DR. A.K. MERCHANT v. THE STATE OF KARNATAKA

Judgment

1. THE STATE OF KARNATAKA THROUGH THE DEPARTMENT OF HOUSING AND DEPARTMENT OF URBAN DEVELOPMENT M.S. BUILDING, BENGALURU – 560001. REPRESENTED BY ITS SECRETARY. - 2 -

3. BANGALORE DEVELOPMENT AUTHORITY CHOWDAIAH ROAD, KUMARA PARK WEST, BENGALURU – 560020 REPRESENTED BY ITS COMMISSIONER. ADDITIONAL LAND ACQUISITION OFFICER BANGALORE DEVELOPMENT AUTHORITY CHOWDAIAH ROAD, KUMARA PARK WEST, BENGALURU – 560020. ...RESPONDENTS (BY SRI HARISHA A.S., AGA FOR R-1; SRI B.S. KARTHIKEYAN, ADVOCATE FOR R-2 & R-3) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARE THAT THE SCHEME OF THE R2 IN RESPECT OF THE SCHEDULE PROPERTY HAS LAPSED AND HAS BEEN ABANDONED; DECLARE THAT THE SCHEDULE PROPERTY NEVER VESTED WITH THE RESPONDENTS; AND ETC., THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 09/01/2026, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA CAV ORDER The petitioner has approached this Court assailing the acquisition proceedings initiated by the Bangalore Development Authority in respect of land measuring 3 acres 13 guntas in Sy No. 85, Kacharakanahalli, Bangalore North Taluk, on the ground that the scheme has lapsed under Section 27 of the Bangalore Development Authority Act, 1976; that possession was never taken nor compensation paid and that the acquisition cannot be revived after four decades. The petitioner seeks for quashing of the notification and endorsement dated 21.07.2022. BRIEF FACTS :

2. The schedule property was purchased by one Mr. S. F. Yaganagi in 1946 and is used for religious, spiritual and welfare activities of Baha’i community. A preliminary notification dated 21.03.1977 and final notification dated

14.05.1980 were issued for formation of HRBR layout. In - 4 - 1981, the Yaganagi Trust was constituted and the property vested in the Trust. Objections were filed and sought de- notification. Bangalore Development Authority’s (‘BDA’ for short) Engineering Wing on inspection, reported that the land was not suitable for layout formation and BDA, in its resolution 1987 recommended reconveyance. An award dated 22.09.1986 was passed. In WP 18877/1986, this Court stayed the award notice on 27.10.1986 preventing taking over of possession. According the petitioner, no compensation was ever paid, and physical possession remained with the Trust and that the BDA's own internal note records that the Trust continues in possession and the structures exist on the land. It is stated that the Trust continued all religious, educational and welfare activities, paid taxes, maintained katha and remained uninterruptedly in possession for more than 4 decades. On 21.07.2022, BDA issued an endorsement asserting that possession has been taken in 1986, that compensation was available for collection and sought documents. Aggrieved, the present writ petition. - 5 -

3. Sri V. Lakshminarayana, learned Senior Counsel appearing for the petitioner, would contend that the schedule land (Sy. No. 85, measuring 3 acres 13 guntas) has been continuously used as a religious, spiritual and welfare center of Baha’i faith for decades, housing, housing permanent structures, compound walls and ancillary facilities, “Tuba Palace”. It is stated that the Trust is registered under the Karnataka Societies Registration Act. The property functions as a recognized center with international linkage. It is contended that the actual settled possession with substantial construction is evidenced through the inspection reports, award narrative and photographs. Learned Senior Counsel for the petitioner submits that preliminary notification was in the year 1977 and final notification in the year 1980, award notice was stayed by this Court on 27.10.1986 and the interim order continued till final disposal. Consequently, no lawful possession was taken. It is submitted that the multiple spot inspections by the BDA officials recorded that the land contained valuable old structures lay away from - 6 - regular layout and was not advantageous for acquisition or layout formation. It is submitted that the BDA resolutions dated 03.07.1987 and 11.12.1987 expressly noted that only 33 guntas were vacant and the remainder was built up and unsuitable. These resolutions were forwarded to government under Section 65 sub-clause (2) and 3 of the Bangalore Development Authority Act, 1976 (‘BDA Act’ for short) and the government communications called upon the BDA to re- examine/release the land. It is submitted that no rescission of these resolutions followed demonstrating abandonment. It is submitted that the mahazar dated 27.10.1986 is legally

infirm, cyclostyle, unsigned by the panchas lacking boundary particulars. It is submitted that Section 16 sub-clause (2) notification premised on such mahazar cannot create vesting. Actual physical possession is a jurisdictional fact and is not proved. Learned Senior Counsel submits that mere assertion of deposit ‘is insufficient’. There is no proof of lawful tender or court deposit under Section 31 of the Land Acquisition Act, 1894 (‘Act, 1894’ for short). The vesting under Section 16 - 7 - requires both lawful possession and payment or lawful deposit of compensation. Absence of either defeats vesting. It is submitted that the scheme was never implemented on this land within five years of the final notification. Where possession is not taken and land is not utilized, Section 27 operates notwithstanding passage of time. Learned Senior Counsel relies upon the following judgments : (i) Girnar Traders vs State of Maharashtra and Others1(Girnar Traders) to contend that the land in terms of Section 16 of the Act shall vest in the State free of encumbrance only when compensation is paid and possession of the land is taken under that Act. (ii) Offshore Holdings Private Limited vs Bangalore Development Authority Others2 (Offshore Holdings Private Limited) to contend that if possession is not taken, scheme cannot be implemented since land is not vested. ORDER i. The preliminary notification

21.03.1977 bearing No.HC.PR.ALAO/389/BDA/76-77 final notification dated 12.06.1980 bearing No.HUD/49/MNJ/78 issued insofar as it relates to the land of the petitioner for which no award has been passed and possession is not taken by BDA, are hereby set aside. ii. The writ petition disposed accordingly.”

8. In Prema (supra) it is held at para Nos. 3 and 4 as under: “3. Evidently, there is a survey conducted at the instance of the BDA, which clearly indicates that the BDA has taken possession only in respect of 1 acre 25 guntas and the remaining land to the extent of 1 acre 27 guntas comes under the revenue built up area, which according to the petitioner, is available with the petitioner, which has been unutilized by the BDA and therefore, the final notification being of the year 1980 and if the scheme has not been implemented insofar as this extent of 1 acre 27 guntas on the ground that it is completely built up, it is to be taken that the BDA - 21 - does not intend to acquire or develop the land and in terms of Section 20 of the BDA Act, would be entitled only to impose betterment charges on the owner of such land. In turn, the petitioner would have the benefit of development by the BDA.

4. Consequently, the scheme insofar as these lands are concerned would lapse and the acquisition as well. Accordingly, the only saving made by the BDA is that it would impose betterment charges, which the petitioner shall pay. With that observation, the petitions are allowed. The impugned notification in respect of land bearing Sy.No.21/1 of Kacharakanahalli to the extent measuring 1 acre 27 guntas insofar as the petitioner is concerned, stands quashed.”

9. This Court has held that the lapse can be land specific even if the scheme survives elsewhere.

10. The respondents - BDA contend possession was taken on 27.10.1986 by drawing a mahazar and issuing a notification under Section 16 sub-clause (2) of the Land Acquisition Act. However, the records indicate that there was an interim order on 27.10.1986, wherein the - 22 - further proceedings pursuant to the Award Notice dated

11.10.1986 was stayed. Once the operation of the Award Notice was stayed, no lawful possession could have been taken and there is no material to show other than the document which is dated 27.10.1986 that the possession was taken thereafter. The alleged mahazar is cyclostyle and does not bear the signature of independent panch witness, does not contain boundary identification and is not signed by the land owner. Such a document cannot be treated as a proof of actual physical possession. In A Parthasarathy (supra), this Court has held at para Nos. 9 and 10 as under: “9. From the above, it is clear that the Authority did not have intention of implementing the scheme over the entire portion of land which was acquired, but it had done so only to create a land bank, which is not the purpose for which Development Authorities have been created. If this is permitted, then any Development Authority can misuse the land acquisition proceedings by notifying and acquiring large tracts of land which may be in hundreds, or even thousands of acres, for future development, which may be proposed to be carried out even after three, - 23 - four or five decades, and deposit the compensation at the rate as on the date of notification which may be awarded by the Special Land Acquisition Officer, and deposit the same after several years, as in the present case, it is after thirty one years of the initial notification for acquisition, and twenty three years even after the award had been passed. The Development Authorities are not in the business of land dealing, as the purpose is different, which is proper development of cities, which may include providing of residential accommodation to citizens, but not create a land bank by way of compulsory acquisition of land, thereby depriving the legitimate owners of land for profiteering purpose by BDA. In the present case, nearly 90% of the land so notified to be acquired, has remained unutilized for more than three and a half decades. The possession of the land belonging to the appellants is said to have been taken in the year 1986 under a ‘mahazar’ which cannot be relied upon, and we have no reason to disturb the finding of fact recorded by the Writ Court in this regard, in para 27 of its judgment, which was on perusal of the original record and is reproduced below: The first question that falls for my consideration is, whether the possession of the land is taken by the Government from the petitioners? My answer to this question is emphatically ‘no’, for the following reasons: - 24 - (a) The perusal of the records reveals that the things are not done in a manner known to law. The mahazar on which all reliance is placed is deficient in more than one respect. It contains the signatures of five persons, but their names, much less their addresses, are available. (b) The alternative portions like (i) the petitioners were present/not present (ii) BDA has taken over the possession/the owners have handed over the possession (iii) malkies are existing/not existing are retained as they are. The non-applicable portion is not even struck off. The mahazar prepared is in the cyclostyled form. It is hard to give any credence to such a mahazar. (c) No acknowledgments for having served the copy of the mahazar on the petitioners is produced. It is also not the case of the respondent BDA that the notice calling upon the petitioners to handover the possession was sent under RPAD.

10. The facts in the case before the Apex Court in the case of Tamil Nadu Housing Board (supra) were different from the facts of the present case and as such, the ratio laid down in the said judgment would not be applicable to these cases. Possession of land so notified for acquisition has to be taken in a proper and - 25 - valid manner. The findings recorded by the Learned Single Judge, that there was no independent witness which had signed the mahazar, nor the names and addresses to show the identity of the alleged witnesses was given, would be sufficient to show that the ‘mahazar’ was not prepared in a valid and legal manner. The same was done in a mechanical manner on a cyclostyle form, and the Learned Single Judge has rightly held that ‘it is hard to give any credence to such mahazar’. Learned Counsel for respondents has also not denied the fact that no notice was ever given to the appellants for handing over possession and straight away the ‘mahazar’ had been prepared, the authenticity of which is extremely doubtful.”

11. And similar view has been reiterated in Jacob (supra) wherein at para No. 6 it is held as under: “6. In the light of the above, this Court finds that the respondent-BDA has in fact admitted that the preliminary notification was issued on 27.06.1978 and final notification was issued on 09.01.1985 and thereafter no award has been passed nor possession of the land in question has been taken in accordance with law. In the endorsement dated 28.04.2005 nothing is stated regarding any impediment in passing the award or payment of compensation. Therefore, in - 26 - the light of the decisions mentioned above and for the reasons stated therein, this court proceeds to pass the following: ORDER (i) The writ petition is allowed. (ii) It is hereby declared that the acquisition proceedings in respect of the land in question has stood abandoned and consequently lapsed.”

12. This Court has held that a mahazar which is unsigned, unsupported by panch witness or prepared mechanically does not establish lawful taking of possession. Significantly, the BDA's own internal survey and inspection report placed on record by the petitioner acknowledges the existence of building, trees and religious structures on land and record that actual physical possession was not taken at any point of time.

13. The vesting of land under Section 16 of the Land Acquisition Act is a legal consequence that arises only when two conditions are satisfied. (i) payment or lawful deposit of compensation and (ii) taking of actual physical possession. In - 27 - Girnar Traders (supra), the Apex Court has held at para No.168 as under : “168. There are different kinds of vesting of lands as mentioned in the two Acts. The State Act has multi-dimensional purposes leading to primary object of planned development, while the Central Act has only one dimension i.e. acquisition of land for a specified public purpose. The land, in terms of Section 16 of the Central Act shall vest in the State free of encumbrances only when the compensation is paid and possession of the land is taken under that Act. Section 48 of the Central Act empowers the State to withdraw from acquisition of any land of which possession has not been taken, despite the fact that award may have been pronounced in terms of Section 11 of the Central Act. But once there is complete vesting of land in the State it amounts to transfer of title from owner to the State by fiction of law.”

14. The Apex Court held that the vesting under Section 16 occurs only after compensation is paid and possession of the land is taken and that vesting results in complete divestiture of the owner's title only upon satisfaction of both conditions. The respondents have not produced any material to show that the compensation was either tendered to the - 28 - petitioner or deposited before the competent Civil Court in accordance with Section 31 of the Land Acquisition Act. Mere internal accounting entries or statements that amount was “deposited with the authorities”, do not satisfy the statutory requirement. This Court in Doddamuniswamappa has held at para No.8 as under : “8. Before moving further it would be apposite to mention the recent decision of the Apex Court in Prahlad Singh v. Union of India [(2011) 5 SCC 386] . Their Lordships were called upon to consider Section 16 of the Land Acquisition Act, 1894 which envisages that- “When the Collector has made an award under Section 11, he may take possession of the land, which shall thereupon vest absolutely in the Government free from all encumbrances”. In Prahlad Singh their Lordships held as follows: “13. We have given our serious thought to the entire matter and carefully examined the records. Section 16 lays down that once the Collector has made an award under Section 11, he can take possession acquired land. Simultaneously, the section declares that upon taking possession by the Collector, - 29 - the acquired land shall vest absolutely in Government encumbrances. In terms of the plain language of this section, vesting of the acquired land in the Government takes place as soon as possession is taken by the Collector after passing an award under Section 11. To put it differently, the vesting of land under Section 16 of the Act presupposes actual taking of possession and till that is done, legal presumption of vesting enshrined in Section 16 cannot be raised favour of the acquiring authority…….”. The dicta is to the effect that if actual possession of the land is not taken, such land cannot vest in the State. In the case in hand, in the background of the uncontroverted case of the parties that as against the entire land owned by the respondents, only a fraction thereof measuring 01 acres 06 guntas could not be taken possession of because it was heavily built up as well as heavily populated/occupied. The effect is that this parcel of the land though notified was not acquired as physical/actual possession was not taken by the BDA and therefore it would not be necessary to go in to the question of whether it could be re- conveyed or de-notified, on the premise of - 30 - HANUMAIAH as the facts in the present case are wholly distinct.”

15. This Court held that the absence of either possession or payment defeats vesting and acquisition cannot be treated as complete. Regarding the possession being not taken and compensation was not lawfully paid, it is also relevant to refer to the judgment of the Apex Court in the case of NAL Layout Residents Association vs Bangalore Development Authority and Others21 wherein at para 47 it is held as under : “47. In Banda Development Authority v. Moti Lal Agarwal (2011) 5 SCC 394 : (2011) 2 SCC (Civ) 747], this Court has considered the question of taking up possession of acquired land after noticing all earlier judgments of this Court. This Court culled out the principles in para 37 of the judgment, which is quoted as below: (SCC p. 411) “37. The principles which can be culled out from the abovenoted judgments are: 21 (2018) 12 SCC 400 - 31 - (i) No hard-and-fast rule can be laid down as to what act would constitute taking of possession of the acquired land. (ii) If the acquired land is vacant, the act of the State authority concerned to go to the spot and prepare a panchnama will ordinarily be treated as sufficient to constitute taking of possession. (iii) If crop is standing on the acquired land or building/structure exists, mere going on the spot by the authority concerned will, by itself, be not sufficient for taking possession. Ordinarily, in such cases, the authority concerned will have to give notice to the occupier of the building/structure or the person who has cultivated the land and take possession the presence of independent witnesses and get their signatures on panchnama. Of course, refusal of the owner of the land or building/structure may not lead to an inference that the possession of the acquired land has not been taken. (iv) If the acquisition is of a large tract of the land, it may not be possible acquiring/designated authority to take physical possession of each and every parcel of the land and it will be sufficient that symbolic possession is taken by preparing appropriate document in the presence of independent witnesses and getting their signatures on such document. - 32 - (v) If beneficiary of the acquisition is an agency/instrumentality of the State and 80% of the total compensation is deposited in terms of Section 17(3-A) and substantial portion of the acquired land has been utilised in furtherance of the particular public purpose, then the court may reasonably presume that possession of acquired land has been taken.””

16. Earlier the Apex Court in Raghbir Singh Sehrawat (supra) at para Nos.26,27, 28 has held as under : “26. Bhagwati, J. (as he then was) and Gupta, J., who constituted the majority did not agree with Untwalia, J. and observed as under: (Balwant Narayan Bhagde case [(1976) 1 SCC 700] , SCC pp. 711-12, para 28) “28. … We think it is enough to state that the Government proceeds possession of the land acquired by it under the Land Acquisition Act, 1894, it must take actual possession of the land, since all interests in the land are sought to be acquired by it. There can be no question of taking ‘symbolical’ possession in the sense understood by judicial decisions under the Code of Civil Procedure. Nor would possession merely on paper be enough. What the Act contemplates as a necessary condition of - 33 - vesting of the land in the Government is the taking of actual possession of the land. How such possession may be taken would depend on the nature of the land. Such possession would have to be taken as the nature of the land admits of. There can be no hard-and-fast rule laying down what act would be sufficient to constitute taking of possession of land. We should not, therefore, be taken as laying down an absolute and inviolable rule that merely going on the spot and making a declaration by beat of drum or otherwise would be sufficient to constitute taking of possession of land in every case. But here, in our opinion, since the land was lying fallow and there was no crop on it at the material time, the act of the Tahsildar in going on the spot and inspecting the land for the purpose of determining what part was waste and arable and should, therefore, be possession of and determining its extent, was sufficient to constitute taking of possession. It appears that the appellant was not present when this was done by the Tahsildar, but the presence of the owner or the occupant of the land is not necessary to effectuate the taking of possession. It is also not strictly necessary as a matter of legal requirement that notice should be given to the owner or the occupant of the - 34 - land that possession would be taken at a particular time, though it may be desirable where possible, to give such notice before possession is taken by the authorities, as that would eliminate the possibility of any fraudulent or collusive transaction of taking of mere paper possession, without the occupant or the owner ever coming to know of it.”

27. In Banda Development Authority v. Moti Lal Agarwal [(2011) 5 SCC 394 : (2011) 2 SCC (Civ) 747] , the Court referred to the judgments in Balwant Narayan Bhagde v. M.D. Bhagwat [(1976) 1 SCC 700] , Balmokand Khatri Educational and Industrial Trust v. State of Punjab [(1996) 4 SCC 212] , P.K. Kalburqi v. State of Karnataka [(2005) 12 SCC 489] , NTPC Ltd. v. Mahesh Dutta [(2009) 8 SCC 339 : (2009) 3 SCC (Civ) 375] , Sita Ram Bhandar Society v. Govt. (NCT of Delhi) [(2009) 10 SCC 501 : (2009) 4 SCC (Civ) 268] and culled out the following propositions: (Banda Development Authority case [(2011) 5 SCC 394 : (2011) 2 SCC (Civ) 747] , SCC p. 411, para 37) “(i) No hard-and-fast rule can be laid down as to what act would constitute taking of possession of the acquired land. (ii) If the acquired land is vacant, the act of the State authority concerned to go to the spot and prepare a panchnama will ordinarily be - 35 - treated as sufficient to constitute taking of possession. (iii) If crop is standing on the acquired land or building/structure exists, mere going on the spot by the authority concerned will, by itself, be not sufficient for taking possession. Ordinarily, in such cases, the authority concerned will have to give notice to the occupier of the building/structure or the person who has cultivated the land and take possession in the presence of independent witnesses and get their signatures on the panchnama. Of course, refusal of the owner of the land or building/structure may not lead to an inference that the possession of the acquired land has not been taken. (iv) If the acquisition is of a large tract of land, it may not be possible acquiring/designated authority to take physical possession of each and every parcel of the land and it will be sufficient that symbolic possession is taken by preparing appropriate document in the presence of independent witnesses and getting their signatures on such document. (v) If beneficiary of the acquisition is an agency/instrumentality of the State and 80% of the total compensation is deposited in terms of Section 17(3-A) and substantial portion of the - 36 - acquired land has been utilised in furtherance of the particular public purpose, then the court may reasonably presume that possession of the acquired land has been taken.”

28. If the appellant's case is examined in the light of the propositions culled out in Banda Development Authority v. Moti Lal Agarwal [(2011) 5 SCC 394 : (2011) 2 SCC (Civ) 747] we have no hesitation to hold that possession of the acquired land had not been taken from the appellant on 28-11-2008 i.e. the day on which the award was declared by the Land Acquisition Collector because crops were standing on several parcels of land including the appellant's land and possession thereof could not have been taken without giving notice to the landowners. That apart, it was humanly impossible to give notice to a large number of persons on the same day and take actual possession of the land comprised in various survey numbers (total measuring 214 acres 5 kanals and 2 marlas).”

17. Both the above decisions of the Apex Court in NAL Layout Residents Association and Raghbir Singh Sehrawat (supra) is by placing reliance upon the Banda Development Authority (supra), wherein it is clarified that while drawing of possession mahazar may constitute - 37 - evidence in cases of large tracts of vacant land, such presumption cannot arise where the land is built up, occupied or contains existing structures. In such cases actual physical possession must be demonstrated by clear and convincing evidence. The same principle has been reiterated subsequent decisions concerning the development authorities and layout acquisition, wherein it has been consistently held that mere preparation of a mahazar or issuance of Section 16 sub-clause (2) notification cannot substitute the requirement of actual possession, particularly where the land owner continues to remain in settled possession. In the present case, the respondents have not produced any reliable material demonstrating that petitioner or the Trust was ever dispossessed from the schedule property. On the contrary, the records indicate continued occupation and use of the land.

18. The learned counsel appearing for the respondents also rely upon the dismissal of W.P 18877/1986 to contend that the present challenge is bad. The earlier petitions were - 38 - not decided on the merits of the acquisition, nor was the issue of lapse or vesting possession adjudicated. The present challenge is founded on subsequent statutory events and a fresh cause of action. Thus the objection of res judicata raised by the respondents is unsustainable and is accordingly rejected. The earlier writ petition did not culminate in any adjudication on legality of the acquisition, lapse of the scheme, vesting or possession. The learned counsel appearing for the respondents also sought to contend that the petitioner is a subsequent purchaser after the land acquisition proceedings initiated and placed reliance upon the decisions stated supra that a subsequent purchaser after acquisition of notification has no locus standi to challenge the acquisition and that the acquisition proceedings cannot be reopened after a long delay and once possession is taken and vesting occurs the land owner cannot seek to question the acquisition. However the reliance placed upon the judgments does not assist the respondents on the facts of the present case, as the petitioner is not a purchaser, but derives title - 39 - from original owner who purchased the property in 1946, much prior to the acquisition notification. The authorities relied by the respondents proceed on the premise that lawful possession had been taken and vesting had occurred. In the present case, no material demonstrates that the possession was ever lawfully taken and compensation was not paid or deposited in accordance with law. Hence, the principles laid down in the afore decisions do not apply to the facts of the present case and they are distinguishable. As stated supra in Raghbir Singh Sehrawat (supra), wherein it is held that symbolic or paper possession cannot be treated as valid, taking of possession and that acquiring authority must establish actual and physical possession of the land. Accordingly the points framed for consideration are answered and this Court pass the following : (i) (ii) ORDER The Writ Petition is allowed. It is declared acquisition proceedings initiated by the respondents- - 40 - BDA under the preliminary notification dated

21.03.1977 and final notification dated

14.05.1980 insofar as they relate to the schedule property bearing Sy. No. 85, measuring 3 acres and 13 guntas situated at Kacharakanahalli Village, Bangalore North, have lapsed. (iii) The endorsement dated 21.07.2022 issued by the respondent No. 2 is hereby quashed. (iv) It is made clear that this order shall not preclude the respondents from initiating fresh acquisition proceedings if so advised in accordance with law. Sd/- ________________________ JUSTICE K.S. HEMALEKHA CKL