Rameshwar & Others vs State of Haryana & Others

Notification u/s. 4 of Land Acquisition Act, 1894 – For setting up of Industrial Township – Objections u/s. 5A filed – Soon after initiation of acquisition proceedings various sale deed executed by land-holders in favour of certain builders/private entities – After Notification u/s. 6 also builders/private entities continued approaching the land-holders showing other awards passed in respect of adjoining land for the same purpose wherein compensation was granted @ 12.5 lakhs and offered higher purchase prizes – After notices u/s. 9 for pronouncement of awards, the builders/private entities started enhancing the price and bought the land from the land-holders at a price around Rs.80 lakhs per acre – Thereafter the State by order dated 24.8.2007 dropped the acquisition proceedings stating that fresh Notification would be issued – Pending writ petitions by land-holders challenging the acquisition proceedings were disposed of as infructuous – Building Plans of Group Housing Societies and schemes of the builders/private entities (purchasers) were approved by the State – By order dated 29.1.2001 decision was taken by the State Government in view of the recommendation of Inter Departmental Committee – Farmers, having come to know that the lands under acquisition were utilized by the builders/colonizers, started agitation – Request was also made for registration of FIR in respect of fraud played by the officials in connivance with the builders – Writ petition by landholders taking the plea that initiation of acquisition proceedings and thereafter dropping of acquisition proceeding was deliberate and fraught with malice – High Court dismissed the writ petition holding that challenge to the dropping of proceeding since initiated 4½ years later, hence was belated – On appeal, Supreme Court directed CBI (to whom investigation in the matter had been entrusted by the State) to place its report before Supreme Court – Held: Decisions dated 24.8.2007 and 29.1.2010 were inconsistent with the relevant policy of the State – They were also not consistent with Regional Plan under NCR Act and the Final Development Plan for Gurgaon-Manesar – Public interest was not the underlying objective behind the decisions – The decisions were taken to confer advantages to builders/private entities – There was unholy nexus between Government machinery and the builders/private entities in devising a modality to deprive the gullible land-holders of their holdings – Thus, the decisions were result of a fraud on power and were not bona fide exercise of power – The facts of the case show that there was nothing wrong with the initiation of acquisition proceedings, but during the process it was hijacked by vested interests – Therefore, mere invalidation of the transaction would not be appropriate relief – Real and substantial relief would be in restoring the situation where process of acquisition is made free from such supervening vested interest and is enabled to achieve the objective that the acquisition was intended to sub-serve – When there is fraud on power, duty of the Court is not only to set aside such exercise of power, but to see that there is no unjust enrichment and there is full and substantial restoration – Unjust retention of benefit would be against the fundamental principles of justice, equity and good conscience – In the present case, as there was a completed acquisition, the award is deemed to have been passed on the date when it was supposed to be pronounced – The greater victim in the present case was public interest – The land-holders who had sold their lands to the builders/private entities had received considerations greater than the amount awarded in other cases, hence they cannot be given benefit of annulment of transactions and restorations of their holdings – The land-holders who had not transferred their holdings and the purchasers of individual apartments from builder, cannot be subjected to any prejudice – Appropriate directions issued – Land Acquisition Act, 1894 – ss. 4,6, 9 and 11 – The Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 – s.24(1(b) – Haryana Development and Regulation of Urban Areas Act, 1975 – National Capital Regional Planning Board Act, 1985. Relief:

Grant of relief – Held: Grant of relief must depend upon who the real victim is and to what extent solace can be granted to such real victim.

Allowing the appeals, the Court

HELD: 1.1 In the present case, notification under Section

4 of the Land Acquisition Act, 1894 was issued on 27.08.2004. After considering various objections made under Section 5A of the 1894 Act, the requirement of 688 Acres of land was assessed and declaration under Section 6 to that effect was issued on 25.08.2005. All the lands purchased were after the issuance of notification under Section 4. Similarly para 18 of the interim report submitted by CBI shows that over 444 Acres of land was purchased by various builders/private entities after the notification under Section 4. Going by the relevant policies holding the field and the law laid down by this Court in *Uddar Gagan case, such purchases did not entitle the concerned builders/private entities to prefer any application for licence, nor could pendency of applications for licence be taken as a relevant factor while arriving at a decision whether acquisition initiated pursuant to notification dated 27.08.2004 be proceeded further or not. However, the record indicates that such purchases and the pendency of applications for licence under the Haryana Act, was a factor which did weigh while decisions dated 24.08.2007 and 29.01.2010 were taken. A factor which ought to have been discarded in terms of the declared policy statements, became the fulcrum for said decisions. Therefore, said decisions are inconsistent with and opposed to relevant policy statements. These decisions were not consistent with the Regional Plan under the NCR Act and the Final Development Plan for GurgaonManesar. [Para 22][261-G-H; 262-A-D]

1.2 The decisions dated 24.08.2007 and 29.01.2010 were taken to confer advantages and benefits upon the builders/private entities rather than to carry out or effectuate public purpose. The record indicates that various entities including certain “middlemen” cornered unnatural gains and walked away with huge profits taking the entire process of acquisition for a ride. Substantial sums have exchanged hands in the form of settlement money. All the steps and stages show that the builders/private entities were well aware that the acquisition would not go through but the landholders were confronted with the smoke screen of acquisition and were cornered and persuaded in entering into transactions with the builders/private entities. The transactions so entered into between the landholders and the concerned builders/private entities could not be said to be voluntary and free from any influence. The unnatural and unreasonable bargain was forced upon the landholders by creating façade of impending acquisition. Public Interest was not the underlying concern or objective behind the decisions dated 24.08.2007 and 29.01.2010 but the motive was to confer undue advantage on the builders/private entities. It is clear that considerations other than those which were required to be bestowed, guided the exercise of power in arriving at decisions dated 24.08.2007 and 29.01.2010. The inescapable conclusion, therefore, is that there was an unholy nexus between the governmental machinery and the builders/private entities in devising a modality to deprive the innocent and gullible landholders of their holdings and jeopardize public interest which the acquisition was intended to achieve. [Para 31][277-D-H; 278-A]

1.3 The entire mechanism was deliberately employed so that gullible landholders could be deprived of their holdings by a set of builders/private entities and after having seen that the desired result was achieved, the acquisition was dropped and later completely withdrawn. The decisions on the part of the State arrived at on 24.08.2007 and 29.01.2010 were clearly a result of fraud on power and cannot be said to be bona fide exercise of power. The initiation of class action and filing of Writ Petition in the present matter was perfectly justified. [Para 31][278-B-C] Collector (DM) v. Raja Ram Jaiswal (1985) 3 SCC 1: [1985] 3 SCR 995; Royal Orchid Hotels Limited and Another v. G. Jayarama Reddy and Others (2011) 10 SCC 608 : [2011] 11 SCR 701; Greater Noida Industrial Development Authority v. Devender Kumar and Others (2011) 12 SCC 375; State of Punjab v. Gurdial Singh (1980) 2 SCC 471: [1980] 1 SCR 1071; S. Pratap Singh v. The State of Punjab (1964) 4 SCR 733; Express Newspapers Pvt. Ltd. and others v. Union of India and others (1986) 1 SCC 133 : [1985] 3 Suppl. SCR 382; Shrisht Dhawan (Smt) v. Shaw Bros. (1992) 1 SCC 534: [1991] 3 Suppl. SCR 446; Indian Council for EnviroLegal Action v. Union of India (2011) 8 SCC 161 : [2011] 9 SCR 146; Uddar Gagan v. Sant Singh & Others (2016) 11 SCC 378 – relied on.

2.1 The relief to be granted must depend upon who the real victim is and to what extent solace can be granted to such real victim. If the result of forcing land holders to enter into unnatural and unreasonable bargain was achieved by wrongful utilization of the power conferred under the Act, in its writ jurisdiction a superior court would be justified in granting the relief of invalidating such transaction as a consequential relief, while holding the State action to be bad and invalid. It is nobody’s case that public interest was adequately achieved and therefore the acquisition was required to be dropped. The fact that other acquisitions have been completed and have attained the required objective is a pointer in the direction that there was nothing wrong with the initiation but somewhere along while the process was on, it was completely hijacked by vested interests. The Court, therefore, cannot grant mere declaration invalidating the transaction and grant relief of restoring status ante. The real and substantial relief would be in restoring the situation where the process of acquisition is made free from such supervening vested interests and is enabled to achieve the objective that the acquisition was intended to sub-serve. [Para 33][278-G-H; 279A-D]

2.2 Wherever there has been fraud on power, the duty of the Court is not only to set aside such exercise of power but to see that there is no unjust enrichment directly or indirectly as a result thereof and there is full and substantial restoration. unjust retention of benefit would be completely against the fundamental principles of justice, equity and good conscience. So long as the deprivation of a party has not been fully compensated for, injustice to that extent continues. Having found that there was a clear case of fraud on power as a result of which unnatural and unreasonable gains have been derived by certain builders/private entities, it is duty of the Court to grant full restitution. The restoration in real and substantial terms has to ensure that the public purpose, the acquisition was intended to achieve, stands sub-served. In the present case there was a completed acquisition and the award deemed to have been passed on the date when it was supposed to be pronounced i.e. on 26.08.2007.[Para 36][281D-E]

2.3 The Land Acquisition Act, 1894 now stands replaced by “The Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013”. In terms of Section 24(1)(b) of 2013 Act, where an award had been made under Section 11 of the Act, the proceedings under the provisions of the 1894 Act would continue as if the 1894 Act had not been repealed. Thus, even if a direction is passed that an award be deemed to have been made on 26.08.2007, the provisions of the 1894 Act would still continue to operate in respect of such acquisition in question. [Para 37][281-G-H; 282-A]

2.4 On one hand, the real and substantial relief to be granted in the matter would be not just restoring the status ante and invalidating of the transactions but the relief ought to be that the process of acquisition is taken to its logical end and the objective that said acquisition was to achieve must be sub-served. On the other hand, even while passing appropriate directions in the nature that there was a deemed Award, the interest of those landholders who had not parted with their holdings and had faced the acquisition and had not participated in the proceedings ought to be secured. Further, the interest of purchasers of individual apartments is also required to be protected. [Para 38][282-F-G]

2.5 Wherever a superior Court finds that the exercise of power by the executive was mala fide or that there was fraud of power, the full and substantial relief must be granted. The principles of restitution and concept of unjust enrichment show that no person who directly or indirectly was a party to the fraud of power be allowed to reap or retain any unjust enrichment. Though, it is through the acts on part of the landholders that the builders/private entities were brought on the scene, they are not held to be pari delicto alongwith builders/private respondents. But at the same time they cannot be given benefit of annulment of transactions and restoration of their holdings. The greater victim in the matter was the public interest. The land-holders in any case had received considerations which were greater than what was awarded in Awards dated 09.03.2006 and 24.02.2007, which were the most proximate awards in terms of time. However, even when it is proposed to take the matter to its logical end and say that there was a deemed award, those who had not sold away their holdings and had not in any manner either directly or indirectly, tried to jeopardize the process of acquisition, cannot at this length of time be subjected to any prejudice. Therefore, that body of land-holders who had not transferred their holdings, so also the purchasers of individual apartments have to be excluded from the width of the directions of the Court. Though fraud vitiates every resultant action and on that principle every beneficiary/purchaser in subsequent transaction must restore such benefit, an exception has to be made in favour of individual purchasers of flats or apartments who are being left undisturbed while moulding the relief. Any payments made by them can be adjusted towards the amounts payable to the colonizer and their possession can be regularized by HUDA/HSIDC on suitable conditions by making allotment to them. [Para 38][282-H; 283A-E] Bhimandas Ambwani (Dead) through LRs. v. Delhi Power Company Limited (2013) 14 SCC 195 : [2013] 1 SCR 996; K.B. Ramachandra Raje LRs. (Dead) by L.Rs. v. State of Karnataka and Others (2016) 3 SCC 422 : [2015] 11 SCR 974 – relied on.

3. The Court issued following directions:

(a) The decisions dated 24.08.2007 and 29.01.2010 are set aside as being brought about by mala fide exercise of power.

(b) An Award is deemed to have been passed on 26.08.2007 in respect of lands (i) which were covered by declaration under Section 6 in the present case and (ii) which were transferred by the landholders during the period 27.08.2004 till 29.01.2010. The lands which were not transferred by the landholders during the period from 27.08.2004 till 29.01.2010 are not governed by these directions.

(c) Subject to the directions issued hereafter, the lands covered under aforementioned direction (b), shall vest in the HUDA/HSIDC.

(d) The period between 24.08.2007 and upto the date of this judgment shall not be counted for the purposes of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

(e) All transactions entered into during the period from 24.08.2007 till 29.01.2010, pursuant to which the original landholders transferred their holdings in favour of builders/private entities or third parties shall be subject to and the interest of the respective parties shall be governed by the directions issued hereafter.

(f) The sale consideration paid by the b u i l d e r s / p r i v a t e entities to the landholders shall be treated towards compensation under the award and the landholders will not be required to refund any amount to such builders/private entities. The landholders will be at liberty to prefer Reference under Section 18 of the Act. If the Reference Court were to enhance the compensation, the amounts received by the landholders by way of consideration from the builders/private entities shall be appropriated towards such sum awarded by the Reference Court.

(g) The builders/private entities will be entitled to refund/reimbursement of any payment made to the landholders or the amounts that had been spent on development of the land, such payments shall be made by HUDA or HSIDC on being satisfied about the extent of actual expenditure not exceeding HUDA or HSIDC norms on the subject as the case may be. Refund will however be in respect of amount at which the landholders sold the land and not of subsequent sales. The subsequent purchasers will have remedies against their respective vendors.

(h) The third parties from whom money had been collected by the builder/private entities will either be entitled to refund of the amount from and out of and to the extent of the amount payable to the builder/private entities in terms of above direction, available with the State, on their claims being verified or will be allotted the plots or apartments at the agreed price or prevalent price, whichever is higher. In cases where, constructions have been erected and the entire project is complete or is nearing completion, upon acceptance of the claim, the plots or apartments shall be made over to the respective claimants on the same terms and conditions. Except for such verified and accepted claims, the remaining area or apartments will be completely at the disposal of HUDA or HSIDC.

(i) As substantial sums were made over to “middle men”. In the pending investigation, the CBI may do well to unravel the truth. In any case, such hefty sums which were made over to “middle men” cannot be said to be rightfully earned by and belonging to them. In fact, this actually represents the return for being able to garner the lands in question and getting requisite licences under the provisions of the Haryana Act and a benefit derived out of fraud on power. This money rightfully belongs to the State and none other. The authorities of the State as well as the Central Government to reach the depths of such transactions and recover every single pie and make it over to the State Government. A complete investigation in the transactions including unearthing unnatural gains received by “middle men” shall be undertaken by the CBI.

(j) If CBI has filed charge-sheet before the concerned Court, the same may be dealt with as per law.

(k) The State shall give benefit of “Rehabilitation and Resettlement of Land Acquisition Oustees” policy of the State/HUDA/HSIDC to the landholders.

(l) The State may revisit its policy of change of land use and giving colonization licence in respect of land which is subject matter of acquisition.

(m) In respect of pending writ petition in the High Court of Punjab and Haryana wherein appointment of Commission of Enquiry to enquire into certain facts concerning acquisitions in respect of lands in Gurgaon-Manesar Urban Complex was challenged, the High Court is requested to deal with and dispose of the matter as early as possible. [Para 39][283-F-H; 284-A-G; 285-B-C, D-F, H; 286-A-E] Ramana Dayaram Shetty v. International Airport Authority of India and Others (1979) 3 SCC 489 : [1979] 3 SCR 1014; State of M.P. and Others v. Nandlal Jaiswal and Others (1986) 4 SCC 566 : [1987] 1 SCR 1; Amita Banta & Another v. State of Haryana (2010) 1 RCR (Civil) 412 – referred to.