Somnath Iyer, J.
(1) At the instance of the Hubli Municipal Borough which has now become the Hubli-Dharwar Municipal Corporation, a preliminary notification was made by the Government of the new State of Mysore on March 14, 1960 under S. 4 of the Land Acquisition Act (Central Act I of 1894) stating that 21 lands in the village of Unkal in the District of Dharwar were likely to be acquired for a public purpose, namely, for a timber depot. A declaration under S. 6 that the lands were required for a public purpose was made on September 11, 1963.
(2) The three petitioners before us who are the owners of one of the lands proposed to be acquired bearing resurvey No. 37 measuring 3 acres and 8 guntas question these proceedings and ask us to quash the preliminary notification under S. 4 and the declaration under S. 6. The grounds on which this challenge is made are these:
(a) that the acquisition was not made for a public purpose;
(b) that the Hubli-Dharwar Municipal Corporation, which will be referred to as the Corporation, made no contribution out of a fund controlled or managed by it to the compensation payable to the owners and so the declaration under S. 6 was impermissible; and
(c) that the Corporation was a company within the meaning of the definition of that word in the Land Acquisition Act, and so, the acquisition should have been made in adherence to the provisions contained in part VII of the Act and that since admittedly it was not so made, the acquisition was illegal.
(3) Before considering the validity of these submissions, it should be mentioned that in the village of Unkal which was in the State of Bombay before its inclusion in the State of Mysore under the States Reorganisation Act, the relevant law operating until August 16, 1961 was the Central Land Acquisition Act as amended by the Legislature of the State of Bombay from time to time. On August 16, 1961 that Central Act which was amended by the Legislature of the State of Mysore by Mysore Act XVII of 1961, began to operate in the whole of the new State of Mysore, with the result that the law operating in the village of Unkal was no longer the Central Act as amended by the Legislature of the State of Bombay. The relevance of the amendment made of the Central Act by Mysore Act XVII of 1961 consists of the fact that S. 6(1) of the Central land Acquisition Act, which will be referred to as the principal Act, was amended by deletion of the proviso to that sub-sections which incorporated a prohibition that no declaration under S 6 could be made by the appropriate Government unless it was satisfied that the compensation to be awarded was to be paid by a company or wholly or partly out of the public revenues or some fund controlled or managed by a local authority.
(4) In consequence of the deletion of this proviso which incorporated this prohibition, it became no longer necessary under the principal Act as it stood amended by the principal Act as it stood amended by Mysore Act XVII of 1961 for the Government of the new State of Mysore to be satisfied in a case like the one before us, that towards any part of the compensation the local authority should make a contribution out of a fund controlled or managed by it.
(5) The other amendment of importance made by the new amending Mysore Act was that, for the definition of 'Public purpose' which was defined by Section 3(f), a more comprehensive definition was substituted.
(6) We should, in pronouncing upon the validity of the submissions made by Mr. Malimath on behalf of the petitioners, keep in mind the amendments made in this way and examine their relevance.
(7) The first two submissions, namely, that there was no public purpose involved in the acquisition and that there could be no declaration under S. 6 unless the Government was satisfied that the Corporation would make a contribution tot he compensation, rest upon the provisions of S. 6 as it stood before it was amended and which enjoined that a declaration under it could be made by the appropriate Government only when they were satisfied that the land was needed for a public purpose, or for a company. It is that section again which said that no such declaration shall be made even if the land was needed for a public purpose or for a company, unless the compensation to be awarded for such property was to be paid by a company or wholly or partly out of public revenues or some fund controlled or managed by a local authority. But we are not concerned in this case with any company.
(8) We shall first examine the submission concerning the purpose of the acquisition. Although the declaration made by the State Government in effect was that they were satisfied that the land was required for a public purpose, it was said for the petitioners that the purpose of the acquisition was to make available to certain individuals who were members of an associations known as the Forest Contractors and Timber Merchants Association Limited which was registered under the Companies Act. The association, which will be referred to as the association, is respondent 4 before us.
(9) It was urged that from the two affidavits produced by the petitioners what became unmistakably clear was that the purpose of the acquisition was to make available the acquired property to the individual members of that association, there being no public purpose impelling any acquisition.
(10) The Corporation has produced an affidavit in which it asserts that the acquisition was made for a public purpose. Respondent 4 has produced another in which also there is a similar assertion.
(11) It is seen from the affidavit produced on behalf of the Corporation of which the deponent is its Commissioner, that the Corporation was of the view that the impugned acquisition was necessary for the purpose of establishing a market yard for the sale of timber outside the limits of Hubli in order to relieve congestion, and for the removal of what is described as a dangerous trade outside the limits of Hubli town. It was stated on behalf of the Corporation that the elimination of risk which was likely to arise out of accidents which might be caused by fire and for ensuring public safety, the Corporation had embarked upon what is described as planned development, and so, had decided to shift the timber depots which were inside the limits of Hubli town to the acquired properties.
(12) That was also in effect what was stated by the association, and both the Corporation and the association repudiated the truth of the allegation that the purpose of the acquisition was to divest the petitioner of their ownership of the acquired property and to transfer such ownership through the process of acquisition to individual members of the association.
(13) Although in one part of the affidavit produced on behalf of the Corporation it was stated that the shifting of the timber depots to the lands under acquisition was an incidental matter and although an argument was constructed by Mr. Malimath in the context of that allegation in the affidavit, that the establishment of a new market yard outside the limits of the Hubli town was not the principal purpose of the acquisition, and that therefore we should say that there was no public purpose involved in the acquisition, we feel persuaded to take the view on the facts stated and explained in the affidavit produced on behalf of the Corporation, that what becomes perfectly manifest is that the Corporation decided upon the acquisition for the purpose of removing the timber trade from the place where it was carried on inside the limits of Hubli town to a better and safer place and thought that there should be a market yard established for that purpose on the acquired properties.
(14) Now, although there was no clear definition of the words 'public purpose' in the principal Act, and the definition which it contained was only an inclusive definition, the Amending Act introduced into the principal Act a very comprehensive definition which is contained in Section 3 (f) as it now stands amended Sub-clauses (ii) and (vii) of this clause read;
'3(f) the expression 'public purpose' includes--
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(ii) the provision of land for planned development from public funds and subsequent disposal thereof in whole or in part by lease, assignment or outright sale with the object of securing further development as planned:
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(vii) the provision of land for any local authority and subsequent disposal thereof in whole or in part by lease, assignment or outright sale with the object of securing further development.'
(15) It emerges from the affidavits produced by the Corporation and the association that the Corporation proposed to make a distribution of the property under acquisition after the completion of the acquisition proceedings to persons who are members of the association and who wished to carry on their trade in timber on the acquired property. What further emerges is that in the context of that proposed distribution a large sum of money has been deposited by persons requiring such allotment with the Corporation.
(16) In regard to the impact of that deposit on the argument that the declaration made under S. 6 transgresses the proviso to sub-section (1) of that section as it stood before the principal Act was amendment, it will not be necessary to say anything at this stage. We shall consider that argument in another context. At the moment it would be enough to state that what the affidavits reveal is that the proposed acquisition was undoubtedly for the establishment of a market yard in which persons carrying on timber trade would be able to carry on their business in a more convenient and orderly way. What is also clear is that the existing arrangements now available for the conduct of that trade inside the limits of Hubli town were not considered by the Corporation to be quite satisfactory or safe, and that it was therefore the considered opinion of the Corporation that the timber trade should be shifted to another place where there would be no congestion, risk or similar dangers. This the Corporation proposed to do in execution of a planned developments, as it calls it.
(17) Now, it is very familiar principle that an acquisition is for a public purpose when it involves an element of public utility and has for its aim social welfare and public good. Even if an acquisition for that purpose produces such public good only for a defined section of the public, the acquisition will still be for a public purpose since it is indisputable than an acquisition for a public purpose need not be an acquisition which benefits every member of the public. this was the enunciation made by the Supreme Court in the State of Bombay v. Ali Gulshan, : 2SCR867 .
(18) So understood, if the intention and desire of the Corporation was that the members of the association should carry on their timber trade in one particular area outside the limits of the Hubli Town instead of in scattered portions of the town, and it was thought that the establishment of a market yard for that purpose would conduce to a more orderly transaction of business which would ensure for the consumer the opportunity for the purpose of timber at a reasonable price and of the quality which he desires to obtain, it could not be contended that the purposes of the acquisition did not have the element of public utility or social welfare which impress upon the acquisition the characteristic of one made for a public purpose.
(19) We do not find it possible to say on the material before us that the intention of the Corporation was to take away the property belonging to the petitioners and to divert them to individual members of the association, just for the purpose of making them transferees of such property. It is of course obvious that through the machinery of an acquisition no State or local authority could bring about change of ownership in that way since an acquisition for transfer of such ownership by such subterfuge is clear misuse of power. We do not find it possible to say that such was the purpose of the acquisition in the case before us. We must therefore negative the argument that the acquisition was not for a public purpose.
(20) We now proceed to consider the submission founded upon the proviso to Section 6(1) of the Act as it stood before its amendment. That proviso incorporated a prohibition against a declaration under Section 6 unless the Government were satisfied in a case like the one before us that the local authority would make a contribution to the compensation payable out of a fund controlled or managed by it. The argument maintained was that the power to make the impugned declaration which was made on September 11, 1963 flowed from Section 6(1) as it stood before it was amended, and that since it was clear from the material on record that the Corporation would not make any contribution from any fund owned, controlled or managed by it, to the compensation payable to the owners, it was not possible for the Government to make any declaration under Section 6.
(21) Mr. Venkataramaiah for the Corporation however has placed before us two arguments in refutation of this submission. The first was that the power to make the impugned declaration was plenary when it was made after the disappearance of the fetter which had been placed upon it by the proviso to the old section. The second was that even otherwise, there was no justification for the supposition made on behalf of the petitioners that the Corporation would make no contribution to he compensation payable out of a fund controlled or managed by it.
(22) In the affidavit produced on behalf of the petitioners it was stated that it was learnt by the petitioners that the association for which the acquisition was commenced had deposited the 'acquisition charges' and that no part of the cost of the acquisition would be met 'out of public funds.' In his counter-affidavit the Commissioner of the Corporation repudiated the truth of the allegation that the cost of the acquisition would be borne by the association and its members and asserted that the Corporation had credited 'the cost of acquisition'. He proceeded to state that no inference to the contrary could be drawn from the fact that the deposits had been made by the members of the association with the Corporation.
(23) We must observe that neither the petitioners nor the Corporation focused attention upon the real issue arising out of the proviso to Section 6(1) of the Act as it stood before its amendment. The real question was whether the Corporation which is the local authority to which that proviso refers would make any contribution to the compensation out of a fund controlled or managed by it.The fact that the members of the association had deposited some amount with the Corporation does not necessarily eliminate the possibility of a contribution by the corporation out of a fund controlled or managed by it. The petitioners did not state that the Corporation would make no contribution out of any such fund. In paragraph 3 of their affidavit it was stated that the acquisition was made for the benefit of the association and that they had deposited the 'acquisition charges'. In another part of the affidavit it was stated that the cost of acquisition would not be paid wholly or in part 'out of public funds' and the petitioners therefore did not in so many words assert that the Corporation would make no contribution out of a fund controlled or managed by it. The Corporation did not in its counter-affidavit assert that some part of the compensation would be paid out of a fund controlled or managed by it. But in his affidavit the Commissioner nevertheless stated that the deposit made by the association was a deposit 'for the respective sales of the portions of the lands' to its members.
(24) Mr. Mahendra, the learned Government Pleader, has made available to us the agreement executed between the State Government and the Corporation which preceded the declaration under section 6. It is seen from that agreement that one of the terms of that agreement is that the Corporation has to pay to the Government the cost of the acquisition. The relevant part of the agreement reads:
'These presents witness that the said Corporation both hereby bind itself to pay to Government the cost of the acquisition of the said land and all such charges as may be incurred by Government.
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(25) The argument founded on this part of the agreement was that the Government did satisfy themselves that the Corporation would pay the compensation payable out of a fund controlled or managed by it, and, it seems to us that the argument is not without substance.
(26) The power to make a declaration under section 6 flows from the satisfaction in the mind of the State Government that compensation would be paid by the local authority in that way. The agreement between the Corporation and the Government was executed on July 27, 1962 and the declaration under section 6 was made on September 11, 1963, and it is obvious that the foundation of the satisfaction in the mind of the Government that the Corporation would make the contribution to the compensation out of a fund controlled or managed by it, was the covenant entered into by the Corporation that it shall bear the cost of acquisition.
(27) We do not find it possible to say that the satisfaction was groundless or was unfounded. If we could say that it is indisputable on the material on record that the Corporation would not make any such contribution, we could have denounced the declaration as having been made in transgression of the proviso to section 6(1), if the proviso was applicable. But we do not find it possible to say that it is demonstrated that the Corporation would make no contribution to the compensation payable.
(28) The fact that the members of the association made some deposit with the Corporation does not necessarily conclude the matter or make it improbable that, as explained by the Commissioner in his affidavit, those deposits were only a consideration for the sales to individual members. There is no material on the basis of which we could say that what was deposited in that way, represented the entire estimated cost of acquisition, and, it is therefore difficult to say that the satisfaction in the mind of the Government was satisfaction contrary to proved facts.
(29) It should be remembered that under sub-clause (ii) and (vii) of section 3(f) of the Act as it now stands amended, an acquisitions for a public purpose even if the property proposed to be acquired was intended to be sold to others. In implementation of a planned development in the one case, and for securing further development in the other. We have no doubt in our minds that the acquisition was for such planned development. The fact that the Corporation intended to make sales of the property to the members of the association after the completion of the acquisition explains the deposit by those members.
(30) We are of the view that even otherwise the question whether the Corporation would make any contribution to the compensation has really no relevance in the case before us in which the declaration under section 6 was made after its amendment. The amendment deleted the proviso to section 6(1), and, so, the State Government became empowered in consequence, to make a declaration under that section whether or not a local authority made a contribution to the compensation out of a fund controlled or managed by it. Similarly in deciding whether the purpose of the acquisition was a public purpose they could depend upon the new definition of a 'public purpose' introduced by the amending Act.
(31) That is so, because, the power to make a declaration under section 6 which the State Government made in this case depended upon the provisions of section 6 as they stood after the principal Act was amended, and, upon the new definition of 'public purpose' contained in section 3(f). For the purpose of making a declaration under section 6, the Government had to be satisfied from the material which they had before them that the acquisition was for a public purpose. What they had to consider when they made the declaration was whether the purpose of the acquisition was a public purpose on the date on which they decided to make a declaration. If a purpose which was not a public purpose had become a public purpose in consequence of the amplification contained in the statutory definition which was enacted on August 16, 1961 by the amending Act, the question to be decided was whether the acquisition was for a public purpose such as that explained by the definition. When the Government made their declaration the definition of 'public purpose' into which they had to look was that new definition which had become part of the principal Act
(32) Similarly we are of the opinion that when the impugned declaration was made by the State Government it was no longer necessary for the State Government to be satisfied that any portion of the compensation would be contributed by the Corporation out of a fund controlled or managed by it. It is true, as contended by Mr. Malimath, that section 6(1) which stood denuded of the proviso is not retrospective. But the question which presents itself before us does not involve the question whether the amended section is retrospective. As section 6(1) stood before its amendment, on the power of the Government to make a declaration, was placed a fetter which required the Government to be satisfied that some portion of the compensation would be paid by the Corporation out of a fund controlled or managed by it. So long as the fetter continued to remain, it was the duty of the Government to feel satisfied about it before they made any declaration. But it is clear that what the amending Act did was to remove that fetter, and so, on September, 1963 when the impugned declaration was made, the Government could make a declaration on their being satisfied that the acquisition was for a public purpose, without there being any necessity for being satisfied that the Corporation would make any contribution tot he compensation from a fund controlled or managed by it.
(33) We do not agree that the proviso to section 6(1) which disappeared in consequence of the amendment made to that section, continued to operate by reason of the fact that the preliminary notification under section 4 with which the acquisition commenced, had been made when the old section was still operating. That preliminary notification, in our opinion has really no relevance. When the State Government proposed to make a declaration under section 6, what they had to do was to read the Land Acquisition Act as it then was, to ascertain whether they had the power to make the declaration and whether on that power there was any fetter. On September 11, 1963 when they made the declaration, section 6 contained no other relevant fetter on the exercise of that power than that the Government should be satisfied that the acquisition was for a public purpose. The antecedent fetter that they should be satisfied that the Corporation would make a contribution to the compensation had disappeared.
(34) The ambit of the power such as that created by section 6 is what it is at the time of its exercise, and the performance of the duty for which it was created is controlled by the statutory provision which regulates it at that point of time.
(35) The old restricted power had become enlarged and that enlarged power was what was available to the State Government. We are therefore of the view that the challenge made to the acquisition cannot succeed.
(36) This conclusion is what we should reach notwithstanding the argument presented by Mr. Malimath on the provisions of section 2(2) of the amending Act which make the provisions of section 6 of the Mysore General Clauses Act applicable to the provisions of all the repealed enactment's enumerated in section 2(1) of that Act. The argument presented was that by virtue of the provisions of Section 2(2) of the amending Act read with section 6 of the Mysore General Clauses Act, the deleted proviso to section 6(1) of the principal Act continued to be applicable to the acquisition proceedings which commenced with the preliminary notification under section 4 before the principal Act was amended. He depended upon clauses (c) and (e) of section 6 of the Mysore General Clauses Act according to which a right privilege, obligation or liability acquired, accrued or incurred under any repealed enactment would remain unaffected, notwithstanding such repeal. it was urged that the petitioners had a right to insist on the acquisition proceedings continuing only under the provisions of the Act as it stood before amendment and in accordance with the repealed proviso to section 6(1). But it is obvious that there was no such right since the purpose of the proviso was not to create a right in the petitioners but to regulate the power of the State Government. Nor could it be said that an obligation had been incurred by the State Government to make a declaration only in accordance with the repealed proviso. The extent and ambit of that power had to be judged only on the occasion on which the necessity for its exercise arose. It could not be said that there was any anterior obligation which had come into being to exercise that power in a particular way.
(37) We now turn to the third submission which rested on the provisions of Part VII of the Land Acquisition Act. That part which consists of sections 38 to 44 relates to acquisition of land for companies. It is not disputed that there was no observance of those provisions in the context of the impugned acquisition, and, it was said that since the Corporation was a company within the meaning of part VII, the acquisition was illegal.
(38) In support of this submission reliance was placed upon section 3(e) which defines a 'company'. Our attention was asked to sub-clause (viii) of that clause which includes in the definition of a 'company' a corporation created by or under any law for the time being in force in any part of India not being a corporation owned or controlled by the State. It was urged that since the corporation with which we are concerned in the case before us was established under the Bombay provincial Municipal Corporations Act (Bombay Act 59 of 1949) and since the Municipal Borough to which it succeeded in the year 1962 had been established under the Bombay Municipal Boroughs Act, the corporation was a company within the meaning of section 3(e)(vii) of the Land Acquisition Act.
(39) We do not agree. No statutory body could fall within section 3(e)(vii) if it is owned or controlled by the State Government. Chapter 28 of the Bombay Provincial Municipal Corporations Act consisting of sections 448 to 452 makes it abundantly clear that the Corporation is in many matters controlled by the State government. So was the Municipal Borough which was the predecessor of the Corporation under Chapter 12 of the Bombay Municipal boroughs Act, 1925.
(40) It is plain that the Corporation is a local authority and not a company. Section(h) of the Land Acquisition Act as it stands amended defines a 'local authority' and the definition is an inclusive definition. This definition makes it clear that the Corporation which is undoubtedly a local authority is a local authority for the purpose of the Act and includes in the definition other bodies which are also local authorities for that purpose.
(41) It emphasises the distinction between a company and a local authority and precludes the inclusion of a local authority which is separately defined in the category of a company.
(42) We dismiss this writ petition. No costs.
(43) Writ petition dismissed