HJ.MAIAYAN TILES & MARBLES (P) LTD v. FRANCIS VICTOR COUTINHO (DEAD) BY LRS & Ors.

In the instant case the first condition that there must be a complete acquisition before section 7 could validate the same has not been fulfilled at all. [245A] B (iv) Until the possession of the entire land acquired was taken by the Government, the acquisition could not be a complete acquisition so as to attract the operation of section 7 of the amending Act. [246H-247A] ,/>, In the instant case the appellant did not appear before the Single Judge in C the writ petition filed by th' respondents and the petition was contested only by the State. Perhaps the appellant may have thought that as his interests were fully safeguarded by the Government, it was not necessary for it at that stage to appear before the High Court. The pleas of both the parties taken together clearly show that the entire possession of the property did not pass to the Government and thus no title vested in the Government despite the notification acquiring the land. [246F-G] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1098 of

1971. Appeal by Special Leave from the Judgment and Order dated 23-7-1970 of the Bombay High Court in Appeal No. 13 of 1965. Y. S. Chitale, P. G. Gokhale and B. R. Agarwala Appellant. V. S. Desai, Mrs. Urmila Sirur far the Respondent Nos. 2 & 3. Ex-parte for the RR 4 and.5. The Judgment of the Court was delivered by FAZAL1Au,'J. :-This appeal'!by special leave is directed'against a judgment dated November 3, 1970 of the Bombay High Court dis missing the Letters Patent Appeal filed by the appellant against a decision of a Single Judge allowing a writ petition filed by the first respondent. The facts of the case lie within a narrow compass and may briefly summarised as follows : D E p G The appellant was a private company which was carrying on the business of manufacture and sale of artificial marbles and tiles and other accessories at village Majas Mogra, Jogeshwari, East Bombay. The company was spread over about 10 acres of land.

Sometime in 1957 or 1958 the company moved the Government for acquiring additional land for purposes:of the company. Accordingly, H on the 7th January 1958, the Government issued a notification under section 4 of the Land Acquisition Act, )894 (hereinafter referred to + A - • as the 'Act') which was followed by a separate notice by the Land Acqnisition Officer acquiring the land in dispute. This was followed by another notification under s. 6 of the Act which was served on the respondent on the 25th January, 1960. In pursuance of these notifi-' cations the acquisition proceedings went on which culminated in an award mad~ under s. 12 of the Act on April 11, 1961, which was pub lished in the State Gazette on April 18, 1961. On December 11, 1961, a letter was written on behalf of the Government informing the owner of the acquired land that possession would be taken on or about the 12th of January 1962.

The purpose of the acquisition, as mentioned in the notification, was 'public purposes for which the land is needed for Himalayan Tiles & Marbles (Pvt.) Ltd'. The first respondent in the writ petition filed in the High Court before a Single Judge prayed that the entire land acquisition proceedings should be quashed because the land was not acquired for any public purpose as contemplated by s. 4 of the Act. It was contended before the Single Judge that the Government was not competent to acquire the land for purposes of a private company which could not be said to be a public purpose under s. 4 of the Act. The plea taken by the first respondent found favour with the Single Judge who af!owed the writ petition and quashed the land acquisition proceedings along with the notifications mentioned above. Thereafter, the appellant filed an appeal before the Letters Patent Bench which confirmed the view taken by the Single Judge and dis missed the appeal mainly on the ground that the appellant had no locus standi to file the appeal before the Bench inasmuch as it was not a person interested within the meaning of s.

18(1) of the Act. In support of this appeal, the learned counsel for the appellant, In the first place, Dr. Chi tale, has argued two points before us. it was submitted that the Division Bench of the High Court was wrong in holding that the appellant was not a person interested and therefore had no locus to file an appeal before the Letters Patent Bench. Secon dly, it was argued that in view of the various amendments in the Act, particularly in ss. 40 and 41, it could not be said that the acquisition under s. 4 was ultra vires of the Act. We might mention here that in the case of R.L. Arora v. State of U.P.(1) majority of the Judges of this Court took the view that a mere acquisition for the benefit of a com pany was not a public purpose and therefore the notification made in that case was strnck down. Sarkar, J., however, took a contrary In view of the decision Parliament amended certain provisions view. of the Act particularly ss.

40, 41, 44A, 44B and added a new sub- (1) [1962] Supp. 2 S.C.R.149. ' n· • HIMALAYAN TILES v. FRANCIS VICTO!l (Fazal Ali, J.) 239 In other words, by virtue of the amend section 5A after section 5. ments, the basis of the decision of the Supreme Court in the first Arora case was removed. By virtue of s. 7 of the amending Act, retros pective effect was given to the amendment superseding any judg ment, decree or order passed before July 20, 1962. Section 7 of the l amending Act may be extracted thus : Validation of certain acquisitions "7. Notwithstanding any judgment, decree or 01 der of any court, every acquisition of land for a Company made or purporting to have been made under Part VII of the principal Act before the 20th day of July 1962, shall, in so far as such acquisition is not for any of the purposes mentioned in clause (a) or clause (b) of sub-section (I) of section 40 of the principal Act, be deemed to have lJeen made for the purpose mentioned in clause (aa) of the said sub-section, and accordingly every such acquisition shall be, and shall be deemed always to have been, as valid as if the provisions of sections 40 and 41 of the principal Act, as amended by this Act, were in force at all material times when rnch acquisition was made or proceeding was held or order was made or agreement was entered into or action was taken . ... " Thls amending Act was also challenged in the case of R.L. Arora v.

State of Uttar Pradesh & Ors.,(1) 'where this Court:upheld its consti tutional validity subject to certain conditior.s. The appellar.t crnten ded before us that in view of the later decision of the Supreme Court the previous decision of this Court stood superseded and the land acquisition proceedings taken even before the amendments were In support of this argument, Dr. Chitale drew our atten validated. tion to various provisions of the Act. Defore, however, deciding the question as to whether or not the proceedings taken under s. 4 were cured by the amending Act, we would first deal with the contention of Dr. Chitale that the High Court w1s wrong iu holding that the company had no locus standi to file an appeal befo1 e the Letters Patent Bench. Learned counsel submitted that the definition of 'a person interested' ins. 18 is an in clusive one and is wide enough to include the appellant for whose benefit the land was acquired and who had to pay the entire compen sation in accordance with the agreement entered into by the Govern ment with the appellant.

He argued that it could not be said that the appellant was not interested in defending the acquisition or in the (I) [1964] 6 S.C.R. 784. B I!' G Ii 240 SUPREME COURT REPORTS [1980] 3 S.C.Jl quantum of compens~tion which was to be awarded by the Court on a reference made by the Collector. The High Court was of the view that as the land was acquired by the Government, the company had no interest in the same and was, therefore, not entitled either to appear or to defend the proceedings before the court. In order to decide this question it may be necessary to extract the relevant part of s. 18(1) which runs thus :- • " 18(1). Any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by the Collector for the determination of the Court, whether his objection be to the measurement of the land, the amount of the compensa tion, the persons to whom it is payable, ot the apportion ment of the compen~ation among the persons i11terested.

" It seems to us that the definition of 'a person inte1ested' given in s. 18 is an inclusive definition and must be liberally construed so as to embrace all persons who may be directly or indirectly interested either in the title to the land 01· in the quantum of compensat10n. In the instant case, it is not disputed that the landi were actually acquired for the purpose of the company and once the land vested in the Government, after acquisition, it stood transferred to the com- pany under the agreement entered into between the company and the Government. Thus, it cannot be said that the company had no claim or title to the land at all. Secondly, since under the agreement the company had to pay the compensation, it was most certainly interested in seeing that a proper quantum of compensation was fixed so that the company may not have to pay a very heavy amount of money. For this purpose, the company could undoubtedly appear and adduce evidence on the question of the quantum of compep, ation.

So far as this aspect of matter is concerned, there appears to be a general consensus of judicial opinion that even though the company title to the property yet it certainly has a right to may not have any appear and put forward its case in the matter of determination of the In the case of Sunder Lal v. Paramsukh quantum of compensation. das(l) this Court observed as follows : "It will be noticed that it is an inclusive definition. Jt is not necessary that in order to fall within the definition a person should claim an interest in land, which has been acquired. A person becomes a person interested if lie It seems claims an interest in compens1tion to be awarded. (I) [1968] I S.C.R. 362. y IIlMALAYAN to us that Paramsukhdas is a "persou interested" within s. 3(b) of the Act because he claims an inte1est in com pensation. It seems to us that Paramsukhdas was clearly a person interested in the objections which were pending before the Court in the references made to it and that he was also a person whose interest would be affected by the objections, within s.21.

He was cccmc'.il'gly entitled to be made a party. " In the case of The Hindustan Sanitaryware and Industries Ltd. Bahadurgarh & Anr. v. The State of Haryana & Ors{l);Pandit J. observed as follows :- "From the facts stated above, it is apparent that the compensation amount has to be paid by the two companies. If the said amount is increased by the learned Additional District Judge on a reference under section 18 of the Land Acquisition Act, it would be the two companies who would be prejudiced .... No authority even was cited by him that under similar circumstances any Court had ever held that the persons who had actually to pay the compensation, could not be allowed to lead evidence and say that the compensation amount be not enhanced. " In the case of Camilla Electric Supple Ltd. v. East Bengal Bank Ltd., Comila & Ors. (2) while the High Court took the view that the company for whose benefit the land was acquired may not strictly be an interested person yet it had undoubtedly a right to appear and adduce evidence on the quantum of compensation.

In this connec tion, Mukherjea, J. observed thus :- "Section 50, cl. (2) purports to remedy this disability and it lays down that in any proceeding held before a Collector or Court in such cases the local authority or company concerned may appear and adduce evidence for the purpose of determining the amount of compensation. The reason is plain. It is the company or the local authority who has got to pay the money in such cases and it would be unjust to deny them the right to appear and adduce (I) A.I.R. 1972 Punjab & Haryana 59. (2) A.I. R. 1939 Calcutta 669. B ~· • 242 SUPREME COURT REPO&TS (1980] 3 S.C.lt evidence which would have a bearing on the amount of the compsenation money. " Roxburgh, J, made the following observations :- "Thus the first question for decision is clearly settled by the above decision and there can be no doubt that in the circumstances at present being considered the company is a person interested, as defined in the Act, and is entitled to reqnire a reference under s.

18 unless that right is restricted by the terms of the proviso to s. 50(2)." In the case of M. Kuppuswami v. The Special Tahsildar (L.A.) II Industrial Estate, Ambathur at Saidapet, Madras (1) Venkatadri, J. interpreting the definition of 'interested [person' observed as follows:- "The only question for consideration therefore is whether the petitioner is a person interested, as defined in section 3(b) of the Land Acquisition Act. The definition section says that the expression 'person interested' includes all persons claiming an interest in compensation to be made on account of the acquisition of land under the Act. The expression 'person interested' is very comprehensive and it does not profess to give an exhaustive definition. The expression 'person interested' has been interpreted, by various Courts, and the trend of the opinion seems to be that I should give a liberal interpre tation .... On a review of the case-Jaw on the subject, it seems to me that the expression 'person interested' does not require that a person must really have an interest in the land sought It is enough if he claims an interest in to be acquired. compensation, as distinguished from an interest in the pro perty sought to be acquired.

As long as a person.claims an interest in the compensation, he is a person interested within the meaning of the definition of that expression. " The only case which appears to have taken a contrary view is a Division Bench decision of the Orissa Hiih Court in the case of State of 'Orissa through the Land Acquisition Collector, Samba!pur v. AmarandraPratap Singh & Anr., (2) where the High Court held that (I) (1967) I M. L. J. 329 . (2) A. I. R. 1967 Orissa 180. G H F . HIMALAYAN TILES V. FRANCIS VICTOR (Fazal Ali, !.) 243 the expression 'person interested' did not include a local authority or a company on whose behalf acquisition is made by the State. At the same time, it was clearly held that it was open to the company in any proceeding before the Collector or court to appear and adduce evidence for the purpose of determining the amount of compensation. Thus, the preponderance of judicial opinion seems to favour the view that the definition of 'person interested' must be liberally construed so as to include a body, local authority, or a company for whose benefit the land is acquired and who is bound under an agree.

In our opinion, this view accords ment to pay the compensation. with the principles of equity, justice and good conscience. How can it be said that a person for whose benefit the land is acquired and who is to pay the compensation is not a person interested even though its stake may be extremely vital ? For instance, the land acquisition proceedings may be held to be invalid and thus a person concerned is completely deprived of the benefit which is proposed to be given to him. Similarly, if such a person is not beard by the Collector or a court, he may have to pay a very heavy compensation which, in case he is allowed to appear before a court, he could have satisfied it that the compensation was far too heavy having regard to the nature and extent of the land. We are, therefore, unable to agree with the view taken by the Orissa High Court or even by the Calcutta High Court that a company, local authority or a person or whose benefit the land is acquired is not an interested person.

We are satisfied that such a person is vitally interested both in the title to the property as also in the compensation to be paid therefor because both these factors concern its future course of action and if decided against him, seriously prejudice his rights. Moreover, in view of the decision of this Court referred to above, we hold that the appellant was undoubtedly a person interested as contemplated by s. 18(1) of the Act. The Higl1 Court, therefore, committed an errorl:in throwing out the appeal of the appellant on the ground that it had no locus to file an appeal before the IJench. The next point that was argued before us was as to whether the land acquisition proceedings are cured by s. 7 of the amending Act referred to above. Mr. V.S. Desai, appearing for the respondents, submitted that in the second Arora case (supra) while upholding the.' constitutional validity of s. 4 and other amendments, this Court laid down certain conditions which had to be fulfilled if an acquisition made prior to July 20, ·1962 was held to be valid.

In this connection, reliance was placed by learned counsel for the respondents on.the fol lowing passage from R.L. Arora's case (supra) : B c E F B • • + A 8 "Therefore~ before s.p can validakan acquisition made before July 20, 1962, it must first be shown that the acqui sition is complete and the land acquired has vested in Government. This means that the land acquired has vested in Government either under s. 16 or s. 17(1) of the Act. Thuss. 7 of the Amendment Act validates such acquisitions in which property has vested absolutely in Government either under s. 16 ors. 17(1). Secondly s. 7 of the Amend ment Act provides that where acquisition has been made for a company before July 20, 1962 or purported to have been made under cl. (a) or cl. (b) of s. 40(1) and those clauses do not apply in view of the interpretation put thereon in R.L. Arora's case [1962 (2) Supp. S.C.R. 149), it shall be deemed that the acquisition was for the purpose mentioned in cl.

(aa) as inserted in s.40(1) of the Act by the Amendment Act. Thirdly s. 7 of the Amendment Act provides that every such acquisition and any proceeding, order, agreement, or action in connection with such acqui sition shall be, and shall be deemed always to have been, as valid as if the provisions of ss. 40 and 41 of the Act as amended by the Amendment Act were inforce at all material times when any action was taken for such acquisition. Finally, this validity is given to such acquisitions and to all actions therewith notwith in connection standing any judgment, decree or order of any court. " A perusal of these observations would manifestly reveal that even under s. 7 of the amending Act, an acquisition made for a company prior to July 20, 1962 must fulfil the following conditions :- (a) that the land has been acquired and is vested in Govern ment; (b) that the acquisition has been made under clauses (a) and (b) of s.

40 (I) (c) that every such acquisition and any proceeding, order, etc., shall be deemed always as valid as if the pro visions of ss. 40 and 41 of the Act, as amended by the amending Act, were in force at all material times; (d) that by virtue of s. 7 validity to the acquisition is given to all actions taken in connection inspite of any judgment. decree or order of any court to the contrary. therewith ., + llIMALAYAN TILES '" FRANCIS VICTOR (Fazal Ali, J.) 245 We are, however, satisfied that in the instant case the first con- dition adumbrated by this Court, viz., that there must be a complete acquisition before s. 7 could validate the same, has not been !fulfilled In this view of the matter we need not go into the other con at all. ditions indicated by this Court. It was contended by Mr. Desai that according to the unchallen- ged pleadings of the respondents, including the Government, which was a party before the District Court and also before !lie Single Judge of the High Court, there is nothing to show that after the issue of notification the Government had taken possession of the land so that it could be said that the land had vested in the Government in which case alone the acquisition prcceedings would have been completed.

In this connection, our attention was drawn to para 1 of the petition filed by the respondents before the High Court, which runs thus : "The petitioners have become the owners of the said lands by inheritance, and the present lands records in respect of the said lands stand in the name of the petitioners. There is no dispute between the petitioners and the res pondents that the ·petitioners are the owners of the said immovable property. The petitioners were at all times and still are in possession of the said immovable properties. " According to this averment, it is clearly pleaded that inspite of the notifications, the possession had not been given to the Govern ment and the respondents (petitioners before the High Court) were still in possession of the properties in question. A similar averment has been made in para 15 of the petition which maybe extracted thus :- "The petitioners say that they are still in possession of the said lands and possession of the said lands has not been taken away from them and the tenants of the petitioners numbering about 53 at present are in physical occupation of the same.

" It was also alleged that the Government had : threatened the peti tioners in the High Court that possession would be taken through police but despite such threats given by the Government, the petitioners were still in possession of the said lands and the structures were in possession of the tenants. The Government in its reply-affidavit did not deny these averments. On the other hand, they admitted the same. Para 8 of the reply-affidavit may be extracted thus : "with reference to paragraph 1 of the petition, I believe the contents thereof to be substantially correct though as stated above the petitioners' names do not appear as A a 1 • -+ SUPREME COURT REPORTS Jl980] 3 S.C.R. ,A occupants or owners in the record of rights relatfog to the land in question. " Similarly, in para 21 of the reply, the contents of para 15 of the peti tion were admitted and further the fact that possession was with the petitioners, was not denied but was admitted to be correct.

Para 21 of the reply-affidavit runs thus :- "21. With reference to paragraph 15 of the petition, I believe the contents thereof to be substantially correct. " Learned counsel for the appellant, however, drew our attention to a letter sent by the' respondents and went on to show that posses- sion of only one acre of land has been taken by the Government. Even the High Court clearly found that. possession had not been fully delivered to the Government after the notification. In this connection, the Division Bench observed as follows :- "On the question of possession being delivered to the Go vernment the petitioners specifically averred at the end of paragraph 15 of the petition. "The Petitioners further say that notwithstanding the said letter and the threat therein contained the petitioners are still in possession of the said lands and their tenants are occupying the said structures standing thereon and possession thereof has not been taken by the respondents".

They made similar averments at the end of paragraph I of the petition, that "the petitioners were at all times and still are in possession of the said im movable properties"." ' y F G H Admittedly, the appellant did not appear before the Single Judge in the writ petition filed by the respondents and the petition was con tested only by the State. Perhaps the appellant may have thought that as its interests were fully safeguarded by the Government, it was not necessary for it at that stage to appear before the High Court. Even so, the pleas of both the parties taken together clearly show that the entire possession of the property did not pass to the Government and thus no title vested in the Government despite the notification In these circumstances, therefore, it is unmis acquiring the land. takably clear that the properties not having vested in the Government, the acquisition was not complete and its invalidity could not be cured by s.

7 of the amendment Act as pointed out by this Court in the case referred to above. On this ground alone the appellant must fail. Dr. Chitale, however, suggested that out of 2 ·2 acres, possession of one acre may have been taken by the Government. Assuming that to be so, until the possession of the e11tire land acquired was taken HIMALAYAN TILES"· l'RANCIS VICTOR (Fazal Ali, l.) 247 by the Government, the acquisition conld not be a complete acquisi tion so as to attract the operation of s. 7 of the amending Act. Io this view of the matter, we are satisfied that the appellant has failed to prove that one of the essential conditions for application of s. 1 of the amending Act, which would cure the infirmities from which the acquisition proceedings suffer, has been fulfilled. The inescapable conclusion, therefore, is that the land acquisition proceedings were void and no benefit accrued to the appellant from the amending Act. _ The result is that the appeal fails and is dismissed but in the circums tances of the case there will be no orders as to costs. A B c N.V.K. Appeal dismissed.