State of Gujarat & Anr. v. Patel Chaturbhai Narsibhai & Ors.

R~Y, C.J. This appeal by certificate raises the question whether the notifications dated 29 September. 1965 and 18 January, 196? issued ·under sections 4 and 6 respectively of the Land Acquisition Act hereinafter referred to as the Act are lawful. In 1960 there was a request by the respondent Baroda Ind~trial ' Development Corporation hereinafter referred to as the Company to the State for acquiring land for expansion of the Industrial Estate of the Company. The Special Land Acquisition Officer, Baroda e:t· pressed the opinion that the acquisition \Yas necessary as the land was adjoining the occupied land of the Company and that was the only land available. On 4 MarchJ 1961 there was a notification under section 4 of the Act. On 22 August, 1961 there was an agreement between the State Government and the Company in accordance with the provisions con­ tained in section 41 of the Act. It may be stated here that the decision of this Court in R. L . Arora v. State of U.P.(li) was that in case of acquisition for a Com· pany, the Government could give its C9nsent if the acquisition was nee<Jed for the construction of some work which was likely to prove useful to the public. (1) [1962] 2 Supp. S.C.R. 149. 4-423SCI !75 286 SUPREME COURT R.EI'O.RTS [1975] 3 s.c.l. In 1962 Section 40 of the Act was amended to the effect tl~ai the Government could not give consent to the acquisition of land for a company unless the Government was satisfied by holding au enquiry as fully mentioned in the section. In the context of the decision of this' Court in Arora's case (supra) the Central Government in 1963 in exercise of powers conferred by section 55 of the Act made rules for the guidance of the State Govern­ ments known as the Land Acquisition (Companies) Rules, 1963 here­ inafter referr~ to as the Companies Acquisition Rules. Rule 4 of the Companies Acquisition Rules provid~s that wheJtJ.ever a Company makes an application to the appropriate Government for acquisition of any land, that Gover~ent shall .direct the Collector to submit a report on the matters mentioned therem. Those matters are ( 1) that the Q:>mpany has made its best endeavour to find out lands in the locality suitable for the purpose of the acquisition; (2) that the company has made all reasonable efforts to get such lands by negotia­ tion with the persons interested therein on payment of reasonable price and such efforts have failed; (3) that the land proposed to be acquired is suitable for the purpose; ( 4) that the area of land, pro,posed to be acquired is not excessive; ( 5) that the Company is in a position to utilise the land expeditiously; and ( 6) where the land proposed to be acquired is good agricultural land, that no alternative suitable site can be found so as to avoid acquisition of that land. Sub-rule (2) of Rule 4 aforesaid further provides that the Collec­ tor shall, after giving the Company a reasonable opportunity· to make any representation in this behalf, bold an enquiry into the matters referred to above. The Collector under sub-rule (3) of Rule 4 afore­ said shall submit a n~port to the appropriate Government. Sub-rule ( 4) of Rule 4 aforesaid provides that no declaration shall be made by the appropriate Government under section 6 of the Act unless ( i) the appropriate Government has consulted the committee and has con­ sidered the report under this Rule and the report, if any, submitted under Section 5·A of the Act; and (li) the agreement under section 41 of the Act has been executed by the Company. . Gujarat Act 20 of 1965 came into effect on 9 July, 1965. By sec­ tion 18 of the Gujarat Act called the Land Acquisition (Gujarat Uni- 1kation and Amendment) Act, section 39 of the Act was amended. ~he result o~ the amenGm~nt of. section 39 of the Act is that the provi­ siOns of sect10n.s 4 to 3 7 mcluslVe of the Act cannot be put into force unless the pr1~VIous consent of .the appropriate Government is obtained :.md unless tbe Company has executed an agreement mentioned in sec· tions foll0wing section 39 of the Act. In the pres~nt case there was an enquiry by the State Government un~er Rule 4 of .the Land Acquisition (Companies) Rules. The en­ q.mry was held prror to the notification dated 4 March, 1961 under'sec­ tlon 4 of the Act. On 22 August, 1961 there was an agreement bet­ ween the State Government and the Company. This agreement was after the State Government had given consent to the acquisition. On 0 GUJARAT v. CHATURBHAI (Ray, C.J.) 287 4 November, 1961. the notification under section 4 of the Act was cor­ rected with regard. to the survey numbers. The notification under sec­ tion 4 of the Act dated 4 March/4 November, 1961 was however cancelled on 28 September, 1965. On 29 September, 1965 there was a fresh notification under sec-· tion 4 of the Act. Subsequent to that notification there was an enquiry under section 5-A of the Act. The respondent, viz., the owner of the land filed objections. There was a report on 11 December, 1968 on that enquiry under section 5-A of the Act that the land sought to be acquir~d was suitable for the company and was nor in excess of the mquirements. On 18 January, 1969 there was a notification under section 6 of the Act. Along with the notification under section 6 of the Act an agreement dated 13 January 1969 between the company and the State as contemplated in section 41 of the Act was published on 18 J nnu:-~ry 1969. . The respondent land owner challenged the notification dated 29 September, 1965 under section 4 of the Act as well as 1he notification under section 6 of the Act dated 18 January, 1969. The High Court accepted the contention of the re.sponde~t that the enquiry co~templat­ cd under rule 4 of the Land Acquisition (Companies) Rules had not been held lawfully, and, therefore, the notification under section 6 of the Act was illegal. The reason given by the High Court was that the enquiry under rule 4 contemplated giving opportunity to the owner of the land to make effective representation against the proposed acquisi­ tion. The High Court held that the enquiry under rule 4 was bad be­ cause no opportunity had been given to the owners of the land. On behalf of the State it was contended that the High Court was wrong in holding that the notification under section 6 of the Act was bad br these reasons. The enquiry under rule 4 is an administrative enquiry and the owner of the land is not entitled to be heard in that enquiry. Second, the satisfaction under section 4 of the Act is subjec­ tive and is formed on the basis of the report pursuant to an enquiry conducted under rule 4. Third, the enquiry under rule 4 is to deter- . mine the bonafides of the Company, and, therefore, in such enquiry the owner of the land need not be heard. Fourth, after the report under rule 4 is made the Government may or may not issue a notifi­ cation under section 4. Fifth, if a notification under section 4 is issued the person concerned viz, the owner of the land will get an opportunity under section 5-A of the Act to make objection. Finally, the enquiry under Rule 4 is a preliminary enquiry in exercise of executive power. This enquiry is for collecting data to form an opinion for or against the issuing of notification. In such enquiry for collecting data the qtrcstion of violating any rights of the land owner does not arise. The contention of the State that the enquiry under rule 4 is admi­ nistrative and that the owner of the land is not entitled to be given an opportunity to be heard at the enquiry cannot be accepted for these reasons. The enquiry under rule 4 shows that the Collector is to sub­ mit a rctport among other matters that the Company bas made all 288 SUPREME COURT REPORTS [1975.1 3 s.c.R. reasonable efforts to get such lands by negotiation with the persons interested therein on payment of reasonable price and such efforts have failed. The persons i~terested therein are the owners of the lap.d which is proposed to be acquired. The Company at such an enquiry has to show that the company made negotiations with the owners of the land. The ow11ers of the land are, therefore, entitled to be heard at such an enquiry for the purpose of proving or disproving the reason­ able efforts of the company to get suc4 land by negotiation. The con­ tention on behalf of the State that the owners of the land will get an opportunity when an <mquiry is m~de under section S~A of the Act is equally unsound. Section 17 of the Act provides that the appmpriate Government may direct that the provisions of section 5-A shall not apply, and if it does so direct a declaration may be made. under section 6 at any time after the publication of the notification under section 4 of the Act. Therefore, the enquiry under section 5~A may not he held. There is another reason why the enquiry under rule 4 should be in the presence oi the. owners of the land, Reference may be made to th~ Rules for the guidance of officers in dealing with objections under secjon 5-A of the Act. These rules are made in exe.rcise of the powers conferred by section 55 of the Act. Under these Rules it is stated that the objections _?re of the following nature : (i) the notified purpose is not genuinely or properly a public purpose; (ii) the land notified is not suitable for the purpose for which it is notified; (iii) the Jand is not so well suited as other land; (iv) the area proposed :is ex­ cessive; (v) the objectors' land has been selected maliciously or vexa­ tiou:;ly; (vi) the acquisition will destroy or impair the amenity of his­ torical or artistic monuments and places of public resort; will t~ke away imponant public right of way or other convenieo~es. or will desecrate religious buildings, graveyard and the like. The nature of objections under these rules shows that the matters which are to be enquired into under rule 4, and in particular, that the Company made all efforts to get such land by negotiation with the persons interested thereon on payment of price and such efforts failed is not one of the objections which can be preferred in an enquiry under section 5-A. It is true that in the present case there was an enquiry under section S~A of the Act but the enquiry was also before the agreement between the State and the Company under section 41 of the Act and without any enquiry under section 40 of· the Act to enable the Government to give its consent. The respondent put in the forefront the contention that the agree­ ment between the Company and the State under section 41 of the Act i u the present case, dated 13 January, 1969. a:1d t>ublishe.d on 1 S January 1969 was subsequent to the notification under sectiot1 4 of the Act, dated 29 September, "1965 and therefore the said notification wns in violation of the provisions contained in section 39 of the Act and therefore invalid. The f;and Acquisition .(Gujarat Unification and Amendment) Act, 1963 w]uch amended section 39 of the Central Act enacted that the provisions of sections 4 to 37 inclusive of the Act shall not be put in (?TJJARAT v. CHATURBHAI (Ray, C.J.) 289 force in order to acquire land for any Company, unless there is pre· vious consent of the State Government or the Company shall have exe­ cuted the agreement. On behalf of the State it was said that the agre~~ ment in the year 1961 would suffice. This is only to be stated to be rejected because the notification under section 4 o'f. the Act was can­ celled by the State on 28 September, 1965. Thereafter fresh proceed­ ings started. FUrther, the agreement in the year 1961 did not survive, because· a fresh agreement was made on 18 January, 1969, which was pubHshed on 18 J anl)ary 1969. The provisions contained in sections 38 to 41 of the Act indicate that the provisions of sections 4 to 3 7 of th_e Act cannot be applied to · acquire land for any company unless the State Government gives pre­ vious consent th~reto and the oompany executes ~n agreement with the State as mentioned in section 41 of the Act. .Second1 section 40 of the Act indicates that the. State Government cannot give consent unless there is an enquiry as provided in that section. It is IWticeable that any enquiry under section 5-A of the Act is not an enquiry within the meaning of section 40 of the Act. The reason is that the Gujarat. Amendment Act 1963 being Gujarat Act No. 20 of 1965 deleted the words "either on the report of the Collector under section · 5-A sub­ section (2) or" from section 40 of the principal Act. Similarly, in section 41 of the Act as a result of the Gujarat Amendment Act the words "either on the reP<>rt of the Collector under section 5-A sub­ section (2) or'' were 'deleted. The effect of th~ deletion of those words by the Gujarat Amendment Act is that the enquiry under section 5-A is not an enquiry within the meaning of section 40 ()f the Act. In the present case, the enquiry under rule 4 of the Land Acquisi~ tion (Companies) Rules was held before the notifications under sections 4 and 6 of the Act were issued in the year 1965. The enquiry pursu­ ant to the notifications in the year 1961 and previous to the fresh notifications in '1965 is of no effect in law for two principal reasons. First, the 1961 notification was cancelled, and, therefore, all steps taken thereunder became ineffective. Second, the enquiry under rule 4 in 1961 was held without giving opportunity to the land owner rcspon~ dent, and, therefore, the enquiry is invalid in law. The affidavit evidence on behalf of the Government was thnr an enquiry was held under section 40 of the Act in the month of July, 1965 and there was a report on 25 August, 1965. The ~nquiry under section 40 of the Act is equally of no avail for similar r.:::.bous why the enquiry Under Rule 4 in 1961 is of no effect in law. 290 ltUPREME COURT REPORTS [1975] ~~ s.c.R. For tht-:se reason~, wr, hold that the a~isition proceedings are vitiated. There was no. compliance with the provisions of se!;tion 39 of the Act. There was no prior agreement between the State and the Company before provisions contained in sections 4 to 37 were put into force. The. enquiry under section S·A of the Act in the pr~~ent case~ does not satisfy the provisions contained in_ rule 4 of the Companies Acquisition Rules. The owners of the land are entitled to opportunity of being heard in an enquiry under rule 4 and enquky under section 40 of the Act. No such. opportunity was given to the owners. The appeal, therefore, fails and is dismiss~d. The State will pay costs to Respondents No. 1, 2 and 3. V.M.K. · Appeal dismissed.