Kedar Nath Yadav Vs. State of West Bengal & Ors.

[Civil Appeal No.8438 of 2016 arising out of SLP (C) No.8463 of 2008]

[CIvil Appeal No.8440 of 2016 arising out of SLP (C) No. 10731/2008]

[Civil Appeal No.8441 of 2016 arising out of SLP (C) No. 11783/2008]

[Civil Appeal No.8444 of 2016 arising out of SLP (C) No. 11830/2008]

[Civil Appeal No.8446 of 2016 arising out of SLP C) No. 12360/2008]

[Civil Appeal No.8447 of 2016 arising out of SLP (C) No. 12724/2008]

[Civil Appeal No.8453 of 2016 arising out of SLP (C) No. 25580 of 2016 arising out of SLP(C) ....CC No. 13645/2008]

[Civil Appeal No.8449 of 2016 arising out of SLP (C) No. 22491/2008]

V. GOPALA GOWDA, J.

Delay condoned in SLP (C) CC No. 13645 of 2008.

Leave granted in all the special leave petitions.

The present appeals arise out of the impugned final common judgment and order dated 18.01.2008 in W.P. No. 23836 (W) of 2006 and connected petitions, passed by the High Court of Calcutta, wherein the Writ Petitions filed challenging the proceedings of the acquisition of land to an extent of about 1000 acres within the mouzas Gopalnagar, Singherberi, Beraberi, Khaserberi and Bajemelia, P.S. Singur, District Hooghly were dismissed. The relevant facts which are required for us to appreciate the rival legal contentions advanced on behalf of the parties are stated in brief as hereunder: The State of West Bengal formulated an industrial policy to establish automobile industries in the State to cater to the needs of the people and to solve the problem of unemployment in the State.

In pursuance of the same, the respondent, Tata Motors Ltd. (hereinafter referred to as "TML"), entered into discussions with the State Government of West Bengal regarding the infrastructural needs of the project. In a letter dated 19.01.2006 addressed to then Principal Secretary of the Commerce and Industries Department of the Government of West Bengal, TML stated that a team had visited the State and met representatives of the Government. It also thanked the Government for the openness with which the discussions were held and the assurance of its full support on the project, and summarized its requirements for the same. The relevant portion of the proposal is extracted hereunder: "

Sl. No.

Aspect/ Parameter

Requirement

Remarks

Land (including vendor park)

1000 acres

1) 75% for Tata Motors land 25% for Vendor Park

2) Unconditional flexibility for allotment to vendors

3) Land title on out-right sale basis, or long lease of 99 years transfer of title after the lease period, without condition.

4) Land to be stabilised/graded and given, or the cost to be reduced from the land cost.

Land for schooling and township

1) Schooling land to be allotted free of cost or Government to promote establishment of prominent schools in proximity.

2) Land for township to be given at 50% of rate applied for factory land.

Power (including vendor park)

100 MVA

Quality of power (50 Hz 3%), availability from 2 sources, regulatory voltage 5%

Water (including vendor park)

15000 cu.m

Potable water as per Indian Standards (IS-10500)

6 lane road around the boundary of the plant, and 4- lane approach road to the site

Approach road to be available within 3 months from the date of land allotment.

Commercial

Land Cost

Rs. 2 lakh per acre. Land cost to be paid after 5 years at the rate of 0.1% interest p.a.

The then Principal Secretary to the Government of West Bengal, Commerce & Industries Department, sent the letter dated 24.01.2006, annexing the proposal which TML had sent, to the then Principal Secretary Land and Land Reforms Department, Shri Sukumar Das to communicate his views to the Commerce and Industries Department. A letter was also sent on the same day to the then Principal Secretary, Finance Department seeking his view on the matter. Further, the 'Record Note of Discussion held between TML and a team from the Government of West Bengal and West Bengal Industrial Development Corporation (hereinafter referred to as the "WBIDC") produced on record, shows that a team from TML met representatives of the Government of West Bengal and WBIDC on 08.03.2006 in Kolkata and on 17.03.2006 in Mumbai.

The relevant portion of the record note reads as under: "TML has shown interest in setting up a "Special Category Project" in West Bengal for manufacture of its new car for a volume of 2, 50,000 per year on maturity. The West Bengal Government is also keen to attract a "Special Category Project" in line with their Industrial Policy Document." The record note also states that the project was looking at a direct investment worth Rs.650 crores in the plant and machinery and the IT infrastructure by TML, a direct investment by the company in factory building including utilities such as roads, water line, sewage line, power lines drainage and effluent treatment plants etc. to the tune of Rs. 176 crores, a direct investment by TML in a township of approximately 2000 dwelling units of an average area of 1000/- sq. ft. per dwelling unit with complete municipal facilities such as roads, power line, water line, drainage, parks and other municipal facilities at Rs. 150 crores.

The record note further mentions an indirect investment by vendors in the vendor park in plant and machinery valued at Rs. 200 crores and a further indirect investment by vendors in factory building including facilities such as roads, power line, water line, drainage, sewage and other municipal facilities amounting to Rs. 90 crores. The employment potential of this project was assessed at 1,800 employees in direct employment by TML and a further 4,700 employees through vendors and service providers. The estimated project requirement of land, is extracted as under: "Land TML factory - 400 acres Vendor park - 200 acres Township - 100 acres"

At this stage, it is also important to consider the incentive package offered by the State Government to TML. The relevant portion is extracted as under: " The West Bengal government has offered to TML an incentive package equal to some of the best being offered in some States. The two teams have worked out the following package which may vary downwards or upwards based on the volumes of sales in West Bengal: The State Government will develop the land admeasuring approx. 600 acres and lease it to TML for its own factories as well as for sub-leasing to the vendors for vendor park needed for the project.

The entire land will be leased to TML for 30 years at an annual lease rental of Rs. 10 lakhs. This lease can be renewed for further blocks of 30 years at a negotiated lease rental at the option of TML. On each renewal, the lease rental would not be increased by more than 5 times of the lease rental existing on the date of renewal. The State Government would develop the land and construct the factory building including the facilities such as roads, power line, water line, drainage, sewage, effluent treatment plant, other utilities e.g. Air compressors, standby generators and LPG storage yard, etc. and lease it to the TML at an annual lease rental of Rs. 90 lakhs per annum for 30 years renewable at the option of TML for further blocks of 30 years.

At each renewal the lease rental will be negotiated. However, the increase in rental will not be more than 500% at any renewal compared to the rental existing on the date of renewal. The State Government will construct an integrated township of approximately 2000 dwelling units of an average area of 1000 sq. ft. per dwelling unit, including the facilities such as roads, power line, water line, drainage, sewage, effluent treatment plants, parks, schools, training institutes, shopping complex, etc. and lease it to TML on lease for 30 years on annual lease rental of Rs. 25 lakhs. This lease can be renewed in future at the option of TML for further blocks of 30 years and the increase in lease rental at each renewal would not be more than 5 times the lease rental existing on the date of renewal. The township is estimated to cost Rs. 150 crores."

The Principal Secretary, Commerce and Industries Department of the Government of West Bengal sent a letter dated 23.03.2006 to the Deputy General Manager, Government Affairs and Collaborations of TML with reference to the letter dated 19.01.2006 and the record notes of the subsequent discussions between the Government of West Bengal and TML on the subject signed on 17.03.2006, approving the proposal as under: "....from TML to set up a plant on 600 acres of land near Kharagpur to manufacture a new car addressing the lower end of the market, with annual capacity of 2,50,000 units on maturity......the targeted date of commencement of commercial production being the year 2008."

By way of letter dated 29.03.2006, the then Chief Minister of West Bengal wrote to the then Chairman of TML regarding the project. There was some discussion regarding the location of the plant, the relevant portion of which is extracted from the file as under: "During our discussion today, you had mentioned the allocation close to Kolkata may be considered. As you are undoubtedly aware, land around Kolkata is difficult to come by and the cost of such land is also very high. Also, land has to be suitable for industry. We had to keep these aspects in view while selecting a location for the TML plant. We had at first proposed location of this project at Guptamoni, which is about 25km west of Kharagpur towards Jamshedpur on National Highway 6.

Thereafter, based on the suggestion given by Shri Ravi Kant during his meeting with Shri Nirupam Sen, we have now selected a site right next to Kharagpur town, on National Highway 6......The distance to Kharagur from Kolkata can now be covered in approximately 90 minutes. Haldia Port is at a distance of 100 kms from this location, while Jamshedpur is about 2 hours away. ...... We now await a visit from Shri Ravi Kant for his approval of the proposed location. I can assure you that this is one of the best locations in West Bengal for locating your plant. I look forward to the final approval from the Board of Directors of TML so that we can immediately start taking all the necessary steps."

(emphasis laid by this Court)

TML subsequently informed the representatives of the State Government of West Bengal that they would like to be shown the site at Singur again for their technical team to reconfirm the suitability of the site. Consequently the said site was again shown to the representatives of TML on 05.05.2006.

They confirmed that this is the site which would be ideally suited for the proposed small car project. The total land area was 1053 acres for the small car project and 200 acres in Telipukur mouza for the township. The Draft Note for Cabinet Memo mentions the mouzas for which the WBIDC had proposed for acquisition of land as well. The Principal Secretary, Commerce and Industries Department drafted the Cabinet Memo No. 2995/PrS/C & I dated 30.05.2006 titled as under: "Proposal for acquisition of land measuring 1053 acres for small car project of Tata Motors at Singur, Hooghly and 200 acres in Telipukur in Singur P.S. District-Hoogly for Housing and related amenities to be developed by Tata Housing Development Co. Ltd."

The Cabinet Memo mentions the investment in the project and the shift in the proposed site as well. The relevant portion is extracted hereunder: "....The Tata Motors Co. Ltd. (TML) have decided to set up their Small Car Project in West Bengal. For this purpose for the last several months, they have scouted for various sites around Kolkata and have finally chosen a site in Singur P.S. in the Hooghly district due to its locational advantage. The site chosen will also cater to the requirement of the vendors of the Company who will be located in the Vendors' Park within the Tata Motors Factory site. The total investment including that by vendors is expected to be about Rs. 1000 crores. The plant will generate substantial direct and indirect employment, and will also create a number of ancillary units, which also generate local employment.

The State Government had initially proposed location of this plant in Kharagpur. TML have informed that this will be flagship project, providing very high visibility to West Bengal as an investment destination. They also need very good connectivity and proximity to airport, as well as quality urban and physical infrastructure. Taking all these factors into account, TML, after seeing a number of sites in Howrah, Hooghly, Paschim Medinipur and Purba Medinipur, finally selected a site in Singur Block. West Bengal Industrial Development Corporation Ltd. (WBIDC) now proposes to acquired 1053 acres of land for the said Small Car Project of Tata Motors Co. Ltd. in following mouzas under Singur P.S. in Hooghly district:

The Tata Housing Company Ltd. has proposed to set up housing and related infrastructure at Telipukur under Singur P.S. in Hooghly district comprising of 200 acres to cater to the Housing and Social infrastructure requirements of the proposed Small Car Project of the Tata Motors Co. Ltd. at Singur, which is not far away from the proposed project site. WBIDC, therefore, proposes to acquire 200 acres of land at Telipukur, Singur P.S. in Hooghly district for the purpose. The identification of lands involved in this acquisition proposal has been made in such a manner that existing settlements/ habitations are avoided. Where isolated homesteads are involved, suitable rehabilitation in the form of providing land/house will be taken up. Detailed land survey and plot identification will be carried out after Cabinet accords approval to the proposal.

Efforts will also be made to avoid/minimize intensively cropped lands. This has the approval of the Chief Minister. Cabinet may kindly approve the proposed acquisition of 1253 (1053+200) acres of land as proposed at para 3 and 4 above."

(emphasis laid by this Court)

Pursuant to the approval of the said decision of the Cabinet by the Chief Minister dated 05.06.2006, the notification under Section 4 (1) of the Land Acquisition Act, 1894 (hereinafter referred to as the "L.A. Act") was published in the Calcutta Gazette Extraordinary dated 21.07.2006, the relevant portion of which reads as under:

"Whereas, it appears to the Governor that land as mentioned in schedule below is likely to be needed to be taken by Government/Government Undertaking/Development Authorities, at the public expense for a public purpose, viz., employment generation and socio economic development of the area by setting up TATA Small Car Project in the Mouza Beraberi, jurisdiction list No. 5, P.S. Singur, District Hooghly; it is hereby notified that for the above purpose an area of land comprising RS/LR plots as detailed below and measuring more or less, 72.03 acres, as specified below within the aforesaid Mouza......"

emphasis laid by this Court)

A perusal of the said notification makes it clear that it does not specifically mention that the land in question is being acquired in favour of WBIDC. It merely states that the land in question might be needed for Government / Government Undertaking/Development Authorities. Proposal numbers 3 and 4 of Cabinet Memo, referred to supra, approved by the Chief Minister make it clear that acquisition of land comprising of 1053 acres is needed for the Small Car Project of TML and 200 acres of land is needed to cater to the housing and social infrastructure needs of the project.

Section 4 of the L.A. Act reads as under: " (1) Whenever it appears to the appropriate Government the land in any locality is needed or is likely to be needed for any public purpose or for a company, a notification to that effect shall be published in the Official Gazette [and in two daily newspapers circulating in that locality of which at least one shall be in the regional language], and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality the last of the dates of such publication and the giving of such public notice, being hereinafter referred to as the date of the publication of the notification."

The Act, under the provision of Section 5-A further provides that after the notification, the objections, if any, may be submitted in writing to the Collector. The Collector, after the receipt of such objections, needs to give an opportunity of being heard to the person so objecting. The Collector is then required to conduct an inquiry and submit a report in that respect to the State Government for its consideration. In the instant case, five objection petitions were received from the land owners/cultivators within 30 days after publication of notification under Section 4 of the L.A. Act. One objector applied for exemption of his land from acquisition as he intended to set up a petrol pump from it. Another applied for exemption of the land from acquisition on the ground that they are running a number of agro-based industries like cold storage, factory and fisheries covering a large area of land providing employment to a considerable number of persons.

The Land Acquisition Collector submitted the report dated 31.08.2006 to the State Government. In the report, the Land Acquisition Collector concluded that WBIDC intends to acquire the land for generating employment and for socio-economic development of the area by setting up a factory for the 'Small Car Project' of TML at Singur. Being such a large scale project, it was bound to create immense job opportunities for the local youth, both directly and indirectly. The Land Acquisition Collector, thus, concluded that the acquisition of the land in question was indeed for public purpose.

As far as certain other objectors were concerned, the Land Acquisition Collector observed that the objectors did not appear before him to justify their objections to the proposed acquisition of lands, despite the factum of hearing before the Land Acquisition Collector being widely advertised, including by way of announcement in two local daily newspapers. The Land Acquisition Collector concluded that it appears that the objectors are no more interested to proceed further in the proceedings with their objections.

Therefore, he concluded that those objections may be ignored in the greater interest of the public and the State and submitted his reports to the State Government dated 29.08.2006. Pursuant to the report of the Land Acquisition Collector, the State Government issued notification under Section 6 of the L.A. Act published in the official gazette dated 30.08.2006, the relevant portion of which reads as under: "Whereas the appropriate Government is satisfied, after considering the report sent by the Collector u/s 5-A (2), the land mentioned in the schedule given below is needed by the State Government/ Government Undertaking/ Development Authorities, at the public expense for a public purpose, viz., employment generation and socio economic development of the area by setting up of TATA Small Car Project........."

The Land Acquisition Collector subsequently made award of compensation on 25.09.2006. WBIDC then took possession of the land in question, the extent of which was 997 acres. By its letter dated 20.12.2006, WBIDC asked TML to take "permissive possession of 950 acres of land pending finalization of the lease deed and lease terms and conditions." The formal lease deed was executed on 15.03.2007. Subsequently, the acquisition proceedings were challenged before the High Court of Calcutta by way of Writ Petitions. By common judgment and order dated 18.01.2008, a Division Bench of the Calcutta High Court, dismissed the Writ Petitions, and upheld the acquisition of land, holding the same to be in the interest of the public and for public purpose.

The same was challenged by way of Special Leave Petition before this Court being SLP (Civil) No. 8463 of 2008 and other connected SLPs as clearly mentioned in the cause title of this judgment. Even as the above said cases were pending before this Court, the State Government of West Bengal and TML went ahead with the development of the land and setting up of the factory for the 'Small Car Project'.

It was, however, at around that time that the local population started protesting against the acquisition of the land and setting up of the factory. Numerous incidents of blockade, protests and violence were reported in the print and electronic media. By letter dated 10.11.2008 addressed to the Director General of Police, West Bengal, TML informed that it is suspending operations as the circumstances were no longer conducive for them to work in a peaceful manner. TML started removing the equipments, machines and other materials from the site from 10.11.2008 onwards. The said plant was then relocated to the State of Gujarat. The new Government of West Bengal enacted a legislation on 20.06.2011 titled the 'Singur Land Rehabilitation and Development Act, 2011' (hereinafter referred to as the "Singur Act, 2011") for taking over the land covered by the lease granted in favour of TML. TML challenged the constitutional validity of the said Act by way of Writ Petition before a single Judge of the Calcutta High Court.

By judgment and order dated 28.09.2011 the learned single Judge upheld the validity of the said Act. The correctness of the said decision was challenged by way of appeals before a Division Bench of the High Court. By its common judgment and order dated 22.06.2012, the Division Bench allowed the appeals and struck down Sections 2, 4(3), 5 and 6 of the Singur Act, 2011 as unconstitutional as they were in direct conflict with the provisions of the L.A. Act and hence, repugnant to the said Act. It was further held that the entire Singur Act, 2011 itself is void and unconstitutional as the same had not received assent from the President of India. Hence, the present appeals. By way of order dated 11.05.2016, this Court has de-tagged the appeals arising out of SLP (C) No. 23843 of 2012, SLP (C) No. 24269 of 2012 and SLP (C) No. 1881-1911 of 2013, as they deal with the constitutional validity of the Singur Act, 2011.

The scope of the present appeals is only restricted to deciding the validity of the acquisition of land and the compensation awarded thereafter in favour of the land losers. Mr. Colin Gonsalves, the learned senior counsel appearing on behalf of the appellant in the appeal arising out of SLP (C) No. 12724 of 2008 submits that admittedly, TML approached WBIDC to develop a small car manufacturing unit within the State of West Bengal. The learned senior counsel further contends that a perusal of the documents on record, being the Cabinet Memo as well as the letters exchanged between TML and the West Bengal State Government would clearly show that the site of the project was chosen jointly by the State Government and TML as the best possible site for the project which was to be implemented by establishing the factory in consultation with each other. The land in question was acquired by WBIDC at the behest of TML.

The learned senior counsel contends that such an acquisition would be hit by the provisions of Part VII of the L.A. Act, the heading of which is "Acquisition of land for companies". It is submitted that the provisions of the said part were not followed in the instant case, though the same are mandatory in nature. The learned senior counsel draws our attention to Section 39 of the L.A. Act which reads as under:

"39.Previous consent of appropriate Government and execution of agreement necessary:- The provisions of section 6 to 37 (both inclusive) shall not be put in force in order to acquire land for any Company, unless with the previous consent of the appropriate Government, nor unless the Company shall have executed the agreement hereinafter mentioned" It is contended that the Agreement in terms of Section 39 of the L.A. Act has not been published in the official gazette. The learned senior counsel places reliance on the decision of this Court in the case of Devender Pal Singh v. State of Punjab[1], wherein this Court has held as under:

"16. When a request is made by any wing of the State or a Government company for acquisition of land for a public purpose, different procedures are adopted. Where, however, an application is filed for acquisition of land at the instance of a "company", the procedures to be adopted therefore are laid down in Part VII of the Act. Although it may not be decisive but the conduct of the State as to how it intended to deal with such a requisition, is a relevant factor. The action of the State provides for an important condition to consider as to whether the purpose where for a company requests it for acquisition of land is a public purpose and/or which could be made at public expenses either as a whole or in part, evidently provisions laid down in Part II shall be resorted to.

On the other hand, if the State forms an opinion that the acquisition of land at the instance of the company may not be for public purpose or, therefore the expenses to be incurred therefore either in whole or in part shall not be borne by the State, the procedures laid down in Part VII thereof have to be resorted to. The procedures laid down under Part VII of the Act are exhaustive. Rules have been framed prescribing the mode and manner in which the State vis-Ã -vis the company should proceed. It provides for previous consent of the Appropriate Government, execution of the agreement, previous inquiry before a consent is accorded, publication of the agreement, restriction on transfer, etc.

It also provides for statutory injunction that no land shall be acquired except for the purpose contained in Clause (a) of Sub-section (1) Section 40 of the Act for a private company which is not a Government company. For the purpose of Section 44B of the Act, no distinction is made between a private company and a public limited company." The learned senior counsel contends that the abovementioned case makes it clear that land can be acquired either for a company, or for a public purpose, but not for both. The learned senior counsel further places reliance on the decision of this Court in the case of Amarnath Ashram v. Governor of U.P. & Ors.[2], wherein this Court held as under: "Admittedly, in the present case the entire cost of acquisition is to be borne by the appellant society and, therefore, it is an acquisition for a company and not for a public purpose.

That is also borne out by the notification issued Under Section 6 of the Act which states "that the land mentioned in the schedule below is needed for the construction of play- ground for students of Amar Nath Vidya Ashram (public school). Mathura in district Mathura by the Amar Nath Ashram Trust, Mathura". Therefore, simply because in the notification issued Under Section 4 of the Act it was stated that the land was needed for a public purpose, namely, for a play- ground for students of Amar Nath Vidya Ashram (public school), Mathura, it cannot be said that the acquisition is for a public purpose and not under Chapter VII for the appellant-society in view of subsequent events and the declaration made Under Section 6.

The learned counsel for the State also relied upon the decision of this Court in Srinivasa Cooperative House Building Society Ltd. v. Madam Gurumurthy Sastry, , wherein this Court has held that though there is "no provision in the Act to say that when a land is required for a company, it may also be for a public purpose. However, even the acquisition for a company, unless utilisation of the land so acquired is integrally connected with public use, resort to the compulsory acquisition under Chapter VII cannot be had".

It was submitted on the basis of this observation that even in case of an acquisition for a company an element of public purpose has to be there and if for that reason it was believed by the Government that it was necessary for it to make substantial contribution from public revenue so as to avoid the charge of colourable exercise of powers, the decision of the Government to withdraw from the acquisition cannot be said to be arbitrary or illegal.

The aforesaid observation was made by this Court in the context of requirement of Section 40 of the Act and they cannot be construed to mean that no land cannot be acquired by the State Government without making substantial contribution towards the cost of acquisition. We cannot read something more in the said observation than what they were intended to convey. The provisions of part VII and particularly the provisions regarding payment of the entire costs of the acquisition would otherwise become redundant." Further reliance has been placed by him on the case of R.L. Arora[3], wherein this Court held as under: "Therefore, though the words "public purpose" in Sections 4 and 6 have the same meaning, they have to be read in the restricted sense in accordance with s. 40 when the acquisition is for a company under s. 6.

In one case, the notification under s. 6 will say that the acquisition is for a public purpose, in the other case the notification will say that it is for a company. The proviso to s. 6(1) shows that where the acquisition is for a public purpose, the compensation has to be paid wholly or partly out of public revenues or some fund controlled or managed by a local authority. Where however the acquisition is either for a company, the compensation would be paid wholly by the company. Though therefore this distinction is there where the acquisition is either for a public purpose or for a company, there is not a complete dichotomy between acquisitions for the two purposes and it cannot be maintained that where the acquisition is primarily for a company it must always be preceded by action under Part VII and compensation must always be paid wholly by the company.

A third class of cases is possible where the acquisition may be primarily for a company but it may also be at the same time for a public purpose and the whole or part of compensation may be paid out of public revenues or some fund controlled or managed by a local authority. In such a case though the acquisition may look as if it is primarily for a company it will be covered by that part of s. 6 which lays down that acquisition may be made for a public purpose if the whole or part of the compensation is to be paid out of the public revenues or some fund controlled or managed by a local authority."

The learned senior counsel contends that the mere mention of public purpose in the notifications, does not in fact make the acquisition one for a public purpose, when the acquisition of lands was made in favour of TML. To make the acquisition one for public purpose, it must be directly useful to the public, and the benefit must not be merely incidental in nature. The learned senior counsel places reliance on the Statement of Objects and Reasons of the Amendment Act 68 of 1984 to the L.A. Act, which states thus:

" With the enormous expansion of the State's role in promoting public welfare and economic development since independence, acquisition of land for public purposes, industrialisation, building of institutions, etc., has become far more numerous than ever before. While this is inevitable, promotion of public purpose has to be balanced with the rights of the individual whose land is acquired, thereby often depriving him of his means of livelihood. Again, acquisition of land for private enterprises ought not to be placed on the same footing as acquisition for the State or for an enterprise under it. The individual and institutions who are unavoidably to be deprived of their property rights in land need to be adequately compensated for the loss keeping in view the sacrifice they have to make for the larger interest of the community. The pendency of acquisition proceedings for long periods often causes hardship to the affected parties and renders unrealistic the scale of compensation offered to them.

2. It is necessary, therefore, to restructure the legislative framework for acquisition of land so that it is more adequately informed by this objective of serving the interests of community in harmony with the rights of the individual. Keeping the above objects in view and considering the recommendations of the Law Commission, the Land Acquisition Review Committee as well as the State Governments, institutions and individuals, proposals for amendment to the Land Acquisition Act, 1894, were formulated and a Bill for this purpose was introduced in the Lok Sabha on the 30th April, 1982.

The same has not been passed by either House of Parliament. Since the introduction of the Bill, various other proposals for amendment of the Act have been received and they have also been considered in consultation with State Governments and other agencies. It is now proposed to include all these proposals in a fresh Bill after withdrawing the pending Bill. The main proposals for amendment are as follows:-

The definition of public purpose as contained in the Act is proposed to be amended so as to include a longer illustrative list retaining, at the same time, the inclusive character of the definition. (ii) Acquisition of land for non- Government companies under the Act will hence forth be made in pursuance of Part VII of the Act in all cases."

(emphasis laid by this Court)

Mr. Kalyan Banerjee, the learned senior counsel appearing on behalf of the some of the appellants, who are cultivators, in the appeal arising out of SLP (C) No. 11830 of 2008 and SLP (C) No. 11783 of 2008 contends that the acquisition of lands in the instant case was not for a public purpose, but for a company, (TML) under the guise of public purpose.

The lands were acquired by WBIDC at the specific instance of TML, as becomes clear from a perusal of the notifications issued under Sections 4 and 6 of the L.A. Act, the relevant portions of which have been extracted supra.

The learned senior counsel further draws our attention to Section 6 of the L.A. Act, which reads as under:

"6. Declaration that land is required for a public purpose. -

(1) Subject to the provision of Part VII of this Act, [appropriate Government] is satisfied, after considering the report, if any, made under section 5A, sub- section (2)], that any particular land is needed for a public purpose, or for a Company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorized to certify its orders [and different declarations may be made from time to time in respect of different parcels of any land covered by the same notification under section 4, sub-section (I) irrespective of whether one report or different reports has or have been made (wherever required) under section 5A, sub-section (2)]; ............... Provided further that no such declaration shall be made unless the compensation to be awarded for such property is to be paid by a Company, wholly or partly out of public revenues or some fund controlled or managed by a local authority.

Explanation 2. - Where the compensation to be awarded for such property is to be paid out of the funds of a corporation owned or controlled by the State, such compensation shall be deemed to be compensation paid out of public revenues." The learned senior counsel contends that as per Section 6 of the L.A. Act, the deposit of money is the deposit of public revenue is to be examined in the light of Explanation-2. Explanation-2 to Section 6, which has been added by way of the Land Acquisition (Amendment) Act 68 of 1984 provides that no declaration under Section 6 shall be made unless the compensation to be awarded for the lands in question is paid by a Company, wholly or partly out of public revenues or some fund controlled or managed by a local authority. The learned senior counsel further contends that WBIDC cannot be said to be 'local authority'.

A local authority must have representative character. This means that it must comprise of elected members and must be under the control of the Government with the control and management of a municipal or local fund. This aspect of the matter has been considered by this Court in a number of cases wherein it was held that a statutory corporation or a company formed by a State Government or Central Government cannot be construed as a local authority. The learned senior counsel places reliance on the Constitution Bench decision of this Court in the case of Valjibhai Muljibhai Soneji v. State of Bombay & Ors[4], wherein on the question of whether or not the State Road Transport Corporation was a local authority for the purpose of the L.A. Act, it was held as under: "The expression "local authority" is not defined in the Land Acquisition Act but is defined in s. 3(31) of the General Clauses Act, 1897, as follows: "'local authority' shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund :" The definitions given in the General Clauses Act, 1897, govern all Central Acts and Regulations made after the commencement of the Act. No doubt, this Act was enacted later in point of time than the Land Acquisition Act; but this Act was a consolidating and amending Act and a definition given therein of the expression "local authority" is the same as that contained in the earlier Acts of 1868 and 1887.

The definition given in s. 3(31) will, therefore, hold good for construing the expression "local authority" occurring in the Land Acquisition Act. We have already quoted the definition. It will be clear from the definition that unless it is shown that the State Transport Corporation is an 'authority' and is legally entitled to or entrusted by the Government with control or management of a local fund it cannot be regarded as a local authority. No material has been placed before us from which it could be deduced that the funds of the Corporation can be regarded as local funds." The learned senior counsel further places reliance on the decision of this Court in the case of Calcutta State Road Transport Corporation v. Commissioner of Income Tax, West Bengal[5], wherein it was held as under: "The expression "local authority" is not defined in the Income Tax Act.

Its definition is, however, contained in the General Clauses Act in Clause (31) of Section 3. It reads : 'Local authority' shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund. The contention of Sri Ray is that inasmuch as the assessee is entrusted by the Government with the control or management of a "local fund", it is a local authority within the meaning of the said definition. Sri Ray placed strong reliance upon the judgement of this Court in Union of India and Ors. v. Shri R.C. Jain and Ors.

The question in the said decision was whether the Delhi Development Authority (D.D.A.) constituted under the Delhi Development Act, 1957 is a "local authority". The question had arisen under the provisions of the Payment of Bonus Act. Chinnappa Reddy, J., speaking for the Bench, laid down the following test for determining whether a particular body is a "local authority" within the meaning of Section 3(31) of the General Clauses Act: "An authority, in order to be a local authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioners, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board or Body of Port Commissioners, but possessing one essential feature, viz., that it is legally entitled to or entrusted by the government with, the control and management of a municipal or local fund."

The learned Judge elaborated the said test saying that to be characterised as a "local authority", the authority must have separate legal existence as a corporate body, it must not be a mere government agency but must be legally independent entity, it must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area.

It must also enjoy a certain degree of autonomy either complete or partial, must be entrusted by statute with such government functions and duties as are usually entrusted to Municipal Bodies such as those connected with providing amenities to the inhabitants of the locality like health and education, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. it was observed-such body must have the power to raise funds for furtherance of its activities and fulfillment of its objects by levying taxes, rates, charges or fees."

(emphasis laid by this Court)

learned senior counsel further places reliance on the decision of this Court in the case of S. Sundaram Pillai & Ors. v. R. Pattabiraman & Ors.[6] to contend that explanation cannot extend the scope of the proviso. It was held by this Court as under:

"42. In Hiralal Rattanlal etc. v. State of U.P. and Anr. etc. this Court made the following observations: Ordinarily, a proviso to a section is intended to take out a part of the main section for special treatment. It is not expected to enlarge the scope of the main section. But cases have arisen in which this Court has held that despite the fact that a provision is called proviso, it is really a separate provision and the so-called proviso has substantially altered the main section.

43. We need not multiply authorities after authorities on this point because the legal position seems to be clearly and manifestly well established. To sum up, a proviso may serve four different purposes:

1) qualifying or excepting certain provisions from the main enactment;

2) it may entirely change the very concept of the intendment of the enactment by insisting on certain mandatory conditions to be fulfilled in order to make the enactment workable;

3) it may be so embedded in the Act itself as to become an integral part of the enactment and thus acquire the tenor and colour of the substantive enactment itself; and

4) it may be used merely to act as an optional addenda to the enactment with the sole object of explaining the real intendment of the statutory provision.

44. These seem to be by and large the main purport and parameters of a proviso." The learned senior counsel contends that explanation is only relatable to the main provision and not the proviso. The learned senior counsel thus, reiterates that even where the acquisition of land is for a corporation, provisions of Part VII of the L.A. Act must be complied with. Mr. Prashant Bhushan, the learned counsel appearing on behalf of the appellant - Association of Democratic Rights in the appeal arising out of SLP (c) No. CC 13645 of 2008 submits that acquisition for a public purpose is made under Part II of the L.A. Act, whereas acquisition for a company is made under Part VII of the L.A. Act.

The procedure under Part VII of the L.A. Act is mandatory and strict compliance of the same is required for the state to exercise its power of eminent domain to acquire the lands in favour of a Company. It is submitted that in the instant case, the lands were acquired for a particular company, TML, at the instance of the said company and the exact location and site of the land was also identified by the said company. Even the notifications issued under Sections 4 and 6 of the L.A. Act clearly state that the land was being acquired for the Tata Motor's 'Small Car Project'.

The learned counsel draws our attention to Rule 4 of the Land Acquisition (Companies) Rules, 1963 framed under Section 55 of the L.A. Act of which reads as under:

"Appropriate Government to be satisfied with regard to certain matters before initiating acquisition proceedings-

(1) Whenever a company makes in application to the appropriate Government for acquisition of any land, that Government shall direct the Collector to submit a report to it on the following matters namely :- that the company has made its best endeavour to find out lands in the locality suitable for the purpose of acquisition.

(ii) that the company has made all reasonable efforts to get such lands by negotiation with the person interested therein on payment of reasonable price and such efforts have failed,

(iii) that the land proposed to be acquired is suitable for the purpose ;

(iv) that the area of land proposed to be acquired is not excessive ;

(v) that the company is in a position to utilize the land expeditiously ; and (vi) 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... .................."

It is submitted that Rule 4 is mandatory in nature and that unless the directions enjoined by Rule 4 are complied with, the notification under Section 6 of the L.A. Act will be invalid. The learned counsel submits that the aforesaid Rule came up for the consideration before this Court in the case of Devender Singh (supra), wherein it was held as under:

"44. Another question which arises for our consideration is as to whether Rule 4 of the Companies Rules is mandatory or directory in nature. The High Court held it to be directory. 45. Rule 4 of the Rules employs the word "shall" not once place but twice. Ordinarily, it is imperative in character. No reason has been shown before us as to why it should be held to be directory provision particularly when the Land Acquisition Act is an expropriatory legislation.

46. In State of Gujarat and Anr. v. Patel Chaturbhai Narsibhai and Ors., this Court held:

15. The contention of the State that the enquiry under Rule 4 is administrative 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 submit a report among other matters that the Company has made all 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 interested therein are the owners of the land 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 owners of the land are, therefore, entitled to be heard at such an enquiry for the purpose of proving or disproving the reasonable efforts of the company to get such land by negotiation. The contention on behalf of the State that the owners of the land will get an opportunity when an enquiry is made under Section 5A of the Act is equally unsound. Section 17 of the Act provides that the appropriate Government may direct that the provisions of Section 5A 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 5A may not be held. 47. In General Government Servants Cooperative Housing Society Ltd., Agra etc. v. Sh. Wahab Uddin and Ors. etc., this Court held:

13. Sub-rule (1) requires the Government to direct the Collector to submit a report to it on the matters enumerated in Clauses (i) to (vi) of the Sub- rule (1) which is for the benefit of the Company. The purpose is to avoid acquisition of land not suitable for a Company. Clause (ii) of Sub-rule (1) requires that the Company has to make all reasonable efforts to get such lands by negotiation with the person interested therein on payment of reasonable prices and that such efforts have failed.

The purpose of Clause (ii) seems to be to avoid unnecessary land acquisition proceedings and payment of exorbitant prices. The purpose of Clauses (iii), (iv) and (v) is obvious. The purpose of Clause (vi) is to avoid acquisition of good agricultural land, when other alternative land is available for the purpose. Sub-rule 2 of Rule 4 requires the Collector to give reasonable opportunity to the Company so that the Collector may hold an inquiry into the matters referred in Sub-rule (1).

The Collector has to comply with Clauses (i), (ii) and (iii) of Sub-rule 2 during the course of the inquiry under Sub- rule (1). The Collector under Sub-rule 3 then has to send a copy of his report of the inquiry to the appropriate Government and a copy of the report has to be forwarded by the Government to the Land Acquisition Committee constituted under Rule 3 for the purpose of advising the Government in relation to acquisition of land under Part VII of the Act, the duty of the Committee being to advise the Government on all matters relating to or arising out of acquisition of land under Part VII of the Act (Sub-rule (5) of Rule 3).

No declaration shall be made by the appropriate Government under Section 6 of the Act unless the Committee has been consulted by the Government and has considered the report submitted by the Collector under Section 5A of the Act. In addition, under Clause (ii) of Sub-rule (4) of Rule 4, the Company has to execute an agreement under Section 41 of the Act. The above consideration shows that Rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by Rule 4 are complied with, the notification under Section 6 will be invalid. A consideration of Rule 4 also shows that its compliance precedes the notification under Section 4 as well as compliance of Section 6 of the Act." The learned counsel further places reliance on the decision of this Court in the case of Royal Orchid Hotels Ltd. v. G. Jayaram Reddy & Ors.[7], wherein it was held that if the land is to be acquired for a company, then the State Government and the company are bound to comply with the provisions contained in Part VII of the L.A. Act.

learned counsel further submits that the argument advanced on behalf of TML that the cost of acquisition has been borne by the public exchequer, if accepted, would in fact make this an even more egregious violation of the L.A. Act. It is submitted that this would not only mean that a colourable device has been used to circumvent the provisions of Part VII of the L.A. Act, but that there has also been a clear violation of Section 41 of the L.A. Act, which provides that the cost of acquisition must be borne by the company and not by the State.

The learned counsel thus, submits that the entire land acquisition proceedings being a colourable exercise of power carried out in violation of the L.A. Act and the relevant Rules be set aside. Mr. Rakesh Dwivedi, the learned senior counsel appearing on behalf of the State of West Bengal in the appeal arising out of SLP (C) No. 13645 of 2008 submits that the acquisition of land in Singur for TML is illegal as the same has been done in complete violation of the provisions of Sections 4 and 6 of the L.A. Act, as well as the non-compliance with Part VII of the L.A. Act and Rules applicable for acquisition of land in favour of a Company.

The learned senior counsel takes us through the cabinet notes with reference to the requisition letter of TML, extracted supra and submits that it becomes very clear from a perusal of the documents on record that the scouting and selection of land was done completely by TML, much before the issuance of the notification under Section 4 of the L.A. Act. The learned senior counsel further submits that initially, TML had submitted a proposal of requirement of 600 acres of land, which was subsequently increased to 1000 acres without any justification for seeking such vast extent of lands in favour of TML. This action of the State Government and its officers shows a complete non application of mind on the part of the cabinet while assessing how much land is needed for the project, before acquiring lands at the behest of TML.

The learned senior counsel further submits that post the amendment to the L.A. Act in the year 1984, it becomes clear that the acquisition for a company must comply with the requirements of Part VII of the L.A. Act, and must only be done in accordance with the same. The same cannot be fused with acquisition of land for a public purpose. The learned senior counsel places reliance on the Statement of Objects and Reasons of the Amendment Act 68 of 1984, the relevant part of which has been extracted supra. The learned senior counsel further submits that Parliamentary Debates relating to the Amendment Act 68 of 1984 also indicate that acquisition for company could be done only under Part VII of the L.A. Act.

The learned senior counsel places reliance on the decision of the Madhya Pradesh High Court in the case of Chaitram Verma and Ors. v. Land Acquisition Officer, Raipur and Ors.[8] and the Allahabad High Court in the case of Pooran and Ors. v. State of U.P. and Ors.[9], wherein it has been held that after the amendment to the L.A. Act in the year 1984, acquisition of land for a company can happen only in accordance with Part VII of the L.A. Act. The learned senior counsel further contends that the doctrine of infusion of public revenue by the government or by corporations covered by Section 3(cc) of the L.A. would not be available after the amendments made in the year 1984. In the pre-1984 legal position, there was lack of clarity in the inclusive definition of public purpose in Section 3(f) to the L.A. Act.

Therefore, the Supreme Court in a number of cases resorted to the second proviso to Section 6 for holding that infusion of public revenue would make the acquisition for a company an acquisition for public purpose. After the exclusion of companies from the purview of Section 3(f) of the L.A. Act, infusion of public revenue cannot be resorted to for holding that acquisition of land in favour of a company is one for public purpose.

The learned senior counsel thus, submits that the reliance placed by the learned senior counsel appearing on behalf of TML on the pre-1984 decisions, including Pandit Jhandu Lal v. State of Punjab[10] , Somawanti v. State of Punjab[11], Jage Ram v. State of Haryana[12] and Aflatoon v. Lt. Governor of Delhi[13] is misplaced as the same have no application to the facts of the instant case as the same pertain to the pre-1984 situation. It is further submitted that the reliance placed upon the decisions of this Court in the cases of Pratibha Nema (supra) and Amarnath Ashram (supra) has no bearing on the facts of the instant case as the same have not correctly appreciated the scope of the 1984 amendment to the provision Section 3 (f) of the L.A. Act.

The learned senior counsel further contends that the objections filed by the landowners/ cultivators before the Land Acquisition Collector after publication of the notification under Section 4 of the L.A. Act were also rejected under Section 5-A(2) of the L.A. Act in a mechanical manner without any application of mind. The learned senior counsel contends that the State Government of West Bengal also recorded its satisfaction under Section 6 of the L.A. Act by recording its satisfaction mechanically, without considering the need of the lands.

It is further submitted by the learned senior counsel that with regard to conducting an inquiry under Section 5-A(2) of the L.A. Act, this Court has held in a catena of decisions that it is a valuable right available to the land owners and cultivators, and therefore, it casts a statutory obligation on the part of the Collector and the State Government to consider the objections and take a decision in accordance with law. The application of mind by the concerned Land Acquisition Collector including the State Government before issuing the notification under Section 6 of the Act, for acquisition of lands is a sine qua non.

The learned senior counsel places reliance on the decision of this Court in the case of Raghubir Singh Sherawat v. State of Haryana and Ors.[14], wherein it has been held as under: "In this context, it is necessary to remember that the rules of natural justice have been ingrained in the scheme of Section 5A with a view to ensure that before any person is deprived of his land by way of compulsory acquisition, he must get an opportunity to oppose the decision of the State Government and/or its agencies/instrumentalities to acquire the particular parcel of land. At the hearing, the objector can make an effort to convince the Land Acquisition Collector to make recommendation against the acquisition of his land. He can also point out that land proposed to be acquired is not suitable for the purpose specified in the notification issued under Section 4(1). Not only this, he can produce evidence to show that another piece of land is available and the same can be utilized for execution of the particular project or scheme.

Though, it is neither possible nor desirable to make a list of the grounds on which the landowner can persuade the Collector to make recommendations against the proposed acquisition of land, but what is important is that the Collector should give a fair opportunity of hearing to the objector and objectively consider his plea against the acquisition of land. Only thereafter, he should make recommendations supported by brief reasons as to why the particular piece of land should or should not be acquired and whether or not the plea put forward by the objector merits acceptance. In other words, the recommendations made by the Collector must reflect objective application of mind to the objections filed by the landowners and other interested persons."

The learned senior counsel further places reliance on the observations made by this Court in the case of Surinder Singh Brar & Ors. v. Union of India[15] to submit that the Collector did not apply his mind at all while considering the objections under Section 5-A (2) of the L.A. Act. In that case, this Court observed as under: "The reason why the LAO did not apply his mind to the objections filed by the Appellants and other landowners is obvious. He was a minion in the hierarchy of the administration of the Union Territory of Chandigarh and could not have even thought of making recommendations contrary to what was contained in the letter sent by the Administrator to Surinder Singh Brar. If he had shown the courage of acting independently and made recommendation against the acquisition of land, he would have surely been shifted from that post and his career would have been jeopardized.

In the system of governance which we have today, junior officers in the administration cannot even think of, what to say of, acting against the wishes/dictates of their superiors. One who violates this unwritten code of conduct does so at his own peril and is described as a foolhardy. Even those constituting higher strata of services follow the path of least resistance and find it most convenient to tow the line of their superiors.

Therefore, the LAO cannot be blamed for having acted as an obedient subordinate of the superior authorities, including the Administrator. However, that cannot be a legitimate ground to approve the reports prepared by him without even a semblance of consideration of the objections filed by the Appellants and other landowners and we have no hesitation to hold that the LAO failed to discharge the statutory duty cast upon him to prepare a report after objectively considering the objections filed under Section 5A(1) and submissions made by the objectors during the course of personal hearing."

The learned senior counsel thus, contends that the acquisition of the vast tracts of lands of the owners/cultivators, depriving them of their constitutional rights for non-compliance with the mandatory procedure as provided under Section 5-A (2) and Part VII of the L.A. Act. Therefore the acquisition proceedings are void ab initio in law.

Mr. K. Parasaran, the learned senior counsel appearing on behalf of WBIDC adopts the arguments advanced by learned senior counsel Mr. Rakesh Dwivedi on behalf of the West Bengal State Government. On the other hand, Mr. Abhishek Manu Singhvi, the learned senior counsel appearing on behalf of TML contends that the government is free to acquire certain lands keeping in mind a certain entity, and the mere fact that the acquisition of lands has been done keeping that entity in mind will not render the acquisition invalid. It is submitted that the State of West Bengal as a matter of Industrial Policy decided to make efforts to establish more manufacturing industries with a view to attract more private sector investment in the manufacturing industry.

The tremendous growth potential of automobile industry in the State of West Bengal would have boosted economy, created job opportunities, direct and indirect, and have had an impact on the secondary employment in the associated service sectors. The learned senior counsel further places strong reliance on the constitution bench decision of this Court in the case of Aflatoon (supra), wherein this Court has held that the acquisition of land for the "planned development of Delhi" was a valid public purpose. It was held that the fact that after the acquisition, the land was handed over to the co-operative housing societies would not attract Part VII of the L.A. Act, 1894. This Court has held as under:

"24. It was contended by Dr. Singhvi that the acquisition was really for the cooperative housing societies which are companies within the definition of the word 'company' in Section 3(e) of the Act, and, therefore, the provisions of Part VII of the Act should have been complied with. Both the learned Single Judge