Summary
The State of Orissa acquired about 6000 acres of agricultural land near Puri from some 6000 families for a proposed university of the Anil Agarwal Foundation, a private company when the MoU was signed and later purportedly converted to a public company. The High Court quashed the entire acquisition and the lease of Government land. The Supreme Court affirmed: the relevant date was the MoU of July 2006, when Section 44B of the Land Acquisition Act barred acquisition for a private company; the conversion was a mala fide and incomplete device; there was no Section 41 agreement before the notifications, no inquiry under Rules 3 and 4 of the 1963 Rules and no Land Acquisition Committee; two rivers and an adjacent wildlife sanctuary were ignored; and undue largesse violated Article 14. The public interest litigation was rightly entertained.
Issues
- Whether land could be acquired under Part VII of the Land Acquisition Act, 1894 for a company that was a private company when the acquisition was initiated and purportedly became a public company later.
- Whether non-compliance with Sections 39 to 41 of the Act and Rules 3 and 4 of the Land Acquisition (Companies) Rules, 1963, including absence of a Section 41 agreement and of a Land Acquisition Committee inquiry, vitiates the entire acquisition.
- Whether public interest litigation on behalf of small landowners who filed no objections under Section 5A was maintainable, and whether the entire acquisition could be quashed even for landowners who did not challenge it.
Provisions considered
- Section 44B read with Section 40(1)(a), Land Acquisition Act, 1894No land may be acquired under Part VII for a private company except for workmen's dwellings or connected amenities; as the beneficiary was a private company when the acquisition was initiated and the MoU signed, the acquisition for a university was barred. (¶¶ 8.5, 8.7, 8.8, 8.9)
- Sections 39, 40 and 41, Land Acquisition Act, 1894Sections 6 to 16 cannot be put in force for a company without the Government's previous consent, which requires a prior inquiry and an executed Section 41 agreement; here the MoU preceded the notifications and no valid Section 41 agreement existed. (¶¶ 8.8, 8.11, 8.12, 8.16)
- Rules 3 and 4, Land Acquisition (Companies) Rules, 1963A Land Acquisition Committee must be constituted and consulted and the Collector must report on the company's efforts to find and negotiate land, suitability, excess, capacity to use the land and availability of alternatives to good agricultural land before any Section 6 declaration; none of this was done and a 'Core Committee' to coordinate the acquisition was no substitute. (¶¶ 8.11, 8.12, 8.13, 8.14, 8.15)
- Sections 23, 25, 31(2A), 189(2) and 192, Companies Act, 1956The purported conversion from private to public company was subject to compliance with these provisions, the amended articles were not furnished, and the Registrar's acknowledgments post-dated the Section 4 notifications; the Section 25 company was not legally a public company. (¶ 8.7)
- Article 14, Constitution of IndiaOffering one trust total autonomy, immunity from reservation laws, tax exemptions, infrastructure and consultation rights over zoning was favouritism vitiating the acquisition. (¶¶ 8.20, 8.21)
Held
- The acquisition was initiated at the instance of the company, which itself identified the land and sought 15,000 acres; the relevant date for the company's status is the MoU of 19 July 2006, not the first Section 4 notification, and on that date it was a private company with three directors, so Section 44B barred acquisition for a university. The later conversion, attempted only after the Law Department's objection, was a mala fide attempt to circumvent the statute and in any event incomplete under the Companies Act. (¶¶ 8.4, 8.5, 8.6, 8.7, 8.9)
- Part VII and the 1963 Rules impose mandatory checks for acquisition for companies; absence of a Section 41 agreement before the notifications, of any Rule 4 inquiry and Collector's report, and of consultation with a Land Acquisition Committee vitiated the State's satisfaction and the entire acquisition, the Core Committee set up to coordinate the acquisition being no substitute. (¶¶ 8.11, 8.12, 8.13, 8.15, 8.16)
- The State failed to consider that two rivers flow through the acquired land, whose control would pass to a private company in violation of the public trust doctrine, and that a wildlife sanctuary lies just across the road; it also considered a proposal from only one trust, did not examine the genuineness of the land requirement, handed over Government and gochar land, and extended undue largesse, all vitiating the acquisition by favouritism and non-application of mind. (¶¶ 8.17, 8.18, 8.19, 8.20, 8.21, 8.22)
- Where the State in utter disregard of the Act acquired a huge tract of agricultural land from 6000 families, displacing 30,000 people, the High Court rightly entertained the writ petitions and the public interest litigation on behalf of poor landowners who could not approach the court; failure to object under Section 5A or acceptance of meagre compensation is no ground to sustain an acquisition vitiated at the root, and the whole acquisition may be quashed following HMT House Building Co-operative Society. (¶ 8.2)
- The belated offer to confine the acquisition to 3837 acres and exclude the writ petitioners' land only confirms that the original demand was exaggerated and that no proper inquiry into the requirement was made; agricultural land that is the only livelihood of the families cannot be compensated in money, and the offer was rejected. (¶ 8.23)
Result
Appeals dismissed with costs of Rs. 5 lakhs to be deposited by the Anil Agarwal Foundation with the Registry within six weeks for transfer to the Orissa State Legal Services Authority; the High Court's judgment dated 16.11.2010 quashing the Section 4 and 6 notifications and awards, directing restoration of possession to landowners on refund of compensation, and quashing the lease of Government land, affirmed.