Supreme Court of India
PRATIBHA NEMA AND ORS.versusSTATE OF M.P. AND ORS.
- Citation
- 2003 INSC 344
- Decided
- 30 July 2003
- Disposal
- Dismissed
- Bench
- K G BALAKRISHNAN
Holding
The acquisition was for a public purpose, the State satisfied the second proviso of Section 6(1) by contributing funds, the notifications were not vague, no colourable exercise of power was found, and the appeals were dismissed.
Summary
The State of Madhya Pradesh, acting on an industrial policy, notified the acquisition of 73.3 hectares of private land for the establishment of a "diamond park" and later issued a declaration under Section 6 of the Land Acquisition Act. The land was to be allotted to private companies, notably B. Arun Kumar International Ltd., for setting up diamond cutting and polishing units. The appellants challenged the acquisition on grounds that it was not for a public purpose, that the notification was vague, that the State had not contributed any public funds towards compensation, and that the acquisition amounted to a colourable exercise of power and excess land acquisition. The Supreme Court examined the applicability of the public purpose test, the second proviso of Section 6(1), and the adequacy of the State's contribution, finding that the State-owned Nigam had paid a substantial sum, satisfying the proviso, and that the purpose of industrial development served the public interest. The Court held that the notification was not vague, no colourable exercise was evident, and the land requirement was reasonable. Consequently, the appeals were dismissed.
Issues considered
- Whether the acquisition of land for the diamond park was for a public purpose within the meaning of the Land Acquisition Act.
- Whether the second proviso to Section 6(1) of the Land Acquisition Act was complied with, i.e., whether part of the compensation was paid out of public funds.
- Whether the notification under Section 4(1) and the declaration under Section 6(1) are void for vagueness of the stated public purpose.
- Whether the acquisition constitutes a colourable exercise of power in favour of a private company.
- Whether the extent of land acquired is excessive and beyond reasonable requirements.
- Whether environmental and security considerations invalidate the acquisition.
Legislation cited
- Land Acquisition Act, 1894s. 3(j), s. 4(1), s. 5(A), s. 6, s. 9(2)
Subjects
Land acquisitionPublic purposeSection 6 provisoColourable exercise of powerIndustrial policyEnvironmental considerationsExcess land acquisitionCompensationPrivate companyIndustrial park
Judgment
A PRA TIBHA NEMA AND ORS.
v.
STA TE OF M.P. AND ORS.
JULY 30, 2003
B [K.G. BALAKRISHNAN AND P. VENKA TARAMA REDD!, JJ.]
Land Laws:
Land Acquisition Act; Part II and Part VII, Sections 3(j), 4(1), 5(A), 6,
C and 9(2)/lndustrial Policy and Action Plan 1994:
Acquisition of land for setting up an industry in private sector-Validity
of-Held, land was acquired for industrial growth in the public interest-
Active role/initiative shown by the private company and expeditious action
in processing of the acquisition proceedings by the Government could not
D be given different colour as it promotes public purpose-When the Government
satisfies about the existence of public purpose for acquisition of land, no
fault could be found with such act of the Government-However, State
Government to make afresh assessment as to the requirement of land to meet
present and future requirements-No personal malice could be attributed to
E the public representatives/authorities-It cannot be concluded that the
Government machinery identified itself with the private interest ofthe company
forsaking public interest.
Public purpose-Proof of-Held, even contribution of a nominal SU'11
towards the cost of acquisition/assurance to sanction the funds by the
F Government could be considered as sufficient compliance with the Proviso
to Section 6-Acquires the character of public purpose-Interpretation of
Statutes.
Words and Phrases: 'public purpose' and 'vagueness in public
purpose'-Meaning of in the context of Land Acquisition Act.
G
The State Government, at the instance of a private company/one of the
respondents, had notified certain land of the appellants for acquisition under
the Land Acquisition Act for the purpose of establishment of a diamond park in
public interest. The land so acquisitioned was proposed to be utilized for setting
up of industries by private companies-respondents. Later, declaration under
H 890
PRA TIBHA NEMA v. ST ATE. 891
Section 6(A) of the Act was published. Before the concerned authority could A
take over possession, aggrieved land-holders filed writ petitions in which High
Court granted status quo. Writ petitions were dismissed thereafter. Land holders
had filed SLPs. Supreme Court disposed of the SLPs on the basis of an
undertaking given by the State that the notifications issued under Section 6
would be withdrawn and instead the procedure as provided under Section 5(A)
would be followed. State followed the procedure and later issued a fresh B
notification under Section 6 of the Act. Aggrieved, landholders challenged the
notification which was dismissed by the High Court. Hen,:e t1•e present appeals.
In an I.A., the Court framed questions pertaining tL contributions by
the private companies towards payment of compensation to the land holders
for consideration by the High Court. The findings submitted by the High Court C
were against the appellants and as such challenged by them.
It was contended for the appellants that the Land proposed to be acquired
for public purpose at the instance of and intended to be handed over to the
private company and therefore Part VII of L.A. Act should have been complied
with; that the public purpose as mentioned in the notification was vague; that D
the area of land proposed to be acquired was in excess of reasonable
requirements; and that environmental norms were not taken into consideration
by the State Government.
Dismissing the appea.ls, the Court
E
HELD: 1.1. A public purpose is involved in the acquisition of land for
setting up an industry in private sector as it would ultimately benefit the
people. However, any and every industry need not necessarily promote public
purpose and there could be exceptions which negate the public purpose. But,
it must be borne in mind that the satisfaction of the Government as to the
existence of public purpose cannot be lightly faulted and it must remain F
uppermost in the mind of the Court. The acquisition under Part VII of the
Land Acquisition Act is not divorced from the element of public purpose. The
concept of public purpose runs through the gamut of Part VII as well.
(904-F-H[
-G
Somawantiv.Stateof Punjab, AIR(1963)SC 151 andR.l. Arorav.State
of Uttar Pradesh, AIR (1964) SC 1230, followed.
Jage Ram v. State of Haryana, (197011 SCC 671; Manubhai Jehtalal
Patel v. State a/Gujarat, [1983( 4 SCC 553 and Bajirao T. Kate v. State of
Maharashtra, !19951 2 sec 442, relied on. H
892 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.
A 1.2. The existence or non-existence of a public purpose is not a primary
distinguishing factor between the acquisition under Part II and acquisition
under Part VII of the Act. The real point of distinction seems to be the source
of funds to cover the cost of acquisition. In other words, the second proviso to
Section 6(1) is the main dividing ground for the two types of acquisition. Thus
the distinction between public purpose acquisition and Part VII acquisition
B has got blurred under the impact of judicial interpretation of relevant
provisions. The main and perhaps the decisive distinction lies in the fact
whether cost of acquisition comes out of public funds wholly or partly. Even a
token or nominal contribution towards the cost of acquisition by the
Government was held to be sufficient compliance with the second proviso to
C Section 6. The result is that by contributing even a trifling sum, the character
and pattern of acquisition could be changed by the Government. In ultimate
analysis, what is considered to be an acquisition for facilitating the setting
up of an industry in private sector could get imbued with the character of
public purpose acquisition if only the Government comes forward to sanction
the payment of a nominal sum towards compensation. If no part of
D compensation amount is to be paid out of the public revenues, then, the
declaration that the land was needed for a public purpose could not have been
validly made and the acquisition cannot be considered to be for a public
purpose. In the instant case, there is sufficient material to hold that the Nigam
which is owned and controlled by the State has itself proceeded to make
E payment of substantial amount towards compensation even at the initial stages
in anticipation of an interim award. This is an unequivocal pointer that the
State owned Corporation, the Nigam, had to bear the cost of acquisition.
1905-E, F; 906-H, 907-A-C, G; 908-AI
R.l. Arora v. State of Uttar Pradesh, AIR (1964) SC 1230, followed.
F Srinivasa Co-operative House Building Society limited v. Madam G.
Sastry, 1199413 SCC 675, relied on.
1.3. There is nothing on record to show that the lease premium or the
advance amount payable was determined by the time the Cheque was issued
by the Company. The payment of any amount at that stage on account of lease
G premium was rather premature, but, the fact remains that under the terms of
MOU, the Companies which were parties to the MOU did express their
willingness to deposit the amount of lease premium in advance. Viewed from
another angle, no interim compensation was determined by the time the
payment was made by the Company and there was no reference in the MOU to
H the compensation amount at all and if so, there is no reason to presume that
PRA TIBHA NEMA v. STATE 893
the amount was deposited by the Company as an advance compensation amount A
The High Court was well justified in relying on the documents/books
maintained in the ordinary course of business and recording a conclusion
that the Cheque for a certain sum was issued by the Company towards advance
lease premium. Hence, the conclusion of the High Court in this regard is not
perverse but sustainable. [908-H; 909-A-C[
B
1.4. Once the amount paid towards advance lease premium, may be on a
rough and ready basis, is credited to the amount of the Nigam, obviously, it
becomes the fund of the Nigam. Such fund, when utilized for the purpose of
payment of compensation, wholly or in part, satisfies the requirements of the
second proviso to Section 6(1) read with Explanation 2. The genesis of the C
fund is not the determinative factor, but its ownership in praesenti that matters.
[909-F-G[
1.5. The State Government and its agencies including the Nigam acted
within the framework of the 'Industrial Policy and Action Plan, 1994' in
taking the decision to develop diamond park complex. The considerations of D
industrial policy and development weighed prominently with all the concerned
authorities while processing the acquisition proposals that these Companies
are not the only entrepreneurs who would get the land in the proposed diamond
park area; that the land is proposed to be allotted to 12 industrial units after
being satisfied about their capacity and bonajides. The remaining area is
earmarked for green belt, housing, common facilities and other amenities. E
Even the MOU entered into between the Nigam and the two Companies do not
give a different picture. Having regard to the strategic location and importance
of Indore city, the choice of the site near Indore cannot be said to be vitiated
by any extraneous considerations. Entering into MOU with the two Companies
and thereafter initiating requisite steps for the acquisition of the land does F
not detract from the public purpose character of acquisition.
[912-C, F-H; 913-A, D[
1.6. One cannot view the planning process in the abstract and there
should be a realistic approach. Industrial projects and industrial development
is possible only when there is initiative, coordination and participation on the G
part of both the private entrepreneurs as well as the Governmental agencies.
The active role and initiative shown by the Company cannot give a different
colour to the acquisition which otherwise promotes public purpose:
[913-D-E[
I. 7. The speed at which the acquisition proposal was pursued should be H
894 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.
A appreciated rather than condemning it, though the overzealousness on the
part of authorities concerned to short-circuit the procedure has turned out to
be counter-productive. True, the tardy progress of acquisition would have sent
wrong signals to the prospective investors. However, due attention should have
been given to the legal formalities. At the same time, malafides cannot be
read in between the lines; in fact, no personal malice or ulterior motives have
B been attributed to the Chief Minister or to any other official. It cannot be
concluded that the Government machinery identified itself with the private
interests of the Company, forsaking public interest. Public purpose does not
cease to be so merely because the acquisition facilitates the setting up of
industry by a private enterprise and benefits it to that extent. Nor the existence
C or otherwise of public purpose be judged by the lead and initiative taker. by
the entrepreneurs desirous of setting up the industry and the measure of
coordi!lation between them and various State agencies. The fact that despite
the unwillingness expressed by the Company to go ahead with the project, the
Government was still interested in acquisition is yet another pointer that the
acquisition was motivated by public purpose. [914-C-G)
D
Somawanti v. State of Punjab, AIR (1963) SC 151 and State of Punjab,
v. Gurdial Singh, AIR (1980) SC 319, referred to.
2.1. Though the State Government could have discreetly avoided to use
sophisticated industrial jargon, however, the specified public purpose is not
E so vague and indefinite that the public would not be in a position to understand
its nature and purpose. That such terminology has gained currency is evident
from the fact that the same expression was used in the Industrial Policy
document. Moreover, the Manager, District Industries Centre, was specified
as an authorized officer. This is a pointer to the fact that the land was being
acquired for industrial purpose. Hence the alleged vagueness is not of such
F a degree as to defy sense and understanding. The objections and
representations filed from time to time would unequivocally indicate that they
were fully aware of the exact purpose of acquisition. Raising the bogey of
vagueness in public purpose is evidently a result of after-thought.
(915-G-H; 916-A-B; 917-8)
G 2.2. True, it is not open to the Land Acquisition Officer to alter or expand
the scope of public purpose as it is within the exclusive domain of the
Government. But the Land Acquisition Officer by elaborating and making
explicit what is really implicit in the notification under Section 4(1), had only
dispelled the possible doubts in this regard so that no one will be handicapped
H in filing objections. Hence, it cannot be said that the Land Acquisition Officer
PRA TIBHA NEMA v. STATE 895
outstepped his jurisdiction. 1917-C-DI A
Madhya Pradesh Housing Board v. Md. Shafi, 119921 2 SCC 168,
distinguished.
Ajlatoon v. Li. Governor of Delhi, 119751 4 SCC 285, referred to.
2.3. When no prejudice has been demonstrated nor it could be reasonably B
inferred, it would be unjust and inappropriate to strike down the notification
under Section 4(1) on the basis of a nebulous plea, in exercise of writ
jurisdiction under Article 226. Even assuming that there is some ambiguity
in particularizing the public purpose and the possibility of doubt cannot be
ruled out, the Constitutional Courts in exercise of jurisdiction under Article C
226 or 136 should not, as a matter of course, deal a lethal blow to the entire
proceedings based on the theoretical or hypothetical grievance of the
petitioner. It would be sound exercise of discretion to intervene when a real
and substantial grievance is made out, the non-redressal of which would cause
prejudice and injustice to the aggrieved party. Vagueness of the public purpose,
especially, in a matter like this where it is possible to take two views, is not D
something which affects the jurisdiction and it would therefore be proper to
bear in mind the considerations of prejudice and injustice.1917-E-GI
3. The guidelines enunciated in the policy statement have to be viewed
realistically. One of the guidelines is that no prime agrii.:ultural lands shall
be converted into industrial site. But, there is no material on record to show E
that the lands in question are prime agricultural lands which were being
utilized for growing crops. Further, on the basis of the materials placed before
the Court it is not possible to hold that the proposed diamond park project
will be detrimental to public health, safety or security so as to override the
public interest that is served by setting up export-oriented industries. ·
(918-F-Gl F
4. It is primarily within the domain of State Government to decide how
much extent of land has to be acquired keeping in view the present and future
needs. Though, no fault could be found with the notification on this ground.
However, it is desirable that the State Government should make assessment
afresh in the light of the latest situation and exclude any part of the land which G
may found to be in excess.1919-B-C[
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7133of1999.
from the Judgment and Order dated 23.7.1999 of the Madhya Pradesh
High Court in W.P. No. 403of1997. H
896 SUPREME COURT REPORTS [2003] SUPP. I S.C.R.
A WITH
C.A. Nos. 7134, 7135, 7136 and 7138of1999.
S.S. Ray, N.N. Goswami, S.K. Jain, Pradeep Aggarwal, A. Ranganathan,
Kumar Kartikay, Anil Vyas, Ms. Anjali doshi, Ms. Ruchhi Kohli, L.P. Singh,
B A.P. Dhamija, B.K. Satija, Ms. Pratibha Jain, V.K. Tankha, Adv. General ofM.P.,
Ashok K. Gupta, Farrukh Rasheed, Mukesh Kumar, Rajesh Pancholi, R.C.
Venna, Mukesh Venna, Manish Shanker, RN. Poddar, S.N. Terdol, B.V. Bairam
Das, P.C. Sen and S.K. Agnihotri for appearing parties.
The Judgment of the Court was delivered by
c P. VEN KATARAMA RED DI, J. Facts and Contentions :
The acquisition of 73.3 hectares of dry land situate in Rangwasa village
of Indore District and Tehsil belonging to the appellants and others is the
subject-matter of challenge in these appeals tiled by the landholders. The said
extent of land was notified for acquisition under Section 4( I) of the Land
D Acquisition Act (hereinafter referred to as 'Act') for the alleged public purpose
of 'establishment of diamond park'. This parcel of land together with an extent
of 44.8 hectares of Government land was meant to be placed at the disposal
of the Industries Department and/or Madhya Pradesh Audyogik Kendra Vikas
Nigam Ltd. (hereinafter referred to as 'the Nigam ') for the purpose of allotting
E the same to various industrial units-the foremost among them being the 9th
respondent-Company, for setting up diamond cutting and polishing units with
modem technology. The proposal in this regard emanated from the General
Manager of District Industries Centre, on the initiative taken by the 9th
Respondent. After the land was located by a joint inspection committee of
officials, the Government of Madhya Pradesh (Commerce & Industries
F Department) had given sanction 'in principle' for the acquisition. The District
Collector, Indore through his letter dated 24.1.1996 sought the approval of the
Commissioner, Indore Division to invoke Section 17(1) of the Act in order to
expedite the process of acquisition. In that letter, the Collector mentioned that
prestigious exporters from India as well as foreign countries were likely to
G establish their units in this park which would generate good deal of foreign
exchange and create employment potential.
The Commissioner accorded his approval by a communication dated
29.1.1996. This resulted in the issuance of the notification under Section 4(1)
of the Act un 30th June, 1996 by the Collector & Ex-officio Deputy Secretary
H to Government, to whom it appears the powers were delegated. By the same
PRATIBHA NEMA v. STATE [REDD!. J.] 897
Notification, the enquiry under Section 5A was dispensed with. It was indicated A
in the Notification that the land map could be inspected in the office of the
SDO, Indore and General Manager, District Industries Centre. A few days later
i.e., on 9.2. I996, the declaration under Section 6 of the Act was published. The
Collector (Land Acquisition) was directed to take possession after the expiry
of I 5 days from the date of issuance of notice under Section 9(2) of the Act.
_, Before the possession was taken, the writ petitions under Article 226 of the B
~
Constitution were filed and an order of status quo was granted. The writ
petitions and the Letters Patent Appeals were dismissed. In the meanwhile,
it appears that an interim award was made for a sum of Rs.2,14,91,115
representing 80% of the estimated compensation amount. The SLPs filed in
this Court were disposed of on I 1.10. I 996 on the basis of the representation C
made by the learned counsel for the State of Madhya Pradesh that the
Notification under Section 6 will be withdrawn and the procedure under
Section 5A will be followed. Accordingly, the Collector, Indore District
published a Notification on 15. I 0. I 996 withdrawing the declaration under
Section 6. After due enquiry, the Land Acquisition Officer submitted a report
under Section SA overruling the objections put forward by the appellants. On D
a perusal of the report, the Collector as well as the Commissioner decided to
go ahead with the acquisition. Accordingly, a fresh Notification under Section
6 was issued on 3.1.1997. As in the earlier Notification, the public purpose
was mentioned as 'establishment of a diamond park'. This was again
challenged by the aggrieved landholders including the appellants. A Division E
Bench of the High Court dismissed the writ petitions which were filed by the
present appellants having interest in about 63 acres in Survey No. 684.
Against that judgment, these appeals by special leave have come up. This
Court, while taking note of certain additional facts disclosed in I.A.No. 2/2001,
passed an order on 29.8.2001 formulating four questions in respect of which
the findings of the High Court were called for. The following are the four F
questions:
(1) Whether Mis. B. Arun Kumar International Ltd. deposited a sum
of Rs.3 crores for payment of compensation to the land holders
for acquisition of land for them.
G
(2) Whether in view of the facts stated in l.A.No.2/200 I and the
counter affidavit and further affidavits the acquisition of land
was for the Company and not for public purpose.
(3) If the findings on question No. I & 2 are in the affirmative,
whether any subsequent withdrawal of compensation amount by H
II
898 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.
A M/s. Arun Kumar International Ltd. would not affect the invalidity
of notification issued under Section 4 of the Act. ....
(4) If the findings on issues Nos. I & 2 are in the affirmative, whether
the State Government also contributed partly towards
compensation to be paid to the land holders and in its absence
B the acquisition of land for public purpose is invalid.
The questions were frame<l in the light of the appellants' contention that the
acquisition was not for a public purpose and it was only meant to benefit the
9th Respondent-Company and its associates which contributed its own funds
for facilitating the acquisition.
c The matters were directed to be listed on receipt of the findings of the
High Court with a further direction not to treat the cases as p:trt-heard.
The High Court has, by its order dated 5-7-2002 recorded its findings
on the four points and transmitted the same to this Court. All the findings
D are against the appellants and naturally, therefore, they are being challenged.
Broadly, four contentions have been urged before us. They are: I.
Acquisition is not for a public purpose. The entire acquisition is a subterfuge
to hand over the acquired land to the Company in the guise of acquisition
for a public purpose. Even the amount paid towards compensation was not
E out of public revenues, but out of the money provided by the Company for
the specific purpose of compensation. 2. The public purpose stated in the
Notifications under Sections 4 & 6 is vague. 3. The area of the land proposed
to be acquired is far in excess of reasonable requirements and 4. Environmental
considerations were not kept in view while taking a decision to acquire the
F land for industrial purpose.
Analysis of relevant provisions and the settled legal position :
In order to appreciate the contentions set out above in proper
perspective, it would be appropriate to advert to certain basic provisions of
G the Act and recapitulate the well settled principles relating to public purpose
and acquisition of land under Part II and Part VII of the Act. Section 4( I)
which occurs in Part II of the Act contemplates a notification to be published
in the official gazette etc., whenever it appears to the appropriate Government
that land in any locality is needed for any public purpose or for a company.
Thereupon, various steps enumerated in sub-Section (2) could be undertaken
H by the authorized officer. There is an inclusive definition of 'public purpose'
PRA TIBHA NEMA v. STATE [REDDI, J.) 899
in clause (f) of Section 3. This clause was inserted by Central Act 68of1984. A
Many instances of public purpose specified therein would have perhaps been
embraced within the fold of public purpose as generally understood. May be,
by way of abundant caution or to give quietus to legal controversies, the
inclusive definition has been added. One thing which deserves particular
notice is the rider at the end of clause (f) by which the acquisition of land
for Companies is excluded from the purview of the expression 'public purpose'. B
However, notwithstanding this dichotomy, speaking from the point of view of
public purpose, the provisions of Part II and Part VII are not mutually exclusive
as elaborated later.
The concept of public purpose (sans inclusive definition) was succinctly C
set out by Batchelor, J. in a vintage decision of Bombay High Court. In
Hamabai Framjee Petit v. Secretary of State for India, AIR (1914) PC 20, the
Privy Council quoted with approval the following passage from the judgment
of Batchelor J:
"General definition5 are, I think, rather to be avoided where the D
avoidance is possible, and I make no attempt to define precisely the
extent of the phrase 'public purpose' in the lease; it is enough to say
that in my opinion, the phrase, whatever else it may mean, must
include a purpose, that is, an object or aim in which the general
interest of the community, as opposed to the particular interest of
individuals, is directly and vitally concerned." E
The Privy Council then proceeded to observe that prima facie the
Government are good judges to determine the purpose of acquisition i.e.,
whether the purpose is such that the general interest of the community is
served. At the same time, it was aptly said that they are not absolute Judges.
This decision of the Privy Council and the words of Batchelor, J. were referred F
to with approval by a Constitution Bench in Somawanti v. State of Punjab,
AIR (1963) SC 151 and various other decisions of this Court.
We may now advert to Section 6. It provides for a declaration to be
made by the Government or its duly authorized officer that a particular land G
is needed for a public purpose or for a Company when the Government is
satisfied after considering the report if any made under Section 5A(2). It is
explicitly made clear that such declaration shall be subject to the provisions
of Part VII of the Act which bears the chapter heading 'Acquisition of Land
for Companies'. Thus, Section 6 reiterates the apparent distinction between
acquisition for a public purpose and acquisition for a Company. There is an H
900 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.
A important and crucial proviso to Section 6 which has a bearing on the question
whether the acquisition is for a public purpose or for a Company. The second
proviso lays down that "no such declaration shall be made unless the
compensation to be awarded for such propeny is to be paid by a Company,
wholly or partly, out of public revenues or some fund controlled or managed
B by local authority". Explanation 2 then makes it clear that where the
compensation to be awarded is to be paid out of the funds of a Corporation
owned or controlled by the State, such compensation shall be deemed to be
compensation paid out of public revenues. Thus, a provision for payment of
compensation, wholly or partly, out of public revenues or some fund controlled
or managed by a local authority is sine qua non for making a declaration to
C the effect that a particular land is needed for a public purpose. Even if the
public purpose is behind the acquisition for a Company, it shall not be
deemed to be an acquisition for a public purpose unless at least part of the
compensation is payable out of public revenues which includes the fund of
a local authority or the funds of a Corporation owned or controlled by the
State. However, it was laid down in Somavanti 's case that the notification
D under Section 6(1) need not explicitly set out the fact that the Government
had decided to pay a part of the expenses of the acquisition or even to state
that the Government is prepared to make a part of contribution to the cost
of acquisition. It was further clarified that the absence of a provision in the
budget in respect of the cost of acquisition, whole or part, cannot affect the
E validity of the declaration. The majority Judges of the Constitution Bench
also clarified that a contribution to be made by the State need not be substantial
and even the token contribution of Rs. 100 which was made in that case
satisfied the requirements of the proviso to Section 6( I). The contribution of
a small fraction of the total probable cost of the acquisition does not
necessarily vitiate the declaration on the ground of colourable exercise of
F power, according to the ruling in the said case. Following Somavanti, the
same approach was adopted in Jage Ram v. State of Haryana, (1971] 1 SCC
671]. The question, whether the contribution of a nominal amount from the
public exchequer would meet the requirements of the proviso to Section 6,
had again came up for consideration in Manubhai Jehta/a/ Patel v. State of
G Gujarat, (1983] 4 SCC Page 553. D.A. Desai, J. after referring to Somavanti 's,
speaking for the three Judge Bench observed thus:
"It is not correct to determine the validity of acquisition keeping in
view the amount of contribution but the motivation for making the
contribution would help in determining the bonafides of acquisition.
H Further in Ma/imabu case AIR (1978) SC 515 contribution of Re 1 from
PRA TIBHA NEMA v. ST ATE [REDDL J.] 901
the State revenue was held· adequate to hold that acquisition was for A
public purpose with State fund. Therefore, the contribution of Re I
from public exchequer cannot be dubbed as illusory so as to invalidate
the acquisition."
In Somavanti 's ~ase, the following note of caution was sounded:
B
"We would, however, guard ourselves against being understood to
say that a token contribution by the State towards the cost of
acquisition will be sufficient compliance with the law in each and
every case. Whether such contribution meets the requirements of the
law would depend upon the facts of every case. Indeed the fact that
the State's contribution is nominal may well indicate, in particular C
circumstances, that the action of the State was a colourable exercise
of power. In our opinion 'part' does not necessarily mean a substantial
part and that it will be open to the Court in every case which comes
up before it to examine whether the contribution made by the State
satisfies the requirement of the law. In this case we are satisfied that D
it satisfies the requirement of law."
A three Judge Bench of this Court in Jndrajit C. Parekh v. State of
Gujarat, [ 1975] I SCC 824, without much of elaboration, relegated the
observations in the above passage to a very narrow confines by stating thus:
"In view of the decision in this case that a nominal contribution out
E
of public revenues would satisfy the requirement of the proviso to
Section 6( I) the observation "whether such contribution meets the
requireme~t of the law would depend upon the facts of every c,_se"
must necessarily be taken to refer to the requirement of some law
other than the proviso to Section 6(1). No such law was pointed out F
to us; and it is not ·necessary for the purposes of this appeal to enter
on a discussion as to what such other law could be."
Another important provision is Sub-Section (3) of Section 6 which
enjoins that the declaration (required to be published in the official gazette
etc.) shall be conclusive evidence that the land is needed for a public purpose G
or for a Company and on publication of declaration, the appropriate
Government is enabled to acquire the land in accordance with the other
provisions of the Act. This sub-Section came up for interpretation of this
Court in Somawanti 's case (supra). The Court emphasised that the
conclusiveness contemplated by sub-Section (3) is not merely regarding the H
902 SUPREME COURT REPORTS [2003] SUPP I S.C.R.
A satisfaction of the Government on the question of need but also with regard
to the question that the land is needed for a public purpose or for a Company,
as the case may be. However, the learned Judges highlighted an important
exception to the finality or conclusiveness of the declaration under Section
6( I). It was observed thus:
B "That exception is that if there is a colourable exercise of power the
declaration wi II be open to challenge at the instance of the aggrieved
party. The power committed to the Government by the Act is a limited
power in the sense that it can be exercised only where there is a public
purpose, leaving aside for a moment the purpose of a company. If it
appears th~t what the Government is satisfied about is not a public
c purpose but a private purpose or no purpose at all the action of the
Government would be colourable as not being relatable to the power
conferred upon it by the Act and its declaration will be a nullity.
Subject to this exception, the declaration of the Government will be
fmal."
D
The main contention of the learned senior counsel for the appellant, as
already noticed, resg en the plea of colourable exercise of power.
Colourable exercise of power or ma/a jides in the province of exercise
of power came up for discussion in State of Punjab v. Gurdial Singh, AIR
E (1980) SC Page 319]. In the words of Krishna Iyer, J.-
"Pithily put, bad faith which invalidates the exercise of power-
sometimes called colourable exercise or fraud on power and oftentimes
overlaps motives, passions and satisfactions-is the attainment of ends
beyond the sanctioned purposes of power by simulation or pretension
F of gaining a legitimate goal.
When the custodian of power is influenced in its exercise by
considerations outside those for promotion of which the power is
vested the Court calls it a colourable exercise and is undeceived by
illusion ....................... .
G
Fraud on power voids the order if it is not exercised bona fide for the
end de>igned. Fraud in this context is not equal to moral turpitude and
embraces all cases in which the action impugned is to affect some
object which is beyond the purpose and intent of the power, whether
this be malice-laden or even benign. If the purpose is corrupt the
H
PRATIBHA NEMA v. STATE [REDDL J.) 903
resultant act is bad. If considerations, foreign to the scope of the A
power or extraneous to the statute, enter the verdict or impels the
action mala tides or fraud on power vitiates the acquisition or other
official act."
The above exposition of law unfolds the right direction or the line of
enquiry which the Court has to pursue to test the validity of declaration made B
under Section 6(1) exalted by the legal protection accorded to it under sub-
section (3).
In order to proceed on these lines, the ambit and contours of public
purpose as understood by this Court in certain decided cases has to be taken
note of. We have already noticed the broad and general meaning of the C
expression 'public purpose' as stated by Batchelor, J. nearly a century back.
In the particular context of setting up industries by private enterprise, this
Court's perspective of public purpose is discernible from certain decided
cases to which we shall make reference.
D
In Jage Ram's case (supra) the. public purpose mentioned in the
notifications under Sections 4 & 6 was "the setting up a factory for the
manufacture of China-ware and Porcelain-ware". The State Government had
contributed a sum of Rs. 100 as was done in ihe case of Somavanti (supra)
towards the cost of the land. The question arose whether it was necessary
for the Government to proceed with the acquisition under Part VII of the Act. E
Holding that acquisition under Part Vil need not have been resorted to, this
Court proceeded to discuss the question whether the acquisition was intended
for a public purpose. K.S. Hegde, J. speaking for the Court observed thus:
"There is no denying the fact that starting of a new industry is in
public interest. It is stated in the affidavit filed on behalf of the State F
Government that the new State of Haryana was lacking in industries
and consequently it had become difficult to tackle the problem of
unemployment. There is also no denying the fact that the
industrialization of an area is in public interest. That apart, the question
whether the starting of an industry is in public interest or not is G
essentially a question that has to be decided by the Government. That
is a socio-economic question. This Court is not in a position to go
into that question. So long as it is not established that the acquisition
is sought to be made for some collateral purpose, the declaration of
the Government that it is made for a public purpose is not open to
challenge. Section 6(3) says that the declaration of the Government H
904 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A that the acquisition made is for public purpose shall be conclusive
evidence that the land is needed for a public purpose. Unless it is
shown that there was a colourable exercise of power, it is not open
to this Court to go behind that declaration and find out whether in
a particular case the purpose for which the land was needed was a
public purpose or not : see Smt. Somavanti and Ors. v. The State of
B Punjab and Raja Anand Brahma Shah v. State of UP. 011 the facts
of this case, there can be hardly any doubt that the purpose for which
the land was acquired is a public purpose."
In Somavanti 's case, setting up a factory for the manufacture of
C refrigeration compressors and ancillary equipment, was held to subserve
public purpose. The importance of such industry to a State such as Punjab
which had surplus food and dairy products, the possible generation of foreign
exchange resources and employment opportunities were all taken into account
to hold that public purpose was involved in establishing the industry. It was
observed "on the face of it, therefore, bringing into existence a factory of this
D kind would be a purpbse beneficial to the public even though, that is a private
venture." The decision in Jageram 's case was cited with approval by this
Court in Bajirao T. Kate v. State ofMaharashtra, [1995] 2 SCC Page 442]. In
R.l. Arora v. State of Uttar Pradesh, AIR (1964) SC Page 1230 a Constitution
Bench of this Court observed that there was definite public purpose behind
E the acquisition of land for taking up works in connection with the setting up
of a factory for production of textile machinery parts. However, that was in
the context of a case of acquisition under Part VII.
These decisions establish that a public purpose is involved in the
acquisition of land for setting up an industry in private sector as it would
ultimately benefit the people. However, we would like to add that any and
F
every industry need not necessarily promote public purpose and there could
be exceptions which negate the public purpose. But, it must be borne in mind
that the satisfaction of the Government as to the existence of public purpose
cannot be lightly faulted and it must remain uppermost in the mind of the
Court.
G
Having noted the salient provisions and the settled principles governing
the acquisition for a public purpose, it is time to turn to Part Vil dealing with
acquisition of land for Companies. The important point which we would like
to highlight at the outset is that the acquisition under Part Vil is not divorced
from the element of public purpose. The concept of public purpose runs
H through the gamut cf Part VII as well.
PRATIBHA NEMA v. STATE [REDDL .I.) 905
'Company' is defined to mean by Section 3(e) as (i) a Company within A
the meaning of Section 3 of the Companies Act other than Government
Company, (ii) a Society registered under the Societies Registration Act other
than a Co-operative Society referred to in clause (cc) and (iii) a Co-operative
Society governed by the law relating to the Co-operative Societies in force
in any State other than a Co-operative Society referred to in clause (cc). An
industrial concern employing not less than I00 workmen and conforming to B
the other requirements specified in Section 38-A is also deemed to be a
Company for the purposes of Part Vil. In order to acquii,'. Jar.d for a Company
as defined above, the previous consent of the appropriate Government is the
first requirement and secondly the execution of agreement by the Company
conforming to the requirements of Section 41 is another essential formality. C
Section 40 enjoins that consent should not be given by the appropriate
Government unless it is satisfied that (I) the purpose of the acquisition is to
obtain land for erection of dwelling houses for workmen or for the provision
of amenities connected therewith; (2) that the acquisition is needed for
construction of some building or work for a Company which is engaged or
about to engage itself in any industry or work which is for a public purpose; D
and (3) that the proposed acquisition is for the construction of some work
that is likely to be useful to the public. The agreement contemplated by
Section 41 is meant to ensure the compliance· with these essentialities. It is
,.; also meant to ensure that the entire cost of acquisition is borne. by and paid
to the Government by the Company concerned. Thus, it is seen that even in E
a case of acquisition for a Company, public purpose is not eschewed. It
follows, therefore, that the existence or non-existence of a public purpose is
not a primary distinguishing factor between the acquisition under Part II and
acquisition under Part Vil. The real point of distinction seems to be the source
of funds to cover the cost of acquisition. In other words, the second proviso
to Section 6(1) is the main dividing ground for thr two types of acquisition. F
This point has been stressed by this Court in Srinivasa Co-operative House
Building Society Limited v. Madam G. Sastry, [1994] 4 SCC Page 675] at
paragraph 12:
" .. .In the case of an acquisition for a company simpliciter, the declaration G
cannot be made without satisfying the requirements of Part Vil. But
that does not necessarily mean that an acquisition for a company for
a public purpose cannot be made otherwise than under the provisions
of Part VII, if the cost or a pm1ion of the cost of the acquisition is
to come out of public funds. In other words, the essential condition
for acquisition is for a public purpose and that the cost of acquisition H
906 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A should be borne, wholly or in part, out of public funds ... "
The legal position has been neatly and succinctly stated by Wanchoo, J.
speaking for the Constitution Bench in R.l.Arora v. State of Ut1ar Pradesh,
AIR (1962) SC Page 764. This is what has been said:
B "Therefore, though the words 'public purpose' in Sections 4 & 6 have
the same meaning, they have to be read in the restricted sense in
accordance with Section 40 when the acquisition is for a company
under Section 6. In one case, the notification under Section 6 will say
that the acquisition is for a public purpose, in the other case the
notification will say that it is for a company. The proviso to Section
c 6( 1) shows that where the acquisition is for a public purpose, the
compensation has to be paid wholly or partly out of public revenues
or some fund controlled or managed by a local authority. Where
however the acquisition is for a company, the compensation would be
paid wholly by the company. Though, therefore, this distinction is
D there where the acquisition is either for a public purpose or for a
company, there is not a complete dichotomy between acquisitions for
the two purposes and it cannot be maintained that where the
acquisition is primarily for a company it must always be preceded by
action under Part VII and compensation must always be paid wholly
by the company. A third class of cases is possible where the acquisition
E may be primarily for a company but it may also be at the same time
for a public purpose and the whole or part of compensation may be
paid out of public revenues or some fund controlled or managed by
a local authority. In such a case though the acquisiton may look as
if it is primarily for a company it will be covered by that part of Section
6 which lays down that acquisition may be made for a public purpose
F
if the whole part of the compensation is to be paid out of the public
revenues or some fund controlled or managed by a local authority.
Such was the case in Pandit Jhandu Lal v. State of Punjab, AIR
(1961) SC 343] .............. ..
G ..... It is only where the acquisition is for a company and its cost is to
be met entirely by the company itself that the provisions of Part VII
apply."
Thus the distinction between public purpose acquisition and Part VII
acquisition has got blurred under the impact of judicial interpretation of
H relevant provisions. The main and perhaps the decisive distinction lies in the
PRATIBHA NEMA v. STA TE [REDDl. l] 907
fact whether cost of acquisition comes out of public funds wholly or partly. A
Here again, even a token or nominal contribution by the Government was held
to be sufficient compliance with the second proviso to Section 6 as held in
a catena of decisions. The net result is that by contributing even a trifling
sum, the character and pattern of acquisition could be changed by the
Government. In ultimate analysis, what is considered to be an acquisition for
facilitating the setting up of an industry in private sector could get imbued B
with the character of public purpose acquisition if only the Government
comes forward to sanction the payment of a nom ina: sum towards
compensation. In the present state of law,-that seems to be the real position.
Whether 2nd proviso to Section 6(/) has been complied with
c
Now, we come back to the facts of the present case and test the validity
of acquisition, keeping in view the principles discussed supra. First, we shall
address .the question argued at length-viz., whether there was compliance
with the second proviso to Section 6( I). Obviously, if no part of compensation
amount is to be paid out of the public revenues, then, the declaration ihat D
the land was needed for a public purpose could not have been validly made
and the acquisition cannot be considered to be for a public purpose. As
already noticed, it was held in Somawanti 's case that the notification under
Section 6( 1) need not on the face of it contain a recital that the Government
had decided to bear a part of the cost of acquisition or it was prepared to
make a part of contribution, Even the absence of budgetary provision shall E
not affect the validity of declaration, it was observed. Nevertheless, there
should be definite indication to the effect that the Government is going to
bear at least a part of the cost of acquisition. Naturally, the Court has to look
into the record including pleadings and it is not impermissible to take into
account the events prior to and subsequent to the declaration. The High F
Court in the findings submitted to this Court noted the statement made on
behalf of the Government that it was prepared to make necessary budgetary
allotment for the amount of compensation payable. However, no record has
been produced either before the High Court or before this Court reflecting the
Government's decision to meet a part of the expenses of acquisition. But, that
is really immaterial as there is sufficient material to hold that the Nigam which G
is undisputedly owned and. controlled by the State has itself proceeded to
make payment of substantial amount towards compensation even at the initial
stages in anticipation of the interim award that was made on 7.6.1996. Payment
of Rs. 1.5 crores was made by Respondent No. 6 (Nigam) through the General
Manager, District Industries Centre by means of a cheque dated 26.2.1996. H
908 SUPREME COURT REPORTS 12003] SUPP. I S.C.R.
A This gives an unequivocal pointer that the State owned Corporation, namely
the Nigam, had to bear the cost of acquisition and as a first step, it made the
payment of Rs.1.5 crores. The assurance on the part of the State Government
to sanction the funds, would indicate that in case of deficit, the Government
is prepared to make the necessary financial provision to enable the Nigam to
meet the cost of acquisition. In the document entitled "Industrial Policy and
B Action Plan, 1994" it is stated at para 7.19 that "the Nigam will work as the
nodal agency for the development of large and medium industries in the
State".
According to the appellants, the amount paid by Nigam to the Land
Acquisition Collector was out of the money received from Mis. Arun Kumar
C International Limited (hereinafter referred to as 'AKI Ltd.') towards the advance
payment of the compensation amount and it was merely passed on to the
Land Acquisition Officer. It is submitted that but for the amount provided by
AKI Ltd., no funds were available with the Nigam for making such payment.
The sequence of events coupled with the fact that the respondents have not
D produced the covering letter that would have accompanied the Cheque gives
rise to a presumption of fact that the Cheque issued by the Company towards
the compensation amount was simply made over to the Land Acquisition
Officer by the Nigam. Therefore, it is stressed that the source of funds was
not public revenue, but, it was the private fund of the beneficiary Company.
On the other hand, it has been the stand of the respondents that the Cheque
E issued by the Company was towards advance lease premium and such payment
was made in terms of the Memorandum of Understanding (MOU). The High
Court found sufficient support for the plea taken by the Nigam and the State
Government from the documentary evidence viz., the receipt dated 20.2.199.5
passed on to AKI Ltd., and the entries in the cash book. Jn fact, the original
F receipt book was placed before us in the course of hearing. There is absolutely
no basis to infer that the particular receipt was prepared at a later stage after
the dispute cropped up. Moreover, the MOU entered into between the Nigam
and the two Companies, namely, M/s B. Arun Kumar Group of Companies and
Rosy Blue of Antwerp, Belgium makes it clear that the said Companies were
willing to deposit the amount of lease premium with the Nigam in advance.
G It is made clear in the sur-rejoinder affidavit filed in the High Court and it has
not been disputed that the Nigam has been vested with the power to allot
land to the industrial units, execute lease deeds and charge premium. True.
there is nothing on record to show that the lease premium or the advance
amount payable was determined by the time the Cheque was issued by the
H Company. The payment of any amount at that stage on account of lease
PRA TIBl-IA NEMA v. STA TE [REDD!. .I.] 909
premium was rather premature, but, the fact remains that under the terms of A
MOU, the Companies which were parties to the MOU did express their
willingness to deposit the amount of lease premium in advance. Viewed from
another angle, no interim compensation was determined by the time the
payment was made by the Company and there was no reference in the MOU
to the compensation amount at all and if so, there is no reason to presume B
that the amount was deposited by the Company as advance compensation
amount. In this state of affairs, the High Court was well justified in relying
on the documents/books maintained in the ordinary course of business and
recording a conclusion that the Cheque for Rs.3 crores was issued by AKI
Ltd., towards advance lease premium. The non-production of covering letter
which according to the sixth respondent is not on its record, does not clinch C
the issue in favour of the appellants. Taking an overall picture, we are unable
to hold that the conclusion of the High Court in this regard is perverse or
unsustainable.
It seems to be fairly clear, as contended by the learned counsel for the
appellant, that the amount paid by the Company was utilized towards payment D
of a part of interim compensation amount determined by the Land Acquisition
Officer on 7.6.1996 and in the absence of this amount, the Nigam was not
having sufficient cash balance to make such payment. We may even go to
the extent of inferring that in all probability, the Nigam would have advised
or persuaded the Company to make advance payment towards lease amount
as per the terms of MOU on a rough and ready basis, so that the said amount E
could be utilized by the Nigam for making payment on account of interim
compensation. Therefore, it could have been within the contemplation of both
the parties that the amount paid by the Company will go towards the discharge
of the obligation of the Nigam to make payment towards interim compensation.
Even then, it does not in any way support the appellants' stand that the F
compensation amount had not come out of public revenues. Once the amount
paid towards advance lease premium, may be on a rough and ready basis, is
credited to the account of the Nigam, obviously, it becomes the fund of the
Nigam. Such fund, when utilized for the purpose of payment of compensation,
wholly or in part, satisfies the requirements of the second proviso to Section
6(1) read with Explanation 2. The genesis of the fund is not the determinative G
factor, but its ownership in praesenti that matters.
Whether acquisition is for private purpose and vitated by colourable exercise
of power
We should now take up for consideration the next important facet of the H
910 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A appellants' argument turning on the question of public purpose and colourable
exercise of power. The proposed acquisition. it is contended, is primarily and
predominantly meant to cater to the interests of the respondent Company and
another Company by name Rosy Blue of Antwerp which together entered into
the Memorandum Of Understanding (MOU) with the State-owned Corporation.
B However, a twist was given to the acquisition as if it were for a public
purpose, bypassing the requirements of Part VII of the Act. The entire exercise
is an instance of colourable exercise of power and is, therefore, ultra vires
the powers of the State Government. The money for the payment of advance
compensation amount came from the source of respondent Company to whom
the Government committed itself to allot the major chunk of land. This last
C point has already been dealt with by us and therefore the attention will be
focused to the other factors that have been highlighted by the learneJ senior
counsel for the appellants.
According to the learned senior counsel, the following facts and
circumstances (apart from the source of payment of compensation), leads to
D a natural and logical inference that the acquisition, though styled as a public
purpose acquisition, was in reality meant to subserve a private purpose.
It all started with the personal and written representation on behalf of
AKI Ltd. (R-9/R-10) on 13.9.1995. The very next day, the Additional Secretary
E in the Industries Department conveyed to the Commissioner, Indore Division
the assurance given by the Chief Minister that suitable land of an extent of
150-200 acres near Indore will be allotted for starting a new ultra modern unit
for diamond polishing and processing. It was indicated in the letter that the
Company proposed to lay foundation stone for its proposed unit on 1st
November, 1995. The Additional Secretary, therefore, requested the
F Commissioner to ensure prompt and early administrative action so as to fulfill
the assurance given by the Chief Minister to the Company's representatives.
Within a week, i.e., on 22.9.1995, there was joint inspection by various State
Government officials on the basis of which the appellants' land was selected
despite the objection by the Zonal Pollution Officer. On 1.11.1995, a
G Memorandum Of Understanding was signed by the representatives of the
Nigam on the one hand and Mis B. Arun Kumar Group of Companies and
Rosy Blue of Antwerp, Belgium on the other. According to that MOU, 200-
260 acres will be acquired and wiil be made available among others to the said
two Companies who were willing to deposit lease premium in advance. The
Nigam agreed to provide water and power facilities and assist the signatory
H Companies to obtain necessary sanctions. It also agreed to provide equity
PRATl13HA NEMA v. STATE [REDDI. .I.] 911
share capital if requested by the Company. On 22.1.1996, a letter was addressed A
by the General Manager, District Industries Centre requesting the Collector,
Indore for acquisition of 73.304 hectares of private land apart from transferring
the Government land of an extent of 44.816 hectares. According to the synopsis
furnished by the appellants' counsel, this letter clearly shows that the
acquisition was for a Company registered under the Companies Act. However, B
it may be clarified at this juncture that the letter dated 22.1.1996 which finds
its place at Page No. 114 of the Paper-book in C.A.No. 7135 of 1999 is
something different and it does not bear testimony to the fact alleged by the
appellants. On 24.1.1996, the Collector requested the Commissioner's sanction
for invoking Section 17(1). The Commissioner by his communication dated
29 .1.1996, gave his approval to invoke emergency clause under Section 17(1) C
of the Act. The Collector issued the Notification under Section 4(1) for the
acquisition of the appellants' land as well as other adjoining lands for the
public purpose, to wit, 'for establishment of diamond park'. Section 17(1) was
invoked in order to dispense with the enquiry under Section SA. On 9.2.1996,
a Notification under Section 6 was issued and the Collector was directed to D
take possession within stipulated time.
The above facts, according to the learned counsel for the appellants,
would reveal that the machinery under the Land Acquisition Act was set in
motion in record time to comply with the request of 9th/I 0th Respondent and
the formalities were completed in post-haste solely with a view to enable the E
Company to go ahead with its proposed project.
The learned Advocate-General appearing for the State of Madhya
Pradesh and also for the sixth respondent Corporation (Nigam) countered the
above arguments by placing reliance inter a/ia on the findings of the High
Court. He stressed on the policy of the State Government and the genuine F
effort made by the State Government and its agencies to develop the notified
land to facilitate the establishment of diamond cutting and processing units
with modem technology. He submitted that public purpose is writ large on
the face of the acquisition and the Government is committed to pursue the
project in public interest notwithstanding the disinterestedness of the G
respondent-Company owing to the delay that occurred.
On a deep consideration of the respective contentions in the light of
the documents and events relied upon and the settled principles adverted to
supra, we have no doubt in our mind that the acquisition was thought of with
the earnest objective to achieve industrial growth of the State in public H
912 SUPREME COURT REPORTS 12003J SUPP. I S.C.R.
A interest. Quite apart from the view taken by this Court that acquisition in order
to enable a Company in private sector to set up an industry could promote
public purpose, we have enough material in the instant case to conclude that
the proposed acquisition will serve larger public purpose. It is fairly clear that
the State's goal to bring into existence a huge industrial complex housing a
good number of diamond cutting and polishing units has led to the present
B acquisition. Such industrial complex is compendiously termed as 'diamond
park'. The State Government and its agencies including tlie Nigam acted
within the framework of the 'Industrial Policy and Action Plan, 1994' in taking
the decision to develop diamond park complex. Para 2.22 of the Industrial
Policy specifically states that "the diamond park will be developed in the State
C for industries based on diamond cutting". Mineral based industries have ueen
brought within the scope of 'thrust sector'. Export oriented units will be
specially encouraged, according to the policy. The policy further states that
the Nigam will work as a nodal agency for the development of large and
medium industries in the State and will play the role of a coordinator for the
development of industrial infrastructure in growth sectors in partnership with
D the private sector and Industrialists' associations. The reference to Industrial
Policy is found in the resolution passed at the meeting ofNigam on 23.11.1995
and the letter of the General Manager, District Industries Centre while
forwarding the proposal for acquisition to the District Collector, Indore. The
District Collector while seeking the approval of the Commissioner stressed
E that prestigious exporters from India as well as other foreign countries were
likely to establish their units in the diamond park which would generate good
deal of foreign exchange and create employment potential. The State
Government by its communication dated I8. I. I996 accorded sanction in principle
for acquiring the private land measuring 73 hectares in Rangwasa village 'for
industrial purpose' in order to set up a diamond park. Thus, the considerations
F of industrial policy and development weighed prominently with all the
concerned authorities while processing the proposals. It is clear from the
stand taken by the Nigam in the counter-affidavit and the enquiry report of
the Land Acquisition Collector that AKI Ltd., and Rosy Blue of Antwerp are
not the only entrepreneurs who would get the land in the proposed diamond
G park area. In the report of the Land Acquisition Officer, it is specifically
mentioned that the land is proposed to be allotted to 12 industrial units after
being satisfied about their capacity and bona tides. Our attention has been
drawn by the learned Advocate-General to the lay out plan in which 12 plots
covering an area of 57 hectares are laid out. The remaining area is earmarked
H for green belt, housing, common facilities and other amenities. Even the MOU
PRATIBHA NEMA v. STATE [REDD!. .I.] 913
entered into between the Nigam and the two Companies do not give us a A
different picture. It is specifically stated therein that the Commerce and
Industries Department will handover the land to Nigam for the development
of diamond park and the Nigam in its turn will allot the land required for
setting up the units for cutting and polishing diamonds on leasehold basis to
the two Companies as well as other Companies. The site has been selected B
by a team of Government officials after visiting various places. The fact that
AKI Ltd., also requested for allotment of suitable land near Indore and
ultimately the land close to Indore was selected, does not necessarily mean
that the official team was acting at the dictates of the said Company. Having
regard "to the strategic location and importance of Indore city, the choice of
site near Indore cannot be said to be vitiated by any extraneous considerations. C
Entering into MOU with the two Companies and thereafter initiating requisite
steps for the acquisition of the land does not, in our view, detract from the
public purpose character of acquisition. MOU, in ultimate analysis, is in the
mutual interest of both the parties and was only directed towards the end of
setting up of an industrial complex .under the name of 'diamond park' which
benefits the public at large and incidentally benefits the private entrepreneurs. D
One cannot view the planning process in the abstract and there should be a
realistic approach. Industrial projects and industrial development is possible
. only when there is initiative, coordination and participation .on the part of
both the private entrepr~neurs ·as well as the Governmental agencies. The
active role and initiative shown by AKI Lid., cannot give a different colour E
to the acquisition which otherwise promotes public purpose. The expression
'foreign collaboration' used in some of the letters which the learned Advocate-
General states, is somewhat inappropriate, does not negative the existence of
public purpose.
Much of support has been drawn by the learned counsel for the appellant F
from the letter dated 14.9.1995 addressed by the Additional Secretary,
Industries Department, to the Commissioner, Indore soon after the meeting
of the representatives of AKI Ltd., with the Chief Minister and other senior
officials. Much of the argument has been built up on it to characterize the
acquisition. as one for private purpose. We find no legal basis for such G
comment. The wording of the letter read in isolation may convey the
impression that the Chief Minister assured allotment of 150 to 200 acres of
land to AKI Ltd., for starting its modem diamond unit. But, it is fairly clear
from the subsequent acts and correspondence including MOU that the land
sought for was in connection with the proposal for a diamond park project
in which not only AKI Ltd., but also other Companies or firms are to set up .H
914 SUPREME COURT REPORTS [2003) SUPP. I S.C.R.
A the diamond cutting and polishing industries with modern technology. Pursuant
to the alleged assurance, no offer was made nor any steps taken to handover
l 50 acres of land to AKI Ltd. The said letter may be the starting point for
action, but, as already noticed the authorities concerned proceeded to acquire
the land for the public purpose within the framework of Land Acquisition
B Act. The contents of the letter, literally read, were not translated into action.
But, it only provided a starting point to proceed with the acquisition for
industrial purpose.
We are of the view that none of the factors pointed out by the learned
counsel for the appellants make any dent on the orientation towards public
C purpose nor do they establish that the acquisition was resorted to by the
Government to achieve oblique ends. The speed at which the proposal was
pursued should be appreciated rather than condemning it, though the
overzealousness on the part of authorities concerned to short-circuit the
procedure has turned out to be counter-productive. True, the tardy progress
of acquisition would have sent wrong signals to the prospective investors, as
D contended by the learned Advocate-General. However, due attention shou Id
have been given to the legal formalities such as holding of enquiry,
specification of public purpose in clear tenns and giving sufficient indication
of State meeting the cost of acquisition wholly or in part. At the same time,
we cannot read mala tides in between the lines; in fact, no personal malice
E or ulterior motives have been attributed to the Chief Minister or to any other
official. The material placed before us do not lead to the necessary or even
reasonable conclusion that the Government machinery identified itself with
the private interests of the Company, forsaking public interest. Public purpose
does not cease to be so merely because the acquisition facilitates the setting
up of industry by a private enterprise and benefits it to that extent. Nor the
F existence or otherwise of public purpose be judged by the lead and initiative
taken by the entrepreneurs desirm1s of setting up the industry and the measure
of coordination between them and various state agencies. The fact that despite
the unwillingness expressed by AKI Ltd., to go ahead with the project, the
Government is still interested in acquisition is yet another pointer that the
G acquisition was motivated by public purpose.
Whether notifications should be struck down on the ground of vagueness of
public purpose
The vagueness of notified public purpose is the next ground of attack
against the notifications issued under Sections 4(1) and 6. According to the
H
PRA TIBHA NEMA v. STA TE [REDD!, J.] 915
learned counsel for the appellant, the expression "establishment of diamond A
park" is vague and unintelligible and therefore deprives the landholders and
the general public of the valuable right to object to the acquisition on relevant
grounds. It is further contended that the elaboration of the public purpose in
the notice of enquiry issued under Section 5-A by the Land Acquisition
Officer does not cure the vital defect in the notification under Section 4(1)
which is an essential prerequisite for all further action under the Act Hence B
it is contended that the notification under Section 4 together with the
subsequent proceedings become null and void. The sheet-anchor of this
argument rests on the decision of this Court in Madhya Pradesh Housing
Boardv. Md. Shafi, [1992] 2 SCC 168. There, the public purpose was described
as 'residential' without even giving definite indication of the exact location C
of the lands sought to be acquired. What is more, in the declaration under
Section 6(1), the public purpose was stated differently as 'housing scheme of
Housing Board'. This Court, inter alia, held that the impugned notification
was vitiated on account of being vague. The Court observed:
"Apart from the defect in the impugned notification, as noticed above, D
we find that even the "public purpose" which has been mentioned in
the schedule to the notification as 'residential' is hopelessly vague
·and conveys no idea about the purpose of acquisition rendering the
notification as invalid in law. There is no indication as to what type
of residential accommodation was proposed or for whom or any other
details. The State cannot acquire the land of a citizen for building E
some residence for another, unless the same is in 'public interest' or
for the benefit of the 'public' or an identifiable section thereof. In the
absence of the details about the alleged 'public purpose' for which
the land was sought to be acquired, no one could comprehend as to
why the land was being acquired and therefore was prevented from F
taking any further steps in the matter."
The Court relied on the observation in Munshi Singh v. Union of India,
[1973] 1 SCR Page 973 to the effect that the public purpose "needs to be
particularized" to satisfy the requirements of law.
G
We do not think that the ratio of the decision in M.P. Housing Board's
case would come to the rescue of the appellants. Though the State Government
could have discreetly avoided to use sophisticated industrial jargon, we do
not think that the specified public purpose is so vague and indefinite that the
public will not be in a position to understand its nature and purpose. That
H
916 SUPREME COURT REPORTS (2003) SUPP. I S.C.R.
A such terminology has gained currency is evident from the fact that the same
expression was used in the Industrial Policy document. I: may not be out of
place to mention that in the recent times, the terminology such as Industrial
Park, Information Technology Park is widely in circulation. Moreover, against
the column 'authorised officer under Section 4(2)' (close to the column 'public
purpose'), the designation of Manager, District Industries Centre, Indore is
B specified. This is a pointer to the fact that the land was be_ing acquired for
industrial purpose. We are therefore of the view that in the instant case, the
alleged vagueness is not of such a degree as to defy sense and understanding.
In Ajlatoon v. Lt. Governor of Delhi, [197S] 4 SCC Page 28S the public
C purpose mentioned in the notification under Section 4 was "planned
development of Delhi". The challenge on the ground of vagueness of the
notification was repelled on several grounds. The approach of the Court and
the crucial consideration to be kept in view in dealing with this question was
highlighted by Mathew, J. speaking for the Constitution Bench in the following
words:
D
" ... According to the Section (Section 4), therefore, it is only necessary
to state in the notification that the land is needed for a public purpose.
The wording of Section SA would make it further clear that all that
is necessary to be specified in a notification under Section 4 is that
the land is needed for a public purpose. One reason for specification
E of the pa1ticular public purpose in the notification is to enable the
person whose land is sought to be acquired to file objection under
Section SA. Unless a person is told about the specific purpose of the
acquisition, it may not be possible for him to file a meaningful
objection against the acquisition under Section SA . ...... .
F We think that the question whether the purpose specified in a
notification under Section 4 is sufficient to enable an objection to be
filed under Section 5A would depend upon the facts and circumstances
of each case."
Absence of prejudice was highlighted in Paragraph I0 thus:
G
"That apart, the appellants did not contend before the High Court that
as the particulars of the public purpose were not specified in the
notification issued under Section 4, they were prejudiced in that they
could not effectively exercise their right under Section 5A."
H On the facts of the case, it is not possible to draw the conclusion that
PRATIBHA NEMA v. STATE [REDD!. J.] 917
the appellants have suffered any prejudice or handicap on account of the A
alleged vagueness in the description of public purpose. First of all, the
appellants did not, in the pleadings before the High Court, point out as to
how the alleged ambiguity or vagueness had resulted in prejudice in the
sense that they could not effectively object to the acquisition. On the other
hand, the appellants filed detailed objections before the Land Acquisition B
Officer covering each and every aspect. The objections and representations
filed from time to time would unequivocally indicate that they were fully
aware of the exact purpose of acquisition. Raising the bogey of vagueness in
public purpose is evidently a result of after-thought. Moreover, by virtue of
what is stated in the notices issued by the Land Acquisition Officer under
Section 5A of the Act, no one could possibly have any doubt about the. exact C
purpose of acquisition. True, it is not open to the Land Acquisition Officer
to alter or expand the scope of public purpose as it is within the exclusive
domain of the Government. But the Land Acquisition Officer by elaborating
and making explicit what is really implicit in the notification under Section
4(1), had only dispelled the possible doubts in this regard so that ilo one will
. be handicapped in filing objections. It is in that light the step taken by the D
Land Acquisition Officer has to be .viewed. We cannot countenance the
contention that in doing so, the Land Acquisition Officer outstepped his
jurisdiction.
When no prejudice has been demonstrated nor could be reasonably E
inferred, it would be unjust and inappropriate to strike down the notification
under Section 4(1) on the basis of a nebulous plea, in exerCise of writ
jurisdiction under Article 226. Even assuming that there is some ambiguity
in particularizing the public purpose and the possibility of doubt cannot be
ruled out, the Constitutional Courts in exercise of jurisdiction under Article
226 or 136 should not, as a matter of course, deal a lethal blow to the entire F
proceedings based on the theoretical or hypothetical grievance of the petitioner.
It would be sound exercise of discretion to intervene when a real and substantial
grievance is made out, the non redressal of which would cause prejudice and
injustice to the aggrieved party. Vagueness of the public purpose, especially,
in a matter like this where it is possible to take two views, is not something G
which affects the jurisdiction and it would therefore be proper to bear in
mind the considerations of prejudice and injustice.
Objection on the ground of ecological and security considerations
The last contention is that the proposed diamond park complex will be H
918 SUPREME COURT REPORTS (2003] SUPP. I S.C.R.
A objectionable from the point of view of ecology and national security. Reliance
is placed on some of the guidelines spelt out in the "Policy Statement for
Abatement of Pollution" issued by Government of India, Ministry of
Environment and Forests in the year 1992. At the outset, we must take note
of the undisputed fact that the diamond cutting and polishing equipment and
the operations connected therewith does not give rise to any pollution caused
B by emission of fumes, noise or discharge of effluents. The problem of air,
water or soil pollution excepting to a minimal extent, caused on account of
inhabitation and transportation, will not arise. The appellants, however, relied
on the guidelines in order to contend that in locating the industries, a distance
of 25 KMs from ecologically and/or otherwise sensitive areas should be
C maintained. It is submitted that the MHOW-a Defence establishment is within
I0 KMs distance and the Centre for Advanced Technology (Department of
Atomic Energy) is 3 kilometers from the proposed site of diamond park.
However, it is on record that the Army Headquarters expressed no objection
from military security point of view for setting u~ the diamond park. So also,
the Centre for the Advanced Technology in its letter addressed to the Managing
D Director of the Nigam made it clear that the establishment of diamond park
would not cause any security problems to the said Centre. The Union Minister
of State in the Ministry of Defence also stated on the floor of the Rajya
Sabha on 11.9. 1996 that there were no direct national security implications
involved in the setting up of the proposed project. It is also pertinent to note
E that in the guidelines themselves, the need to strike a balance between
economic and environmental considerations has been stressed. One of the
guidelines is that no prime agricultural lands shall be converted into industrial
site. But, there is no material on record to show that the lands in question are
prime agricultural lands which were being utilized for growing crops. The
guidelines enunciated in the policy statement have to be viewed realistically.
F The topography of the area and the development around the area are some
of the factors that could be legitimately taken into account. On the basis of
the materials placed before the Court it is not possible to hold that the proposed
diamond park project will be detrimental to public health, safety or security
so as to override the public interest that is served by setting up export-
G oriented industries. We have, therefore, no hesitation in rejecting this
contention.
Objection regarding acquisition of excess land
Before parting with the case, we may advert to one more contention
H advanced by the learned counsel for the appellant which is realll a facet of
1.
PRAT!BHA NEMA v. STATE [REDD!. .I.] 919
the argument on the question of public purpose. It is contended that such a A
vast extent of land is in fact not reqJired by any reasonable standards and
there was total non application of ~ind as regards the extent of the land
required. In reply to this, the learned Advocate-General has drawn our attention
to the Lay Out Plan and pointed out that it was only on the basis of an
assessment of the requirements, the extent of land to be acquired has been
arrived at. Excepting oral assertions and bald averments, there is ilo material B
before us to reach the conclusion that the requirements were not properly
assessed by the concerned authorities. It is primarily within the domain of
State Government to decide how much extent of land has to be acquired
keeping in view the present and future needs. Though, we are not inclined
to find fault with the notification on this ground, we would only like to C
observe that it is desirable that the State Government makes a fresh assessment
in the light of the latest situation and exclude any part of the land which may
be found to be in excess.
For the reasons aforesaid, the appeals are dismissed with no order as to
costs. D
S.K.S. Appeals dismissed.
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