possession had not been taken. However, its contention is that possession
of land comprised in Survey No. 4112 was taken and on that account also any
action under section 48(1) of the Act would be bad in law. The fact that
possession of land in the writ petition and Survey No. 41/2 was in fact taken
has strenuously denied by not only the private respondents but also by the C
State Government. It is admitted that though there is an order of the State
Government withdrawing from acquisition on notification has yet been issued
in the official gazette and on that ground also appellant submits there could
not be any valid withdrawal from acquisition and any action of the respondents
in pursuance to that very decision of State Government to withdraw from
acquisition would be illegal. D
In respect of certain portions of land comprised in Survey No. 41/2,
subject matter of SCA 5149/89 (SLP 11900/97), we have already held that L&T
Ltd. was put in possession. Any action under Section 48 of the Act to that
extent of land is bad in law.
E
In support of his submission Mr. Naik said that apart from the fact that
there was no notification issued under Section 48 of the Act making.withdrawal
from acquisition the reasons for withdrawal from acquisition are justiciable
and the beneficiaries for whom the land is acquired are to be heard. It is the
(- beneficiary and in the present case L&T Ltd. which is the affected party. F
When there is withdrawal from acquisition of the land, owners are well
protected under sub-section (2) and (3) of Section 48 of the Act. Mr. Naik
submitted that there cannot be any unilateral withdrawal and there has to be
bona fide exercise of power in case the State Government decides to withdraw
from acquisition before possession is taken over.
G
State Government in the Revenue Department issued a 'Yadi' (memo) on
April 11, 1991 withdrawing from the acquisition of land under Survey No. 39
and 4112 of the village Magdalla. This decision of the State Government was
communicated to L&T Ltd. on April 29, 1991/May 3, 1991. Yet another 'Yadi'
(memo) was issued by the State Government on May 3, 1991 withdrawing H
358 SUPREME COURT REPORTS [ 1998] 2 S.C.R.

A from acquisition of the land under Survey No. 44/2 in village Magdalla under
Section 48 (1) of the Act. L&T Ltd. was informed of this decision on June
3, 1991. High Court held that Section 48 created an absolute right as a
dominion eminent in favour of the State which proposes to acquire the land
to take unilateral decision to withdraw from the acquisition and there was no
B restriction on its powers to withdraw from acquisition except in a case where
in pursuance to the acquisition proceeding, owner of the land was
dispossessed. High Court said that this restriction on the State to withdraw >--
from acquisition, when possession had not been taken, could not be there
and that it was unable to hold that appellant ought to have been heard by
the State before passing the order of withdrawing from the acquisition.
c
All the formalities as per requirements of Rules 3 and 4 had been
complied with and so also the provisions of Sections 40, 41 and 42 of the Act.
After the notifications had been issued under Sections 4 and 6 of the Act,
notices under section 9 were issued on April I, 1987, present writ petition
(SCA 5171/91) was filed by L&T Ltd. on July 15, 1991 when its protest against
D withdrawal from acquisition of the land to the State Government failed. What
led the State Government to withdraw from the acquisition is reflected from
its affidavit in reply filed in the writ petition of the appellant. It is as under:

"I say that various land owners who are respondent in this petition
E has made application to the government. I say that the said decision
is bona fide can be seen from the applications were given by the land
owners much prior to the date of the Election, i.e. as back as in March,
1991 and the Jarid owners had pointed out various facts including the
fact that there are various lands have been acquired in past and since
they are poor agriculturists left with no other land, their land should
F be released from acquisition. They had pointed out hardship to them.
All these applications were processed legally. For example in the case
of Ganapatbhai Narottambhai, application was made on 12-03-1991
pointing out that his lands in village in Magdalla have been acquired
for one purpose or the other with the result that he was left with no
land. His lands were acquired for Surat Urban Development Authority
G
housing Indian Oil Corporation, Surat Municipal Corporation etc. Similar
applications were also given by other lands owners mentioning the
reason why their lands should be denotified from acquisition. The
government had thereafter got verified the facts and ordered release
of the land. I say that the government has not released from acquisition
H all the lands which were acquired for petitioner, but only part of the
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA, J.] 359
lands in which the government found bona fide case for withdrawal A
from acquisition the Government has done so. Not only that but after
the land were released from the acquisition the petitioner Larsen
Toubro has filed objections and representations against the same.
Immediate on getting the petition from Larsen Toubro petitioner herein
on 21--6-1991 the Prant Officer Choryasi Prant has written at the B
instructions of the Government to the land owners not to proceed
further on the basis that the land have been denotified. This has been
done because objections filed by Larsen and Toubro were under
consideration. Thereafter having verified all the facts, Government
was convinced that there was no reason to the change the said order
and therefore Government i.e., Under Secretary, Revenue Department · C
informed the Deputy Collector by his letter dated 15-07-1991 that the
instructions which were given in the previous letter, stay order given
is withdrawn."

Mr. Naik strongly objected to the observations mac!Oby the High court
that it would be open to the appellant to lay its claim and sue the State D
Government for damages if any suffered by it on account of the action of the
State Government in withdrawing from the acquisition. He said it was not for
the High Court to advise the beneficiary to go to the civil court for damages
when challenge before it was to the very legality of the action of the State
Government withdrawing from acquisition. Mr. Naik said it was also wrong for
the High Court to observe that the land which was proposed to be withdrawn
E
from acquisition was in reality not needed by the appellant and on that
account withdrawal from acquisition would not have seriously prejudiced the
appellant in the implementation of its housing scheme for its employees and
that "nothing of that sort has been taken place in this case". Mr. Naik said
has per the report of the Surat Urban Development Authority all the lands F
which were subject matter of acquisition in all the three writ petitions measured
29 acres which satisfied only 45% need for housing of the employees of the
L&T Ltd. He said the observations of the High Court were entirely against
the record. Mr. Naik appears to be right in his submissions . High Court has
not properly considered the need of the appellant. It was only after all the
enquiries as required under the Act and the Rules has been made that action G
to acquire land for housing scheme of the employees of the appellant was
taken. It was submitted that the lands were needed by the appellant and were
situated in the middle of the other lands being acquired for the housing
colony for the appellant. Appellant said that there was no ground for the
State Government to withdraw from acquisition when proceeding for acquisition H
360 SUPREME COURT REPORTS [1998] 2 S.C.R.

A had been initiater:l as for back as in the year 1986. Appellant had established
a large industry at Hazfra and its needs for a housing colony for its staff and
workers were imperative. Appellant said that it was not able to provide
suitable accommodation to its employees to make appropriate arrangement for
their transport to the factory and that most of the staff had scattered residential
B accommodations in the city of Surat. They all came from different surrounding
villages and even from Surat. Their regularity of attendance and efficiency
was affected on account of the long distances they had to travel to reach the
factory of the appellant. These difficulties became aggravated during the
rainy season and in extreme climate. Appellant had also difficulties in finding
accommodation in Surat for its employees and had to pay large amounts
C towards rent. The appellant said that the lands proposed to be withdrawn
from acquisition were such that the planning of the appellant housing colony
would go haywire. It was also submitted that the land proposed to be withdrawn
from acquisition did constitute a compact block at one end of the lands
acquired for the appellant housing colony. Various other pleas were also
raised which did not find favour with the High Court and rather not adverted
D to. The appellant alleged that apart from legal submissions that appellant had
been denied opportunity of being heard before decision was taken by the
State government withdrawing from acquisition, the action of the state
Government was politically motivated inasmuch as the decision was taken at
the time of General Elections to the Parliament. This allegation has however
E been denied by the State Government. It has justified its action otherwise as
stated above and asserted that it was not the requirement of law nor necessary
to hear the appellant before taking decision to withdraw from acquisition
under Section 48(1) of the Act. A great deal of agruments were addressed if
it was the requirement of law that a notification withdrawing from acquisition
had to be issued and before that the beneficiary for whom the acquisition
F proceedings were initiated to be heard.

In State of Maharashtra & Anr. v. Umashankar Rajabhau & Ors.,
[1996] 1 SCC 299, a submission was made that Maharashtra Road Transport
Corporation for whom the notification was issued for acquiring the land for
public purpose did not need the plots of land. This Court observed that "so
G long as there is no notification published under Section 48(1) of the Act
withdrawing from the acquisition, the Court cannot take notice of any
subsequent disinclination on the part of the beneficiary". In U.P. Jal Nigam,
Lucknow through its Chairman & Anr. v. Katra Properties (P) Ltd., Lucknow
& Ors., [1996] 3 SCC 124 land stood vested in the state under Section 17(2)
H of the Act free from all encumbrances. The Court said that it was settled law
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADHWA. J.] 361

that once possession is taken by operation of Section 17(2), the land vested A
in the State free from all encumbrances unless the notification under Section
48(1) was published in the Gazette withdrawing from the acquisition. The
Court further said, "there is no other provision under the Act to have the
acquired land divested, unless, as stated earlier, notification under Section
48(1) was published and the possession is surrendered pursuant thereto". In B
Murari & Ors. v. Union of India & Ors., [1997] I SCC 15, this Court affirmed
the Full Bench decision of the Delhi High Court in Roshanara Begum v.
Union of India & Ors., AIR (1996) Delhi 206. It was submitted before the
Court, which was the alternative argument, that the withdrawal of certain land
included in the notification under Section 4 could be effected only by
denotifying the release and that since there was no such notification C
denotifying the release, it could not be regarded as a release within the
meaning of Section 48 of the Act. The argument was that Section 48 could
be applied only when the release was published in the Official Gazette in the
same manner as the notification under Section 4 and declaration under Section
6 of the Act are published in view of the provisions contained in Section 21
of the General Clauses Act and since no such notification was published in D
,A the official Gazette, mere information given with regard to the withdrawal from
acquisition would be of no consequence. This Court referred to its earlier
decisions in State of Maharashtra & Anr. v. Umashankar Rajabhau & Ors.,
[1996] l SCC 299 and also in U.P. Jal Nigam, Lucknow through its Chairman
& Anr. v. Kalra Properties (P) ltd., Lucknow & Ors., [1996] 3 SCC 124 and £
said "in this view of the matter even if we assume that there was an order
for release of certain land from acquisition the same could not be given effect
to in the absence of a notification denotifying the acquisition of land". In The
Special land Acquisition Officer, Bombay & Ors. v. Mis Godrej & Boyce JT,
( 1987) 4 SC 218 = [ 1988] I SCC 50 the State Government wanted to withdraw
from acquisition of land by exercising its power under Section 48 but the F
owner of the land insisted that the Government should be directed to go
ahead with the acquisition, take over the land and pay him the compensation.
The High Court Struck down the order made under Section 48 and directed
and State Government to acquire the lands of the respondent-owner. This
Court held that the High Court committed error in doing so. In the context G
whether the view taken by the High Court that a decision of withdrawal from
acquisition must be backed by reasons and could not be arbitrary or whimsical,
this Court said as under:

"We may observe that having regard to the scheme of the Act as
discussed above, it is difficult to see why the State Government H
362 SUPREME COURT REPORTS [1998] 2 S.C.R.

A shou Id at all be compel led to give any cogent reasons for a decision
not to go ahead with its proposal to acquire a piece of land. It is well
settled in the field of specific performance of contracts that no person
will be compelled to acquire a piece of land as any breach of a
contract to purchase it can always be compensated for the damages.
That is also the principle of Section 48(2).
B
This Court even examined the question if the withdrawal was bona fide and
held that to be so. We are, however, not concerned with that issue in the
present case.

C In Amarnath Ashram Trust Society and another v. The Governor of
Uttar Pradesh and others, JT (1997) 9 S.C. 659, the argument by the appellant
was that when acquisition was under Part VII, when land is acquired for a
company and when all the formalities have been completed including execution
of the agreement for payment of cost of the acquisition and Section 6
notification has also been issued, it was not open to the Government to
D withdraw from such acquisition without the consent of the company for
which the land had been acquired. It was submitted that the power to withdraw
from acquisition was not absolute and was fettered by implicit restrictions and
was thus justiciable. In that case the government had issued notification
under Section 4 of the Act notifying its intention to acquire the land for a
E public purpose namely "playground of students of Amar Nath Vidya Ashram
(Public School), Mathura". Thereafter, inquiries under Section 5-A and under
Rule 4 of the Land Acquisition (Company) Rules, 1963 were made and the
Government also entered into an agreement with the appellant as required by
Section 40(1) of the Act. It then issued a declaration under Section 6 mentioning
the fact that the report made under Rule 4 was considered by the Government
F and that the Land Acquisition Committee constituted under Rule 3 of the said
Rules was consulted and the agreement entered between the appellant and :')
the Governor was duly published recording satisfaction of the Governor that
land mentioned in the agreement needed for construction of a playground.
The acquisition of land was challenged by the owner of the land by filling
G writ petition in the Allahabad High Court and an interim order was passed
directing the parties to maintain status quo as regards possession. During the
pendency of the said writ petition the Government denotified the land from
acquisition in exercise of its power under Section 48 of the Act. Challenge to
this by the appellant in the High Court failed. Contention of the State before
this Court was that the State was under no obligation to give any reason for
H withdrawing from the acquisition and when it was shown that the power was
LARSEN AND TOUBRO LTD. v. STA TE [D.P. WADH\V A. J.] 363

exercised bona fide it was not open to the Court to invalidate such an action A
even if the reason given by the State was found to be erroneous. h was
submitted on behalf of the State that Section 48 contained no words of
limitation as regards the exercise of power and the only limitation put upon
the power of the State Government was that it could exercise that power till
possession of the land sought to be acquired was taken and not thereafter. B
Strong reliance was placed by the State upon the decision of this Court in
Special Land Acquisition Officer, Bombay v. Godrej and Boyce, JT (1987) 4
SC 218. This Court, however, distinguished the judgment in Godrei and
Boyce's case as in that case the challenge to the withdrawal order under
Section 48 was by the owner himself and as provided in sub-section (2) of
Section 48 if as a result of withdrawal from acquisition any damage be C
suffered by any party he could be paid damages for the loss caused to him.
The decision in the case of Godrej and Boyce's case was, therefore
distinguished as in the case before the Supreme Court the challenge was by
the beneficiary. This Court observed that the decision in Godrej and Boyce
case was no authority laying down the proposition that in all cases where
power was exercised under Section 48 of the Act it was open to the State D
Government to act unilaterally and that it could withdraw from acquisition
without giving any reason or for .. ny reason whatsoever. The Court observed
as under:

"In an acquisition under Part VII of the Act, position of the company E
or the body for which the land acquired is quite different from that
of the owner of the land. As a result of withdrawal from the acquisition
whereas the owner of the land is ordinarily not likely to suffer any
prejudice or irreparable loss, the company for whose benefit the land
was to be acquired, may suffer substantial loss."
t F
The Court examined the reasons given by the State withdrawing from
acquisition and held that the decision of the Government to withdraw from
acquisition was based upon misconception of the correct legal position and
that such a decision had to be regarded as arbitrary and not bona fide. Then
the Court said as under:
G
"Particularly, in a case where as a result of a decision taken by the
Government other party is likely to be prejudicially affected, the
Government has to exercise its power bona fide and not arbitrarily.
Even though Section 48 of tht Act confers upon the State wide
discretion it does not permit it act in an arbitrary manner. Though the H
364 SUPREME COURT REPORTS [1998] 2 S.C.R.

A State cannot be compelled to acquire land compulsorily for a company
its decision to withdraw from acquisition can be challenged on the
ground that power has been exercised mala fide or in an arbitrary
manner. Therefore, we cannot accept the submission of the learned
counsel for the State that the discretion of the State Government in
this behalf is absolute and not justiciable at all."
B
It was submitted by Mr. Salve that Section 48 of the Act did not
contemplate issue of any notification and withdrawal from the acquisition
could be by order simpliciter. He said that Section 4 and 6 talked of notification
being issued under those provisions but there was no such mandate in
C Section 48. It was thus contended that when statute did not require to issue
any notification for withdrawal from the acquisition, reference to Section 21
of the General Clauses Act was not correct. Section 21 of the General Clauses
Act is as under:

"2 l. Power to issue, to include power to add to, amend, vary or
D rescind, notifications, orders, rules or bye-laws.-Where by any Central
Act, or Regulation, a power to issue notification, orders, rules, or bye-
laws is conferred, then that power includes a power exercisable in the
like manner and subject to the like sanction, and conditions, if any,
to add to, amend, vary or rescind any notifications, orders, rules or
bye-laws so issued."
E
Mr. Salve said that Section 21 expressly referred to the powers being given
to issue notifications etc. under an Act or Regulations and under this that
power included power to withdraw or rescind any notification in the similar
fashion. It was therefore submitted that when Section 48 did not empower the
State Government to issue any notification and it could not be read into that
F provision that withdrawal had to be issued by a notification. His argument,
therefore, appeared to be that on correct interpretation of Section 21 of the
General Clauses Act befo.re reaching the stage of Section 48, the State
Government could withdraw notifications under Sections 4 and 6 of the Act
by issuing notification withdrawing or rescinding earlier notifications and that
G would be the end to the acquisition proceedings. We do not think that Mr.
Salve is quite right in his submissions. When Sections 4 and 6 notifications
are issued, much has been done towards the acquisition process and that
process cannot be reversed merely be rescinding those notification. Rather
it is Section 48 under which, after withdrawal from acquisition is made,
compensation due for any damage suffered by the owner during the course
H of acquisition proceedings is determined and given to him. It is, therefore,
LARSEN AND TOUBRO LTD. v. STATE [D.P. WADIIWA . .I.] 365
implicit that withdrawal from acquisition has to be notified. A
Principles of law are, therefore, well settled. A notification in the Official
Gazette is required to be issued if the State Government decides to withdraw
from the acquisition under Section 48 of the Act of any land of which
possession has not been taken. An owner need not be given any notice of
the intention of the State Government to withdraw from the acquisition and B
the State Government is at liberty to do so. Rights of the owner are well
protected by sub-section (2) of Section 48 of the Act and if he suffered any
damage in consequence of the acquisition proceedings, he is to be
compensated and sub-section (3) of Section 48 provides as to how such
compensation is to be determined. There is, therefore, no difficulty when it C
is the owner whose land is withdrawn from acquisition is concerned. However,
in the case a company, opportunity has to be given to it to show cause
against any order which the State Government proposes to make withdrawing
from the acquisition. Rearnns for this are not far to seek. After notification
under Section 4 is issued, when it appears to the State Government that the
land in any locality is needed for a company, any person interested in such D
land which has been notified can file objections under Section 5-A(l) of the
Act. Such objections are to be made to the collector in writing and who after
giving the objector an opportunity of being heard and after hearing of such
objections and after making such further enquiry, if any, as the Collector
thinks necessary, is to make a report to the State Government for its decision. E
Then the decision of the State Government on the objections is final. Before
the applicability of other provisions in the process of acquisition, in the case
of company, previous consent of the State Government is required under
Section 39 of the Act nor unless the company shall have executed the
agreement as provided in Section 41 of the Act. Before giving such consent,

,I
Section 40 contemplates a previous enquiry. Then compliance with Rules 3 F
and 4 of the Land Acquisition (Company) Rules, 1963 is mandatarily required.
After the stage of Section 40 and 41 is reached, the agreement so entered into
by the company with the State Government is to be published in the Official
' Gazette, This is Section 42 of the Act which provides that the agreement on
its publication would have the same effect as if it had formed part of the Act. G
After having done all this, State Government cannot unilaterally and without
notice to the company withdraw from acquisition. Opportunity has to be
given to the company to show cause against the proposed action of the State
Government top withdraw from acquisition. A decla> ation under Section 6 of
the Act is made by notification only after formalities under part Vil of the Act
which contains Section 39 to 42 have been complied and report of the H
366 SUPREME COURT REPORTS (1998] 2 S.C.R.

A Collector under Section 5-A(2) of the Act is before the State Government who
consents to acquire the land on its satisfaction that it is needed for the
company. A valuable right, thus, accrues to the company to oppose the
proposed decision of the State government withdrawing from acquisition. The
State Government may have sound reasons to withdraw from acquisition but
B those must be made known to the company which may have equally sound
reasons or perhaps more which might persuade the State Government to
reverse its decision withdrawing from acquisition. In this view of the matter
it has to be held that Yadi (Memo) dated l l.4.91 and Yadi (Memo) dated 3.5.91
were issued without notice to the appellant (L&T Ltd.) and are, thus, not
legal.
c
Accordingly all these appeals are allowed with costs; impugned judgment
of the Higlrt:ourt is set aside. SCA 1568/87 and SCA 5149/89 filed in the High
Court are dismissed and SCA 5171/91 is allowed. Yadi (Memo) dated 11.4.91
and Yadi (Memo) dated 3.5.91 containing orders of the State Government
withdrawing from acquisition of the land are quashed. A direction is issued
D to the respondents I and 2 to complete the acquisition proceeding in pursuance
to the notification under Section 4 and declaration under Section 6 of the
Land Acquisition Act.

V.M. Appeals allowed.

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