Holding

The Supreme Court set aside the High Court’s orders, holding that the issuance of the Section 4 notification was illegal as the High Court failed to consider material objections and statutory requirements, and a pending Section 5A enquiry cannot cure that illegality.

Summary

The petitioners, a group of cooperative societies including Pranita Powerloom Co‑op. Society, sought acquisition of land for an industrial estate. The State cancelled the acquisition order on 30‑08‑2005 for non‑compliance with statutory requirements. The Bombay High Court, ignoring several objections and the lack of a government contribution, ordered the parties to compromise and directed the Collector to issue a Section 4 notification under the Land Acquisition Act. The Supreme Court held that the High Court erred by not considering the objections, by assuming exclusive rights for the societies, and by believing that a pending Section 5A enquiry could cure the illegality of the Section 4 notification. Consequently, the High Court’s orders were set aside and the matter remanded for fresh consideration.

Issues considered

Whether the High Court could direct issuance of a Section 4 notification despite the petitioners’ failure to comply with the statutory requirements under the Land Acquisition Act.
Whether a pending Section 5A enquiry can cure the illegality of a Section 4 notification already issued.
Whether the land in question was exclusively reserved for the cooperative societies under the Maharashtra Regional and Town Planning Act, 1966.
Whether the State’s contribution is essential to establish a public purpose under Section 3(f) of the Land Acquisition Act.
Whether the High Court erred in limiting the parties to only two private societies and ignoring other claimants.

Legislation cited

Land Acquisition Act, 1894s. 37(f)(vii), s. 3(e), s. 4, s. 5A, s. 6(1)
Maharashtra Regional and Town Planning Act, 1966s. 125, s. 20

Subjects

Land acquisitionSection 4 notificationSection 5A enquiryPublic purposeCooperative societiesMaharashtra Regional and Town Planning ActGovernment contributionHigh Court errorRemand

Judgment

[2009] 6 S.C.R. 891

PRANITA POWERLOOM COOP. SOC. LTD. A
v.
STATE OF MAHARASHTRA & ORS.
(Civil Appeal No. 2566 of 2009)

APRIL 15, 2009
B
[TARUN CHATTERJEE AND V.S. SIRPURKAR, ~J.]

' LANO ACQUISITION ACT, 1894:

tf
Sections 3(e}, 4, 5A, 6(1), 37(f)(vii) - Allotment land - c
Subsequent cancellation on the ground that complete
information not furnished - Held: High Court not considered
important objections - Merely because s.5A enquiry is
pending and objections could be taken by the parties, State
Government cannot cure the illegality committed in the
D
issuance of s.4 Notification - Matters remanded to High Court
for fresh consideration - Maharashtra Regional and Town
Planning Act, 1966 - Section 125.

Pratibha Nema & Ors. v. State of M.P. & Ors. (2003) 10
SCC 626 and R.L. Arora v. State of UP. AIR 1962 SC 764, E
referred to.

4 CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2566 of 2009.
F
From the Judgment and Order dated 01.12.2006 of the
High Court of Judicature at Bombay in W.P. No. 8967 of 2005.

WITH

; C.A. Nos. 2570 of 2009, 2572-73 of 2009, 2568 of 2009, G
2574-2575 of 2009, 2567 of 2009, 2569 of 2009.

S.K. Verma Vijay K. Singh, Manoj K. Singh Meenakshi
Arora, Sudhanshu S. Choudhari, Naresh Kumar, Arundhati S.
891 H
.'
892 SUPREME COURT REPORTS [2009] 6 S.C.R.

A Sukhtankar, Uday U. Lalit, Prasenjit Keswani, Manu Beri,
Gaurav Agrawal, Bhupender Yadav, S.S. Shemshery, Kiran
Bala Sahay and R.C. Kohli for the Appellant.

Jaideep Gupta, A. Mariamputham, Shivaji M. Jadhav,
Sanjay V. Kharde, Asha Gopalan, Rukhsana Choudhary for the
B
Respondents.

The Judgment of the Court was delivered by
·f

V.5. SIRPURKAR, J. 1. This judgment shall dispose of
c SLP (C) No. 12077/07, as also SLP(C) No. 11250/08, SLP(C)
No.11345-11346/08, SLP(C) No.11357/08, SLP(C) No.
23332-23333/08, SLP(C) No.23335/08 and SLP(C) No.20656/
08.

2. Leave granted in all the Special Leave Petitions.
D
3. One lchalkaranji Industrial Cooperative Estate filed a
Writ Petition No. 8967/05 before Bombay High Court,
impleading the State of Maharashtra, Collector for District of
Kolhapur, Commissioner for Directorate of Industries and Land
E Acquisition Officer, Kolhapur initially. One Pride India
Cooperative Textile Park Ltd. came to be joined as respondent
No. 5 later on. In this petition, validity of the communication-cum-
order passed by the State of Maharashtra and the Collector
dated 30.08.05 was challenged. By that order the acquisition ..
F started in favour of the lchalkaranji Cooperative Society Ltd.
(hereinafter called 'Society' for short) was cancelled. It was
contended, inter alia, that the Society was a registered
cooperative society under the Maharashtra Cooperative
Societies Act and was established for the purposes of erecting
G industrial estates for the benefit of its members and that it was
active right from 1974 and was also instrumental in setting up
Industrial Estate for the areas Kolhapur and lchalkaranji.

4. It was claimed that in the year 1974 the Kolhapur District
Planning Committee had assured the Society that an area of
H
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 893
OF MAHARASHrRA & ORS. [V.S. SIRPURKAR, J.]

600 acres would be made available to it for the purpose of A
erecting such industrial estate. Initially in the year 1980, the area
of 100 acres of land was sought to be acquired for the benefit
of the said Society and that acquisition was completed in the
year 1988 by the Land Acquisition Officer-respondent No.5.
The Society had also paid Rs.37.50 lakhs towards the B
acquisition charges. It was further contended that after the land
was handed over to the Society, a layout of the land was
prepared and some 457 plots were made therein. The Society
made infrastructure for establishment of the industrial estate
including roads, water supply, sewerage, electricity connection, c
petrol pump, recreation grounds, roads for transportation etc.

5. The Society further contended in its petition that several
persons, who were in the waiting list of the State Cooperative
Society as their members for allotment, made further cry for the '
allotment of plots to them so that they can set up industrial units D
in that area. Considering the need for relocation for the
industrial estate, a proposal came to be made by the Society
to the respondents State authorities that additional land of 134
acres at village Tardal be made available to them so that the
infrastructure which was already erected by the Society in the E
industrial estate at Shahpur could be used and utilised for
setting up the industrial estate at Tardal which was barely
beyond a road and was in the vicinity of the earlier industrial
estate set up by the Society. This proposal was made on
30.08.02. According to the further contentions, this proposal F
was recommended by respondent No.1 through the Deputy
Registrar (Industries) by communication dated 11.09.02.

6. It was further contended by the Society that on 19.03.02,
it was informed by the Land Acquisition Officer that it must file G
the said proposal for acquisition in the prescribed form (g) along
with the necessary revenue records like 7/12 extract and other
relevant information. Accordingly, some further enquiries were
made from the Society with respect to the other land. It was
further contended in the petition that the Society, immediately H
894 SUPREME COURT REPOR'fS [2009] 6 S.C.R.

A on 23.09.02, had informed the State Government about the
queries made to them and, thereafter, the Joint Registrar by -
his communication dated 25.p9.02 to the Development
Commissioner, who recommended the acquisition by his letter
dated 17 .12.2002 of 134 acres to Collector, Kolhapur, had
B recommended the acquisition in favour of the Society. It was
further contended that by the communication-cum-order dated
26.02.04 the Collector of Kolhapur had held that the land should
be acquired on behalf of the Society. A further proposal was .,
made that since the acquisition was for the benefit of the
c authority other than the Government, there should be a nominal
compensation paid by the Government of Rs. 100/- so that the
acquisition proceedings could begin. The Society further
contended that it requested the State authorities to accord their
consent to pay Rs. 100/- so that the acquisition proceedings
may begin. The Town Planning Department by its letter dated
D
02.03.04 sought for some information from the Society.
Thereafter, there was a letter dated 29.02.04 informing the
Society that the State has not consented to pay the said sum
•
of Rs. 100/- and, therefore, the acquisition would be termed to
be an acquisition for the company.
E
7. The Society further pleaded that it was informed by the
State Government by its letter dated 07.10.04 and 13.05.05 that
the sum of Rs. 100/- was likely to be sanctioned soon.
Thereafter further information was sought by the Town Planning •
F Department by letter dated 04.05.05 which was given by the
Society by letter dated 24.05.05. It was pleaded that at this
stage the Cooperative Society apprehended that certain
portion of the land might be given in favour of the third parties
and especially in favour of one Pride India Cooperative Textile .
G Park Ltd. which was joined as respondent No.5 and, therefore,
the So~y by its communication as well as by the .
advertisement in the local newspapers informed the State
authorities and public at large that no action should be taken
which was detrimental to the interests of Society. In pursuance
H of that, the Commissioner for Directorate of Industries by letter
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 895
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]
i
dated 06.10.05 directed the Collector, Kolhapur that the land A ..
should be kept reserved in the industrial zone and no industrial
activity should be sanctioned in the said area and the land in
favour of the Society should be acquired at the earliest. In the
wake of all this, the Collector by his letter dated 30.08.05
informed the Society that it had not complied with the several B
requirements of law and, hence, acquisition proposal of the
Cooperative Society was being cancelled. In short, the Society
chall.enged this letter dated 30.08.05 on various groµnds
including the ground that its proposal in its favour of land
acquisition had reached almost finality and the State c ..
Government could not, in the wake of all what had happened,
cancel the proposal. It sought for the quashing of that letter. In
its prayer it sought for a writ of Mandamus directing the Collector
Kolhapur to cancel the impugned communication-cum-order
dated 30.08.05. Some interim reliefs were also prayed for. D
.. 8. This petition was opposed by the Land Acquisition
Officer who filed a detailed affidavit mainly stating that the relief
claimed by the said Cooperative Society could not have been
granted in its favour. It was pointed out that the land was not
reserved only for the petitioner in the Regional Plan and could E
be developed by each of the owners in accordance with the
reservation. It was also pointed out that the information sought
from the respondent No. 4 herein in accordance with Land
Acquisition Act and Rules had not been supplied by it for about
a year and it had not complied with the requirements and F
hence, the cancellation order had been passed. It was also
pointed out that sufficient industrial zone had been earmarked
in the Regional Plan of Kolhapur lchalkaranji.

9. The other Society, namely, the Pride Powerloom
G
.A
Cooperative Society Ltd. also appeared in the matter and
pointed out by affidavit that it had interest in about 46 acres of
land, which was acquired by private negotiation and that the
Society could not claim exclusively for the acquisition.

10. This petition was. however, compromised on the basis H
896 SUPREME COURT REPORTS [2009) 6 S.C.R.

A of the consent terms presented to the Court. In these consent
terms dated 01.12.06 only two Societies were parties to that
petition - lchalkaranji Industrial Cooperative Estate and the 5th
respondent, namely, one Pride India Cooperative Textile Park
Ltd. But before that an order dated 16.11.06 came to be
B passed by the High Court suggesting that there should be
negotiations between the Society and Pride India Cooperative
Textile Park Ltd. That order reads as thus:
.,
"Having heard Mr. 'Jahangirdar the learned senior counsel
with Mr. Dani for the petitioner-Society-Society and Mr.
c Rajure, learned counsel for the respondent No.5 Society,
we are of the considered opinion that at the first instance
the petitioner-Society and the respondent No.5 Society
must arrive at a compromise in sharing the proposed land
for acquisition and thereafter it would be appropriate for
D them to approach the Collector with this compromise
reduced in writing so as to enable him to issue a
notification under Section 4 of the Land Acquisition Act,
1894. Undoubtedly, both the petitioner-Society as well as
the respondent No.5 will have to deposit the compensation
E amount in the Collectorate before the declaration under
Section 6 of the said Act is published.

Mr. Rajure seeks time to take instructions. Time granted,
S.O. for two weeks. ~

F
Status quo in respect of the subject land be maintained
until the next date."

11. Ultimately the consent terms were given on 01.12.06
which were recorded by the High Court incorporating those
G consent terms in its order. On the same day the petition was
....
disposed of directing the Collector, Kolhapur to proceed with
the acquisition proceedings as soon as the legal compliance
was fulfilled by the Society. For better understanding, we would
quote the whole order of the High Court. It reads as thus:
H
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 897
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]
, "1. As per the order passed by us on 16th November, A
2006, the petitioner-Society and respondent No.5
'
negotiated for an amicable settlement and these
negotiations have resulted in the parties agreement
in terms of the consent terms which have been
placed before us. The consent terms are taken on B
record and marked as "X" for identification. A copy
of the same has already been supplied to the
... learned AGP .

2. The Affidavit-in-reply filed by Shri S.D. Chavan, the
Special Land Acquisition Officer (XI), Kolhapur
c
indicated that the claim between the petitioner-
Society Society and respondent No.5 Society, over
the same land was coming in the way of initiating
acquisition proceedings. Undoubtedly, under the
scheme of the Land Acquisition Act, 1894 the D
Cooperative Societies can approach the State
Government for acquiring land on submitting a
scheme for the proposed development. The
petitioner-Society No.5 will, therefore, now
approach the Collector, Kolhapur and submit a E
scheme on the portion of the land identified in the
consent terms. We have also noted that the
respondent No.5 is satisfied with the land, it has
,.
already acquired by private negotiations and the
remaining land from the subject reservation is left F
for the petitioner-Society Society alone. It is,
therefore, necessary for the petitioner-Society
Society to comply with statutory requirements
including the deposit of compensation amount.
G
~ 3. We direct the collector, Kolhapur to proceed with
>
the acquisition proceedings as soon as legal
compliance are fulfilled by the petitioner-Society.

4. Mr. Jahangirdar, learned senior counsel, on
• instructions, states that the amount of Rs. H
898 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 50,00,000/- (Rupees Fifty Lakhs) will be deposited .·
by the petitioner-Society Society within a period of
two months from today with the Collectorate,
Kolhapur, so that the Notification under Section 4(1)
of the Land Acquisition Act, 1894 is issued and the
B balance amount will be deposited before the
declaration under Section 6 of the said Act is
issued, so as to make a total of 90% of the
compensation amount that may be worked out by ~ •
the Land Acquisition Officer. "
c 5. The Notification under Section 4( 1) of the said Act
to be issued before 19th February, 2007, subject
of course, to the compliance of the statutory
requirements by the petitioner-Society.
D 6. The requirement of Government contribution of -
whatever amount will not come in the way of
initiating the acquisition proceedings."

12. The basic features to be noted in this consent order
E are:-
1. That the State of Maharashtra which was an
opposite party had never given the consent though
it was the most affected party and the writ petition •
was sought against it.
F
2. That the feasibility of the land acquisition and the
right of the petitioner and respondent No.2 for such
land acquisition or the nature of rights of the Society
and respondent No.5, were never examined and it
was almost taken for granted that the whole land
G
was liable to be acquired for the private persons
..
like the Society and the 5th respondent therein. '
3. That though apparently this was an acquisition of
H
land for companies covered by Part VII of the Act,
·-
-.:·
~
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 899
OF MAHARASHTRA & ORS. [VS. SIRPURKAR, J.]
..
the Court proceeded to pass a direction in A
--~

paragraph 6 that the requirement of the
Government contribution would not come in the way
of initiating the acquisition proceedings. In fact till
that time the Government had not agreed to
contribute anything so as to take out the acquisition B
from Part VII and show it to be an acquisition by the
Government.

' 4. The consent order was· without any reasons.
,~

13. It seems that on 30.12.06, the Collector, Kolhapur c
called upon the 4th respondent herein i.e. the lchalkaranji
Industrial Cooperative Estate to deposit an amount of Rs. 50
lakhs and to submit a fresh proposal for acquisition and also
to deposit 2/3rd amount of the cost of acquisition before
Section 4 Notification was issued in terms of the Government D
resolution dated 14.06.01.

14. The Special Land Acquisition Officer, respondent No.3
herein, issued a Notification dated 12.02.07 under Section 4
in respect of the lands which the present appellant claims to
,...' E
be owned by it, namely, Kamakshi Tex-Fab Pvt. ltd. This
t Notification dated 12.02.07 which was passed in terms of
judgment and order dated 01.12.06 quoted above, was
challenged by way ofa Wit Petition No.3296/07 wherein review
of the order dated 01.12.2006 was sought for by as many as
11 petitioners, including the present petitioner. F

15. During the pendency of this writ petition, respondent
No. 1, State of Maharashtra declined the Government
contribution in support of the proposal of the land acquisition
. by its communication dated 21.06.2007. While the matter was

-
G
pending, certain other parties filed Special Leave Petition
before this Court being SLP (C) CC No.5574/07· (converted to
SLP (C) No.12077/2007) wherein this Court had issued notice
on 13.07.2007. Pride India Cooperative Textile Park ltd.,
respondent No.5 herein, filed a reply affidavit and the petitioner H
900 SUPREME COURT REPORTS [2009] 6 S.C.R.

A also filed a further affidavit in Writ Petition No. 3296/07 pending
before Bombay High Court wherein it was pointed that State
of Maharashtra had declined the Government contribution. The
Special Land Acquisition Officer, respondent No.3 herein also
filed its reply by way of affidavit before the High Court and it
B was pointed out that the Notification was issued only to obey
the order of the High Court in Writ Petition No. 8967/05 which
was an order passed on consent.

16. The other petitioners also approached the High Court I-
by filing Writ Petition No.1954/2008 seeking therein review of
c order dated 01.12.06 and also praying for quashing of the
Notification dated 12.02.07. The High Court thereupon by its
order dated 04.04.2008 dismissed both the writ petitions. All
other petitioners who were the co-petitioners before the High
Court in Writ Petition No.3296/07 as also in Writ Petition
D No.1954/07, are party respondents herein.
•
17. In the impugned judgment passed in Writ Petition No.
3296/07 the High Court has clarified that the Writ Petition No.
8967/05 was decided on the basis of the settlement arrived at
E between lchalkaranji Society and Pride India Cooperative ......
I
Textile Park ltd. The High Court further took note that the
petitioners in Writ Petition No. 3296/07 were Cooperative
'
Societies, a private limited company, a proprietary firm as well
as a Hindu Undivided family and individual. The High Court also ..
noted the grievance that it was a land under the ownership of
F
the petitioner which was the concerned land and that the same
was directed to be acquired by the Court without even hearing
them. The High Court proceeded to find that all the petitioners
whose lands were concerned had filed objection certificates
under Section SA of the Land Acquisition Act. The High Court,

-
G therefore, came to the conclusion that since the mandatory ...
procedure in Section SA was to be followed in the Land
Acquisition case, there would be no prejudice caused to the
petitioner because of the land acquisition. The petitioners had
also raised an objection before the High Court that there was
H
PRANITA POWERLOOM COOP. SOC. LTD: v. STATE 901
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

no contribution made for the public funds by the State A
Government and, therefore, it could not be said that the
acquisition was for the public purpose, as defined in Section
3(f) of the Act. For this purpose, the petitioners therein have
relied on a decision of this Court in Pratibha Nema & Ors. V.
State of M.P. & Ors. [(2003) 10 SCC 626]. The High Court, on B
this issue, extensively quoted from the judgment of this Court
in R.L. Arora v. State of U.P. [AIR 1962 SC 764] but made no
.... comment thereon. It merely recorded that there was no case
made out for recalling the order dated 01.12.06. It disposed of
the writ petition with three directions:- c
(1) that the order dated 01.12.06 which was called in
question in the writ petition did not give a go bye
to an enquiry under Section SA and that the said
enquiry must be completed before issuing a
declaration under Section 6. D
1\

(2) that the contribution in favour of respondent No.4
from the State Government/public funds or from any
local authority must be received by the Collector
before the declaration under Section 6 is due to be E
issued as per the extended period of one year,
failing which the acquisition will have to be as per
the procedure laid down in Part VII of the Act.
.
(3) that the interim order which it had passed on
15.06.07 would stand vacated forthwith and the one F
year period for issuing the declaration under
Section 6 shall stand extended taking into
consideration that the stay order passed on
15.06.07 and was vacated on the day when the
said judgment was passed. G

18. The High Court, therefore, disposed of the writ petition
confirming the judgment, dated 01-12-06 dismissing Writ
Petition No. 3296/07. This was severely criticised by the
learned counsel appearing on behalf of the appellants herein. H
902 SUPREME COURT REPORTS (2009] 6 S.C.R.

A The main thrust of the argument of Shri U.U. Lalit, learned
Senior Counsel and the other learned counsel who appeared
with him, was that the initial judgment dated 01-12-06 had
proceeded on the incorrect premise as if the whole land was
exclusively reserved for respondent No. 4 lchalkaranji Society,
B which was not the fact. Learned counsel pointed out that the
State authorities had declined to ;:iroceed with the acquisition
and in the original Writ Petition the respondent No.4-lchalkaranji
Society had failed to show any right in its favour for initiating
the process of land acquisition. Learned counsel pointed out
c that there was nothing to suggest that this land was reserved
in favour of the 4th respondent and that the only factual situation
was that the user of this land was specified as an industrial
zone as per the plan under MRTP Act. According to the learned
counsel this did not give any right to the 4th respondent to
approach the Court and to monopolise by insisting on the land
0
acquisition in its favour alone.

19. Learned counsel further pointed out that the impugned
order dated 30.08.05 passed by the Collector, Kolhapur clearly
showed that there were serious infirmities in the proposal given
E by the 4th respondent and, therefore, the proposal was rightly •
rejected. Learned counsel then further urged that even if the
order dated 30.08.05 could be presumed to be incorrect, still
the 4th respondent could not have rushed with the writ petition
without there being any specific right in its favour.
F
20. Learned counsel urged that the High Court, by passing
the order dated 01.12.06, presumed as if this was a private
estate meant for the 4th respondent and the 5th respondent
herein i.e. Pride India Cooperative Textile Park Ltd. It was further
G pointed out that the correctness or otherwise of the order dated
30.08.05 was never gone into by the High Court and it was as
if there were only two players in the field - 4th respondent and
the 5th respondent the private persons. The High Court asked
the respondent Nos. 4 and 5 to compromise the matter which
was a totally incorrect practice. The High Court was, in the first
H
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 903
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

place, required tcr decide about the right of the 4th respondent A
and further to take into consideration the objections raised by
the State Government and test the correctness of the order
dated 30.8.2005.

21. Learned counsel pointed out that the writ petition was
8
opposed by a specific reply affidavit by the State Government
which was not even referred to by the High Court and strangely
enough the High Court chose to dispose of the Writ Petition
....
merely on the compromise between respondent Nos. 4 and 5 ·
presuming there existed a right exclusively in favour of both the C
respondents for the land acquisition. The learned counsel
further suggested that this was a glaring error which could have
been corrected in the review in Writ Petition No. 3296/07. It was
pointed out that even while disposing of that petition, the High
Court did not bother to correct this error which was apparent
on the face of the record. Learned counsel further pointed out D
that the interests of the petitioner-appellants herein who were
the owners of the land were adversely affected by compromise
between the two private parties i.e. the 4th respondent and the
5th respondent. It was also pointed out that there are some
factual mis-statements in the order dated 01.12.06 about the E
affidavit of Shri S.D. Chavan opposing the writ petition to the
effect that the conflicting claims of respondent Nos. 4 and 5
were coming in the way of initiating acquisition proceedings and
hence in view of the compromise between the two private
parties, there was no impediment in acquiring the lands, as if F
the said land was reserved for respondent No.4 only. The
learned counsel took pains to point out that there was no
whisper in the affidavit of Shri Chavan about the conflicting
claims. It was further argued that the only reason why the State
of Maharashtra proceeded with the land acquisition G
proceedings was the direction incorrectly given by the High
Court. Lastly, it was argued that though the State of Maharashtra
had declined the Government contribution for the proposal of
the 4th respondent, yet the 4th respondent misled the authorities
by pointing out that the writ petition filed by the present H

I I
904 SUPREME COURT REPORTS [2009] 6 S.C.R.

A appellant-petitioners had been dismissed and threat of
contempt was given to call for the release of Government
contribution. The said Government contribution was stayed only
on the petitioners pointing out to the Government about the
pendency of the Special Leave Petition before this Court. It was
B also contended that the acquisition i'l this case can never be
covered by Part II of the Act and had to be proceeded ahead
as an acquisition for the company, if at all it could so proceed.

22. As against this Shri Jaideep Gupta, learned senior
..
counsel appearing on behalf of the respondents and more
c particularly the 4th respondent supported the orders of the High
Court. The mainstay of the arguments of Shri Gupta is that the
4th respondent had set up an industrial estate as far back as
in the year 1960. In the year 1974 there was a Government
decision to establish an industrial estate in the villages of
D Kabnoor, Tardal and Shahpur and Government itself had
recommended that up to 600 acres of land would be made ..
available to the estate over a period of time. Out of those 600
acres, 62 acres of land was made available in the year 1978
and further 68 acres were acquired by the State in the year
E 1986. In the year 2002 the society sought for another 134 acres
at Tardal which was adjacent to the industrial estate. Shri Gupta
argued that the total membership of the society was 4200 and
it was to only about 1040 members that industrial plots could
be made available and that about 3160 members were in the .
F waiting list of the Society and as such it cannot be said that
there was any irregularity in the land acquisition proceedings.
Shri Gupta also relied on Section 125 of the Maharashtra
Regional and Town Planning Act, 1966 which provides for
compulsory acquisition of land needed for the purposes of
G regional plans, development plans or town planning schemes.
It was tried to point out that there is a regional plan wherein it ...
is specifically mentioned that the industrial zone earmarked
within lchalkaranji and Jaisingh Pur complexes could be
acquired by the cooperative industrial estate existing there, if
H not acquired by the Maharashtra Industrial Estate at that time.
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 905
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

It was pointed out that the lchalkaranji Society was the only A
existing society at that time. It was then submitted by Shri Gupta
that the Pride India Cooperative Textile Park Ltd. was also
another relevant player in the field who intended to establish a
textile park in 46 acres of the land. He further pointed out that
the proposals of the land acquisition were rejected only B
because the contribution by the State Government was not
forthcoming which, according to the learned Senior counsel was
? fault not on the part of the Society or Pride India Cooperative
Textile Park but on the part of the State Government.

23. According to the learned counsel, the earlier proposals C
were rejected on the ground that the respondent Society did
not answer the queries required for such acquisition. Learned
Senior counsel further pointed out that those queries were
irrelevant inasmuch as the acquisition was for Part II and not
Part VII. Learned senior counsel very strenuously pointed out D
that since the proposal was rejected on the incorrect grounds,
the Society had to file the writ petition before the High Court·.
According to the learned Senior counsel, the High Court had
taken a practical and pragmatic view of the matter and
encouraged the Society to compromise its disputes and E
differences with Pride India Coope~ative Textile Park, as it
appeared to the High Court that the real difficulty coming in the
land acquisition proposal by the Society was the proposal of
Pride India Cooperative Textile Park which was also put forward
before the Collector. It was on this ground that the High Court F
correctly ordered the Collector to issue a Notification under
Section 4. Learned Senior counsel also pointed out that it was
only the State Government which could have been aggrieved
by such order of the High Court which it chose not to challenge
and it allowed the order dated 01.12.06 to become final. G
Therefore, the order was binding in· so far as the State

• Government was concerned. Learned Senior counsel also
pointed out that the State Government had ultimately agreed
to direct the sum of Rs. 100/- as its contribution and that it had
fully stood behind the Societies-lchalkaranji and Pride India H
906 SUPREME COURT REPORTS [2009] 6 S.C.R.

A Cooperative Textile Park.

24. Learned Senior counsel tried to urge that the decision
to issue Section 4 Notification was not because of the order
of the High Court, as, if the State Government did not issue
8 such a Notification it could have appealed against the order of
the High Court directing the issuance of such Notification.
Learned Senior counsel lastly contended that the petitioners
could not have any grievance as all their interests could be
covered in the enquiry under Section 5A wherein they could
C have fully taken part and be convinced about their position. The
State Government's counsel has also very haltingly supported
the respondents practically on the only ground that the interest
of the petitioner could be taken care of under Section 5 A.of
the Act. It is on these rival claims that we have to consider the
matter.
D
. , 25. It cannot indeed be disputed that the basic order is
dated 01.12.06 which undoubtedly was disposed of on the
compromise which also appears to have been brought about
by the High Court itself. We have noted the basic features of
E this compromise in paragraph 12 of our judgment. It is extremely
strange that the High Court presumed that there were only two
players in the field, namely, the lchalkaranji Society and the
Pride India Cooperative Textile Park. The High Court seem to
have almost presumed that these two Societies alone mattered
F in the whole affair and were the only two Societies which were
entitled to the land to be acquired by the State Government for
establishment of the industrial estate. There can be no dispute
that lchalkaranji Society was established for the purposes of
developing industrial estates and that it had done so in the past.
G There can also be no dispute that it had a long waiting list of
about a thousand persons wanting the plots in the industrial
estate for establishing industries. The question is whether it had
that exclusive right. There is nothing at least brought either to 1111
the notice of the High Court or before this Court to suggest that
H there is any exclusivity in favour of lchalkaranji Society. Indeed,
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 907
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]
~
in the field there were so many other Societies which were also A
of the same nature. At least three of them were industrial
societies they being Chhatrapati Shivaji Powerloom
Cooperative Society, Mahalaxmi Sahakari Audyogik Vasahat
Maryadit . and Jagjivan Ram Magal Vargiya Charmakar
Audyogik Sahakari Sanstha. Their status was also identical as B
they were registered as industrial cooperative societies as
contemplated by Maharashtra Cooperative Societies Act. It is,
. therefore, clear that the High Court proceeded on the
presumption that the only two relevant players in the field were
respondent Nos. 4 and 5 herein i.e. lchalkaranji society and c
Pride India Cooperative Textile Park and went on to presume
that they alone had the exclusive rights of getting the lands from
the Government by way of land acquisition. This, in our opinion,
is a wrong presumption.

26. In the reply affidavit which has been sworn by Shri S. D. D
• Chavan, Special Land Acquisition Officer, Kolhapur, it was
specifically urged that specific queries were put to the
lchalkaranji Society vide letter dated 02.03.04 and letter dated
29.09.04 and the Manger of the lchalkaranji Society had also
attended office of the Special Land Acquisition Officer twice E
in relation to those queries. Those queries were not specifically
met by lchalkaranji Society. It was further pointed out in the
affidavit that the land in question was earmarked in the industrial
~
zone in the zone sanctioned Regional plan of Kolhapur-
lchalkaranji region. However, the said land had not been F
reserved only for the lchalkaranji Society in the said regional
plan and, therefore, the lchalkaranji Society could not exclusively
claim the same. In the said affidavit it was again denied that
the proposal made by the lchalkaranji Society was in terms of
the Land Acquisition Act and in fact the lchalkaranji Society was G
... merely relying upon its correspondences with the Industries
Department. It was further contended that lchalkaranji Society
was directed to fulfil various queries suggested by State of
Maharashtra vide its letter dated 02.03.04. One of the queries
was the opinion about the sandion of the Industrial Department H
908 SUPREME COURT REPORTS [2009] 6 S.C.R.

A of State of Maharashtra and also for the fulfilment of
requirement under Section 37 (D (vii) along with the requirement
of the second proviso of Section 6 (1) of the Land Acquisition,
1894 Act i.e. about public purpose. !twas pointed out further
that the Cooperative Society was covered under the provisions
B of Section 3 (e) of the Land Acquisition Act and was a company
for the purpose of Land Acquisition Act, 1894. It was further
pointed out in these queries that unless a nominal contribution
by the State Government was made, the said acquisition coul_d .
not be set up for the public purpose. It was also pointed out
c further in the said affidavit that though the Director of Industries
had asked to reserve the remaining land for the petitioner, it
had nothing to do with the Collector since the land was
earmarked as an industrial zone in the sanctioned regional plan
of Kolhapur-lchalkaranji region and there was no reservation of
D industrial land for the petitioner in the regional plan after
.following the necessary procedure under Section 20 of the •
Maharashtra Regional and Town Planning Act, 1966. It was also
pointed out that the information required under Rule 4(3) of the
Land Acquisition (Company Rules), 1963 as also the
information required under Section 39 of the Land Acquisition
E
Act was not supplied by the lchalkaranji Society for about one
year and that it was also expressed in the affidavit that the
petitioner gave the impression that it was not ready to comply
with the information under law and, therefore, the Collector in
his order dated 30.08.05 cancelled the land acquisition
F proposal.

27. It is also pointed out in the affidavit that all the
concerned lands were private lands and could also be
0
developed by their respective owners for industrial purposes.
G The claim of the petitioners-lchalkaranji Society that it was a ,.
land reserved for them alone, was specifically refuted. It is
pointed out that in order to provide such a reservation in favour
of lchalkaranji Society, a Notification in the sanctioned regional
plan should have been made after following the legal procedure
H laid down under Section 20 of the Maharashtra Regional Town

"•·
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 909
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

Planning Act. Thus, it was clear that the High Court was bound A
to consider these grounds raised against the claim in the writ
petition. The High Court, however, does not seem to have
considered any of these questions.

28. It is interesting to see how the matter proceeded. On B
16.11.06, the High Court passed the order that after hearing
the counsel for the petitioner-lchalkaranji Society and counsel
for respondent No. 5-Pride India Cooperative Textile Park, the
High Court was of the considered opinion that, at the first
instance, the petitioner and the respondent No. 5 Society must
arrive at a compromise in sharing the proposed land for
c
f acquisition and, thereafter, it would be appropriate for them to
approach the Collector with these compromise terms reduced
in writing so as to enable him to issue a Notification under
Section 4 of the Land Acquisition Act, 1894.
D
29. The second order has been passed on 01.12.06
wherein the High Court has recorded the consent terms. The
High Court has mentioned the lands covered as also the map
provided wherein the lands acquired by the 5th respondent as
also the land claimed by the petitioner were shown in different E
colours. In all these consent terms which we have seen,
specifically, there is not even a stray reference to the
Government or to any other private party who admittedly owned
some of the lands mentioned therein. Lastly, the order came ·
•
to be passed on 01.12.06 accepting the said terms. What F
surprises us is the apathy on the part of the High Court to
decide the question raised by the Government in its reply
affidavit and to point out whether the petitioner-Society could
claim an exclusive right of the land acquisition along with 5th
respondent when there was no reservation in its name under
G
the provisions of Maharastra Regional and Town Planning Act.
,..__ "" Such reservation, undoubtedly, required the procedure to be
' followed by Section 20, which objection was specifically raised
in the affidavit by the State Government. It is on that the State
Government asserted that there could not be any exclusivity in
H
910 SUPREME COURT REPORTS [2009] 6 S.C.R.

A favour of the petitioner-Society so as to claim the compulsory
acquisition in its favour. Again the High Court completely
ignored the fact that this was not at least till that time an
acquisition under Chapter II of the act as the Cooperative
Society was nothing but a company and the necessary
B condition of the contribution by the State Government was not
till then fulfilled as the State Government had indeed not
contributed nor had it agreed to contribute so as to give a
colour that the land acquisition was for the public purpose. ..
30. On the other hand, it is very surprising that the High
c Court directed the State Government to issue a Notification
under Section 4 ignoring the fact that no contribution was made
and it suggested therein by way of _sixth clause that the
requirement of the government contribution would not come in
the way of initiating the acquisition proceedings. The High
D Court, thus, had left all the questions undecided. All this was
pointed out to the High Court in subsequent petition wherein •
the petitioners-appellants sought the review of the order dated
01.12.06. However, that order is also clearly silent on the
qaestions raised on the spacious ground that all the concerns
E of the parties could be taken care of in the enquiry under
Section SA. In fact that was the mainstay of the argument of
Shri Gupta that even if the petitioners owned the land and even
if they were parties who could develop the land for the industrial
}I
purposes, yet all that could be taken care of under Section SA
F enquiry and they could be provided for the plots by the
respondent No.4 Society after the land acquisition process was
completed. What we fail to understand is if the direction to
initiate Section 4 of the Act itself emanated in an illegal fashion
whether the concerned petitioners should be put to a rigmarole
G of an enquiry under Section SA. The answer has to be negative. .. ,.....
31. The basic contention of the lchalkaranji Society that it
was entitled exclusively to the land acquisition in respect of all
the lands in the area is incorrect in law as has been shown in
the affidavit on behalf the State of Maharashtra. It is obvious
H
~
k
'
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 911
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

that the State of Maharashtra proceeded to issue the A
Notification under Section 4 merely because of the direction
of the High Court. It is quite another thing that now at this juncture
the State of Maharashtra is trying to justify the land acquisition
proceedings on the spacious ground that the petitioners-
appellants' contentions could be considered in the Section 5A B
enquiry. We do not wish to go into the question as to whether
the queries raised by the State of Maharashtra were justified
.... or not. However, we must say that the High Court has not even
bothered to consider the order dated 30.08.05 nor has it set it
aside specifically. Following queries were made which were c
found not to have been complied with by the petitioner-Society.
They were:

"1. For the question of land acquisition, which efforts
are made by the Society for acquiring maximum.
proper place in the area? D

2. Which efforts have been made by the Society for
obtaining such lands by private transactions by
giving proper compensation? As to whether those
efforts are succeeded? E
3. How the area proposed for the questioned
proposal is proper for the object of acquisition?

4. Whether the entire area propose in question is
required? Or whether the part of area therein if F
acquired will be sufficient?

5. Which proposal/projects the society has for using
the acquired land immediately?
~
6. If the area under acquisition is proper for good G
agriculture, besides that land, whether any other
appropriate land is not available for proposed
acquisition?"

32. The communication thereafter mentions that the H
912 SUPREME COURT REPORTS (2009] 6 S.C.R.

A lchalkaranji Society had complied with the issues raised at r
reference No. 3 and 4 only and since the other deficiencies
have not been removed the proposal was being cancelled. Even
in the earlier paragraphs the attention of the Society was drawn
towards the fact that the acquisition could be done only after
B the nominal compensation of Rs. 100/-, a share of the
Government towards expenses of land acquisition. It is further
pointed out in the same paragraph that the Association, namely,
the petitioner Society would be required to submit a guarantee
in triplicate about the availabili'y of funds in the present land
c acquisition letter and it is only after this compliance that the land
acquisition proceedings could be initiated. It is also pointed that •
the Association i.e. the petitioner-Society could be accepted
only as a company and, therefore, it had to submit a report
under Rule 4 (3) of the Land Acquisition Company Rules, 1963.
D 33. When we have a glance on the order of the High Court
it is clear that the High Court has not considered any of these
.
important objections. In this backdrop, it is pointed out by the
learned counsel for the appellant-petitioners that they are the
owners of the land and each has the capacity for developing
E the industrial estate as per the regional plan and, therefore,
there was no justification in supporting the acquisition
proceedings even without any compliance whatsoever by the
respondent No.4 Society or treating the respondent Nos. 4 and
5 to be the only players in the field. It was pointed out that like
F respondent No.5 i.e. Pride India Cooperative Textile Park, the
petitioners-appellant also owned the land and they are all
industrial units. Therefore, there was nothing special with the
respondent No.5, and if the estate was given to respondent No.
5 i.e. Pride India Cooperative Textile Park merely because their
G proposal was also pending, the similar direction should have
been given to the others whose proposal were either pending ....
or who were capable of making any such proposal. All that was -~

not done and the matters were rushed on the basis of the mere
compromise formula which too was suggested by the High
H Court.
PRANITA POWERLOOM COOP. SOC. LTD. v. STATE 913
OF MAHARASHTRA & ORS. [V.S. SIRPURKAR, J.]

34. In these circumstances, we are of the clear opinion that A
merely because Section SA enquiry is pending and merely
because the objection can be taken by the petitioners, the
respondents by themselves will not be able to cure the illegality
committed in the issuance of Section 4 Notification.
B
35. We deliberately do not want to go into the merits of
the matter since we propose to remand these matters back to
the High Court by setting aside both the orders of the High Court
dated 01.12.06 and the subsequent order dated 04.04.08. The
High Court will now proceed to consider both the writ petitions,
namely, Civil Writ Petition No. 8967/05 and Civil Writ Petition C
No. 3296/07 jointly to examine the feasibility of the land
acquisition in the light of objections raised by the State
Government in its affidavit and to be raised by the parties for
which an opportunity shall be granted to them. The appeals,
. thus, succeed. The matter is remanded to the High court for D
fresh consideration of the two writ petitions in the light of the
observations made by us. The respondents 4 and 5 shall pay
the costs in all the appeals.

G.N. Appeals allowed. E

•