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Shyam Behari and ors. Vs. State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 81 of 1961
Judge
Reported inAIR1962MP80
ActsConstitution of India - Article 31(2) and 31(5); Land Acquisition Act, 1894 - Sections 4, 4(1), 4(2), 6 to 37, 39, 40, 40(1), 41, 41(5) and 42; Industries (Development and Regulations) Act, 1951
AppellantShyam Behari and ors.
RespondentState of Madhya Pradesh and ors.
Appellant AdvocateR.S. Dabir and ;L.G.R. D'Silva, Advs.
Respondent AdvocateH.L. Khaskalam, Additional Government Adv. for Respondent Nos. 1 to 3 and ;P.R. Padhye and ;P.S. Khirwadkar, Advs. for Respondent 4
DispositionPetition dismissed
Cases ReferredSatrughna Sahu v. State of Orissa
Excerpt:
- - 243 of tahsil murwara, district jabalpur, more particularly described in the schedule hereunder and for greater clearness delineated on the plan annexed hereto and thereon coloured red (hereinafter referred to as the said land), for the purposes of construction thereon refractory factory (hereinafter referded to as the said refractory factory); and whereas the state government, being satisfied on consideration of the report made under the provisions of the said act that the proposed acquisition is necessary for the construction of refractory factory, which is likely to prove useful to the public, has agreed to acquire the said land; the company has already collected materials, has started boring well, construction of a shed and is trying to make further constructions as early as.....dixit, c.j. 1. this application under article 226 of the constitution is for the issue of a writ of certiorari for quashing two notifications dated 8th july 1960, and 3rd december 1960 issued by the state under sections 4 and 6 of the land acquisition act, 1894, for the acquisition of certain lands belonging to the petitioners and for the issue of a direction to the respondents forbearing them from exercising any rights over those lands, 2. it is necessary to state the facts in some detail in order to reach and appreciate the questions to be determined. the petitioners are the owners of land admeasuring 17.82 acres in mouza chhaparwah (settlement no. 245) in katni tahsil of jabalpur district. the respondent no. 4 is a private limited company known as the premier refractories of india.....
Judgment:

Dixit, C.J.

1. This application under Article 226 of the Constitution is for the issue of a writ of certiorari for quashing two notifications dated 8th July 1960, and 3rd December 1960 issued by the State under sections 4 and 6 of the Land Acquisition Act, 1894, for the acquisition of certain lands belonging to the petitioners and for the issue of a direction to the respondents forbearing them from exercising any rights over those lands,

2. It is necessary to state the facts in some detail in order to reach and appreciate the questions to be determined. The petitioners are the owners of land admeasuring 17.82 acres in Mouza Chhaparwah (Settlement No. 245) in Katni Tahsil of Jabalpur District. The respondent No. 4 is a private limited company known as the Premier Refractories of India which proposes to manufacture fire-clay bricks, high alumina bricks etc. On 26th April 1960 the said respondent addressed a letter to the Collector, Jabalpur, saying inter alia that the Government of India had sanctioned the installation by the said company of a refractory factory at Katni for the manufactures of fire-clay and high alumina bricks which were not being manufactured in India; that the Company had selected a site adjoining to the railway station at New Katni Junction for the establishment of a refractory; and that as the land which was in possession of the Company was insufficient for the erection of the factory, the Company desired to acquire lands specified in the schedule to the letter. The letter proceeded to say:

'According to the proposed layout of the factory it is proposed to put up godowns, administrative buildings and also provide some recreation ground for the workers of the company and other amenities and also siding facilities.

'That the Company is willing to enter into an agreement with the Provincial Government for the purposes of this acquisition and is willing to defray all costs of this acquisition.

'That the Company has selected and acquired the land in this area because of Railway siding facilities that can be made available and therefore the land applied for is also required for the purpose of Railway Siding.'

On this representation of the respondent No. 4, which was supported by the Collector, the State Government issued a notification under Section 4 of the Act on 8th July 1960. The notification was in Hindi. It began with a recital to the effect that 'it appeared to the Government that lands specified in columns 1 to 4 of the Schedule were needed or likely to be needed for the public purpose specified in column 6 of the Schedule. It then proceeded to make a notification under Sec. 4 of the Act to that effect. The public purpose specified in column 6 of the schedule was stated to be the construction of godowns and administrative buildings of the Premier Refractories of India Private Limited. The petitioners thereupon filed their objections under Section 5A of the Act to the proposed acquisition con-tending inter alia that the lands were very valuable and much in demand and were not being acquired for a public purpose. All these objections were rejected by the Land Acquisition Officer who made a recommendation to the Government that a notification Under Section 6 of the Act should be published for the acquisition of 20.96 acres of land in village Chhaparwah (Survey No. 245) of Katni Tahsil.

3. On the 10th October 1960, the respondent No. 4 executed an agreement in favour of the respondent-State. The material part of the agreement is as follows:

'Whereas the Company has requested the State Government to acquire, under the provisions of the Land Acquisition Act, 1894 (I of 1894) (hereinafter referred to as the said Act), the land bearing total Khasra Nos. 37 measuring 20.98 acres situated in Mauza Chhaparwah, settlement No. 243 of Tahsil Murwara, District Jabalpur, more particularly described in the schedule hereunder and for greater clearness delineated on the plan annexed hereto and thereon coloured Red (hereinafter referred to as the said land), for the purposes of construction thereon Refractory Factory (hereinafter referded to as the said Refractory Factory); And whereas the State Government, being satisfied on consideration of the report made under the provisions of the said Act that the proposed acquisition is necessary for the construction of Refractory Factory, which is likely to prove useful to the public, has agreed to acquire the said land;

And whereas the State Government has called upon the company under Section 41 of the Land Acquisition Act, 1894, to enter into an agreement with the Governor on the terms and conditions hereinafter appearing;

Now, therefore, this agreement witnesses and hereby agreed and declared as follows:

1. The Company shall pay to the Governor or to such persons as the Governor may appoint in this behalf all such sums as the Governor may have to spend in acquiring the said land on account of compensation Or other charges incidental to acquisition.

2. Upon the payment of all moneys payable under Clause 1, the Governor shall transfer the said land to the Company and the Company shall, thereupon, hold the said land subject to its liability to pay such revenue as may, from time to time, be fixed and to the following conditions, namely:

3. The works for which the land is sought to he acquired shall be executed by the Company within a period of three years from the date of taking over possession of the land:

Provided that the period may be extended by the Government for reasonable cause. x x x x x'

4. A notification under Section 6 of the Act was published On 3rd December 1960. As that notification did not specify sufficient particulars of the land intended to be acquired a fresh notification under Section 6 was issued by the Government on 19th April 1961, after the filing of this petition. That notification declared that the lands specified in columns 1 to 4 of the Schedule to the notification were required for the public purpose specified in column 5 of the Schedule. In this column the public purpose for which the lands were needed was stated to 'for the purpose of the Premier Refractory Factory and for projects connected with it.'

5. The main ground on which the acquisition has been challenged is that it is not for a public purpose but for the Premier Refractories of India a private limited company. In paragraph 6 of the petition the applicants contend that the requirement of the respondent No. 4 'cannot be a 'Public Purpose' within the meaning of the Act, enabling exercise by the State powers of Eminent Domain by acquisition of private property, for the avowed purposes of such a body under the provisions of the Act;' that the Company is an entity different from that of the Government; and that the words 'or for a Company' appearing in Section 6 of the Act are ultra vires. In paragraph 10 of the petition it is further stated that:

'It is apparent that the Respondent No. 4, the Premier Refractories have no plan to utilise the land already acquired by them and lying unused. There is absolutely no public purpose involved. It is purely a commercial venture. The present land being in a vantage position is an eye-sore to the respondent No. 4, the Premier Refractories, who want to get hold of it under the disguise of acquisition for Public Purpose and abuse the machinery of Law under the scheme of Land Acquisition Act.'

6. In the petition the validation of the first notification issued under Section 6 of the Act was questioned on the ground that it did not specify the property intended to be acquired.

7. In the return filed on behalf of the respondents Nos. 1 to 3 it has been averred that the purpose for which the land is being acquired is a public purpose as the acquisition is in the interest of the society and the notifications issued under Sections. 4 and 6 are in conformity with the provisions of the Act and supported by an agreement under Section 41 of the Act giving full particulars of the land acquired. The respondent No. 4 stated in the return filed by them in answer to the petition that they proposed to put up godowns, administrative buildings and to provide a recreation ground and other amenities for workers of the Company, as also Railway siding facilities; and that under the Act land can be acquired by the State for the purposes of a company and the acquisition for them is in substance for a public purpose. In paragraph 10 of the return of the Company, it has been stated that:

'The respondent company has been granted a licence under the Industries (Development and Regulation) Act, 1951, (Annexure 4) for manufacturing fireclay bricks, High Alumina bricks and Mortars and Masses at Katni, Madhya Pradesh, by Government of India, Ministry of Commerce and Industry.

These products are necessary for use in Steel Plants. For the present they are imported from foreign countries. With the establishment of Heavy Steel Plants, it has become necessary to manufacture the said products in India.

The Central and State Governments have so far given all types of facilities in order that the establishment of Factory and the production may materialise soon.

The Company had placed an order for Machinery last year and part of it is expected to arrive by the end of this month (Annexure 5) and the rest must be shipped by April end. The Central Railway has sanctioned a railway siding for the factory (Annexure 6). The work of this siding has to be completed before monsoon.

Similarly an agreement with the M. P. Electricity Board for supply of electricty has also been arrived at. The necessary constructions will have to be made immediately.

The Company has already collected materials, has started boring well, construction of a shed and is trying to make further constructions as early as possible. The building work at site can only be commenced when all the land available is known.

It is denied that it is a purely commercial venture or that there is no public purpose.'

8. Before us, Shri Dabir, learned counsel appearing for the petitioners, did not rightly press the contention that Section 6 of the Land Acquisition Act in so far as it permitted acquisition of land for a company without there being a public purpose was ultra vires the Constitution. Indeed he could not as under Article 31(5)(b) (sic) of the Constitution the acquisition of land for companies is not subject to any attack under Article 31(2) of the Constitution. He, however, urged that the notification issued under Section 4 of the Act declared that the lands in question were needed or were likely to be needed for a public purpose; that in column 6 of the schedule to the notification the public purpose was stated to be the construction of godowns and administrative buildings of the respondent No. 4; that the acquisition of land far this company was not a public purpose; that the notification did not contain the particulars showing any public ourpose; and that it was vague and general and so for these reasons invalid Learned counsel proceeded to say that the notification under Section 6 was also invalid. The argument was that it also, like the notification under Section 4. declared that land was needed or likely to be needed for a public purpose which was described, as 'for the purpose of the Premier Refractory Factory and for projects connected with it'; that the notification must be read as containing a declaration of the acquisition of land for a public purpose and not for the purposes of a company; that the need of the lands by the Company could not be regarded as a public purpose; that the Company intended to carry out a business enterprise for its. own profits and it had nothing to do with public interest either directly or indirectly; and that if the notification was regarded as one for the acquisition of land for the respondent-Company, it was void and inoperative for the reason that there was no compliance with the requirements of Part VII of the Act and especially of Sections 40 and 41.

It was said that Section 6 was subject to the provisions of Part VII of the Act and a declaration for the acquisition of land for a company could not, therefore, be made without satisfying the requirements of Part VII; that the satisfaction of the Government under Section 40(1)(b) of the Act that land was needed for the construction of some work which was likely to prove useful to the public was act real; that the goods intended to be manufactured by the respondent-Company were of no direct use and help to the public; that the considerations that the manufacture of fire-clay bricks and High Alumina bricks would save a considerable amount of foreign exchange or that the employment potential would be increased were wholly irrelevant in determining whether the acquisition of land for the respondent-Company was for a work likely to prove useful to the public; that the public did not stand to benefit at all by the business and enterprise of the Company; and that the agreement executed by the respondent No. 4 in favour of the State did not also mention 'the terms on which the public shall be entitled to use the work' as required by section 41(5) and consequently the notification issued under Section 6 was invalid.

9. Before examining the validity of the contentions advanced on behalf of the petitioners, it is necessary to point out that it is now authoritatively settled by the decisions of the Supreme Court in Barkya Thakur v. State of Bombay, AIR 1960 SC 1203 and Jhandu Lal v. State of Punjab, AIR 1961 SC 343 that the Land Acquisition Act contemplates acquisition for a public purpose and for a company, and that this implies the idea that acquisition for a company is not for a public purpose. But acquisition for a public purpose as also acquisition for a company are governed by considerations of public utility. In AIR 1961 SC 343 (supra) it was emphasized that where acquisition is made for a public purpose, the cost of acquisition for payment of compensation has to be paid wholly or partly from public revenue or some fund controlled or managed by local authority and that in the case of acquisition for a company the compensation has to be paid by the company; that an acquisition for a company may also be made an acquisition for a public purpose if a part or whole of the cost of acquisition is paid from the public funds and in such a case it would not be necessary to go through the procedure prescribed by Part VII but that if the acquisition were to be made for a company at the cost entirely of the company itself no declaration under Section 6 of the Act can be made without satisfying the requirements of Part VII; and that the provisions of Sections 39-41 lay down conditions precedent to the application of the machinery of the Land Acquisition Act if the acquisition is made for a company.

10. The petitioners' objection to the validity of the notification under Section 4 is unsubstantial and must be rejected. It is quite true that the notification stated that the land sought to be acquired, was needed for a public purpose and the public purpose was mentioned to be the construction of godowus and administrative buildings of the respondent No. 4. It did not in so many words say that land was needed for the company. But the notification does not become void and inoperative if the public purpose stated is not a public purpose or if the notification does not refer to the land being needed for a company. Section 4(1) does not expressly provide that where a land in any locality is needed or likely to be needed for a company a notification to that effect should be published. There is, however, no bar to a notification under Section 4 making a reference to a company.

AS observed by the Supreme Court in AIR 1960 SC 1203 at p. 1205, Section 5A predicates that the notification under Section 4(1) may not only refer to land needed for a public purpose but also to land needed for a company. Now, the purpose of a notification under Section 4 is to make a public announcement of the fact that land is needed or likely to be needed for acquisition in any locality and to enable the competent authority under Section 4(2) to undertake a reconnaissance survey. The notification does not determine the precise land to be acquired or fix the purpose for which it is needed. That being so, a notification, such as the one in the present case, cannot he regarded as invalid for acquisition of land for a company merely because it does not make a reference to the land being needed for the company. It cannot be treated as invalid even for the acquisition of land for a public purpose on the objection that it does not contain the particulars showing any public purpose and that the public purpose stated is not a public purpose.. The notification is a valid announcement of land being needed for a public purpose as well as for the Company.

The question of the validity of the notification under Section 4(1) is concluded by the observations in paragraph 12 of the judgment in AIR 1960 SC 1203 (supra). In that case it was urged that Section 4(1) of the Act had deliberately omitted the words 'for a company' and insisted upon a public purpose and, therefore, the absence in the notification issued under Section 4 of the words 'for a public purpose' was fatal to the proceedings. Repelling this contention, it was observed by the Supreme Court :

'The purpose of the notification under Section 4 is to carry on a preliminary investigation with a view to finding out after necessary survey and taking of levels, and, if necessary, digging or boring into the sub-soil whether the land was adapted for the purpose for which it was sought to be acquired. It is only under Section 6 that a firm declaration has to be made by Government that land with proper description and area so as to be identifiable is needed for a public purpose or for a Company. What was a mere proposal under Section 4 becomes the subject-matter of a definite proceeding for acquisition under the Act.

Hence, it is not correct to say that any detect in the notification under Section 4 is fatal to the validity of the proceedings, particularly when the acquisition is for a Company and the purpose has to be investigated under Section 5A or Section 40 necessarily after the notification under Section 4 of the Act.'

It follows from those observations that the notification issued under Section 4(1) in the present case must be held to be valid and legal for the acquisition of land both for a public purpose as also for the Company.

11. Turning now to the notification issued under Section 6, its validity has been attacked on two grounds, namely, first, that it must be read as containing a declaration for the acquisition of land for a public purpose and not for the purpose of the respondent No. 4, and, secondly, that it was invalid in either case as the acquisition of land for the purpose of a private limited company (respondent No. 4) could not be regarded as a public purpose and further that it was issued without complying with the requirements of Part VII of the Act. The first attack concentrated on the words of the notification rests upon the assumption that acquisition for a company cannot be made for a public purpose and that 'public purpose' and 'purpose of a company' are matters which are distinct and mutually exclusive. There is no warrant for such an assumption.

The decision of the Supreme Court in AIR 1961 SC 343 makes it very clear that an acquisition for a company may also be made for a public purpose and the test to be applied for determining whether the acquisition is for a public purpose or is for a company is whether the compensation to be awarded for the property is to be paid wholly or partly out of public revenues or some fund controlled or managed by a local authority, or, entirely by a company. The notification issued under Section 6 of the Act in the present case declared that lands were required for the public purpose specified in column 5 of the Schedule. This column mentioned that the lands were needed for the purpose of the Premier Refractory Factory and for projects connected with it'. The notification thus in express terms states that the lands are being acquired for a public purpose and for the purposes of a company. In so far as the declaration speaks of the acquisition of lands for a public purpose, it is ineffective as admittedly here the compensation for the property is to be paid wholly by the Company (respondent No. 4) and no part of the compensation is to be paid out of public revenues.

In AIR 1961 SC 343, the Supreme Court has observed that a declaration under Section 6 for the acquisition for a public purpose cannot be made unless the compensation wholly or partly is to be paid out of public funds. This follows from the fact that Section 6(1) is subject to the proviso about the award of compensation. The declaration must, therefore, be regarded in substance and in law as one for the acquisition of land for the respondent-Company.

12. As the acquisition is for the Company simpliciter, there must be fullest compliance with the requirements of Part VII of the Act. Section 6 is subject to the provisions of Part VII of the Act Sub-section (3) of Section 6 provides that 'the said declaration shall be conclusive evidence that the land is needed for a public purpose or for a company'. The conclusiveness to a declaration under Section 6(i) for the acquisition o land for a company simpliciter cannot be attached if the requirements of Part VII, to which the application of section 6 is subjected, are not complied with. As observed by the Supreme Court in AIR 1960 SC 1203 and AIR 1961 SC 343, the provisions of Sections 39-41 Jay down the conditions precedent to the application of the machinery of the Land Acquisition Act if the acquisition is meant for a company.

Sections 38 to 44, which are included in Part VII of the Act, deal with the acquisition of land for companies. Sections 38 and 38A are not material for the purposes of this case. Section 39 prescribes that the provisions of Sections 6 to 37 (both inclusive) shall not be put in force in order to acquire land for any company, unless the previous consent of the appropriate Government has been obtained and unless an agreement in terms of Section 41 has been executed by the Company. Section 40 declares that the appropriate Government shall not give the consent provided for in Section 39 unless it is satisfied either on the report of the Collector under Section 5A(2) or by an enquiry held in the manner provided in that section:

'(a) that the purpose of the acquisition is to obtain land for the erection of dwelling-houses for workmen employed by the Company or for the provision of amenities directly connected therewith, or

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

When the Government is satisfied as to the purposes stated in Section 40(1) of the acquisition, then the Company is required to enter into an agreement with the Government providing to the satisfaction of the Government for the matters mentioned in Section 41. These matters are mentioned in Section 41 thus :

'(1) the payment to the Appropriate Government of the cost of the acquisition;

(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-houses or the provision of amenities connected therewith, the time within which, the conditions on which and the manner in which the dwelling-houses or amenities shall be erected or provided; and

(5) where the acquisition is for the construction of any other work, the time within which, and the conditions on which, the work shall be executed and maintained and the terms on which the public shall be entitled to use the work.'

Under Section 42 the agreement has to be published in the Gazette and when it is published it forms a part of the Act so far as the terms on which the public is entitled to use the work are concerned.

13. In the present case, the respondent-Company made an application to the Government for acquisition of the land for the construction of its godowns, administrative buildings and for providing a recreation ground and other amenities for the workers of the company and facilities for railway aiding. The Company expressed its willingness to bear responsibility for the entire cost of acquisition The Government consented to the acquisition after satisfying itself that the work proposed to be constructed by the respondent-Company was likely to prove useful to the public. Thereafter an agreement was entered into between the respondent-Company and the Government providing for the payment of the cost of acquisition by the Company, the transfer of land to the Company the terms on which the company is to hold the land, and the time within which the work is to be executed. The agreement was also published in the Gazette.

14. There is no dispute as regards these facts. The petitioners' contention is that in fact the acquisition for the Company is not for the purposes indicated in Clause (a) of Section 40(1); that it is not even for the purpose referred to in Clause (b), for the construction of the proposed work is not likely to prove useful to the public; and that, therefore, the satisfaction of the Government under Section 40 and the agreement entered into between the respondent-Company and the Government are illusory and thus there is no compliance with the provisions of Sections 40 and 41 of the Act. It was further submitted that the agreement executed by the respondent-Company does, not mention the terms on which 'the public shall be entitled to use the work'; and that as this requirement is mandatory under Clause (5) of Section 41 read with Section 42, there is no valid agreement as contemplated by Section 40(1) and consequently the notification under Section 6 is void and inoperative.

15. The argument first requires a consideration of the extent of the Court's power to enquire into the proceedings carried out prior to the declaration under Section 6. As already stated, a declaration under Section 6 that the land is needed for a company cannot have the effect of conclusive evidence of the fact that the land is so needed if the requirements of Part VII are not complied with. That Part provides the conditions precedent for putting into force the provisions of Sections 6 to 37 where land is intended to be acquired for any company. The court has, therefore, the power to examine whether the statutory provisions containing in Part VIE have been complied with.

It is well settled that where a statute lays down that certain conditions must be complied with before a rule, order or a notification is made, the court is not precluded from saying that the rule, order or notification is inoperative because the statutory conditions upon which the competent authority is authorised to make it had not been fulfilled. But the scope of investigation into the performance of the conditions precedent is limited by the very nature of those conditions. The limitations here are to be found in the language of Sections 39, 40 and 41. The conditions laid down in Section 39 for the acquisition of land for a company are the obtaining of the previous consent of the Government and the execution of an agreement referred to in Section 41. The giving of the consent and the execution of agreement are objective matters and the court can always determine as a fact whether the consent was given and the agreement was executed.

The giving of the consent is subject to the condition precedent of the Government satisfying itself as to the matters provided in Section 40 in the manner kid down therein. The 'satisfaction of the Government' is clearly a subjective matter. The very use of the expression ''unless the Appropriate Government be satisfied' shows that it is left entirely to the discretion of the Government to judge whether the land is required by the company for the erection of dwelling-houses or for the provision of amenities or for the construction of some work which is likely to prove useful to the public. In satisfying itself as to the matters mentioned in Section 40 the Government does not act judicially or quasi-judicially. That being so, 'the satislaction of the Government under Section 40' cannot be questioned in a court of law, provided, of course, that the Government acts in good faith and not in fraud of the powers given to it.

It is unnecessary to refer to the numerous cases under several enactments where the question of the court's power to undertake an enquiry into the satisfaction of the competent authority, which is to be formed as a condition precedent for taking any decision or making any order, has been considered. All those cases are to the effect that where an order, decision or action is made dependent on the satisfaction of an authority, the responsibility for the decision, order or action rests on that authority alone and it would be a serious derogation from that responsibility if the court were to substitute its own judgment for the satisfaction of that authority and undertake an investigation into the correctness of the satisfaction or of the materials on which it was grounded. The satisfaction cannot be questioned in a court of law if the authority has acted in good faith.

The satisfaction is no doubt open to attack if it is based on grounds which have no rational probative value and which are extraneous to the scope or purpose of the relevant legislative provisions. The question whether in the present case the satisfaction of the Government under Section 40 suffers from this infirmity will be dealt with later. But if the Government has acted in good faith and not in fraud of its powers, then, in Our judgment, it is not competent for this court to question the validity of the satisfaction under Section 40 or of the proceedings under that provision.

In this connection it would be pertinent to refer to the decision of the Calcutta High Court in Ezra v. Secy, of State, ILR 30 Cal 36, In that case, it has been held that Section 40 constitutes the Government, as the custodian of the public interests, the sole jurlge of the fact whether the land is required for the construction of some work and whether the work is likely to prove useful to the public. The learned Judges of the Calcutta High Court observed (at page 77) :

'Having regard to the economic and social conditions of the country, the provision that the Government should be the sole judge of what is likely to prove useful to the public is both expedient and reasonable.'

16. These observations made in 1902 are more true now when the State is not merely a regulatory State charged with the responsibility of collecting revenue and maintaining law and order but is a welfare State which has a direct responsibility for accelerating the rate of economic growth, speeding up of industrialization, and developing, in particular, heavy industries. The State has now assumed direct responsibility for the future development of industries over a wide area and is therefore the best judge of deciding whether the construction of any work by a company is likely to prove useful to the public.

17. Section 41 has a similar restrictive effect on the power of the Court to enquire into the validity of the agreement between the company and the Government, and the agreement that the company is required to enter into with the Government is one 'providing to the satisfaction of the Appropriate Government for the matters enumerated in Section 41.' It is thus for the Government to judge whether the agreement does or does not adequately provide for those matters. The provision that the agreement should be to the satisfaction of the Government clearly indicates that the legislature has left the matter of 'the terms on which the public shall be entitled to use the work' to the subjective satisfaction of the Government. The terms on which the public should be allowed to use the work obviously depend upon the nature of the work. They cannot be fixed in abstract irrespective of the nature of the work. Now, if under Section 40(1)(b) it is the Government which is required to be satisfied as to whether the work for the construction of which land is needed is likely to prove useful to the public, then consistently with it the terms on which the public can use the work must also be left to be determined on the satisfaction of the Government.

It must be borne in mind that under Section 39 the condition precedent for the acquisition of land for any company is the execution of an agreement between the Company and the Government providing to the satisfaction of the Government on the matters indicated in Section 41 and not an agreement incorporating those matters. Clause (5) of' Section 41 cannot therefore be read as laying down that the incorporation in the agreement of the terms on 'which the public shall be entitled to use the work is a condition precedent for the acquisition of the land for the company. If the condition about the terms on which the public can use the work cannot be regarded as a condition precedent the provision to that effect in Clause (5) cannot be construed; as a mandatory requirement, the non-fulfilment of which renders the declaration of the agreement under section 6 invalid.

18. Learned counsel for the applicants laid some stress on Section 42, which says that the agreement when published in the Gazette shall thereupon, so far as regards the terms On which the public shall be entitled to use the work, have the same effect as if it had formed part of the Act. The plain meaning of this section is that so far as the use by the public is concerned the terms of the agreement will be binding both on the company and the public. Section 42 has not the, effect of modifying the language of Section 41 so as to make imperative the insertion in the agreement of specific terms on which the public shall be entitled to use the work. It is easy to see that in some cases where the acquisition is clearly for the construction of some work likely to prove useful to the public it may be impossible to state the precise terms on which the public would be entitled to use the work. All that can be said is that the public can use the work for doing business in connexion with the manufacture and production of the company for whom the land is being acquired.

Such was the case in ILR 30 Cal 36 (supra) where a land was acquired for a bank and the agreement inter alia provided that subject to the Act and bye-laws the public 'shall be entitled to use the building in relation to Government business so far as the same may be utilized by the Bank for the purpose of that business'. In R. L. Aurora v. State of U. P., AIR 1958 All 126 where land was acquired for a company' engaged in the manufacture and production of textile machines the agreement mentioned that the public could use the factory for doing business in connexion with the production of textile machines. This was held to be a substantial provision in the agreement regarding user by the public under Clause (5) of Section 41.

In our view, the insertion of such a general and vague term in the agreement is to no purpose. If a bank is a public bank and a company is engaged in the manufacture and production of goods needed by the public and other industries, the user of the work by the public is necessarily implied. It would be impossible for a bank or a company to carry out its business if the public is not allowed to use the work.

19. The agreement concluded in the present case between the State and the respondent-company begins with a statement that the company made a request to the Sate for acquisition of the landls in question, and that Government was satisfied on a consideration of the report made under the provisions of the Act that the acquisition of the lands was necessary for the construction of some works by the factory, and that it was likely to prove useful to the public. The agreement then recorded the consent of the Government to the acquisition. Then followed the terms on which the cost of the acquisition was to be paid by the company, the transfer of the land was to be made, and the terms on which it was to be held by the company. It also contains the provision that the works for which the land is being acquired shall be executed by the company within a period of three years from the date of taking possession of the land.

It is quite true that there is no express term as regards the user by the public of the works. But, as pointed out earlier, 'the agreement does not for that reason become invalid. The acquisition of the land is for the construction of works for the respondent-company, which proposes to manufacture fireclay and alumina bricks. The nature of the works thus makes it impossible to state with precision the terms on which the public can be allowed to use them. The only way the public can use these works is by utilizing the factory and establishment of the respondent-company for doing business with the company or for employment. That the public will be allowed this user is plain from the nature of the respondent-company's undertaking and is a necessary implication of the terms of the agreement. The petitioner's contention that the agreement is invalid and consequently a declaration under Section 6 is also invalid as the agreement does not contain an express term in regard to the user by the public or the works cannot, therefore, be accepted.

20. It follows from what has been said above that the declaration under Section 6 was made after complying with the conditions precedent laid down in Sections 39 to 41 and the declaration is not, therefore, invalid. If that be so and if the Government has acted bona fide in making the acquisition, then under Section 6(3) the declaration is conclusive evidence of the tact that land is need-ed for the respondent-company. But learned counsel for the petitioners sought to suggest that the Government acted in fraud of its powers and the acquisition was merely colourable and made mala fide for a purpose wholly extraneous to Section 41. It, therefore, becomes necessary to examine the purpose for which the acquisition has been made in order to determine the tenability of this contention.

It is unnecessary to burden this judgment by referring to numerous decisions in which it has been held that it is always open to the Court to examine whether the acquisition is for a purpose sanctioned by the law when it is contended that the Government has acted in fraud of its powers and the acquisition is cofourable. It would be sufficient to refer to the observations of the Supreme Court in State of Bihar v. Kameshwar Singh, AIR 1952 SC 252, explaining colourable legislation. In that case the Supreme Court pointed out that legislation ostensibly under one or other of the powers conferred by the Constitution but In truth and fact not Falling within the content of that power is merely coiourably constitutional but is really not so, and when a legislature has a limited or qualified power and has got to act within a certain circumscribed sphere, tne question whether in purporting to act under res powers, it has, In substance, gone beyond them, is really a question affecting the competency of the legislature.

On the same principle if the Government acts in fraud of its powers and makes acquisition of property for a purpose which on the face of it may not amount to a public purpose or for a company for a purpose otherwise than as contemplated by Section 41, then the acquisition proceedings are colourable, a fraud on the provisions of the statute and ultra vires the provisions. In such a case bad faith, collateral and indirect object, irrelevant motives become matters which, if proved to exist, establish the ultra vires character of the act in question.

21. The declaration under Section 6 made in the present case plainly said that land was needed for the purpose of the Premier Refractories of India Private Ltd., and for projects connected with it. It no doubt did not give particulars of the purpose, but this was not necessary. The particulars can be gathered from the averments made by the parties. The averments show that the acquisition is for the construction of works needed for manufacturing fire-clay and alumina bricks which are used in steel plants; that these bricks are being imported from foreign countries; and that; therefore, manufacture in India would save considerable foreign exchange. The respondent-company needs land also for the construction of godowns and administrative buildings and for providing railway siding and some amenities for the workers of the company.

The point sought to be made by Shri Dabir, learned counsel for the petitioners was that this acquisition was purely for a private concern whose sole aim was to make profits; that the public did not stand to get any direct benefit as a result of the acquisition; and that the fact that the bricks would be used in heavy steel plants or that their manufacture would save considerable exchange had no bearing whatsoever on the question of the general and direct interest of the public resulting from the acquisition. It was said that the acquisition was not on the face of it for any of the purposes mentioned in Section 40(1)(b); and namely for the construction of some works likely to prove useful to the public. In our judgment this attack on the validity of the acquisition proceedings must also fail. It is true, and as has been pointed out by the Supreme Court in AIR 1960 SC 1203 (supra) and AIR 1961 SC 343 (supra), the purposes of public utility referred to in Section 40 are akin to public purpose. But the definition of 'public purpose' given in Section 3(f) of the Act, as amended in the State, is of no assistance whatsoever.

It was observed by the Supreme Court in AIR 1952 SC 252 (supra), that the definition of the expression 'public purpose' is elastic and takes its colour from the status in which it occurs, the concept varying with the time and state of society and its needs. 'Public purpose' is thus an indeterminate concept which varies according to the drift of thought and feeling in a period; it is essentially a product of time. In a police or regulatory State, the expression 'public purpose' may have a narrow meaning, but in a welfare State it must be given a wide meaning. In a welfare State the emphasis is not on individual rights but on the good of the community, and it is the responsibility of the Government to assist and regulate the development of industries in the national interest. There are some industries the development of which is the exclusive responsibility of the State. There are some other industries in which private enterprise supplements the efforts of the State.

There are also industries the development of which is undertaken through the initiative and enterprise of the private sector, and in regard to these industries it is the policy of the State to facilitate and encourage the development of those, industries in accordance with the programme formulated in successive Five Year Plans and give all possible facilities. These considerations cannot be ignored in determining whether the acquisition is fop the construction of a work likely to prove useful to the public.

22. Even in America at one time the view prevailed that 'public use' meant 'use by the public' and consequently

'to make a use public a duty must devolve upon the person or corporation seeking to take property by right of eminent domain to furnish the public with the use intended, and the public must be entitled, as of right, to use or enjoy the property taken.'

(Nichols on Eminent Domain, 3rd Edition, Vol. 2, page 430).

This narrow view has now been very much modified. The ''broad view'' has been stated in Nichols on Eminent Domain, 3rd Edition, Vol. 2, at page 433 thus:

'On the other hand the courts that, are inclined to go furthest in sustaining public rights at the expense of property rights contend that 'public use' means 'public advantage', and that anything which tends to enlarge the resources, increase the industrial energies, and promote the productive power of any considerable number of the inhabitants of a section of the State, or which leads to the growth of towns and the creation of new resources for the employment of capital and labour, manifestly contributes to the general welfare and the prosperity of the whole community, and giving the constitution a broad and comprehensive interpretation, constitutes a public use.''

It has been further stated in the same book at page 447 that if the use for which land is taken by eminent domain is public, the taking is not invalid merely because an incidental benefit will enure to private individuals. With regard to the element of profit accruing to a public service corporation it is observed at page 448 :

'This condition arises in almost every case in which a taking of land is made by a public service corporation. While the primary object in taking and holding such land is the public benefit, which alone justifies a taking without the consent of the owner, an incidental object is the hope of profit to be derived by the corporation from the use of the land. It is well settled that the incidental benefit to the stockholders in the profits arising from tolls, fares and other charges does not render the taking for a private use, if the tolls, fares and charges are to be derived from serving the public.'

23. Dealing with the 'newer viewpoint' of public use, Willis in his 'Constitutional Law' has written at pages 808 to 810:

'According to the newer viewpoint there is a public use if the thing taken is useful to the public. This makes public use for eminent domain practically synonymous with public purpose for taxation and somewhat like social interest for police power ........ Under this rule it is not necessary for the benefit to be for the whole community, but it must be for a considerable number. The fact that the benefit also inures to a private in dividual is no objection,

* * * * * 'In these cases there is not necessarily a general use by the public, but there is a general benefit to the public. Private enterprises are thus allowed to exercise the sovereign power of eminent domain, not because they are taking the property for their own use, but because in taking the property for their use they are benefiting the public.'

24. In State of Bombay v. R.S. Nanji, 1956 SCR 18: ((S) AIR 1956 SC 294), the Supreme Court accepted the test laid down by Batchelor J., which was approved by the Privy Council in Hamabai Framjee Petit v. Secy, of State for India, 42 Ind App 44 : AIR 1914 PC 20. Batchelor J. expressed his view on the meaning of 'public purpose in these words :

''General definitions are, I think, rather to be avoided where the 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.'

The Supreme Court then referred to the cases of State or Bombay v. Bhanji Munji, (1955) 1 SCR 777: ((S) AIR 1955 SC 41) and The State of Bombay v. Ali Gulshan, (1955) 2 SCR 867 : ((S) AIR 1955 SC 810) and proceeded to say that it was impossible to define precisely the expression 'public purpose', and that in each case all the facts and circumstances must be closely examined in order to determine whether a public purpose has been established. It was pointed Out by the Supreme Court that in the cases of Bhanji Munji, (1955) 1 SCR 777 : ((S) AIR 195 SC 41) and Ali Gulshan, (1955) 2 SCR 867 : ((S) AIR 1955 SC 810) the person directly and vitally concerned was the person to whom the residential accommodation had been allotted, with which prima facie the general interest of the community was not directly concerned at all; but in each of those cases there was a public purpose.

Explaining these cases the Supreme Court said:

'We must regard Hamabai's case, AIR 1914 PC 20 as a decision to the effect that the general interest of the community was directly and vitally concerned with the efficiency of the Government servants because it would be to its benefit to have such servants and, therefore providing living accommodation for them was a public purpose. The decision in Bhanji Munji's case, (1955) 1 SCR 777 : ((S) AIR 1955 SC 41) must be read as one in which the general interest of the community was directly and vitally concerned with prevention of lawlessness and disease and to house the homeless in order to avoid such a contingency was a public purpose. In Ali Gulshan's case, 1955-2 SCR 867 : ((S) AIR 1955 SC 810) a State purpose was served because the State Government was interested in its own trade or commerce and in the efficient discharge of his duties by a foreign Consul who would be concerned with such trade or commerce.'

The decision of the Supreme Court only illustrates that if by a project the general interest of the community is furthered it would be for a public purpose, even if benefit is derived by a private person under it.

25. The principle that emerges from the decisions of the Supreme Court referred to above and the passages quoted above from Nichols on Eminent Domain and Willis on Constitutional Law is that a work is likely to prove useful to the public if its object and aim is to advance the general interest of the community. It is not necessary that the public should be able to use the work actually or should have the right to use it. The work must promote public welfare, prosperity, or convenience. If upon the completion of the project the public good is enhanced, then it does not matter if in accomplishing and carrying out the project a private corporation or a company reaps profits.

26. The public utility involved in the acquisition here must be judged in the light of these principles. The respondent-company proposes to engage itself in the manufacture and production of fire-clay and alumina bricks. It has obtained a licence under the Industries (Development and Regulation) Act, 1951, for undertaking the manufacture of the bricks. This Act controls the development and regulation of a number of important industries, the activities of which affect the country as a whole, and the development of which is governed by economic factors of all-India import Section 2 of the Act says that it is expedient in the public interest that the Union should take under its control the industries specified in the first Schedule. The scheme of the Act is to establish a Central Advisory Council and Development Council for the development and regulation of industries specified in the schedule to the Act and to prohibit any person or authority other than the Central Government from establishing any undertaking pertaining to a scheduled industry except under a licence issued under the Act,

An industry engaged in the manufacture or production of 'non-ferrous metals including alloys' and semi manufactures thereof is a scheduled industry. The manufacture of alumina bricks falls under the category of semi manufactures of non-ferrous metals. The Central Government has the power to regulate the production, quality, price, and distribution of goods manufactured by any scheduled industry and to call for an investigation to be made into the working of the industry for the purpose. The fact that the respondent-company has been given a licence for the manufacture and production of high alumina bricks--a scheduled industry under the Act--is thus in itself indicative of the fact that the undertaking of the company is for a public purpose. Fire-clay and high alumina bricks are indispensable in Iron and Steel plants. They are needed for blast furnaces.

It cannot be denied that the manufacture of these bricks in India would save considerable foreign exchange and that would tend to enlarge the financial resources of the country in the international market. There can therefore be no doubt that the construction of works needed for an industry which will promote the productive power of the country and save considerable foreign exchange will contribute to the general welfare and prosperity of the whole community and is likely to prove useful to the public. If the Government had itself acquired the land for locating a plant of its own for the manufacture of such bricks it could not have been contended with any degree of force that the acquisition of the land was not for a public purpose. It is difficult to see how, if that is a public purpose, it ceases to be so when the project is to be implemented and carried out by the machinery and agency of a limited company.

Even if the respondent-company earns some profit for itself in the working and running of the industry, the purpose for which the acquisition has been made would none-the-less be the akin purpose of public utility. In our opinion, the contention that the acquisition of land for the respondent-company has been made by the Government in fraud of its powers or that it is not for the construction of any work likely to prove useful to the public is altogether unsubstantial and must be rejected.

27. Before concluding it would be pertinent to refer to a decision of the Gujarat High Court in Motibhai v. State of Gujarat, AIR 1961 Guj 93, which is in line with the view we have taken. In that case also acquisition of some lands situated in Baroda was made for the expansion of 'Sarabhai Chemicals of Karamchand Premchand Private Ltd.' This concern is engaged in the manufacture and production of essential chemicals and medical preparations. In that case also the notification issued under Section 6 of the Act mentioned the public purpose for which the land was needed as 'for expansion of Sarabhai Chemicals of Karam-chandi Premchand Private Ltd., at Baroda.' the owners of the land acquired Urged that the purpose for which the land had been acquired was not a public purpose inasmuch as the public did not stand to derive any benefit in consequence of the construction of the work and that the agreement under Section 41 was not valid as it did not mention, the terms on which 'the public shall be entitled to use the work' as required by Section 41(5). Both these contentions were rejected by the Court.

The learned Chief Justice who delivered the judgment of the Court while rejecting the contention raised on the absence of a term' under Section 41(5) observed:

'It has also to be noticed that the conditions antecedent are laid down only in Section 39. The provision contained in Section 41(5) relating to insertion in the agreement with the Company of the terms on which the public is to be entitled to use the work apart from its inapplicability or otherwise to the case of a purpose of the nature before us--is an affirmative enactment which does not relate to the jurisdiction or authority to acquire land but obviously relates only to the mode or manner in which that jurisdiction or authority is to be exercised. It is not limitative of the same. It is not of the essence of the whole matter of acquisition and the notification to be issued under Section 6. We have to consider the importance of this provision in relation to the general object intended to be secured by the Act and we do not think we would be justified in holding that the Legislature has demanded such punctilious observance of it that failure to do so must result in the break-down of the whole process of acquisition and the illegality of the notification made for that acquisition.

It is pertinent to stress in the present context that the requirement in Section 41(5) about insertion in the agreement of the terms on which the public is to be entitled to use the work relates to a matter which is left by the legislature to the subjective satisfaction of the Government.'

On the concept of 'public purpose' he expressed himself thus :

'Public purpose is not a constant. The scope of an expression which conjugates general interest of the public must necessarily depend inter alia on social and economic needs and broad interpretation of the democratic ideal. It must alter as social and economic conditions alter. The social and economic theorist may contend for an extremely wide application of this concept of public purpose and over-emphasise the element of the general interest of the public. The reactionary on the other hand may strive for stringent restraint on its shifting boundaries and oppose any shift in emphasis. The true rule of the matter would seem to lie midway. The Court will not attach too much weight to the apparent character of the activity of agency but would prefer to lean in favour of an application of the rule which has regard to the substance of the matter and embraces activities, engagements and operations wliich would serve the common good as being affected with public interest.

The application of the rule must rest on the modern economic system of a welfare state having its own requirements and problems. The application of the rule would not be governed by right distinctions nor would the economic principle be allowed to be blurred by the blending of forms and interests.

In the field of economic progress and interest of the public the application of the rule would include operations which are more or less indispensable to the community. The very lack of definitiveness of the expression public purpose, somewhat paradoxical though it may seem, requires that the field of its coverage must extend to concerns which are fit to serve the common welfare. That coverage can include activities open to the initiative of both private enterprise and public administration for private enterprise is certainly amenable to public control and can be an efficient instrument of economic benefit.'

28. In this background of a welfare State and having regard to the facts that Sarabhai Chemicals was a scheduled industry controlled by the provisions of the Industries (Development and Regulation) Act. 1951, and that the manufacture by the company of several medical preparations which were at present imported from foreign countries would save large and valuable foreign exchange, the learned Judges of the Gujarat High Court came to the conclusion that the land acquired was needed for a public purpose.

29. The second case which must be noticed is that of the Orissa High Court in Satrughna Sahu v. State of Orissa, AIR 1958 Orissa 187. In that case lands were acquired by a notification issued under the Orissa Development of Industries, Irrigation, Capital Construction and Resettlement of Displaced Persons (Land Acquisition) Act, 1948, for the project of establishing a paper mill by a company. It was held that the acquisition of land for an industrial concern working purely for its own gain, even though the goods produced by the concern may be of use to the general public, was not an acquisition for a public purpose. If the learned Judges of the Orissa High Court intended to lay down a general proposition that acquisition of land for a company would never be regarded as one for a public purpose inasmuch as the object of the company was to derive some profit from the undertaking, then we must express our respectful dissent.

The passages from Weaver's Constitutional Law and Rottsheaoffcr's Constitutional Law referred to by the learned Judges do not lend support to any such conclusion. The Orissa decision is, however, clearly distinguishable on facts. In that case no agreement had been drawn between the company and the State Government regarding the conditions of the working of the mill and no material was placed before the Court to show how the manufacture of paper by the company would serve the interests of the public. An industry engaged in the manufacture or production of paper is a scheduled industry under the Industries (Development and Regulation) Act, 1951, but the learned Judges observed that there was no statement either by the State Government or by the paper mill to show that the establishment of paper mill at Choudwar was in furtherance of any scheme sponsored by the Government of India and accepted by the State Government.

30. For all these reasons, we are of the opinion that the validity of the acquisition of the petitioners' land for respondent No. 4 cannot be questioned. The acquisition is valid. In consequence, this petition is dismissed with costs of the respondent-State and the respondent-company. Counsel's fee payable to each of the said respondents is assessed at Rs. 100/-. The outstanding amount of security shall be refunded to the petitioners.


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