SRINIVASA COOP. HOUSE BUILDING SOCIETY LTD.versusMADAM GURUMURTHY SASTRY AND ORS.

                                                                                   f


A         SRINIVASA COOP. HOUSE BUILDING SOCnlTY LTD.                                  i
                               v.
              MADAM GURUMURTHY SASTRY AND ORS.

                                   MAY 3, 1994

B            [K.RAMASWAMY AND N. VENKATACHALA, JJ.]

          Land Acquisition Act, 1894 (prior to 1984 Amendment}-Ss.J(e) and
   (f), Chs. II and VII-Public purpose and private purposr-Acquisition of land
  for registered housing society for constrnction of houses for its member:r-
C Government making token contribution towards compensation, and procedure
  under Ch.II followe<f-Whether acquisition for public purposr-Whether pro-
  cedure under Ch.VII should have been followed-Held, a company (coopera-
  tive society) may compulsorily acquired land only in strict compliance with
   Ch. VII which applies to companies, and not Ch.II which deals with acquisi-
D tion for public purposr-Such acquisition can be effected only where the land
  is required for purpose mentioned in S.41>-Govemment cannot waive
  provisions of Ch. VIl-A.P. Cooperative Societies Act-Constitution of India,
  Articles 14, 31A Proviso and Article 31 (prior to Constitution (44th Amend-
   ment) Act, 1978)

E          Land Acquisition Act, 1894 (prior to 1984 Amendment)--Or.. VJ/-
    Land Acquisition (A.P. Amendment} Act-Held, private cooperative housing
    society not company entitled to invoke provisions of Ch. VII.

          Land Acquisition Act. 1894 :

F          Public Purposr-Judicial Review of-Held, generally executive would be
    best judge of what constitutes public purposr-Yet it is not beyond judicial
    scrntiny-rlcquisition for anything that is not public purpose cannot be done
    compulsorily.

G         Public Purpos~eaning of-Held, acquisition for public purpose
    must be for welfare of the people and not to benefit a private individual or
    group of individuals joined collectively.

        Land Acquisition Act, 1894 (prior to 1984 Amendment}-Ss.5A, 6,40,
  41, 44A, 44B--Colourable exercise of power-What is-Held, act done by
H State under the colour or authority of law must be for a public purpose
                                         848
    SRINIVASBUILDINGSOCIETYLTD. v. MADAMGURUMURTY 849

envisaged in the Act--Govemnzent appealing not to have co1!sidered reporl      A
under S.5A, and contlibuted from public exchequer in the teeth of Ch. VII,
held, declaration of acquisition under S.6 is colourable exercise of power.

       The appellant is a society registered under the A.P. Cooperative
Societies Act, to develop land and allot plots thereof to its members for
construction of houses. On February 8, 1979, a notification under S.4(1)       B
of tl1e Land Acquisition Act, 1894 was published in the gazette, acquiring
71 acres 56 cents. An enquiry report under S.5 A was submitted to the
goverument. The appellant entered into· an agreement with the govern·
ment in December 1981 to be treated as a company. But in February, 1982
the goverument contributed Rs. 100 for each acquisition and published S.6      c
declarations of completion of acquisition of 54 acres 66 cents and 16 acres
19 cents.

        In the litigation that ensued, a single judge dismissed one writ
petition and allowed other writ petitions in December, 1985 on the ground
that the procedure in Ch.VII, which applies to acquisitions of land by         D
companies, had not been followed. On appeal, the Division Bench quashed
the S.4 (1) and S,6 notifications on three grounds : that the respondents
are small fa;·mers; that the members of the appellant society could afford
to construct houses by themselves, and that acquiring the lands of poor
small farmers for the benefit of the rich is arbitrary, and the contribution   E
of Rs, 200 was colourable exercise of power to avoid the mandatory
requirement in Ch.VII of the Act,

      Before this Court, the questions were wt.ether the acquisition was
for a public purpose as envisaged in the Land Acquisition Act, 1894;
whether the procedure for acquisition should have been under Ch.VII and        F
not Ch.II; and whether the acquisition was a colourable exercise of power.
The appeal was confined to 40 acres of land since other owners had not
challenged the acquisition.

      Dismissing the appeal, this Court
                                                                               G
      HELD : 1. Acquisition for anything which is not a public purpose
cannot be done compulsorily. On a reading of the provisions of Chapters
II and VII of the Act, the acquisition for a private cooperative house
building society to construct houses for its members must be a private
purpose. (854-B-C]                                                      H
                                                                                    f
    850                   SUPREME COURT REPORTS                   [1994] 3 S.C.R.

A         2.1. Public purpose is not capable of precise definition. Each easer.
    has to be considered in the light of the purpose for which acquisition is
    sought. Public purpose broadly speaking would include the purpose in
    which the general interest of the society as opposed to the particular
    interest of the individual is directly and vitally concerned. The interest of
    a section of the society may be public purpose when it is benefited by the
B   acquisition. Acquisition for anything which is not for a pnblic purpose
    cannot be done compulsorily. [853-E-G]

          2.2. The Land Acquisition Act recognises a dichotomy : acquisition
    for a public purpose in Ch.II, and for a private purpose in Ch.VII. The
C   Act nowhere says that when land is required for a company, it is for a
    public purpose. Where the company (cooperative society) requires the land
    for any purpose other than that mentioned in S.40 no compulsory acquisi-
    tion under the Act is possible. The A.P. State Amendment Act specifies the
    purposes for which compulsory acquisition may be invoked. By necessary
D   implication, the acquisition for a private cooperative housing building
    society to construct hoses for its members - which is not in the provision
    - must be a private purpose. [853-H, 854-A-C]

           3.1 Even when Chapter VII is invoked for acquisition of land by a
    company, the requirements of s.40 and s.41 are mandatory and shall be
E   strictly complied with. [856-B]

          3.2 It is not open to the government to waive any of the provisions
    in Chapter VII. The provisions contained therein have mandatory opera-
    tion. The dominant purpose of public utility pervades the provisions in
    Chapter VII of the Act. The private cooperative housing society registered
F   under the A.P. Cooperative Societies Act is not a company under S.3{<) of
    the Act entitling to invoke the provisions in Chapter VII. [856-E, G, 857-A]

          4. A token contribution from public revenue, under all circumstances
    carinot be considered to be colourable exercise of power. Each case must
G   furnish its backdrop whether the acquisition is for a public purpose or for
    a private purpose. The facts and circumstances must carefully be
    scrutinised to reach a finding. [860-D-E]

          Smt. Somavanti v. State of Punjab, (1963] 2 SCR 774, referred to

H         5. When an act is done by the State under colour of authority of law
             SRINNAS BUILDING SOCIETY LTD. v. MADAM GURUMURTY 851

         it must be for the lawful purpose envisaged under the Act. If the purpose,      A
     \
         namely public purpose envisaged under the Act is not served, then the
         exercise of the power of the declaration under section 6 must be held to be
         colourable exercise of the power, though not with evil motive. [861-C]

               Virnpaxappa Veerappa Kadampur v. State of Mysore, AIR (1963) SC
-.       849, relied upon.                                                               B
'
               Stroud's Judicial Dictionary, 5th edition Vol. I p.460 and Black's Law
         Dictionury, 6th Edition p.266, referred to

              The appellant is a private society and its object is not any of the
         purposes nuder s.40(1) (a) of the Act. Its members to whom the lands are        C
         to be transferred are advocates, chartered accountants, businessmen al-
         leged to be in posses:-1ion of more than one house. The government does
         not appear to have considered this when it considered the report under s.5
         A, and while contributing Rs. 200 from the public exchequer in the teeth
         of Ss. 40, 41, 44A and 44B of the Act. Thus it must be held that the D
         acquisition and declaration published under s.6 is a colourable exercise of
         power. [861·D·E]

              6. The contribution of Rs. 100 for each declaration from the public
         exchequer would not by itself make the private purpose into a 'public
         purpose' under s.2(0 of the Act where there is a colourable exercise of         E
         power. [857-B]

               Smt. Somavanti v. State of Punjab, [1963] 2 SCR 774; lnderjit C.
         Prakash v. State of Gujarat, [1975] 1 SCC 824; Bai Malibabu v. State of
         Gujarat, [1978] 2 SCC 373; Land Acquisition Collector v. Durga Pada Muk-
         herjee, [1981] l SCR 573; Manubhai Jehtalal Patel v. State of Gujarat, [1983]
                                                                                         F
         4 SCC 553 andlhandulal v. State of Punjab, AIR (1961) SC 343, referred to.

              7. Generally the executive would be the best judge to determine
         whether or not the impugned purpose is a public purpose. Yet it is not
         beyond the purview of judicial scrutiny. [853-F]                       G

              CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2339 to
         2346 of 1989.

              From the Judgment and Order dated 6.12.86 of the Andhra Pradesh
         High Court in W.A. Nos. 316, 561-64, 575, 576 and 577 of 1986.       H
                                                                                   f
    852                    SUPREME COURT REPORTS                  11994] 3 S.CR.

A           C. Sitaramiah and B.Parthasarthi for the Appellant.

            R.N. Keshwani and G. Prabhakar for the Respondents.

            The Judgment of the Court was delivered by

B         K. RAMASWAMY, J. Admittedly the appellant was registered under
    the Andhra Pradesh Coop. Societies Act. Its object appears to be to                    r
    develop the land and allot plots thereof to its members for construction of
    houses. Notification under s.4(1) of the Land Acquisition Act 1of1894 for
    short 'the Act' was published in the State Gazette on February 8, 1979,
    acquiring an extent of 71 acres 56 cents of land situated in Moolasagararn
c near Nandyal in Kurnool Dist. for the aforesaid purpose. A report under
    s.5A, of the enquiry, was submitted to the Govt. The appellant entered into
    an agreement under s.41 of the Act dated December 12, 1981 with the
    Govt. treating the appellant as a company and it was published in the
    gazette dated February 4, 1982. But it was given up. The state thereafter
D   contributed Rs. 100 for each acquisition and got declarations under s.6,
    published in the State Gazette on February 4, 1982 to an extent of 54 acres
    66 cents and on January 19, 1984 for another extent of 16 acres 19 cents.
    It is not necessary to mention Jhe previous history of the litigation but
    suffice to state that a single Judge dismissed one writ petition and allowed
    other writ petitions on December 9, 1985 on the ground that the procedure
E   prescribed in part VII of the Act had not been followed holding when the
    acquisition was for public purpose. On appeals the Division Bench in Writ
    Appeal No. 316 of 1986 etc. by judgment dated December 6, 1986, quashed
    the notification under s.4(1) and the declarations under s.6, primarily on
    two grounds, namely, (1) that the respondents are small farmers; (2) the
F   appellant society consists of members who could afford to construct houses         •
    by themselves, (3) acquiring the lands of the poor small farmers for the
    benefit of the rich is arbitrary and the contribution of Rs. 100 each by the
    government is a colourable exercise of the power to avoid the mandatory
    requirements in Chapter VII of the Act. In these appeals we are concerned
G   with 40 acres of land, since other owners have not challenged the acquisi-
    tion.

         Sri Sitararnaiah the learned Senior counsel for the appellant con-
    tended that once the government contributed Rs. 200 from the public
    exchequer, the public purpose envisaged under s.3(f) of the Act is satisfied
H   and the requirements envisaged in Chapter VII need not be followed.
    , SR!NIVASA BUILDING SOCIETY LTD. ~. MADAM GURUMURTY {K. RAMASWAMY. J.]     853

     Alternatively it was contended that once the acquisition was found to be          A
     for providing house sites to the members of the Co-op. Society, it was a
     public purpose and that, therefore, mandatory requirement of Chapter VII
     was not required to be followed. In either event, it was contended that the
     High Court was wrong in quashing the notification and the declaration on
     the ground that the acquisition of the small farmers inferentially offends
     Art. 14 and proviso to Art. 3JA of the Constitution is unwarranted.
                                                                                       B

           Section 2( e) of the Act defined Company under pre 1984 Amend-
     ment Act as meaning a Company registered under the Indian Companies
     Act, 1882... and included a society registered under the Societies Registra-
     tion Act, 1860, and a registered society within the meaning of the Co-            C
     operative Societies Act, 1912, or any other law relating to coop. societies
     for the time being in force in any State. Section 2(1) defined the expression
     public purpose to include the provision of village-sites in districts in which
     the appropriate government shall have declared by notification in the
     Official Gazette that it is customary for the government t~ make such
     provision. Chapter VII deals with the acquisition of land for companies D
     Art. 31 of the Constitution (preceding 44th Constitution Amendment Act,
     1978) prohibits compulsory acquisition of the property for anything except
     for a public purpose. Public purpose is not capable of precise definition.
     Each case has to be considered in the light of the purpose for which
     acquisition is sought for. It is to serve the general inter~st of the community   E
    as opposed to the particular interest of the individual. Public purpose
    broadly speaking would include the purpose in which the general interest
    of the society as opposed to the particular interest of the individual is
    directly and vitally concerned. Generally the executive would be the best
    Judge to determine whether or not the impugned purpose is a public
    purpose. Yet it is not beyond the purview of judicial scrutiny. The interest       F
J
    of a section of the society may be public purpose when it is benefited by
    the acquisition. The acquisition in question must indicate that it was
    towards the welfare of the people and not to benefit a private individual
    or group of individuals joined collectiveiy. Therefore, acquisition for any-
    thing which is not for a public purpose cannot be done compulsorily.
    Admittedly, there is no group housing scheme approved by the State G
    Government. On the other hand, housing schemes are being executed by
    . the A.P. Housing Board under the Act. We are not concerned with the
      public purpose as amended under the 1984 Act.

          The Act recognises dicatomy, namely, acquisition for a public pur-           H
    854                   SUPREME COURT REPORTS                   (1994] 3 S.C.R.

A   pose in Chapter II and acquisition for a private purpose of a type restricted
    in Chapter VII. There ia no provision in the Act to say that when a land
    is required for a company, it may also be for a public purpose. Therefore,
    if a company, namely a co-operative society registered under the Central
    or State Coop Societies Act, preceding 1984 Amendment Act, it had to
    acquire the land in strict compliance with Chapter VII. If the company,
B   (Coop Society) requires land for any purpose other than those mentioned
    in s. 40, then no compulsory acquisition under the Act is possible. Part VII
    no where authorises the government to apply the provision of that part to
    private acquisition. A.P. State Amendment Act expressly included acquisi-
    tion for providing house sites for the poor; for the execution of any housing
c   scheme under A.P. Housing Boards Act; godowns for a coop. society as
    for public and urgent purposes. By necessary implication the acquisition
    for a Private Coop. House Building Society to construct houses for its
    members must be a private purpose.

          Section 39 (preceding 1984 Amendment Act) provides that the
D   provisions of Ss.6 to 37 both inclusive shall not be put into force in order
    to acquire land for any company unless with the previous consent of the
    appropriate government or unless the company shall have executed the
    agreement thereinafter mentioned. Section 40 enjoins that s1,1.ch consent
    shall not be given unless the appropriate government be satisfied, either
E   on the report of the Collector under sub-s.(2) of s.5-A or by an enquiry
    held as hereinafter provided :

          (a) . that the purpose of the acquisition is to obtain land for the
    erection of dwelling-house for workmen employed by the company or for
    the provision of amenities directly connected, therewith or ;
F
          (aa) that such acquisition is for the construction of some building or
    work for a company which is engaged or is taking steps for engaging itself
    in any industry or work which is for a public purpose; or

G         (b) that such acquisition is for the construction of some work and
    that such work is likely to prove useful to the public.                         f,

          Under s.41, if the appropriate government is satisfied, after consider-
    ing the report, if any, of the Collector under sub-s. (2) of s.5-A, or on the
    report of the officer making an inquiry under s.40 that the proposed
H   acquisition is for any of the purposes referred to in clauses (a) or (aa) or
        SRlNIVASA H!Jll.DING SO''IETY LTD. r. MA['IAM C1URUMURTY [K. RAMASWAMY, J.J   855

\
        (b) of sub-s.{1) ot s.40, it shall require the company to enter into an             A
        agrei;n1ent \Vith the appropriate goverr.mcnti providing to the satisfaction
        of the appropriate go\'crnrnent for the following matters, namely :

              (1) the payment to the appropri,tc government of the cost of the
        acquisition;
                                                                                            B
              {2) the transfer, on such payment, of the land to the company;

              (3) the terms on which the land shall be held by the company;
    '
              (4) where the acquisition is for the purpose of erecting dwelling
        house Oi the provision of amenities connected therewith, the time wit~in            c
        which, the condition en which and the manner in which the dwelling houses
        or amenities shail be erected or provided;

              (4-A) where the acquisition is for :he construction of any building or
        \Vork for a cGmpany \vhich is engaged or is taking steps for engaging itself
                                                                                     i)
        in any industry or work which is for public purpose, the time within which,
        and the condition on which, the building or work shall be constructed or
        executed; and

              (5) where the acquisition is for the construction of any other work,
        the tirne within which and the conditions on which, the company shall be            E
        entitled to use the work.

              Under s. 42, every such agreement shall as soon as n1ay be after
        execution, be published in the Official Gazette and shall thereupon, so far
        as regards the terms on which the pt.blic shall be entitled to use the work,
        have the same effect as if it had formed part of. the Act. Explanation              F
        engrafted in s.43 is not material for the purpose of the case. Section 44-A
        provides that no company for which any land is acquired under this part
        shall be entitled to transfer the said land. or any part thereof bv sale,
        n1ortgage, gift, lc:ise or uthLr\vise except with the previous sanction of the
        appropriate government. Section 44-B enjoins that, notwithstanding any-
                                                                                            G
        thing contained in this Act, no land shall be· acquired under this part except
        for the purpose mentioned in clause (a) of sub-s.(1) of section 40, for a
        "private company'' wh~ch is not a government company.

y             Explanation - 'Private CompJny' and 'Goverhment Company' shall
        have the meanings respectively assigned to them in the Companies Act,               H
    856                   SUPREME COURT REPORTS                   (1994[ 3 S.C.R.

A   1956. A plain reading of the fascicule of these provisions clearly indicates     I
    the distinction, statute has envisaged, namely, acquisition for a public
    purpose and acquisition for a private purpose. Even the acquisition for a
    company, unless utilisation of the land so acquired is integrally connected
    with public use, resort to the compubory acquisition under Chapter VII
    cannot be had. Even when Chapter VII was invoked, the requirements of
B   s.40 and s.41 are mandatory and shall be strictly complied with. It is dearly
    discernible from scheme of the acquisition in Chapter Vll that the land
    can be acquired for the erection of dwelling houses for workmen employed
    by the company or for the provisions of amenities directly connected
    therewith or needed for the construction of some building or work for a
c   company which is engaged or is taking steps for engaging itself in any
    industry or work which is for a public purpose or is needed for the
    construction of some work which is likely to prove useful to the public.
    Notwithstanding anything contained in the Act, i.e. despite the compliance
    of Chapter VII, no land should be acquired under Chapter VII except for
D   the purpose mentioned in clause (a) of sub-s.(1) of section 40, for a private
    company which is not a government company and that such company shall
                                                                                     ·'
    not be entitled after the acquisition under Chapter VII to transfer the said
    iand or any part thereof by sale mortgage, gift, lease or other\vise except,
    with the previous sanction of the appropriate government. The object,
    therefore, appears to be that the land acquired under Chapter VII shall
E   always remain to serve the public purpose, beneficial to the public. It is not
    open to the government to waive any of the provisions in Part VII. The
    provisions contained therein have mandatory operation. The object of
    ss.44-A and 44-B appears to be that they intend to safeguard public
    interest. The company acquiring the land for a public purpose in Chapter
F   VII may, after the acquisition has become final, divert the land for private
    profit motive, defeating the purported public purpose for which the ac·
    quisition was made. The government company obviously does not alienate
    such property for private gain since the profits merges into public fund.
    While the private con1pany could get acquisition but thereafter become                '
    free to dispose of the property. Therefore, the acquisition for a private
G   company get limited only for purposes envisaged under s.40(1)(a) and
    thereby the public purposes envisaged therein gel safeguarded and
    protected. The dominant purpose of public utility pervades the provisions
    in Chapter VII of the Act.

H         A private company as defined under the Companies Act, 1956, the
    SRJNIVASA BUILDING SOCIETY LTD.~. MADAM GURU MURTY [K. RAMASWAMY. J.J   857
\
    private Coop. House Building Society does not become a private company         A
    under s.44-A of the Act and s.44-B prohibi:s transfer by way of sale etc. of
    the land so acquired under Part VII. Therefore, the Private Coop. Housing
    Society registered under the A.P. Coop. Societies Act is not a company
    under s.3( d) of the Act entitling to invoke the provisions in Chapter VII.

          The question, therefore, is whether the contribution of Rs. 100 for
                                                                                   B
    each declaration from the public exchequer would make the private pur-
    pose "a public purpose" under s.2(1) of the Act.

          Jn Smt. Somavanti & Ors. v. The State of Punjab & Ors., [1963] 2 SCR.
    774, the facts were that the Government of Punjab issued a Notification        c
    under s.4(1) acquiring the petitioners lad for a private company to set up
    a factory to manufacture various ranges of refrigeration compressors and
    ancillary equipment. An inquiry under s.5-A was dispensed with and a
    declaration under s.6 was published. The Government contributed Rs. 100
    from public exchequer. When it was questioned by a petitioner under Art. D
    32, this Court at p.805 and p.818 held that it is for the State Govt. to decide
    about a public purpose. Jf the pnrPose is within the legislative competence,
    the declaration of the government in that behalf will be final, however,
    subject to one exception, being that if there is a colourable exercise of
    power, the declaration will be open to challenge at the instance of the
    aggrieved party. It was contended that when the government contributed a       E
    token money and when the entire compensation of the land was to be met
    by a company, declaration under s.6 would be a colourable exercise of the
    power and thereby the acquisition was ma/a fide and invalid. In that
    context, this Court considered the question and laid at pp.817-18 that "We
    would, however, guard ourselves against being understood to say that a         F
    token contribution by the State towards the cost of acquisition will be
    sufficient compliance \vith the law. In each and every case whether such
    contribution satisfies the requirement of law would depend upon the facts
    of a particular case. Indeed the fact that the State's contribution is nominal
    may well indicate, in particular circumstances that the action of the State G
    was a colourable exercise of power. In our opinion, part does not neces-
    sarily mean a substantial part, and that it would 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 law". In that case it was
    found that the company was to manufacture refrigeration equipment and
    its accessories which would save c;ubstani:iaJ part of foreign exchange and    H
    858                   SUPREMF COURT REPORTS                   [1994] 3 S.C.R.

A   construction of the qu<trtcrs for \VOrkn1cn \vould also be a public purpose.    I
    Accordingly it \Va~ held that though the company was a private company,
    acquisition \Vas not a culourabh: d~,·icc lo avoid the rigour of part VII. In
    that behalf it was amplified that if "the Gm1. could acquire land for such
    a purpose (private) only after complying with the provisions of Part VII
    and that the use of the provisions of s.6(1) is merely a colourable device
B
    to enable respondent No. 6 to do something, which, under termc. of s.6(1}
    could not be done.'' In view of the finding that the manufacturing of the
    articles was for the benefit of the community and to save substantial part
    of foreign exchange and staff quarters to workmen it was held that acquisi-
    tion was for public purpose. Acquisition without resort lo Part VII did not
c constitute a fraud on state's po\ver to acquire land and was not colourable
    exercise of such powers. In Inde1jit C. Prakash v. State of Gujarat & Ors.,
    I1975] 1 sec 824, nine proposals       were sent by E.S.I. Corporation, a
    Company incorporated under the Indian Companies Act to acquire certain
    plots of land in Driyapur- Kazipur area of the city of Ahmcdabad bearing
D   certain numbers to establish a dispensary for Employees' State Insurance
    Scheme al Ahmedabad. The government contributed one rupee to each of
    the proposals and passed resolution to acquire the private plots of land for
    the above purpose. After receipt of the report under s. 5-A declaration
    under s.6 was published. When they were challenged, the High Court
E   dismissed the writ petition. On appeal, this Court held that the public
    purpose of the E.S.I. Scheme was not disputed. The only question was
    whether publication of declaration under s.6 is a colourable exercise of the
    power by the State Govt. In the light of those facts it was held that the
    exercise of the power under s.6 could not be held to be colourable exercise
    of the power. In Bai Malipabu v. State of Gujarat, [1978] 2 SCC 373 for the
    const.ruction of staff quarters for employees and of the dispensary etc. of
    E.S.I., after s.4(1} notification followed by an inquiry under s.5A and a
    declaration under s.6 of the Act were published, the Govt. contributing
    Rc.1 towards the cost of acquisition. This Court negatived the contention
    that contribution of Re.1 from the public exchequer for the purpose of
G   acquisition of the land for the use of E.S.I. Corporation was a colourable
    exercise of the power. In Land Acquisition Collector & Anr. v. Durga Pada
    Muklwjee & 01>. (1981] l SCR 573, the Govt. published a notification
    under s.4(1) of the Act that the lands specified therein was needed for a
    public purpose, namely, expansion of factory of the company at the expense
H of the company. When it is objected to another notification was issued that
SRINIVASA BUILDING SOCIEITL"ID. v. MADAM GURUMURTY [K. RAMASWAMY,J.]   859

the land was needed for industrial development at public expense con-         A
tributing token money. It was contended that it \Vas for the private
purpose, namely, for the benefit of the con1pany. A single judge disn1issed
the writ petition but the division bench allowed the appeal holding that
there was oo evidence produced that the land was needed for public
purpose and not for the benefit of the company. On appeal this Court
                                                                              B
allowed and held that the public purpose was for the industrial develop-
ment which was a public purpose and declaration under s.6 was conclusive.
The person impugning on the ground of mala fide or colourable exercise
of the power must prove affirmatively. Even in the absence of production
of documentary evidence by the State, the onus does not shift the burden
that it is a mala fide or colourable exercise of power on the part of the     C
State.

       In Manubhai Jahta/a/ Patel & Anr. v. State of Gujarat & 01'., [1983]
4 SCC 553, the notification issued under s.4(1) and published in the State
Gazette followed by an enquiry under s.5-A and declaration under s.6 for D
acquiring the land for the State Road Transport Corporation with a
contribution from the Gujarat State Revenue was impugned as being ultra
vires of the power. This Court held that the contribution of Re.1 from the
State Revenue was adequate to hold that the acquisition was for public
purpose with the Stale fund and it was not illusory so as to invalidate the
acquisition. Infhandula/ v. State of Punjab, AIR (1961) SC 3434, this Court E
held that where acquisition is made for a public purpose, the cost of
acquisition for payment of compensation has to be paid wholly or partly
out of Public Revenues, or some fund controlled or managed by a local
authority. On the other hand, in the case of an acquisition for a Company,
the compensation has to be paid by the Company. In such ;; case there can
be an agreement under s.41 for transfer of the land acquired by the F
Government to the Company on payment of the cost of acquisition, as also
other matters. The agreement contemplated by s.41 is to be entered into
between the Company and the appropriate government only after the latter
is satisfied about the purpose of the proposed acquisition, and subject to
the condition precedent that the previous consent of the appropriate G
government has been given to the acquisition. Section 6 is in terms, made
subject to the provisions of Part VII of the Act. The declaration for
acquisition for a Company shall not be made unless the compensation to
be awarded for the property is to be paid by a Company. In the case of an
acquisition for a Company simpliciter, the declaration cannot be made
without satisfying the requirements of Part VIL But that does not neces-      H
    H60                    SUPREME COURT REPORTS                    [1994] 3 S.C.R.

A   sarily mean that an acq·uisition for a Company for a public purpose cannot
    he made otherwise than under the provisions of Part VII, if the cost or a
    portion of the cost of the acquisition is to come out of r·ublic funds. In         '
    other \VOrds, the essential condition for acquisition is for a public purpose
    and that the cost of acquisition should be borne, \Vholly or in part, out of
    public funds. Hence an ac.qui!-lition for a Company may also be made for
B   a public purpose, within the meaning of the Act, if a part or the whole of
    the cost of acquisition is met by public funds. If, on the other hand, the
    acquisition, for a company is to be made at the cost entirely of the
    Company itself, such an acquisition comes under the provisions of Part VII.
    In that case the government have sponsored the Housing Scheme and
    substantial amount has been extended on the scheme out of the govern-
c ment Revenue in the form of subsidies and loan~.. The acq~isition was also
    for the construction of the quarters for the workmen under the government
    sponsoring Housing Scheme for industrial worker$. Under those cir-
    cumstances it was held that the acquisition for the company was for public
    purpose. We may make it clear at once that a token contribution from
D   public revenue, under all circumstances cannot be considered to be
    colourable exercise of power. Each case must furnish its back drop whether
    the acquisition is for public purpose or for a private purpose. The facts
    and circumstances must carefully be scrutinised to reach a finding.


           This Court in Vintpaxappa Veerappa Kadampur v. State of Mysore,
E
    AIR (1963) SC 849 construing S.161(1) of the Police Act and the words
    (under the colour of duty) interpreted to include acts done under the cloak
    of duty, even though not by virtue of the duty, when the police officer
    prepares a false Panchnama or a false report, he is clearly using the
    existence of his legal duty as a cloak for his corrupt action or as a veil of
F   his falsehood. The acts thus done in dereliction of his duty must be held
    to have been done under colour of the duty. In Stroud's Judicial Dictionary,
    5th Edn. Vol.1, p.460, "Colour of office" was defined as is always taken in
    the worst part, and signifies an act evil done by the countenance of an
    Office and it bears a dissembling face of the right of the office, whereas
G   the office is but a veil to the falsehood, and the thing is grounded upon
    Vice, and the office is as a shadow to it. In Black Law Dictio11a1y, 6th Edn.,
    p.266 "under colour of any law" of a State include not only acts done by
    State officials \vithin the bounds or limits of their lawful authority, but also
    acts done without and beyond the bounds of their lawful authority;
H   provided that, in order for unlawful acts of an official to be done under
    SRINJVASA BUILDING SOCIETY LTD.,.. MADAM GURUMURTY [K. RAMASWAMY.J.]        861

    colour of any Jaw, the unlawful acts must be done while such official is           A
    purporting or pretending to act in the performance of his official duties;
    that is to say, the unlawful acts must consist iiran abuse or misuse of power
    which is possessed by the official only because he is an official; and the
    unlawful acts must be of such a nature or character, and be committed
    under such circumstances, that they would not have occurred but for the            B
    fact that the person committing them was an official then and there
    exercising his official powers outside the bounds of lawful authority. It
    would thus be clear that when an Act is done by the State under colour of
    authority of law it must be for the lawful purpose envisaged under the Act.
    If the purpose, namely, public purpose envisaged under the Act is not
    served that the exercise of the power of the declaration under section 6
                                                                                       c
    must be held to be colourable exercise of the power, though not with evil
    motive. It is seen that the appellant is a private society and it is not for any
    of the purposes under s.40(1) (a) or under s.3(e) of the Act. It is for the
    transfer of the acquired land to the members of the society who are now
    as per the record placed in this court appears to be Advocates, Chartered          D
    Accountant Businessmen and alleged to be possessed of more than one
    house. The Government does not appear to have bestowed its thought to
    these aspects while considering the report under s.SA in this perspective
    before accepting the report and contributing a sum of Rs. 100 each from
    the public exchequer within the teeth of Ss. 40, 41, 44A and 44B of the Act.       E
    Thus it must be held that the acquisition and declaration published under
    s.6 is a colourable exercise of the power.

          The appeals are accordingly dismissed with cost quantified at Rs.
    10,000.

'   U.R.                                                       Appeals dismissed.