R.N. Misra, J.
1. Owners of certain lands located within the Bhadrak Subdivision of the district of Balasore filed a suit on 12-10-1961 for a decree of permanent injunction against the defendants restraining them from continuing a land acquisition proceeding for the purpose of laying a road on the disputed property. They impleaded in the said suit the State of Orissa represented by the Collector of Balasore and the Land Acquisition Officer, Balasore, as defendants 1 and 2. They also impleaded as many as 12 other defendants under Order 1, Rule 8 of the Code of Civil Procedure.
2. Plaintiffs claimed that some of defendants trespassed over their lands on 2-5-1956 with a view to constructing a road and they dug up portions of the land. Thereupon plaintiffs filed Title Suit No. 112 of 1956 and obtained a decree. Plaintiffs also claimed damages and obtained a separate decree. As those defendants did not remove the encroachment, plaintiffs levied execution. The defendants with a view to frustrating the decree obtained by the plaintiffs moved the Sub-divisional Officer, Bhadrak, for acquisition of the land at their cost and under his orders deposited the value of the land in the public treasury. Plaintiffs alleged that the construction of the road was not being undertaken by the State of Orissa and payment of compensation was not being made out of the State Fund. When a notification under Section 4 of the Land Acquisition Act was made, plaintiffs objected, but the Land Acquisition Officer (defendant No. 2) brushed aside the objections and recommended acquisition. A declaration as envisaged under Section 6 of the Land Acquisition Act was also made saying that the construction was to be made at public expense which is not a fact. Therefore, the acquisition was void, illegal and mala fide.
3. Defendants 1 and 2 filed a jointwritten statement while defendants 4 and 5 filed a separate written statement. The maintainability of the suit was seriously challenged and it was contended, that the acquisition was a valid one and the plaintiffs had no cause of action.
4. At the trial, on plaintiffs' side asingle witness being plaintiff No. 4 was examined as P. W. 1. On the defendants' side, four witnesses in all were examined. Voluminous documents were produced on both sides. The learned trial Judge dismissed the suit finding on all material issues against the plaintiffs.
5. Plaintiffs thereupon appealed to the lower appellate Court. The learned Appellate Judge came to holds-
(i) The compensation was paid by the villagers and, therefore, the declaration under Section 6 of the Land Acquisition Act (Ext H) was not a valid one;
(ii) No sum of money was contributed by the Sub-divisional Officer and no step was taken by him so implement his own suggestion to pay a sum of Rs. 6/- out of the Development Fund;
(iii) The deposit of the compensation amount in the Treasury though appeared to have been made by the Sarpanch, in reality, the villagers paid the same and contribution by the villagers did not form part of Fund under the control and management of Local Authority;
(iv) While the Grama Panchayat was a Local Authority and it had Fund under its management and control, but the payment was not made out of that Fund;
(v) As the compensation to be awarded was not decided to be paid wholly or partly out of public revenue or some Fund managed or controlled by a Local Authority, the action of the acquiring authority is a colourable exercise of power; and
(vi) The action of the Land Acquisition Officer and the Sub-divisional Officer in directing the Sarpanch of the Grama Panchayat to pass resolutions in a particular way amounted to colourable exercise of powers.
On the aforesaid findings, he allowed the appeal, set aside the judgment of the trial Court and decreed the suit. Against the said reversing decision, two separate appeals have been filed. Second Appeal No. 21 of 1973 is by defendants 5, 11, 13 and 14 while Second Appeal No. 13 of 1973 is by defendants 1 and 2 only. As both the appeals arise out of a common judgment and were heard together, this judgment shall dispose of both fee appeals.
6. Three questions arise for determination :--
(1) Is the acquisition vitiated on account of the provisions in the Grama Panchayats Act not having been followed
(2) Is the declaration under Section 6 of the Land Acquisition Act not final and is the same bad and the acquisition proceeding vitiated on account of the declaration being incorrect
(3) Is the proceeding for acquisition a mala fide one?
Point No. 1:
7. The Grama Panchayat which was a body corporate in terms of Section 7 of the Orissa Grama Panchayats Act of 1948was not impleaded in the suit. Nor was there any allegation made that the provisions of that Act regarding acquisition had not been complied with and, therefore, the land acquisition proceeding was vitiated. In the absence of appropriate pleadings, no issue was raised on this score. On the other hand, one of the issues was whether the suit was bad for not impleading the Grama Panchayat. In the trial Court it had been contended on behalf of the plaintiffs that notice under Order 1, Rule 8 of the Code of Civil Procedure having been issued, it was not necessary to implead the Grama Panchayat specifically as a defendant. Relying on the statutory, provision for notice and the further provision that 'no suit would lie unless notice is served', the learned Munsif had held that Order 1, Rule 8 of the Code would not cure the defect and as he was of the view that the Grama Panchavat was a necessary party, he came to the conclusion that the suit was bad for non-joinder of necessary parties.
If the Grama Panchayat had been impleaded and appropriate opportunities had been given, it would have been open to the Grama Panchayat to show that proper steps as provided under the statute had been taken for the acquisition. Even in the absence of Grama Panchayat, if the plea had been raised, it would have been open to the defendants to lead evidence in regard to compliance. Even if some of the provisions have not been complied with, in my view, the acquisition would not be vitiated. In the Grama Panchayats Act certain provisions have been made to facilitate acquisition of property. There is nothing in these provisions from which it can be construed that non-compliance with any of the provisions would vitiate the acquisition. An acquisition made not strictly in compliance with the procedure indicated for acquisition in the Grama Panchayats Act does not vitiate the acquisition. On this basis it must be held that non-compliance with the provisions of the Grama Panchayats Act in regard to initiating the acquisition proceeding in no manner vitiates the acquisition. Point No. 2:
8. Ext. H is the declaration dated 3rd June, 1961 and runs thus:
'No. 26447-L-A-30/61'-Bls.-R- Whereas it appears to the Government of Orissa that land is required to be taken by Government at the public expense, viz. for a village road in mouza Baradadihi, Bhadrak in the village of Baradadihi Pargana Randhiaorgada, Zilla-Balasore, it is hereby declared that for the above purpose a piece of land measuring more or less 0.54 acre bounded on the-
North ............ South ............East ............West ............ is required in the aforesaid village of Baradadihi.
This declaration is made under the provisions of Section 6 of Act 1 of 1894, to all whom it may concern.
A plan of the land may be inspected in the office of the Collector, Balasore.
By order of the Governor.. ... ...'
Section 6 of the Land Acquisition Act provides :--
'(1) Subject to the provisions of Part VII of this Act, when the appropriate Government is satisfied, after considering the report, if any, made under Section 5A, Sub-section (2), that any particular land is needed for a public purpose, or for a company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorised to certify its orders, and different declarations may be made from time to time in respect of parcels of any land covered by the same notification under Section 4, Sub-section (1), irrespective of whether one report or different reports has or have been made (wherever required) under Section 5A, Sub-section (2).
Provided further that no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a Company, or wholly or partly out of public revenues or some fund controlled or managed by a local authority.
(3) The said declaration shall be conclusive evidence that the land is needed for a public purpose or for a company, as the case may be; and, after making such declaration, the appropriate Government may acquire the land in manner hereinafter appearing.'
The effect of Section 6(3) of the Land Acquisition Act was considered at length in the case of Somawanti v. State of Punjab, AIR 1963 SC 151. The majority decision indicated that the declaration under Section 6 that a particular land isneeded for a public purpose or for a company is not to be made- by the Government arbitrarily, but on the basis of material placed before it by the Collector. The provisions of Sub-section (2) of Section 5A make the decision of Government on the objections final while those of Sub-section (1) of Section 6 enable the Government to arrive at its satisfaction. Subsection (3) of Section 6 goes further and says that such a declaration shall be conclusive evidence that the land is needed for a public purpose or for a company. The conclusiveness or finality attached to the declaration of Government is not only as regards the fact that the land is needed but also as regards the question that the purpose for which the land is needed is in fact a public purpose or what is said to be a company is really a company. It is further stated that whether in a particular case the purpose for which the land is needed is a public purpose or not is for the State Government to be satisfied about. If the purpose for which the land is being acquired by the State is within the legislative competence of the State, the declaration of the Government will be final subject, however, to one exception. That exception is that if there is a colourable exercise of power, the declaration will be open to challenge at the instance of the aggrieved party. If it appears that what the Government is satisfied is not a public purpose but a private purpose or no purpose at all, the action of the Government would be colourable as not being relatable to the power conferred upon it by the Act and its declaration will be a nullity. To such a declaration the protection of Section 6(3) will not extend. For, the question whether a particular action was the result of a fraud or not is always justiciable, provisions such as Section 6(3) notwithstanding.
Mr. Pal for the respondents cited a number of authorities in respect of the stand that when there is colourable exercise of power, it is open to dispute notwithstanding the provision for conclusive-ness of the declaration. I think, it is unnecessary to refer to them in view of the settled position on the authority of the decision of the Supreme Court referred to above.
The challenge to the declaration was, as the plaint averments would show, that the purpose of acquisition was not public as also that the compensation money for the acquisition was being fully paid out of a fund not referred to in the SecondProviso to Section 6(1) of the Land Acquisition Act. Mr. Pal during argument in the second appeal, however, no more contended that the acquisition was not for a public purpose. The sole basis for challenge as adopted by Mr. Pal, therefore, was that the source of money from which compensation was intended to be paid was not one of those referred to in the Proviso. Three alternate sources have been referred to in the Proviso, namely that compensation is payable (i) by a company; (ii) wholly or partly out of public revenue or (iii) some fund controlled or managed by a Local Authority. It is the case of the defendants that the compensation money in this case has been paid out of the Grama Fund of the Kalei Grama Panchayat -- a Fund which 19 controlled by a Local Authority.
Before I proceed to deal with this aspect of the matter, it is appropriate to briefly refer to the historical background. Admittedly some of the defendants wanted to forcibly lay a road on the disputed property and it led to litigations in which plaintiffs ultimately succeeded. With a view to avoiding the decree of the Civil Court and completing the laying of the road, the judgment-debtors-defendants moved the Sub-divisional Officer and even deposited the compensation money into the public treasury. At one point of time, the Sub-divisional Officer was of the view that out of the State Fund a part of the compensation money would be paid so that the requirement of the Proviso would be satisfied. That having failed and the Sub-divisional Officer being satisfied that laying of a road at the place was for public benefit, directed the Grama Panchayat within whose jurisdiction the land lay to put the road after acquiring the property. As it appears, the judgment-debtors-defendants deposited the money with the Sarpanch who credited it to the Grama Fund and in due course, as would appear from Ext. 3, the Grama Panchayat deposited the money in the treasury.
Mr. Pal does not dispute the fact that the Grama Panchayat is a Local Authority. He also does not dispute the fact that the Grama Fund is a Fund controlled by that Local Authority. According to him, however, the money given by the judgment-debtors-defendants to the Grama Panchayat had not become a part of the Grama Fund. The logic of the argument is that even if it is accepted that the judgment-debtors-defendants had made a gift of the amount of money, there is no evidence of acceptance thereof Section 40 of the Grama Panchayats Act, 1946 deals with Grama Fund, Clause (h) of Sub-section (1) provides that 'all sums received by way of loan or gift' would be part of the Grama Fund. According to Mr. Pal, a gift is not complete until accepted and an acceptance of a gift for the Grama Fund can only be by a resolution of the Grama Panchayat. As there is no such resolution, even if the money had been physically put into the Grama Fund it would not be a part of it. This argument obviously is based upon a fallacy. Undoubtedly under the Transfer of Property Act, a gift of immovable property does not become complete without acceptance. No law has been cited to require acceptance as a condition precedent for completing a gift of movable property. The fact that the money had been credited to the Grama Fund for laying of the road is itself evidence of acceptance and the Sarpanch as the principal executive of the Grama Panchayat had accepted the money. I see no justification to hold that the money deposited by the judgment-debtors-defendants had not become a part of the Grama Fund. On the basis of Ext. 3, it can safely be held that the deposit for compensation money has been from out of the Grama Fund.
The next aspect for consideration on this point is that even if it be accepted that the compensation money to be awarded came from a fund controlled by a Local Authority, the declaration under Ext. H being that the acquisition was being at public expense, while payment was really being made from the fund of a Local Authority was a colourable notification. In the notification 'public expense' has been referred. Mr. Pal contends that 'public expense' is synonymous to public revenue and public revenue certainly refers to money in the Consolidated Fund. It is contended, therefore, that while money was really being paid from a Fund of a Local Authority, the notification had shown that money was given from the State Exchequer. This itself was a colourable action.
Mr. Pal referred to certain decisions wherein no distinction had been made between 'public expense' and 'public revenue'. There is, however, no pointed discussion on the question and 'public expense' has been assumed to be 'public re-venue' in these decisions. These decisions, however, cannot be taken as authority for the proposition that 'public expense' shallnecessarily mean 'public expenditure'. The phrase public expense has no statutory definition. 'Expense' as indicated in the case of Indian Molasses Co. v. I.-T. Commr., AIR 1959 SC 1049, is synonymous to 'expenditure' and expense means money paid out by calculation and intention though in many tees of the word this element may not be present. Paying out or away money is the primary 'meaning of 'expense'. The Grama Fund is admittedly a public Fund and expense from such a public Fund can certainly be described as public expense and it cannot be said that when expense made out of such a Fund is described as 'public expense', it is not a proper description of the position. Therefore, when money was drawn from the Grama Fund for payment into the treasury for meeting the compensation for acquisition and in the declaration it was stated that the acquisition was being made at public expense, no false statement was made and the declaration cannot be struck down on that ground. Unless it is found that the phrase 'public expense' was introduced into the declaration in a motivated manner and with a view to making a show of satisfaction of the legal requirements, the plaintiffs should mot be permitted to agitate this question. In my view, on the second point, plaintiffs must also lose. The lower appellate Court went wrong in holding that 'public expense' meant 'public revenue'.
It may not be out of place to refer to the decision of this Court in this very matter on the earlier occasion (See Bhagaban Sahu v. Collector, AIR 1972 Orissa 193). This very litigation had come before this Court and was remitted to the lower appellate Court for a fresh disposal and, in particular, to record a finding as to whether a nominal or token contribution by the State amounted to strict compliance with the requirements of the Proviso. As a fact, the proposal of the Sub-divisional Officer for contributing Rs. 5/-had not materialised and the entire money had gone out of the Grama Fund. A proposition was advanced before this Court which had no foundation at all as pointed out by the learned Counsel for the appellants but it is wholly unnecessary for me to go into the aspect. It is sufficient to say that the decision reached on the earlier occasion is not relevant for the point in issue.
Point No. 3:
9. The last question for consideration is whether the proceeding for acquisition is mala fide. In paragraph 11 of the plaint, the following averment has been made:--
'That the acquisition of land in the present case is being made at the instance of some villagers of another village after their failure in original suit No. 112 of 1959 (I) of the Court of the Munsif, Bhadrak, and hence the exercise of the powers of the State Government under Act 1 of 1894 is mala fide and in derogation of the powers conferred on the State Government under the aforesaid Act. Hence the proceeding under Land Acquisition Act is mala fide (sic).'
Indisputably the plaintiffs had obtained a decree against some of the defendants declaring their title and restraining them from interfering with plaintiffs' possession. When those defendants found that their attempt of laying a road has been thwarted through the legal process, they asked for acquisition of the land and claimed that laying of a road was of immense benefit to the local public. The Sub-divisional Officer who is in charge of looking after the development work was moved and he directed those defendants to deposit the compensation money. He appears to have been confronted with the difficulty that an acquisition when money was being paid by a set of individuals could not be lawfully made. Once he was satisfied that the laying of a road was useful, he directed the local Grama Panchayat whose duty under the statute it was to lay and maintain roads to ask for acquisition. Though not pleaded, plaintiffs have contended in the Courts below that issue of a direction by the Sub-divisional Officer when moved by the vanquished defendants was itself a mala fide act. The Sub-divisional Officer has not been impleaded in this suit, nor has there been any clear allegation of mala fide in his conduct Therefore, mala fide on the part of the Sub-divisional Officer is not open to examination and in case such a plea is entertained, apart from the fact that the defendants are likely to be prejudiced, the Sub-divisional Officer would clearly be affected without being given a hearing. There is no allegation of mala fides against the Grama Panchayat or its Sarpanch, nor have they been impleaded in the litigation. Under the Grama Panchayats Act, sufficient control is vested in the Sub-divisional Officer over the activities of the Grama Panchayats. The direction of the Sub-divisional Officer to take steps for acquisition for the purpose, therefore, cannot convert his action into a mala fide one.
Mr. Pal next claimed that there was no decision of the Grama Panchayat for acquisition and, therefore, the acquisition proceeding itself is mala fide. This does not seem to be a correct statement. On 10-6-1960, the Grama Panchayat had resolved that the acquisition may be made at its cost and in the letter of the Sarpanch to the Sub-divisional Officer (Exhibit R-2), the copy of the resolution has been incorporated, from which it clearly appears that the Grama Panchayat had been satisfied that the acquisition was necessary and out of the Grama Fund the Panchayat was agreeable to meet the expenses for it. As early as November, 1959 (See Ext. B), the Grama Panchayat had recorded a resolution having been satisfied that the acquisition was necessary, In fact, the proposed road linked up certain villages with the Jagannath Trunk Road. In view of such evidence, there is no basis for the finding of mala fide.
10. Mr. Pal relying on some decisions of the Supreme Court maintained that whether the acquisition was mala fide or not was a question of fact and in view of the decision of the lower appellate Court that the acquisition was a mala fide one, the said finding was not open to be disturbed in second appeal. See Valjibhai v. State of Bombay, AIR 1963 SC 1890 and Ganga Bishnu v. Cal. Pinjrapole Society, AIR 1968 SC 615. In the earlier judgment, the Supreme Court observed:
'.....The question whether theacquisition was collusive or mala fide is one of fact and on this point the High Court and the two Courts below have come to the conclusion that the appellants have not been able to substantiate their pleas. It is not for this Court to review the evidence in a case where there are concurrent findings of fact, unless there be exceptional reasons, and we find none here.....'
In the second case, it was observed:--
'The question as to mala fides of the Government or the Government having misused its powers or having acted in fraud of the statute was entirely a question of fact. There being a concurrent finding on that question by the trial Court and the District Court against the 1st respondent Society, the High Court couldnot have reopened their concurrent finding except on the around that it was perverse or unreasonable or without evidence. Such an argument not having been urged, the High Court could not go into that question.....''
As I have already pointed out, there is no clear plea of mala fides except what has been quoted above from the plaint. The persons against whom mala fide is alleged were not impleaded; plaintiffs led no oral evidence to establish mala fide; the documents exhibited on the plaintiff's side did not establish any mala fide. On the other hand, the documentary evidence on the side of the defendants clearly shows that an acquisition proceeding had been taken under the statute in keeping with the manner prescribed by the Act. The lower appellate Court obviously lost sight of the deficiencies in the plaintiffs' case, did not take into account properly the fact that appropriate parties had not been impleaded and overlooking the material evidence on record came to its own conclusion. While in the rase reported in AIR 1968 SC 615, the question of mala fides had not been disputed before the High Court, in these appeals, that question was seriously challenged. Having examined the entire matter, I am of the view that the learned Appellate Judge came to an erroneous conclusion by committing an illegality. His conclusion that the acquisition is vitiated by mala fides has, therefore, to be vacated. Here again, the finding must be against the plaintiffs.
11. On the analysis presented, the decision of the learned Appellate Judge cannot be sustained. I would accordingly allow both the appeals, vacate the judgment and decree of the learned Appellate Judge and restore those of the trial Court. Plaintiffs obtained a decree and, therefore, had laboured under the view that they had a right which law was obliged to protect. It is under that sense of frustration that they had initiated the litigation and pursued the matter. Under these circumstances, it is appropriate that both parties are directed to bear their own costs throughout.