Land Acquisition Act, 1894 – ss. 4(1), 6, 44B – Land Acquisition Rules, 1963 – rr. 3 & 4 – Acquisition Proceedings – Allotment of land – To Private Company – For setting up of University – Undue Favour to Company – Non-compliance of Mandatory Provisions – Doctrine of Public Trust – Violation of – Appellant, a private company at that time, made a representation to the Govt to grant land to set up a University – Necessary steps were taken by the Govt for allotment of land – However, the Law Department opined that the land can be acquired only for a Public Company under the 1894 Act – Pursuant to which, appellant company passed resolution to change the status from Private Company to Public Company and intimated the same to Govt. – Thereafter, Land Acquisition notifications u/s 4(1) of the Act were issued for 6917.63 acres – Writ Petition was filed in the High Court challenging the entire acquisition proceedings – Division Bench of High Court allowed the Petition and held that the entire proceeding was in flagrant violation of the statutory provisions of the Act – High Court quashed the acquisition proceedings by observing that the public interest was affected and there was violation of rule of law – On appeal, held: Initiation of the acquisition proceedings was by the Vedanta Foundation and thereafter by the Anil Agarwal Foundation, which admittedly at the relevant time and as on 19.07.2006 was a private company – It was the case of appellant that it successfully converted into the public company on 23.11.2006 and it increased number of members from 3 to 7 and in terms of Section 44 of the Companies Act, 1956, it amended its Articles of Association to delete the restriction on free transferability of the shares and the same has been acknowledged by the Registrar of Companies (ROC) by acknowledgment dated 21.02.2007 and 03.03.2011 – However, even the subsequent acknowledgment by the Registrar of Companies on 21.02.2007 and 03.03.2011 was much after s.4(1) notification which were issued between 13.12.2006 to 21.08.2007 – Therefore, legally, the appellant was not converted to public company at the relevant time – At the relevant time, when the company was a private company, in view of the bar under s.44B of the 1894 Act, the lands in question could not have been sought to be acquired by the appellant company – Subsequent conversion from private company to public company was an attempt to get out of the statutory provision under the Act, 1894, which is mala fide exercise on the part of the appellants – Even there was noncompliance of mandatory provisions under rr.3 and 4 of the Rules, 1963 and therefore, the entire acquisition proceedings for the beneficiary company was vitiated – There was also non-application of mind by the State Government on environmental aspects and passing of two rivers from the acquired lands in question – How the maintenance of the rivers etc. can be handed over to the beneficiary company – If the lands in question are continued to be acquired by the beneficiary company, the control of the rivers would be with the said private company, which would violate the Doctrine of Public Trust – Further, there is a Wildlife Sanctuary, just adjacent across the road to the proposed university and the lands acquired – Therefore, large-scale construction for establishment of the proposed university as observed by the High Court will also adversely affect the Wildlife Sanctuary, entire Eco system and the ecological environment in the locality – Even otherwise, there is non-application on part of the State Government on the requirement of the lands by the beneficiary company – From the material on record, it appears that undue benefits were proposed / in fact offered and given to the beneficiary company providing undue largesse – It is not appreciable why the Government offered such an undue favour to one trust/company – Thus, the entire acquisition proceedings and the benefits, proposed by the State Government were vitiated by favourism and violative of Art.14 of the Constitution – High Court was justified in setting aside the entire acquisition proceedings, which was vitiated by non-compliance of the statutory provisions under the Act, 1894 and the Rules, 1963 and also vitiated by mala fides and favourism and is a clear case of the non-application of mind on relevant aspects – Constitution of India – Art. 14.
Dismissing the appeals, the Court
HELD: 1. The initiation of the acquisition proceedings was by the Vedanta Foundation and thereafter by the Anil Agarwal Foundation, which admittedly at the relevant time and as on 19.07.2006 was a private company having three Directors on its Board and less than seven members. The initiation of the proceedings to acquire the identified lands, identified by the appellant company was in the month of April/June, 2006, which was followed by the MoU dated 19.07.2006. Therefore, the relevant date for consideration would be 19.07.2006 and not 13.12.2006 as sought to be contended on behalf of the appellants. [Para 8.5][1014-F-G, H; 1015-A]
1.2 At this stage, it is required to be noted that even otherwise the subsequent alleged conversion from private company to public company was an attempt to get out of the statutory provision under the Act, 1894. The Law Department specifically observed that the land cannot be acquired by private company for the purposes for which the lands were sought to be acquired, only thereafter the appellants changed the status of the company from private company to public company. The aforesaid was a mala fide exercise on the part of the appellants. [Para 8.6][1015-B-C]
1.3 It is the case on behalf of the appellant that the appellant successfully converted into the public company on 23.11.2006 and it increased number of members from 3 to 7 and in terms of Section 44 of the Companies Act, 1956, it amended its Articles of Association to delete the restriction on free transferability of the shares and the same has been acknowledged by the Registrar of Companies (ROC) by acknowledgment dated 21.02.2007 and 03.03.2011 is concerned, it is required to be noted and as observed hereinabove the relevant date for consideration would be June, 2006 and in any case 19.07.2006 when the MoU was entered into. Even the subsequent acknowledgment by the ROC was on 21.02.2007 and 03.03.2011 even much after Section 4(1) notification. Therefore, as rightly observed and held by the High Court legally, the appellant was not converted to public company, which as such was a Section 25 company and therefore, not a public company. [Para 8.7][1015-D-G]
2. From the material on record, the High Court has given the specific findings that there is a non-compliance of mandatory provisions under Rules 3 and 4 of the Rules, 1963 and therefore, the entire acquisition proceedings for the beneficiary company has been vitiated and there are checks and balances and certain mandatory procedures and requirements are to be satisfied, more particularly, when the lands are to be acquired for the company, the same have to be adhered to and non-consideration of the relevant aspects, which are mandatory to be considered under Rule 4 would vitiate the entire acquisition proceedings as the subjective satisfaction by the State Government has been vitiated on non-consideration of the relevant aspects, more particularly, the aspects mentioned in Rule 4. [Para 8.15][1021-C-D]
3. The most important aspect, which is required to be considered is the non-application of mind by the State Government on environmental aspects and passing of two rivers from the acquired lands in question. It is not in dispute that from the lands in question two rivers namely ‘Nuanai’ and ‘Nala’ are flowing, which as such were acquired by the State Government. How the maintenance of the rivers etc. can be handed over to the beneficiary company. If the lands in question are continued to be acquired by the beneficiary company, the control of the rivers would be with the said private company, which would violate the Doctrine of Public Trust. Even requiring the beneficiary company to maintain the flow of above two rivers may also affect the residents of the locality at large. It is also required to be noted that just across the road, there is a Wildlife Sanctuary, which is just adjacent across the road to the proposed university and the lands acquired. Therefore, the large-scale construction for the establishment of the proposed university as observed by the High Court will also adversely affect the Wildlife Sanctuary, entire Eco system and the ecological environment in the locality. It is a duty of the State to protect the Wildlife Sanctuary and it may affect the entire Eco system and the ecological environment in the locality. It is also required to be noted that even the distance of the sea from the proposed Vedanta University is approximately 2000 meters. Merely because the Balukhand Wildlife Sanctuary is separated from the proposed site by a highway – Puri-Konark Marine Drive, cannot be a ground to acquire the huge lands for the proposed university and as rightly observed by the High Court, the same will adversely affect the Wildlife Sanctuary and the entire Eco system and the ecological environment in the locality. The aforesaid aspects has not at all been considered by the State Government and/or the Collector and/or the appropriate authority even while considering the proposal and/or even the objections under Section 5A of the Act, 1894. [Para 8.17 & 8.18][1022-F-H; 1023-A-D]
4. Even otherwise, there is a non-application on the part of the State Government on the requirement of the lands by the beneficiary company. The lands were proposed to be acquired at the instance of one foundation / company and the State Government was dealing with the lands belonging to the agricultural landowners. The Government is holding a public trust and has to deal with the lands belonging to private landowners, more particularly, agricultural landowners in accordance with law. The State Government could not have considered the proposal from only one beneficiary/trust. There may be other public trusts / companies, who might be interested in establishing such university. Even no proper inquiry seems to have been initiated by the Government / Collector while considering the proposal by the beneficiary company. It is required to be noted that initially, 15,000 acres of the agricultural lands was sought to be acquired for the proposed university. Ultimately, approximately, 8000 acres of the land belonging to the private landowners / agricultural landowners came to be acquired. The State Government has also handed over the possession of approximately 495 acres of land belonging to the State Government including the Gochar Lands etc., which could have been used for the other public purpose and even for the Gochar Lands also. It is not appreciable why the Government offered such an undue favour in favour of one trust/company. Thus, the entire acquisition proceedings and the benefits, which were proposed by the State Government were vitiated by favourism and violative of Article 14 of the Constitution of India. [Para 8.19 & 8.21][1023-E-H; 1024-A, G-H] Delhi Administration vs. Gurdip Singh Uban and Ors., (2000) 7 SCC 296: [2000] 2 Suppl. SCR 496; V. Chandrasekaran and Anr. vs. Administrative Officer and Ors., (2012) 12 SCC 133: [2012] 10 SCR 603; S.P. Gupta vs. Union of India, 1981 Supp SCC 87: [1982] SCR 365; Bandhua Mukti Morcha Vs. Union of India, (1984) 3 SCC 161: [1984] 2 SCR 67; Public Union for Civil Liberties vs. State of T.N., (2013) 1 SCC 585: [2012] 9 SCR 579; Devinder Singh vs. State of Punjab, (2008) 1 SCC 728: [2007] 11 SCR 475; City
Montessori School vs. State of U.P., (2009) 14 SCC 253: [2009] 2 SCR 630 and Common Cause, A
Registered Society vs. Union of India and Ors. (1999)
6 SCC 667: [1999] 3 SCR 1279 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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