SPECIAL LAND ACQUISITION OFFICER, BOMBAY AND OTHERSversusGODREJ AND BOYCE

        SPECIAL LAND ACQUISITION OFFICER, BOMBAY,
A
                      AND OTHERS.
                            v.
                    GODREJ AND BOYCE

                              OCTOBER 27, 1987
B
      [E.S. VENKATARAMIAH ANDS. RANGANATHAN, JJ.]
                                                                                  __,._
           Land Acquisition Act-Power of the Government to withdraw
    proceedings for acquisition of lands under section 48 after issue of no ti-
    fication under section 4 thereof.
c         The State Government, by a notification dated November 6, 1961,
    issued under section 4 of the Land Acquisition Act, notified for acquisi-     ~
    tion lands belonging to the respondent. This was followed by a declara-
    tion dated November 18, 1965, under section 6 of the Act, and the
    notices calling upon the respondent to put its claims for compensation in
D   respect of the lands sought to be acquired. Thereafter, no further action
    was taken in this behalf. In the meantime, the lands in question were
    encroached upon by a large number of trespassers who put up slums
    thereon. The respondent repeatedly asked the State Government to
    take steps to remove the encroachments and expedite the making of the
    award and payment of the compensation but no action was taken by the
E   Government. The respondent thereupon filed a Writ Petition in the             +
    High Court for a writ of mandamus, directing the State Government to
    make the award under section 11 of the Act, and take possession of the
    lands after payment of the compensation to the respondent.

          On March 25, 1981, the State Government passed an Order under
F   section 48 of the Act, withdrawing the lands of the respondent from

                                                                                  ~
    acquisition, and the respondent was, accordingly, informed of that
    decision. The respondent thereupon amended its writ petition to
    challenge the withdrawal order above-said as ma/a fide and to pray
    for the quashing of the same. The writ petition was allowed by a Single
    Judge of the High Court and his decision was affirmed by a Division
G   Bench of the High Court. Aggrieved, the State Government appealed to
    this Court, against the decision of the High Court.

          Allowing the appeal, the Court,
                                                                                  ~
          HELD: The High Court erred in striking down the order under
H   section 48 of the Land Acquisition Act and compelling the State

                                       590
                            L.A. OFFICER v. GODREJ & BOYCE                      591

         Government to acquire the lands of the respondent. Under the scheme            A
         of the Act, neither the notificatiou under section 4 nor the declaration
         under section 6 nor the notice under section 9 is sufficient to divest the
         original owner of, or other person interested in, the land of his rights
         therein. Section 16 makes it clear beyond doubt that the title to the land
         vests in the Government only when possession is taken hy the Govern-
         ment, and till that point of time, the land continues to be with the           B
 -+-     original owner and he is also free (except where there is specific legisla-
         tion to the contrary) to deal with the land just as he likes. So long as the
         possession is not taken over, the mere fact of a notification issued under
         section 4 or a declaration made under section 6, does not divest the
         owner of his rights in the land to take care of it and confer on the State
         Government any right whatsoever to interfere with the ownership of the
......   land or safeguard the interests of the owner. Section 48 gives liberty to
         the State Government to withdraw from the acquisition at any stage
                                                                                        C

         before the possession of the land is taken by it. By such withdrawal, no
         irreparable prejudice is caused to the owner of the land, and, if at all
         the owner has suffered any damage in consequence of the acquisition
         proceedings or incurred costs in relation thereto, he will be compensa-        D
         ted therefor under s. 48(2). As held in Trustees of Bai Smarth Jain
         Shvetamber Murtipujak Ganodhaya Trust and Ors. v. State of Gujarat
         and another, AIR 1981 Gujarat 107, the State can be permitted to
         exercise its power of withdrawal nnilaterally. Having regard to the
         scheme of the Act, it is difficult to see why the State Government should
         at all be compelled to give any cogent reasons for its decision not to go      E
          ahead with the acquisition of any land, as was the view of the High


-         Court. It is well settled in the field of specific performance of contracts
          that no person will be compelled to acquire any land, as a breach of a
          contract can always be compensated for by damages. That is also the
         principle of section 48(2) of the Act. [5940-H; 595A-D]
                                                                                   F
               Even assuming that a withdrawal order under section 48 should
         be backed by reasons and should be bonafide, in the present case,
         the order is not vitiated in any manner. The Government had intended
         to acquire vacant land for the construction of houses, but his land had
         been over-run by slum dwellers to such an extent that it was not possible
         for the Government to effectuate the intended purpose of acquisition. G
         The Government cannot be compelled to go ahead with the acquisition.
         Where ,slum dwellers on a large scale occupy pieces of land, social and
         human problems of such a magnitude arise, that it is virtually impo-
         ssible for municipalities, and no mean task for the Government, to get
         the lands vacated, and in view of these genuine difficulties if the
         Government is reluctant to go ahead with the acquisition, it can hardly H
    592                   SUPREME COURT REPORTS            [1988) 1 S.C.R.

A be blamed. The Court sees no justification to direct the Government to     "iJ.
  embark upon such a venture to acquire the land. Section 24 of the acts
  lays down the rule that the State will, generally speaking, pay for the
  land only in the condition in which it was on the date of issue -0f the
  notification under sec. 4, and that subsequent changes on the land will
  not be taken into account in the determination of the compensation.
B The fact that the Government exercised the power of withdrawal after
  the writ petition was tiled, does not spell ma/a fides, once, the           -+·
  existence of circumstances, which justified the decision of the
  Government to withdraw, is acknowledged. Far from a decision to
  withdraw in such a case being considered ma/a fide, the Government                 ~
  would have been acting ma/a fide if, despite the clear knowledge that              l,
C the land could not be used for its purpose, it had decided to go ahead
  with the acquisition. The State Government has definitely acted in the     -~ ·-
  best interests of the public and public revenues and its decision could
  not be faulted. [5950-F, H; 596B; F-H]

       Appeal allowed, Orders impugned of the High Court set aside.
D Rules issued by the High Court discharged. [597G]

        M/s. Majas Land Development Corpn. and another v. State of
    Maharashtra and others, AIR 1983 Bombay 188, referred to.

        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2622                   1-
E of 1987.

         From the Judgment and Order dated 6.8.1985 of the Bombay
    High Court in Appeal No. 139 of 1984.                                            -

          V.S. Desai and A.S. Bhasme for the Appellants.
F
         G.L. Sanghi, D. Chandrachud and Ms. Rainu Walia for the
    Respondents.

          The Judgment of the Court was delivered by

G       RANGANATHAN, J. The question raised in this appeal is a
  somewhat unusual one. The State Government wants to withdraw
  proceedings for acquisition of lands initiated by it under the Land
  Acquisition Act (hereinafter referred to as 'the Act') by exercising its    ;Ii·
  power under section 48 but the owner of the land is insisting that the
  Government should be directed to go ahead with the acquisition, take-
H over the lands and pay him compensation. The reasons for this some-
                    L.A. OFFICER v. GODREJ & BOYCE [RANGANATHAN, J.]          593

             what unusual request will become apparent a little later.
     *'            By a notification dated 6th November, 1961, issued under
                                                                                    A

             section 4 of the Act, certain lands belonging to the respondent com-
             pany were notified for acquisition in order to accommodate housing
             schemes of the Maharashtra Housing Board. This was followed up, on
             18th November, 1965, by a declaration under section 6 of the Act and, B
             on 15th January, 1966, by notices calling upon the respondent to put
     ~       forward its claims of compensation in respect of the land sought to be
             acquired. Thereafter, however, no further proceedings were taken. In
-<           the meantime it appears that the lands were encroached upon by a
I            large number of trespassers who put up slums thereon. The respondent
        ,    repeatedly requested the State Government to take steps to remove
             the encroachments and to expedite the making of the award and pay- c
     ·'-     men! of compensation but these requests went unheeded. The respon-
             dent thereupon filed Miscellaneous Petition No. 1803/78 in the High
             Court of Bombay praying, inter alia, for a Writ of Mandamus directing
             the State Government to make the award under section 11 of the Act
             and to take possession of the lands after payment of due compensation D
             to the respondent.

                   On 25th March, 1981, the State Government passed orders with-
             drawing the lands of the respondent from acquisition under section 48
             of the Act. The respondent was informed of this decision on the 20th
     ·-+     of October, 1981 and an affidavit to this effect was also filed in the E
~            High Court in reply to the Writ Petition. Thereupon the respondent


-            company amended its Writ Petition, challenged the withdrawal order
             as malafide and included a prayer for quashing the decision of the
             State Government to withdraw its lands from the acquisition. This
             Writ Petition was allowed by a learned Single Judge of the High Court
             on 9.11.83 and his decision was affirmed by a Division Bench on 6th F
    -4-      August, 1985. The State Government has preferred this appeal.

                    The contention of the respondent before the High Court was that
             the State Government had acted mala fide in invoking the power of
             withdrawal permittf,'d by section 48 in the facts and circumstances of
             the present case. It was contended that the purpose for which the lands G
             had been sought to be acquired continued to subsist and that, all
             along, in the correspondence between the parties the State Govern-
     Jlol"   ment had given no indication that the lands were no longer needed by
             it for that purpose. It was urged that the order under section 48 had
             been passed, after the respondent company filed a writ petition, solely
             with a view to defeat the relief claimed by the Company in the writ H
   594                   SUPREME COURT REPORTS            [1988] 1 S.C.R.

A petition and render the same infructuous. It was submitted that the
  respondent had not been able to take steps to remove the encroach-
  ments because of the pendency ofthe proceedings for acquisition inas-
  much as under section 24 of the Act any expenditure incurred by the
  company in this regard could not be taken into account in determining
  the compensation due to the respondent. It was pointed out that while
B the company was helpless in defending itself against the encroach-
  ments, the State had ample powers, while taking possession of the
  land, to remove the trespassers and enforce the surrender of the lands
  to the Government both under the Land Acquisition Act and the
  Maharashtra Land Revenue Code. It was urged that the long delay of           .,.
                                                                               \
  about 20 years in taking the step of withdrawal showed ma/a fides on
  the part of the Government. A grievance was also made that no show
C cause notice had been given to the respondent company before the
  withdrawal order was passed. These contentions (except the last one
  which was left open) were accepted by the High Court.

        We are of opinion that the High Court erred in striking down the
D order under s. 48 and compelling the State Government to acquire the
  lands of the respondent. Under the scheme of the Act, neither the
  notification under section 4 nor the declaration under section 6 nor the
  notice under section 9 is sufficient to divest the original owner of, or
  other person interested in, the land of his rights therein. Section 16
  makes it clear beyond doubt that the title to the land vests in the
E Government only when possession is taken by the Goverrunent. Till
  that point of time, the land continues to be with the original owner and
  he is also free (except where there is specific legislation to the con-
  trary) to deal with the land just as he likes, although it may be that on
  account of the pendency of proceedings for acquisition intending
  purchasers may be chary of coming near the land. So long as posses-
                                                                               -
F sion is not taken over, the mere fact of a notification under section 4 or
  declaration under section 6 having been made does not divest the
  owner of his rights in respect of the land or relieve him of the duty to
  take care of the land and protect it against encroachments. Again,
  such a notification does not either confer on the State Govt. any right
  to interfere with the ownership or other rights in the land or impose on
G it any duty to remove encroachments therefrom or in any other way
   safe-guard the interests of the original owner of the land. It is in view
  of this position, that the owner's interests remain unaffected until
   possession is taken, that section 48 gives a liberty to the State Govern-
   ment to withdraw from the acquisition at any stage before possession is
   taken. By such withdrawal no irreparable prejudice is caused to the
H owner of the land, and if at all he has suffered any damage in conse-
       L.A. OFFICER v. GODREJ & BOYCE [RANGANATHAN, J.]             595


quence of the acquisition proceedings or incurred costs in relation        A
thereto, he will be compensated therefor under s. 48(2). In this view of
the matter, it does not matter even if there is lapse of considerable
time between the original notification and the withdrawal under sec-
tion 48 as held in Trustees of Bai Smarth Jain Shvetambar Murtipujak
Gyanodhyaya Trust and others v. State of Gujarat and another., AIR
 1981 Gujarat 107. It also follows that the State can be permitted to      B
exercise its power of withdrawal unilaterally and no requirement that
the owner of the land should be given an opportunity of being heard
before doing so should be read into the provision.

       ~ High Court has taken the view that a decision of withdrawal
from acquisition must be backed by reasons and cannot be arbitrary or
whimsical. We may observe that having regard to the scheme of the C
Act as discussed above, it is difficult to see why the State Government
should at all be compelled to give any cogent reasons for a decision not
to go ahead with its proposal to acquire a piece of land. It is well
settled in the field of specific performance of contracts that no person
will be compelled to acquire a piece of land as any breach of a contract o
to purchase it can always be compensated for by damages. That is also
the principle of section 48(2). But this consideration apart, and even
assuming that a withdrawal order under section 48 should be backed
by reasons and should be bona fide, we are qi the opinion that in the
present case the order is not vitiated in any manner. The Government
 had intended to acquire a vast piece of vacant land for construction of E
 houses by the State Housing Board. But this land had been over-run
 by slum dwellers to such an extent that it was no longer possible for the
Government to effectuate the intended purpose of acquisition. The
High Court's observations that "the respondents have not stated in
 their affidavit that the lands in question are unsuitable for the purpose
in question': and that "the.purpose continues to exist" lose all meaning F
in the face of the finding recorded by the High Court itself at another
 place that "the lands of the petitioners today are fully occupied by
 unauthorised hutments which have come up on these lands, rendering
 the lands worthless." The basic question is really whether the Govern-
 ment can be held responsible for this state of affairs and can be com-
 pelled to go ahead with the acquisition though its purpose could not be G
 achieved. We have already pointed out that the State can-not be held
 responsible for the occupation of the land by trespassers. It is true that
 if the Government decides to go ahead with the acquisition and to take
 possession of the land, it has powers to evict trespassers and to, secure
 possession of the land but, for this reason alone, they cannot be com-
 pelled to go ahead with the acquisition. In the conditions presently H
    596                    SUPREME COURT REPORTS            [1988] 1 S.C.R.

A   prevailing in major metropolitan cities, such eviction, for the Govern-
    ment, poses more serious difficulties than to a private person like the
    respondent company and it is common experience that, far from
    removing such encroachments, Government and municipalities are
    constrained to "regularise" them and provide them with civic neces-
    sities, Enactments like the Slums Act and the Urban Land Ceiling and
B   Regulation Act have further complicated the situation. Where slum
    dwellers on a large scale occupy pieces of land, social and human
    problems of such magnitude arise that it is virtually impossible for
    municipalities, and no mean task even for th~ Government, to get the
    lands vacated. If the Government is reluctant to go ahead with the
    acquisition in view of these genuine difficulties, it can 1'rdly be
    blamed. We see no justification to direct the Government to acquire
C   the Jarid and embark on such a venture. We are also of the opinion that
    the fact that the Government exercised the power of withdrawal after
    the writ petition was filed does not spell mala fides, once the existence
    of circumstances, which, in our opinion, justified the Government's
    decision to withdraw, is acknowledged.
D

        The High Court, in this context, has referred to s. 24 of the Act
  and pointed out that the respondent company could not afford to take
  steps for the eviction of the slum dwellers as it might incur in this
  behalf will not be taken into account in determining the compensation
E payable to it under the Act. This is not strictly correct for under s. i4,
  it was open to the respondent company to have incurred such expendi-
  ture with the sanction of the Collector and claimed reimbursement but
  the respondent company did not seek the sanction of the Collector in
  this regard. That apart, this clause of s. 24 is only a provision laying
  down the rule that the State will, generally speaking, pay for the land
p only in the condition in which it was on the date of the s. 4 notification
  and that subsequent changes on the land will not be taken into account
  in the determination of the compensation. It cannot follow from this
  provision that the State should be compelled to take over the land
  because the owner of the land will need to take care of it at his own
  cost until it vests in the Government. Far from a decision to withdraw,
G in such cases as the present one, being considered to be ma/a fide, it
  could be perhaps said with greater truth that the Government would
  have been acting ma/a fide if, despite the clear knowledge that the land
  could not any longer be used for the purpose for which it had been
  acquired, it decided to go ahead with the acquisition. We are emphati-
  cally of the view that the State Government has acted in best interests
H of the public and of public revenues and its decision cannot be faulted.
               L.A. OFFICER v. GODREJ & BOYCE [RANGANATHAN, J.[            597

           Before w,e conclude we may point out that somewhat similar             A
 ..-questions came up for the decision of this Court in an appeal preferred
     by the State of Maharashtra, from an order of the Bombay High Court
     reported as Mis. Majas Land Development Corpn. & another v. State
     of Maharashtra and Others, AIR 1983 Bombay 188. The special leave
     petition preferred by the State against the order of the High Court to a
                                                                                  B
     like effect was set aside by this Court, vide its order of August 1983, in
  . Civil Appeal No. 6086 of 1983, by pointing out that it is open to the
 k State Government to release the lands from acquisition and that the
     Land Acquisition Officer cannot be compelled to make the award. It
     was, however, pointed out that the Government will be liable to pay
= compensation to the claimants under section 48(2) of the Land
     Acquisition Act. In the affidavit filed by the appellants before the         c
  j  High Court in the present case they have already called upon the
    ·respondent company to furnish details of claims, if any, regarding the
     compensation claimed under section 48. It is open to the respondent
     company to pursue this claim and the State Government will dispose
     of the same in accordance with law.
                                                                                  D
            We are therefore of the opinion that the order passed by the
      State Government under section 48 should be upheld and the release
      of the lands from acquisition sustained.

             Learned counsel for the respondent company contended that at
   -{- the time the land was initially acquired under section 4 there had been    E
       a proposal that the Government should grant in favour of the company
       some land contiguous to S. No. 40, Hissas Nos. 2 & 3, in exchange for
=      the land sought to be acquired and that the appellants should be
       directed to give or sell some land to the petitioner. We are unable to
       follow how any such proposal, even if made originally, could survive in
       view of the acquisition proceedings having been dropped. However,          F
 ......we express no opinion in this regard and leave it to the company, if so
       advised, to pursue the matter with the Government.

            For the reasons discussed above, the civil appeal is allowed and
      the orders of the High Court dated 9.11.1983 and 6.8.1985 are set
      aside. The Rule issued by the High Court stands discharged. However,        G
      in the circumstances of the case, we make no order as to costs.

   ::.. S.L.                                                  Appeal allowed.