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In the High Court at Calcutta Constitutional Writ
Jurisdiction
Appellate Side
W.P. No. 9949 (W) of 2011 With
W.P. No. 10198 (W) of 2011
TATA MOTORS LIMITED AND ANOTHER Versus
STATE OF WEST BENGAL AND OTHERS
For the petitioners : Mr. Samaraditya Pal, Sr. Adv. Mr.
Siddhartha Mitra, Sr. Adv. Ms. Vineeta Meharia, Adv. Mr. Soumitra
Dutta, Adv. For the respondent Nos. : Mr. Anindya Kumar Mitra,
learned 1,3,5,6 & 7 Advocate General Mr. Saktinath Mukherjee,
Sr. Adv. Mr. Asoke Banerjee, Ld. Govt. Pleader Mr. Kalyan Kr.
Bandyopadhyay, Sr. Adv. Mr. Protik Prokash Banerji, Adv. Mr.
Paritosh Sinha, Adv. Mr. Abhratosh Majumdar, Adv. Mr. Sakya Sen,
Adv. Mr. Subhobrata Datta, Adv. Mr. Ramanand Agarwal, Adv. Mr.
Swagata Datta, Adv. Mr. Mintu Goswami, Adv. Mr. Sandip Chakraborty,
Adv. Mr. Sumon Sengupta, Adv. Mr. Debasish Ghosh, Adv. Mr. Ayan
Banerjee, Adv. Mr. Arindam Mondal, Adv. Mr. Satrajit Sinha, Adv.
Mr. Saikat Chatterji, Adv. Mr. Asish Das, Adv. For the respondent
Nos. : Mr. Kalyan Kr. Bandyopadhyay, Sr. Adv. 2 & 4 Mr. Protik
Prokash Banerji, Adv. Mr. Abhratosh Majumdar, Adv. Mr. Swagata
Datta, Adv.
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Mr. Sirsanya Bandyopadhyay, Adv. For the respondent No. 8 : Mr.
G.S. Makkar, Adv. Mr. Raj Sekhar Basu, Adv. For the respondent Nos.
: Mr. Asoke Banerjee, Ld. Govt. Pleader 5, 6 & 7 in Mr. Subrata
Talukdar, Adv. W.P. No. 10198(W) of 2011 Heard on: 28.07.11,
29.07.11, 01.08.11, 02.08.11, 03.08.11, 04.08.11, 05.08.11,
10.08.11, 11.08.11, 12.08.11, 16.08.11, 17.08.11, 18.08.11,
19.08.11, 24.08.11, 25.08.11, 26.08.11, 30.08.11, 01.09.11,
02.09.11, 05.09.11, 06.09.11, 07.09.11, 08.09.11, 09.09.11,
12.09.11, 13.09.11, 14.09.11, 15.09.11, 16.09.11.
Judgment on: 28th September, 2011
I.P. MUKERJI, J. BACKGROUND FACTS: Two writ applications
preferred by Tata Motors Limited (hereinafter referred to as the
Tatas) were heard by me between 28th July, 2011 and 16th September,
2011, when hearing was concluded. One challenges the
constitutionality of the Singur Land Rehabilitation and Development
Act, 2011, hereafter the impugned Act and the action of the State
thereunder; the other, the Singur Land Rehabilitation and
Development Rules, 2011, framed under it. The history before
institution of this litigation is of paramount importance. I will
try to recount the events, which finally led to this contested
litigation. In and around 2006, the Government of West Bengal was
trying to invite the Tatas to set up an establishment for the
manufacture of their conceived small car Nano. The Tatas, it seems
to me, were being similarly entreated by some other states in the
country, to set up the industry there. One of such states was
Uttarakhand. It offered them many incentives and concessions. The
Tatas were willing to consider investment in West Bengal provided
its government was able to outmatch these benefits. I have no
doubt, in my mind, that the government was able to convince them
that they would make available to them comparable if not better
incentives, concessions and exemptions. The Tatas did decide to
manufacture this small car here. They announced to the world that
the manufactured car would be cleared from the Singur factory in
District Hooghly in October, 2008.
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According to records, the government promised them land at this
place for setting up this project. More than 1000 acres of land
were required. By the end of May, 2006, the government started
proceeding in the most expeditious manner to provide this land. The
proposal for providing this land was approved by the cabinet in its
meeting held on 31st May, 2006. By his letter dated 6th July, 2006,
the Joint Secretary to the Government of West Bengal wrote to the
West Bengal Industrial Development Corporation (WBIDC), the fourth
respondent, the District Magistrate being the fifth respondent and
the Land and Land Revenue Department being the third respondent
telling them that he was directed to ask them to initiate
acquisition proceedings. It appears that almost immediately the
fifth respondent who was also the Collector issued notices under
Section 4 of the Land Acquisition Act, 1894. I have noticed from
annexure P2 that such notice was issued on 13th July, 2006 and
notified in the gazette on 19th July, 2006. There are also notices
issued subsequently and gazetted thereafter. 0ne was issued on 17th
July, 2006, and gazetted on 20th July, 2006, another on 21st July,
2006 and gazetted on the same day, yet another on 24th July, 2006
and gazetted on the same day and so on. I have not been invited to
any notice issued after 24th July, 2006, which makes me believe
that the Section 4 notices were issued and gazetted between 13th
July, 2006 and 24th July, 2006, more or less. Acquisition
proceedings were speedily undertaken. 997.11 acres of land were
acquired. On 23rd September, 2006 and 25th Septmeber, 2006 awards
of compensation were made by the Collector. On 4th October, 2006,
this land was handed over to the fourth respondent. I am told that
it was conveyed to them by the State. This respondent got its name
mutated in the land records. 1.75 acres were set apart for setting
up a power station and handed over to them on 26th October, 2006.
Thereafter, the said respondent applied to the land department for
conversion of land from agricultural land to factory land. It was
decided by the State that 645.67 acres would be leased out to the
Tatas. On 20th December, 2006, the fourth respondent wrote to the
Tatas asking them to take permissive possession of 950 acres of
land pending finalization of the lease deed and lease terms and
conditions. The letter also mentioned that this respondent had
acquired land measuring 997 acres. They proposed to lease out 950
acres of this land to the Tatas and its selected vendors. The
persons who, were to set up auxiliary or ancillary industries
around the Tatas factory in Singur were referred to as the
vendors.
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It was recorded in an agreement of 9th March, 2007 between the
Tatas and the government that substantial fiscal benefits were
promised to be provided to the Tatas, by the state, matching the
offer made to them by the State of Uttarakhand. It is very
interesting to note that the agreement provided for 47.11 acres of
land to be used for rehabilitation of project affected persons.
According to a counter affidavit affirmed on 24th October, 2008 and
filed on behalf of the state in Special Leave Petition (Civil) No.
8463 of 2008, which was a petition before the Supreme Court from
the judgment and order of a division bench of this court deciding
on the challenge thrown, inter alia, to the acquisition process, by
holding the acquisition to be lawful, possession of 997.11 acres
was taken by the Collector of Hooghly on 4th October, 2006. It was
delivered to the fourth respondent on the same day. It is said that
the total compensation payable to land owners was Rs. 118.95
crores. The amount of compensation received by land owners was Rs.
90.87 crores up to 8th April, 2008. The compensation payable to
bargadars was Rs.56,62,032/- up to 25th April, 2008. The amount of
compensation received by the bargadars was Rs.43,44,286/- up to 8th
April, 2008. THE LEASE A formal deed of lease was executed on 15th
March, 2007.It was signed on behalf of the fourth respondent by its
Managing Director and on behalf of Tatas by Amarjit Singh Puri,
described as the authorised signatory. The duration of the lease
was ninety years from the date of execution. The lessee had the
obligation to build an automobile plant and related facilities on
the land. No premium was asked for or paid by the Tatas. The annual
rent was rupees one crore per year for the first five years with a
25% increase on the expiry of the period with similar increase
every five years for a period of thirty years from the date of
execution of the lease. Then there was a provision for further
increase. The rent payable from the 61st year till the end of the
term was rupees twenty crores annually. As provided in the recital
part of the lease 645.67 acres of land were let out. Clause 10 of
the covenants disentitled the lessee to permit any other person to
use any part of the demised land for any purpose apart from the
purpose of the lease which was for setting up of an automobile
plant. Clause 13 forbade the lessee to sublease or assign any part
of the lease. However, any company which was a subsidiary or part
of the group of the lessee would be permitted to enjoy it. The
termination clause contained in part VI of the lease is very
significant. Clause 1 of part VI, inter alia, provided that if the
lessee had not utilised the demised land for a period of three
years or more, the lessor had the right to give notice indicating
the breach and if such breach was not rectified within six months
from the date of receipt of the notice, the lessor would have the
right to determine the lease. But such notice of determination
could not be exercised unless another notice of three months was
served on the lessee. By clause 2 the lessee had also the
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right to determine the lease in case of any breach of covenant
by the government upon notice of six months followed by another
three months notice, similar to the determination by the
government. In case of determination the lessee under clause 1d had
one years time to remove their plant, machinery, equipments and so
on. TROUBLE POST EXECUTION OF LEASE: Trouble started not long after
execution of the lease. The letter dated 16th July, 2008 from the
Police to the General Manager of the Tatas at Singur warned them
that their employees should take written permission from the police
before going out into the villages adjacent to the site. The
Superintendent of Police wrote on 6th August, 2008 to the General
Manager of the Tatas at Singur that a decision had been taken to
set up 20 camps on an urgent basis within the project site to guard
it. There were complaints by the Tatas that their employees were
being attacked by local people. Wrongful restraint by the local
people, of the employees of Tatas and the vendors, was reported by
them to the police. There were also allegations of confrontation
and agitation by local people. By a letter dated 23rd September,
2008 the Tatas informed the Officer-in-Charge of Singur police
station that they had suspended construction and commissioning work
at the small project site with effect from 29th August, 2008. Their
letter dated 10th October, 2008 to the Director General of police,
West Bengal pointed out that because of intimidating circumstances
they were compelled to suspend the work. They stated that because
of this they were unable to keep their commitment to complete the
manufacture and effect clearance of Nano Cars from the Singur Plant
by October, 2008 which was their commitment. Therefore, they had to
relocate the plant. Therefore, they had decided to move out of
Singur and to withdraw from the site. It appears from the annual
report of Tata Motors Ltd. from 2008 to 2009 that when shifting
started 95% of the work was completed. Some one and half years
later on 22nd June, 2010 the fourth respondent wrote to the Tatas,
citing another letter of the Tatas dated 31st October, 2008 that
they needed ten months time to shift their things from the site. It
was pointed out to them that they were to utilise the land for
manufacture of a small car within three years from the date of
lease. Since the period had expired, an enquiry was made by this
respondent as to whether they wanted to utilise the land for any
other manufacturing activity. This letter was replied to more than
three months later on 28th September, 2010 by the Managing Director
of India Operations of Tatas as follows:
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We, therefore, concluded that a peaceful environment could not
be created for normal working of the Plant and we had to take the
most painful decision to close the operations on 3rd October, 2008.
Meanwhile, we also took permission from you to remove our equipment
and machinery, which we have now done. We, therefore, have
buildings, sheds and infrastructure left behind on which we have
invested Rs. 440 crores and of course continue to incur Rs. 1 crore
per month towards maintenance. This is in addition to the
investment of about Rs. 171 crores (inclusive of Rs. 40 crores for
land premium charges) done by our vendors. We would consider an
alternative investment in the premises only if we were satisfied
that a peaceful and normal condition were to be created for running
a manufacturing plant. However, we feel it is not so at this stage.
We have also had discussions with Honble Industry Minister as well
as with the industry Secretary for finding various alternative uses
for this Plant. In this respect, we would like to submit that we
could also consider the option of moving out from the premises
provided we and our vendors are compensated for the cost of the
buildings, sheds on the premises and expenses incurred in
developing the infrastructure which remain on the premises.
It needs to be mentioned that the Tatas removed equipments,
machinery and other things from the site in the ten months from
10th October, 2008. Records show that the police ensured safe
transit of the items. The Nano manufacturing plant was relocated at
Sanand, Gujarat. THE ACT AND RULES THEREUNDER: The Act is entitled
the Singur Land Rehabilitation and Development Act 2011
(hereinafter the impugned Act). It has a Preamble. It is in the
following terms:
An Act to provide for taking over of the land covered by the
lease granted to Tata Motors Limited for the sole purpose of Small
Car Manufacturing project and letters of allotment issued to the
Vendors as recommended by Tata Motors Limited in view of
non-commissioning and abandoning Small Car Project and
ancillary
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factories with a view to returning such portion of land to the
unwilling owners thereof, who have not accepted compensation and to
utilize the balance portion in public interest and for the benefit
of the State.
The Preamble is followed by a long title. It is in the following
terms:
WHEREAS it is expedient to provide for taking over of the land
covered by the lease granted to Tata Motors Limited for the sole
purpose of Small Car Manufacturing project and letters of allotment
issued to the Vendors as recommended by Tata Motors Limited in view
of non-commissioning and abandoning Small Car Project and ancillary
factories with a view to returning such portion of the land to the
unwilling owners thereof, who have not accepted compensation and to
utilize the balance portion in public interest and for the benefit
of the State;
The Act has nine sections. It came into force on the day of its
notification in the Official Gazette, on 20th June, 2011, after
receiving the assent of the Governor. As is usual in enactments
Section 2 contains definitions. 2(b) contains the definition of
land. It means inter alia, the land leased out by the fourth
respondent to the Tatas. Now this definition of land is further
elucidated in Section 4(1). It includes all assets, rights,
leaseholdsall properties movable and immovable standing thereon.
Section 3 is the vesting section under the Act. The land stands
transferred to and vested in the State Government, free of any
lease or allotment. Sub-section (1) of Section 4 repeats this with
special regard to the lease and adds that it would also stand inter
alia, discharged of any lease. Section 4(3) of the Act enjoins
inter alia, the Tatas to forthwith restore vacant position of the
land in favour of the District Magistrate, Hooghly. In case of any
failure the District Magistrate or any officer authorised by him in
this behalf shall be entitled to take steps and use force as may be
necessary to take possession of the land. Section 5 deals with
compensation. Sub-sections (2) and (3) of Section 5 are in the
following terms:
(2) For the transfer to and vesting of the land leased to the
Tata Motors Limited, the amount of compensation would be adjudged
and determined
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by the District Judge, Hooghly on an application being made by
the Tata Motors Limited in due compliance with the principles of
natural justice and by reasoned order. (3) The amount so determined
in accordance with the provisions hereto, shall carry simple
interest at the rate of six per centum per annum from the period
commencing on the date of application made by the claimant and
ending on the date of tender of the amount as may be determined and
payable by the State Government.
Section 6 amplifies the avowed public purpose in enacting the
Act in the following terms:
6. The State Government shall return equivalent quantum of land
to unwilling owners, who have not accepted the compensation from
the land described in Part I and Part II to the Schedule and the
rest of the land shall be utilized by the Government for
socio-economic development, employment generation, industry and for
other public purpose of the State.
A statement of objects and reasons was issued to justify the
Act. Paragraph 2 of this statement is of great importance. It reads
as follows:
(2) Since the grant of lease to the TML, four years have passed
but no small car production industry has been commissioned for
regular production of small car, which has in fact been abandoned
by the TML as announced by the TML and reiterated in their letters
including the letter dated 28.09.2010 and the TML have already
transferred, removed the small car project and all machinery and
equipment from the said land to another State. So far as letters of
allotment issued to the ancillary industries recommended by TML for
the purpose of setting up of the industry/factory is concerned, the
object has also totally failed. None of those industrial
undertakings have taken any steps for obtaining lease in terms of
letters of allotment or at all have not set up any industry and the
land has been lying unutilized for more than three years. No
employment generation and socio-economic development has taken
place and people
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in and around the area have not been benefited in any manner,
whatsoever, although more or less Rs.137 crore has been paid by
WBIDC as compensation to landowners and the State Government has
spent more than Rs.76 crore for construction drainage and other
infrastructure. In addition, the State Government has incurred
expenses for providing security at site.
Paragraphs 4 and 5 are statements about public purpose and are
in the following terms:
(4) Several owners of the land/farmers have protested against
acquisition against their wishes and have not accepted any
compensation and on having realized that there is no scope of
generation of employment have been clamouring for return of their
land and staging agitations in that area endangering safety and
security of the area which unless properly handled urgently,
serious law and order problems is likely to develop. (5) In the
circumstances, the State Government in public interest considers it
necessary to take back the ownership of those plots of land and to
take over possession thereof in view of total frustration of the
object and purpose of allotment/lease of land and for ameliorating
ascending public dissatisfaction and agitation and to take steps
urgently for return of the land to the unwilling owners of the land
who have not accepted any compensation and to utilize remaining
portion of the land in public interest for benefit and
socio-economic development of the State of West Bengal.
In exercise of the power conferred by Section 9 of the said Act,
the Singur Land Rehabilitation and Development Rules, 2011 were
framed. It contains the machinery for allotment and distribution of
land to persons who unwillingly delivered up their land during the
acquisition process of 2006. Although these rules have been
challenged, no substantial arguments were made in this behalf. The
attack was confined to the validity of the Act and the manner of
its implementation for taking possession of the land in occupation
of the Tatas.
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THE ENACTMENT AND TAKING OF POSSESSION: On 14th June, 2011, the
bill was introduced in the State legislature. It was passed on the
same day. It received the assent of the Governor which was notified
in the Kolkata Gazette Extraordinary on 20th June, 2011. It appears
from the submissions made on behalf of the Tatas and not
controverted by the respondents that on 21st June, 2011 at about
6.30 p.m. the Honble Minister for Industry of the State announced
in a press conference which was televised that the Act had received
the assent of Governor. At or about the same time, some government
officials arrived at the gate of the Singur factory. On 21st June,
2011 itself a Joint Secretary to the Government of West Bengal
wrote to the District Magistrate and Collector asking her to take
immediate possession of the land. However, the letter contained a
rider that such possession was to be taken after serving notice to
the Tatas observing all the formalities. Now, the formalities that
were observed are quite extraordinary. They become extremely
relevant and assume utmost importance in this case. The noting of
the District Magistrate dated 21st June, 2011 in an order sheet
records, first a direction to issue notice to the Tatas to deliver
vacant possession of the land to the District Magistrate, Hooghly.
The second endorsement on the sheet made on the same day records
that such notice had been issued and service return were in the
records. Now the notice stated 21st June, 2011 addressed to the
Managing Director of Tata Motors Ltd. was said to have been posted
on 22nd June, 2011 and received by the addressee on 28th June,
2011. However, a duplicate notice was received by a security
officer of the Tatas on 21st June, 2011 at 8.51 in the evening. The
third recording in the said order of the District Magistrate is
also dated 21st June, 2011. It records failure on the part of the
Tatas to restore possession of land. At about 8.30 p.m. in the
evening of the same day the District Magistrate and the
Superintendent of Police arrived at the site. Now, the letter dated
23rd June, 2011 from the Superintendent of police, Hooghly, to the
District Magistrate refers to two Memoranda 131/C and 132/C of the
District Magistrate, Hooghly both received by the Superintendent at
8.30 hours in the evening of 21st. The Memo 131/C recorded that
possession had been taken and made a requisition for a huge police
arrangement at the Singur Site from the night of 21st June, 2011
while Memo 132 B said that such exercise was undertaken to keep
vacant possession.
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It is plain that the State was in possession of the Singur land
by 8.30 p.m. in the evening on 21st June, 2011. All the above
documents have been disclosed in the affidavit-in-opposition of the
District Magistrate, the fifth respondent affirmed on 7th July,
2011. This leads very little room for doubt that possession was
taken without any notice. SUBMISSIONS: Mr. S. Pal, Sr. Advocate The
case of the Tatas was advanced by Mr. Samaraditya Pal, learned
Senior Advocate. He began his submissions by citing Joydeep
Mukherjee Vs. State of West Bengal reported in (2008)2 CHN 546.
This is a Division Bench judgment of our High Court delivered on
18th January, 2008 by P.C. Ghose, J. on behalf of the bench. By
this judgment the acquisition of land in Singur in 2006 was upheld.
It is submitted that the party/parties aggrieved preferred a
special leave petition before the Supreme Court, which has been
admitted by the Court. The appeal is pending. No interim order was
passed by the Supreme Court while admitting the Special Leave
Petition. He took me in detail through the provisions of the lease,
showing me the recitals, representations, warranties as well as the
covenants. Such provisions of the lease are mentioned by me in
detail below. He described in great detail the concept of eminent
domain as being an incident of the sovereign power of the State to
take private property and the recognition of that power in the
original Article 31 of the Constitution, relating to acquisition.
It was to be exercised for public purpose and upon payment of
compensation. He showed me all the law on the subject, right from
The State of Bihar vs. Sir Kameshwar Singh reported in AIR 1952 SC
252 to the two latest five Judges bench decisions of the Supreme
Court in Rajiv Sarin vs. State of Uttarakhand and K.T. Plantation
(P) Ltd. vs. State of Karnataka, both decided on 9th August, 2011.
Thereafter, he placed Article 245, 246 and 254 of the Constitution
of India together with entry 18 of list II which is the State List
which is part of the seventh schedule of the Constitution and entry
42 of list III which is in the Concurrent list and part of the same
schedule. Placing Article 245 he contended that parliament may make
laws for the whole or any part of the territory of India, and the
legislature of a state may make laws for the whole or any part of
the state. Placing article 254(1) he said that if any state law
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was contrary to a law made by parliament or the law made under
the Concurrent list, the law of parliament would prevail. The law
made by the state which was repugnant to the law made by parliament
would be void to the extent of such repugnancy. However, this was
subject to Article 254(2) which stated that if a law made by the
legislature received the assent of the President, it would prevail
despite its repugnancy with a law made by parliament. He cited the
case of Kuldip Nayar and others v Union of India and others,
reported in (2006)7 SCC 1. He remarked after placing paragraph 50,
55, 56, 57, 58, 59, 62, 63 and 64 that the Indian polity was
federal but it had strong unitary features. The judgment of the
Supreme Court said that the Indian Constitution was more unitary
than federal. Thereafter, he elaborated on Article 246 which
divided the subject matters within the competence of parliament and
the state legislature into three seperate lists. These lists make
up the seventh schedule of the Constitution. List I is called the
Union List and contain the subject matters over which parliament
may exclusively legislate. List II refers to the subject matters
over which the state legislature may exclusively legislate. List
III is the concurrent list over which both may legislate. Then he
refers to the subject matters in List II and III relating to land
and acquisition. Mr. Pal also spoke about the history of amendments
of the items in these two lists relating to acquisition. Entry 33
of List I at the time of enactment of the Constitution related to
acquisition for the purposes of the Union. Entry 36 of the State
List related to similar acquisition by the state, except for the
purpose of the Union subject to the provision of entry 42 of list
III. Entry 42 of List III empowered the parliament and the state
legislature to concurrently legislate on the principles on which
compensation was to be given. By the seventh Amendment Act, 1956
entry 33 of List I and entry 36 of List II were deleted. Entry 42
was reanacted by deleting the existing subject matter and replacing
it by the expression acquisition and requisitioning of property.
Mr. Pal submitted that the state in paragraph 24 and 25 of their
Affidavit-in-opposition had asserted that the subject matter of the
impugned Act fell under entry 18 of list II. This entry is as
follows:
18. Land, that is to say, right in or over land, land tenures
including the relation of landlord and tenant, and the collection
of rents; transfer and alienation of agricultural land; land
improvement and agricultural loans; colonization.
He cited Rustam Cavasjee Cooper v Union of India, reported in
1970 (1) SCC 248 and also reported in AIR 1970 SC 564 for many
purposes.
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During this stage of the arguments he cited paragraph 38 of that
judgment which stated that after the seventh amendment Act, 1956
the power to legislate for acquisition of property can only be
exercised under entry 42 of List III and not an incident of the
power to legislate over the subject matters covered by the other
entries in the three lists. He argued that this power was not
available under entry 18 of List II. The impugned Act, according to
him expropriated property that is the leasehold interest of the
Tatas in Singur. Therefore, the legislation being expropriation in
nature was an exercise of power under entry 42 of List III. This
submission was made to advance the argument that if there was
exercise of power under entry 42 of List III, the Act to stand, had
to have the assent of the President. Since, it did not have the
assent of the President it could not be in conflict with any
parliamentary law and to be more specific the Land Acquisition Act,
1894. The impugned Act was absolutely repugnant to the Land
Acquisition Act, 1894 and was therefore void. Next, he cited the
case of Ishwari Khetan Sugar Mills (P) Ltd. And Others vs. State of
Uttar Pradesh and Others reported in (1980) 4 SCC 136, while
formulating the pith and substance doctrine. He referred to the
portion of the judgment in paragraph 13 and said that if a
legislation was substantially within one entry but some part of the
legislation incidentally trenched upon any subject matter of
another list the Act as a whole would be valid. He also placed
paragraph 18 and argued that after the 7th Amendment Act, of 1956
relating to Entry No. 33 of list I, Entry No. 36 of list II and
Entry No. 42 of list III the power of acquisition and requisition
of property could not be an incident of any other power. Mr. Pal
then cited the case of H. D. Vora vs. State of Maharashtra and
Others reported in (1984) 2 SCC 337, to explain the nature of
expropriation, which according to his submission based on the above
judgment was acquiring of the entire title of the expropriated
owner whatever the nature and extent of that title may be. The
entire bundle of rights which was vested in the original holder
passes on acquisition to the acquirer leaving nothing to the
former. Thereafter the learned Counsel placed the provisions of the
Act, namely, Section 3 which provided for vesting of the land and
Section 5 which provided for compensation. Immediately thereafter
he placed R.L. Jain (D) By Lrs. vs. DDA And Others reported in
(2004) 4 SCC 79 paragraph 11 to submit that compensation had to be
paid immediately after taking of possession by the government.
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Thereafter, the learned Counsel tried to place the parts of the
Act dealing with public purpose. He argued that the public purpose
mentioned in the Act was for return of land to unwilling owners of
land which was acquired for the Tatas. He said that there was no
public purpose involved in giving the land to unwilling owners when
land was acquired exercising the power of eminent domain, and when
such acquisition was upheld by the Court. The question of
willingness was totally irrelevant in acquisition. Willing or
unwilling the owners had to give up the land. A purpose directed at
returning the land acquired could not be public purpose. He cited
Charanjit Lal Chowdhury vs. The Union of India And Others reported
in AIR 1951 SC 41 para 48 to submit that in case of acquisition
willingness or unwillingness of the expropriated owner does not
matter. He next contended that Section 4(3) of the impugned Act
directing the Tatas to forthwith restore vacant possession in
favour of the District Magistrate, Hooghly contained unguided
power. He cited State of Maharashtra vs. Mrs. Kamal Sukumar Durgule
and Others etc. reported in 1985 SC 119 relating to Maharashtra
Vacant Lands (Prohibition of Unauthorised Occupation and Summary
Eviction) Act, 66 of 1975 to submit that such provision was
unconstitutional. The learned Senior Advocate also submitted that
any action of the government or a statutory authority in undue
haste is malice in law and is presumed to be arbitrary referring to
Sarva Shramik Sangh, Bombay vs. Indian Hume Pipe Co. Ltd. And
Another reported in (1993) 2 SCC 386, R.S. Garg vs. State of U.P.
And Others reported in (2006) 6 SCC 430, Zenit Mataplast Private
Limited vs. State of Maharashtra And Others reported in (2009) 10
SCC 388 and Fuljit Kaur vs. State of Punjab And Others reported in
(2010) 11 SCC 455. The action of the government in enacting the
impugned Act and the rules thereunder and implementing the Act by
taking most expeditious possession of the land on 21st June, 2011
was on the face of it misuse of power. He cited Congreve vs. Home
Office reported in (1976) 1 ALL ER 697 and Wheeler and Others vs.
Leicester City Council reported in (1985) 2 ALL ER 1106.
Thereafter, Mr. Pal made an endeavour to interpret the word
forthwith under Section 4(3) of the Act. The section provided,
inter alia, that the Tatas would forthwith restore vacant
possession of the land in favour of the District Magistrate,
Hooghly. According to him, forthwith did not mean taking possession
within a few hours without giving notice. He drew my attention to
Gopal Mondal v The State of West Bengal, reported in AIR 1975 SC
1087. In that particular case according to Mr. Pal, the Supreme
Court opined
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15
that a reasonable view has to be taken of the word forthwith in
the facts and circumstances of each case. Three days delay was
considered by the Supreme Court to be forthwith in the facts and
circumstances of that particular case. Therefore, although there is
provision for forthwith delivery of possession in favour of the
District Magistrate, Hooghly, nonetheless, taking of possession
within a few hours of notification of the statute was a most
arbitrary act. He also referred me to State of W.B. and others v
Vishnunarayan & Associates(P) Ltd. and another, reported in
(2002)4 Supreme Court Cases 134. He contended that the Tatas have
been evicted from Singur by force and that in paragraph 17 of that
judgment placed by Mr. Pal, the use of force in taking possession
of premises by the State Government was held to be bad. The Act was
also attacked. It conferred unfettered discretion on the state
administration. The Act was most unreasonable in its conception and
in its application. Two English decisions were cited by Mr. Pal,
Sharpe v- Wakefield and others, reported in [1886-90] All E.R. 651
and Associated Provincial Picture Houses Ltd. v Wednesbury
Corporation, reported in [1947]2 All E.R. 680. Paragraphs 9 and 10
of the judgment of the Supreme Court in Khudiram Das v- The State
of West Bengal and others, reported in AIR 1975 SC 550 (paragraph
16 and 24), The Manager, Govt. Branch Press and another v D.B.
Belliappa, reported in AIR 1979 SC 429 were also cited. Before
introducing the topic of eminent domain Mr. Pal took me in detail
through the provisions of the Land Acquisition Act, 1894, right
from issuance of notice, receiving of objections, making of award,
vesting, principles to be taken into account for computation of
compensation, principles to be disregarded in calculating
compensation, the obligation to tender the awarded sum, upon making
of an award by the collector, reference to the District Judge,
payment of interest under the Act and so on. Thereafter, he argued
that the power to acquire was not an incident of any other power.
It was wholly exercise of powers under list III entry 42. List II
entry 18 did not cover acquisition of land. The power of the
legislature to acquire land was not an incident of any other power.
He cited the case of Rustom Cavasjee Cooper vs. Union of India
reported in AIR 1970 SC 564 and Ishwari Khetan Sugar Mills (P) Ltd.
and others v State of Uttar Pradesh and others, reported in (1980)
4 SCC 136. Then he came to the topic of a single person
legislation. He argued that a single person legislation could not
be arbitrary or discriminatory. If such a law was unjust it was no
law at all. He cited four decisions for this
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16
proposition in Ram Prasad Narayan Sahi and another v The State
of Bihar and others, reported in AIR 1953 SC 215, P. Venugopal v
Union of India, reported in (2008)5 SCC 1, para 36, Bharat
Petroleum Corporation Ltd. v Maddula Ratnavalli and others,
reported in (2007)6 SCC 81, para 20, State of T.N. and others v
Ananthi Ammal and others, reported in (1995) 1 SCC 519, para 7.
After this he started elucidating his arguments on public purpose.
He referred to the erstwhile Article 31 of the Constitution. He
said that acquisition was exercise of the power of eminent domain.
This power could be exercised for public purpose only and upon
payment of compensation. The power to acquire property and the duty
to pay compensation had been deleted from the part relating to
fundamental rights. It was enacted as a constitutional right in
Article 300A. It said that no person would be deprived of his
property save in accordance with law. Now, this deprivation had to
be for public purpose only and upon payment of reasonable
compensation. He cited Hindustan Petroleum Corpn. Ltd. v Darius
Shapur Chenai and others, reported in (2005)7 SCC 627 and Sooraram
Pratap Reddy and others v District Collector, Ranga Reddy District
and others, reported in (2008)9 SCC 552, paras 43,44 and 45 and
argued that no public purpose was disclosed in the impugned Act. He
said that willingness or unwillingness of a person was not material
in acquisition referring to the case of Charanjit Lal Chowdhury
(Supra). Therefore, the reference to unwillingness persons did not
signify any public purpose. He cited Gadadhar Ghosh v State of West
Bengal, reported in AIR 1963 Cal 565 to submit that when a purpose
had been declared the Court could not investigate any undisclosed
purpose. However, he argued that since no purpose had been
manifestly declared by this Act it was invalid. He relied on Smt.
Somawanti and others v- The State of Punjab and others, reported in
AIR 1963 SC 151, paras 35 and 36 to argue that such statement of
public purpose was justiciable. He also showed me Munshi Singh and
others v Union of India, reported in (1973)2 SCC 337, para 8 to say
that a purpose which was vague was not public purpose at all. He
also cited The State of Karnataka and another v Shri Ranganatha
Reddy and another, reported in (1977)4 SCC 471 to augment his
argument regarding alleged absence of public purpose. Thereafter,
the learned counsel started arguing on the question of
compensation. At the outset he said that Section 5 did not specify
the compensation to be paid. Nor did it specify any principles for
the calculation or payment of compensation. It only said that the
amount of compensation would be adjudged and determined by the
District Judge, of Hooghly on an
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17
application being made by the Tatas, by a reasoned order, after
observing the rules of natural justice. He began his arguments
challenging the compensation claim by placing the case of
Paschimbanga Bhumijibi Krishak Samiti & Ors. vs State of West
Bengal, reported in (1996)2 CLJ 285. Thereafter, he recounted the
history of the law of acquisition and payment of compensation by
placing the Land Acquisition Act 1894 in great detail. Thereafter,
he placed Section 299 of the Government of India Act, 1935 which
said that no property could be acquired except in accordance with
law and except upon payment of compensation to be specified in the
Act or upon provision of the principles for payment of
compensation, therein. He showed me Article 31 of the Constitution
of India as it was at the time of adoption of the Constitution. He
also took me through the various constitutional amendments amending
Article 31, namely, the Fourth Amendment of 1955 which said that
the adequacy of compensation could not be examined by the court. He
also showed me the Twenty Fifth Amendment of 1971 where the word
compensation was replaced by the word amount. Then he came to the
Fortyfourth amendment of 1978 which deleted Article 31 and ceased
to recognise right to property as a fundamental right. It was only
recognised as a constitutional right by insertion of Article 300A.
This subsection stated that no person would be deprived of his
property save in accordance with law. He cited the case of Rustam
Cavasjee Cooper vs Union of India, reported in 1970(1) SCC 248
which is a eleven Judges bench decision of the Supreme Court. He
made a very significant argument by pointing out the difference
between the word confiscation and the word compensation. He argued
that when a property was confiscated by the State it was done as a
penalty for some act done by the land owner. When there is
confiscation no compensation is payable. Compensation is the money
awarded for deprivation of property. How the compensation was to be
fixed or calculated was a different matter. But, any expropriation
of property by exercise of the power of eminent domain or
acquisition had to be accompanied by payment of compensation by the
state. He cited His Holiness Kesavananda Bharati Sripadagalvaru vs
State of Kerala and another, reported in (1973) 4 SCC 225 . This
was followed by State of Maharashtra and another vs Basantibai
Mohanlal Khetan and others, reported in (1986) 2 SCC 516, para 7,
8, 15, Paschimbanga Bhumijibi Krishak Samiti & Ors. vs State of
West Bengal & Ors., reported in 1996(2) CLJ 285. He also
reiterated the case of Hindustan Petroleum Corpn. Ltd. vs Darius
Shapur Chenai and others, reported in (2005)7 SCC 627. He showed me
the various lists under the seventh schedule. He referred to the
history of those lists. He showed entry 18 of list II and entry 42
of list III.
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18
He placed the case of Jilubhai Nanbhai Khachar and others vs
State of Gujarat and another, reported in 1995 Supp (1) SCC 596 to
argue that while legislating for land, land tenure and on other
subjects relating to land the legislature could also make
acquisition which fell under entry 42. Thereafter, he came to the
question of abandonment and argued that there was no abandonment on
the part of the Tatas. The word meant permanently leaving
something. There was no permanent leaving by the Tatas. They had
only removed their plant, equipment and machinery from the site. He
relied on Kanhiya Shanker and others vs Mohabata Sedhu and others,
reported in AIR 1960 Punjab 494, Bombay Dyeing & Manufacturing
Co. Ltd. vs The State of Bombay and others, reported in AIR 1958 SC
328, paragraphs 28, 29 and 30 , G.T. Lad and others vs Chemicals
and Fibres India Ltd., reported in AIR 1979 SC 582, paragraph 3.
Next he argued on the question of repugnancy. He argued that since
the impugned Act was without the assent of the President, it was
repugnant to a Central Act, namely, the Land Acquisition Act, 1894.
In no way could the provisions of the impugned Act be reconciled
with the Land Acquisition Act, 1894. Therefore, the repugnancy was
total and irreconcilable, referring to State of West Bengal vs
Union of India, reported in AIR 1963 SC 1241, paragraph 46 , Thakur
Amar Singhji and others vs State of Rajasthan and others, reported
in AIR 1955 SC 504, paragraph 27. He also referred to G.P. Stewart
vs Brojendra Kishore Roy Chaudhury, reported in AIR 1939 Calcutta
628, M.P. Ait Permit Owners Assn. and another vs State of M.P.,
reported in (2004)1 SCC 320 in support of his proposition.
Thereafter, he emphasized on the pith and substance theory. The
pith and substance of an Act had to be gone into. He relied on
Bondu Ramaswamy and others vs Bangalore Development Authority and
others, reported in (2010) 7 SCC 129. He also took me through two
recent Supreme Court decisions, each by a five Judges bench of the
court and each rendered on 9th August, 2011. The first is the case
concerning the Kuzarlar Act, the second is the case of K.T.
Plantation Private Limited vs State of Karnataka. Both are still
unreported. Both of them deal with the power of the State to
acquire property under Article 300A of the Constitution of India
and recognised the right of the land owner to receive compensation
which was not illusory. He also referred to the case of Bondu
Ramaswamy and others vs Bangalore Development Authority and others,
reported in (2010) 7 SCC 129, para 89 dealing with Bangalore
Development Authority Act. He also referred to Offshore Holdings
Private Limited vs Bangalore Development
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19
Authority and others, reported in (2011)3 SCC 139 concerning the
same Bangalore Development Authority Act and Girnar Traders vs
State of Maharashtra and others, reported in (2011)3 SCC 1
concerning a Maharashtra Act. Submissions of State-respondents: The
submissions on behalf of the State-respondents were made by the
learned Advocate General, Mr. Saktinath Mukherjee, learned Senior
Advocate, Mr. Kalyan Bandopadhay, learned Senior Advocate and Mr.
Ashoke Banerjee, learned Senior Advocate. Mr. Advocate General The
learned Advocate General began his argument by contending that the
definition of compensation was very wide in the impugned Act. The
definition of compensation in the Land Acquisition Act was very
narrow. Then he placed the history of acquisition of this land in
2006. Thereafter he placed the provisions of the lease agreement.
He said that the purpose was for setting up of an automobile plant.
No premium was paid by the Tatas. The rent was Rs. 1 crore per
year. He submitted that the rent payable to the State was very
meagre. He said that this lease was not assignable. The land could
not be sublet. It could not be used for any purpose other than for
manufacture of automobile. His argument was that the leasehold
right had no saleable interest. He submitted that the operation in
the factory was suspended from 29th August, 2008. He placed great
reliance on the use of the expression by the Tatas in the letter
dated 10th October, 2008 to move out of Singur and to withdraw from
the site. Operations were formally closed on 3rd October, 2008
referring to the letter dated 28th September on 2010 of the Tatas
at page 297 of the writ petition. He also relied upon the letter of
the Tatas dated 31st October, 2008 which said that they would take
ten months time to move out of Singur. He then read the letter
dated 22nd June, 2010 of the fourth respondent enquiring from the
Tatas whether the site would be used by them for manufacturing
activity. He also read their reply dated 28th Septemeber, 2010
which inter alia, said that they would consider the option to move
out permanently provided they were suitably compensated. He then
referred to the case of Tata Power Co. Ltd. vs. Reliance Energy
Ltd. And Others reported in 2009 (16) SCC 659 and the case of State
of Bihar And Others vs. Bihar Distillery Ltd. And Others reported
in 1997 (2) SCC 453 which relied on the case of SEAFORD COURT
ESTATES vs. ASHER reported in 1949(2) ALL ER 1955 to submit that
there was a presumption of
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20
constitutionality of a statute. The Court should not pick holes
in it and try to interpret the Act so as to support it. Thereafter,
he apprised the Court that the total compensation paid for the
first acquisition was Rs. 137 crores. Rs. 76 crores were expended
for drainage and other infrastructure by the State. In spite of
such investment by them the land was lying idle. Therefore, the
State decided to take it over. He tried to justify the impugned Act
by drawing its analogy with the West Bengal Premises (Tenancy
Regulation) Act, 1976. He submitted that a tenant of government
premises could be given a notice of termination of tenancy and
asked to restore possession, taking the help of force if necessary.
There was no question of payment of any compensation. Then he tried
to distinguish the Land Acquisition Act, 1894 and the impugned Act
by saying that under the Land Acquisition Act there was no
automatic acquisition. By the impugned Act, the leasehold interest
of the Tatas was automatically extinguished. He argued that in the
impugned Act there could not be any acquisition because the State
could not acquire its own land, citing the case of M/s Ahad
Brothers vs. State of M.P. & Another reported in AIR 2005 SC
355. Thereupon he cited Nader Chand vs. State of West Bengal
reported in AIR 1952 CAL 67 paragraph 19 and 20 to contend that
payment of compensation was not a condition precedent to vesting or
taking of possession of land. He relied on by the case of Nader
Chand vs. State of West Bengal reported in AIR 1952 CAL 67 to say
that the notices were issued by the district officials after
enactment of the impugned Act, as a matter of grace and there was
no requirement for issuance of such notice. Then he spoke about the
law of repugnancy. He said that there was no repugnancy between any
Central Act and the impugned Act. He argued that the subject matter
covered by the impugned Act was wholly within Entry 18 of List II.
The legislation related to land, land tenure, landlord and tenant.
The pith and substance of the legislation was under entry 18 of
List II. Therefore, the said legislature had the competence to make
this legislation. Thereafter, he cited State of Karnataka vs. Shri
Ranganatha Reddy & Another reported in 1977 (4) SCC 471 to
emphasize on the public purpose. Then he argued on the question of
compensation, taking note of Article 31 and its amendments and the
various amendments of List II and List III of the 7th Schedule to
the Constitution, but, particularly entry 18 of List II and entry
42 of List III. He argued that the law regarding compensation as
laid down by
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21
the Supreme Court after coming into force of the Constitution,
has been considerably diluted by various constitutional amendments.
Even the case of Cooper was not absolutely relevant at this point
of time, considering the subsequent decisions of the Supreme Court.
The compensation to be awarded was not to be absolutely illusory or
arbitrary. Nevertheless, he placed the concept of compensation as
being equivalent, citing the case of Md. MOZIAHARAL AHMAD vs. Md.
AZIMADDIN reported in AIR 1923 CAL 507 and Rathi Menon vs. Union of
India reported in 2001 (3) SCC 714. Then he made the arguments
relating to public purpose. He said that the need of a section of
the people would be termed as public purpose. In this case the
section of people were the unwilling owners. He cited the case of
Ratilal Shakarabhai & Ors. vs. The State of Gujarat & Ors.
reported in 1970 (2) SCC 264 and Urmila Roy & Others vs. Bengal
Peerless Housing Development Company Ltd. & Others reported in
2009 (5) SCC 242 (paragraph 16). He said that the Act enjoined
forthwith taking of possession of the property and possession as
taken of the property at Singur was valid. Mr. Saktinath Mukherjee,
Senior Advocate: Mr. Mukherjee began his arguments by citing
Chiranjit Lal Choudhury vs. Union of India reported in AIR 1951 SC
41. He argued that an enactment directed at one person was
constitutional if there was sufficient basis or reasons for it. He
referred to the acquisition of several oil companies like ESSO,
Burma Oil Company and Caltex. Then he tried to justify the taking
of possession. He showed me Section 16 of the Land Acquisition Act,
1894. He argued that the Government has the power to take
possession of the land upon making of the award. The award need not
be published or served upon the person affected. The award becomes
operational upon its signing and sealing by the collector, citing
the case of State of Bihar vs. Samsuz Zoha reported in AIR 1996 SC
61. Therefore, upon making of the award the Government is entitled
to take possession. He referred to the West Bengal Land
(Requisition and Acquisition) Act, 1948 and West Bengal Land
Development and Planning Act, 1948. He said that under those Acts
no compensation was payable. He cited West Bengal Housing Board
& Ors. vs. Bruendra Prasad Gupta & Ors. reported in 1997
(6) SCC 207, arguing that the West Bengal Land (Requisition and
Acquisition) Act, 1948 had been affirmed by the Supreme Court in
the case.
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22
Thereafter, he proceeded to explain the term freed of the lease
in the impugned Act. He explained the nature of a lease by inter
alia placing Section 105 of the Transfer of Property Act. He argued
with great fervour as to what happened in the event of
determination or extinguishment of a lease. He referred to an old
decision of this Court in a case in 1897 ILR 24 Cal 440 where it
was said that upon happening of such an event the barrier between
the owner and the land was removed. He said that the lease was
extinguished. He also placed passages from commentaries by Mulla
and by Sir Hari Singh Gour, 8th Edition, 1974. He extended these
arguments by explaining the effect of surrender of a lease. He
cited Provident Investment Co. Ltd. vs. Commr. Of Income-tax,
Bombay City reported in AIR 1954 Bombay 95 and H.S. Ramsingh vs.
Bijoy Singh Surana & Another reported in 76 CWN 217. His next
argument was with regard to the exercise of power by the
legislature in enacting the impugned Act. It was not an exercise of
the power of eminent domain but of the power of land reform,
extinguishment of land tenure affecting landlord tenant
relationship under entry 18 of list II. He placed the case of
Sooram Pratap Reddy vs. District Collector Ranga reddy District
& Others reported in 2008 (9) SCC 552 to explain the concept of
eminent domain together with the case of Anand Singh vs. State of
U.P. reported in 2010 (11) SCC 242. In this connection he also
referred to the case of Rakhal Chandra Basak vs. The Secretary of
State for Indian Council reported in 33 CWN 669. He showed me
decisions Calcutta Crdit Corporation vs. Happy Homes Ltd. reported
in AIR 1968 SC 471 (paragraph 7) and Mira Sen vs. Dipak Kumar Ghosh
reported in 82 CWN 177. These landlord tenant cases were cited so
as to show that even if defective notice was accepted by a tenant
it was a good notice, referring to the allegedly defective notice
issued by the District Magistrate to the Tatas on 21st June, 2011.
Then he came to the question of compensation. He cited Yadava Kumar
vs. National Insurance Co. Ltd. 2010 (10) SCC 341 (paragraph 70) to
argue that compensation was more broad based than damages. He
placed the Calcutta Thika Tenancy Act, 1949. He cited two decisions
of the Supreme Court relating to taking over of zamindari, jagir,
etc. and argued that this fell under land reforms. He cited State
of Vindhya Pradesh vs. Mayadhwaj Singh reported in AIR 1960 SC
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23
796 para 6 and Amarsarjit Singh vs. State of Punjab reported in
AIR 1962 SC 1305 para 22. He cited the case relating to taking over
of coffee plantation being the case of Coffee Board, Karnataka,
Bangalore vs. Commissioner of Commercial Taxes, Karnataka and
others reported in AIR 1988 SC 1487 paragraph 28 and 29 and argued
that there was no exercise of eminent domain. The second aspect of
his argument was relating to the constitutionality of the impugned
Act. He said that it should always be the endeavour of the Courts
to make a harmonious construction of the Act. In this regard he
cited Harakehand Ratunehand Banthia & Ors. vs. Union of India
reported in AIR 1970 SC 1453 and Ajay Kr. Singh & Others vs.
State of Bihar & Others reported in 1994 (4) SCC 401. He argued
that the pith and substance of legislation had to be examined. In
an effort to interpret one entry, another could not be robbed of
its entire content. In this connection he referred to Rajiv Sarins
case and the K.T. Plantation case. He relied upon three Acts of
West Bengal 1) West Bengal Public Land (Eviction of Unauthorised
Occupants) Act, 1962, 2) Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 and 3) West Bengal Government Premises
(Tenancy and Regulation ) Act, 1976, to argue that in these Acts
the provisions for extinguishment of the interest of tenants were
without any payment of compensation. The last Act had been affirmed
by the Supreme Court in the case of Associated Indem Mechanical (P)
Ltd. vs. W.B. Small Industries Development Corporation Ltd.
reported in 2007 (3) SCC 607. Kalyan Bandopadhay, Senior Advocate:
Mr. Bandopadhay, submitted that the main consideration before the
Court was the competence of the legislature. It had to see whether
the legislature had the competency or not for enacting the impugned
Act under List II entry 18. He argued that it had such competence.
There was no acquisition. He argued that such kind of law was
upheld by the Supreme Court in the case of Jilubhai Nanbhai Khachar
vs. State of Gujarat reported in 1995 (Supp) I SCC 596 and placed
paragraph 48 and 49 thereof. He argued that by the impugned Act
there was extinguishment of the lease and the resumption of
ownership and possessory rights of the leased land by the State. He
argued that only if exercise of power by the legislature was
pretended, could it be called colourable and could be struck down
by the Court, citing
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24
the case of Ashoke Kumar vs. Union of India reported in 1991 (3)
SCC 498 paragraph 9. He cited the case of DHARAM DUTT AND OTHERS
vs. UNION OF INDIA AND OTHERS reported in 2004 (1) SCC 712 to argue
that a single institution could be treated as a class. He also
cited the case of Ram Krishna Dalmia vs. Justice Tendolkar reported
in AIR 1958 SC 538. He argued that the Court should not seek an
unnecessary confrontation with the government and should interfere
with legislation in an exceptional case as held by the Supreme
Court in the case of Government of A.P. vs. P. Laxmi reported in
2008 (4) SCC 720. He also relied upon the case of State of A.P. vs.
Mc. Dawell Devi & Co. reported in 1996 (3) SCC 709 paras 37 and
38 and Glanrock Estate P. Ltd. vs. State of Tamil Nadu reported in
2010 (10) SCC 96. He cited the case of Organo Chemical Industries
& Anr. vs. Union of India reported in 1979 (4) SCC 51 to argue
that the provision for compensation in the statute was adequate. He
also referred to the case of M/s Hoeeshst Pharmacuticals Ltd. vs.
State of Bihar & Ors. reported in 1983 (4) SCC 45 paragraphs 52
and 57. Mr. Ashoke Banerjee, Senior Advocate: Mr. Ashoke Banerjee,
learned Government Pleader made general arguments citing points
argued by the other three learned counsel, but from his own
perception and with his own ideas of importance. All the learned
Counsel, who argued on behalf of the State were unanimous in
submitting that in the event this Court held that the impugned Act
involved acquisition, the legislature had kept open the field for
grant of lawful compensation by the District Judge, Hooghly. They
argued that the legislature did not limit the compensation or
enunciate any principles so that the District Judge would be
fettered. Compensation according to the legislation is to be paid
accordingly. At the very close of submissions I asked the learned
Advocate General to take specific instruction, whether the state
government would prefer any appeal, if the Court interpreted the
word compensation as embodying the principles enshrined in Sections
23 and 24 of the Land Acquisition Act, 1894. He replied on the next
date after taking instruction that the State had no objections if
those principles for grant of compensation were deemed to have
been
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25
embodied in the impugned Act and were to be considered and
applied by the District Judge, subject to admissibility of any
principle, while awarding compensation. I have taken that statement
of the learned Advocate General to be the stand of the State. LAND
ACQUISITION -CONSTITUTIONAL HISTORY AND PROVISIONS On 1st March,
1894, the Land Acquisition Act, 1894 came into force. In Section
3(a) land was defined as including benefits arising out of land,
and things attached to the earth or permanently fastened to
anything attached to the earth. Section 4 says that when it appears
to the appropriate government that land is needed for any public
purpose a notification will be published by the Collector. Then
there are various provisions regarding notification of claims,
making of award, vesting of land and payment of compensation. The
principles which are to be taken into account for payment of
compensation are mentioned in Section 23 of the Act and the
principles which are to be disregarded are mentioned in Section 24.
Sections 23 and 24 are stated hereunder:
23. Matters to be considered in determining compensation (1)
determining the amount of compensation to be awarded for land
acquired under this Act, the Court shall take into
consideration-
the market value of the land at the date of the publication of
the [notification under section 4, sub-section (1)]; the damage
sustained by the person interested, by reason of the taking of any
standing crops or trees which may be on the land at the time of the
Collectors taking possession thereof; the damage (if any),
sustained by the person interested, at the time of the Collectors
taking possession of the land, by reason of severing such land from
his other land; the damage (if any), sustained by the person
interested, at the time of the Collectors taking possession of the
land, by reason of the acquisition injuriously affecting his other
property, movable or immovable, in any other manner, or his
earnings; if, in consequence of the acquisition of the land by the
Collector, the person interested in compelled to charge his
residence or place of business, the reasonable expenses (if any)
incidental to such change; and
first,
Secondly,
thirdly,
fourthly,
fifthly,
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26
the damage (if any) bona fide resulting from diminution of the
profits of the land between the time of the publication of the
declaration under section 6 and the time of the Collectors taking
possession of the land. .
24. Matters to be neglected in determining compensation But the
Court shall not take into consideration.
the degree of urgency which has led to the acquisition; any
disinclination of the person interested to part with the land
acquired; any damage sustained by him which, if caused by a private
person, would not render such person liable to a suit; any damage
which is likely to be caused to the land acquired, after the date
of the publication of the declaration under section 6, by or in
consequence of the use to which it will be put; any increase to the
value of the land acquired likely to accrue from the use to which
it will be put when acquired; any increase to the value of the
other land of the person interested likely to accrue from the use
to which the land acquired will be put; any outlay or improvements
on, or disposal of, the land acquired, commenced, made or effected
without the sanction of the Collector sub-section (1) [or] any
increase to the value of the land on account of its being part to
any use which is forbidden by land or opposed to public policy.
The Government of India Act came in 1935. Section 299 of the Act
was about compulsory acquisition of land. It is in this Act of 1935
that this celebrated statement appears No person shall be deprived
of his property [in British India] save by authority of law.
[Section 299(1)]. Section 299 said that no law for acquisition of
any land or any commercial or industrial undertaking or any
interest therein would be made without providing for payment of
compensation in the Act itself or without specifying the principles
for its calculation, in the Act. Now, this provision of the
Government of India Act, 1935 is not only part of our
constitutional history but is part of the basic constitutional
principle for acquisition of property, which it will be seen, has
been modified over the years.
sixthly,
first, secondly, secondly,
Thirdly, fourthly, fifthly, sixthly, Seventhly , Eighthly,
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India became independent. On 26th November, 1949, we adopted,
enacted and gave to ourselves the constitution. By the operation of
Article 394 major provisions of the constitution came into force
only on 26th January, 1950. Article 31 related to right to
property. It was part of our fundamental rights. Sub sections 1 and
2 substantially, if not wholly adopted and incorporated sections
299 (1) and (2) of the Government of India Act, 1935. These sub
sections and S.299 of the Government of India Act, 1935 were in the
following terms:
31. (1) No person shall be deprived of his property save by
authority of law.
(2) No property, movable or immovable, including any interest
in, or in company owing, any commercial or industrial undertaking,
shall be taken possession of or acquired for public purposes under
any law authorising the taking of such possession or such
acquisition, unless the law provides for compensation for the
property taken possession of or acquired and either fixes the
amount of the compensation, or specifies the principles on which,
and the manner in which, the compensation is to be determined and
given.
299.(1) No person shall be deprived of his property in [British
India] save by authority of law.
(2) Neither the Federal nor a Provincial Legislature shall have
power to make any law authorizing the compulsory acquisition for
public purposes of any land, or any commercial or industrial
undertaking, or any interest in, or in any company owning, any
commercial or industrial undertaking, unless the law provides for
the payment of compensation for the property acquired and either
fixes the amount of the compensation, or specifies the principles
on which, and the manner in which, it is to be determined.
By the fourth Amendment Act effective from 27th April, 1955
Article 31(2) was amended. The amendment was that no law of
acquisition could be called in question in any court on the ground
that the compensation was not adequate. Further, the 25th Amendment
Act, 1971 was made effective from 20th April, 1972. The word
compensation was deleted and replaced by the word amount. By the
44th Amendment Act of 1978 right to property ceased to be a
fundamental right. Article 31 was deleted. A provision was added
after Article 300 and numbered as Article 300A. The first sub
section of Section 31
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was transferred to that place. The rest was deleted. Article
300A reads as follows:
300-A. Persons not to be deprived of property save by authority
of law. No person shall be deprived of his property save by
authority of law.
Connected with this constitutional principle is another
constitutional principle - the competence of Parliament and the
state legislature to enact laws with regard to land acquisition.
Part XI Chapter 1 of the Constitution is entitled legislative
relations. Parliament has the power to make laws for the entire
territory of India. It can also make extra territorial law. The
legislature of the State has power to make laws for the State. This
is a very general power, made subject to the other provisions of
the Constitution (Article 245). Now, this broad and general power
is made more specific by the subsequent articles. List I of the
seventh schedule contains subjects over which Parliament has
exclusive power to make laws. List II contains subjects over which
the State legislature has exclusive power to make laws. List III of
it contains subjects over which both Parliament and State have
concurrent powers to make laws. These three lists are called the
Union list, State list and Concurrent list, respectively. (See
article 246). Now, Article 254 is very important. It enacts that if
a state law is repugnant to a law made by Parliament it is void to
the extent of such repugnancy. However, there is one exception. If
the state makes a law with regard to a subject in the concurrent
list and such law has received the assent of the President, then it
is good law although it is repugnant to the central law. The
circumstance when a bill is reserved for the consideration of the
President is mentioned in Article 201. The President can assent to
the bill or withhold his assent. The most important provision in
the article is that when an enactment by the state legislature, on
a subject in the concurrent list without the assent of the
President, is in conflict with a law made by Parliament, that law
will be void or void to the extent of its conflict with any
parliamentary law. [Article 254(2)] When the Constitution was
enacted entry 33 of list I provided for acquisition or
requisitioning of property for the purposes of the Union.
Similarly, entry 36 of list II provided for acquisition or
requisitioning of property except for the purposes of the Union
subject to entry 42 of list III. Entry 42 of list III related to
the principles on which compensation for property acquired or
requisitioned for the purposes of the Union or of a state or for
any other public purpose was to be determined and the form and the
manner in which such compensation was to be given. By the Seventh
Amendment Act, 1956, entry 33 of list I was deleted. So was entry
36 of the State list. Entry 42 of
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the Concurrent list was amended by deleting everything it
contained and substituting them with acquisition and requisitioning
of property. LAW ON ACQUISITION AND COMPENSATION: In England all
land in the realm is owned by the sovereign. Each individual holds
it of some lord (See Law of Real Property by Megary and Wade
Seventh Edition). An attribute of sovereign power is acquisition.
The sovereign could acquire or take over any private property if it
was needed by him for public use (See Kameshwar Singh AIR 1952 SC
252 judgment of Mahajan J. page 39). Although this power to take
land resided absolutely with the sovereign, nevertheless, it was
attached with an obligation to recompense the land owner for the
loss that he suffered. In the beginning it was a matter of
negotiation between the officers of the sovereign and the
landholder. Later this obligation was engrafted in statutes, first
of special pplication and then of general application (See State of
Bihar vs. Kameshwar Singh reported in AIR 1952 SC 252 judgment of
Das J. para 91). Blackstone the famous English commentator on
common law had spoken about this in his three volumes of
Commentaries on the laws of England published in the 18th Century.
According to Blackstone, the standard of compensation was an
equivalent of the property lost. It is very necessary to set out
what Blackstone said as embodied in paragraph 94 of R. C. Cooper
vs. Union of India AIR 1970 SC 564(Judgment of J.C. Shah J).
94. Under the Common Law of England, principles for payment of
compensation for acquisition of property by the State are stated by
Blackstone in his Commentaries on the Laws of England, 4th Edn.,
Vol.1, at p. 109:
So great moreover is the regard of the law for private property,
that it will not authorize the least violation of it; no, not even
for the general good of the whole community. * * * Besides, the
public good is in nothing more essentially interested, than in the
protection of every individuals private rights, as modeled by the
municipal law. In this and similar cases, the legislature alone
can, and indeed frequently does interpose, and compel the
individual to acquiesce. But how does it interpose and compel? Not
by absolutely stripping the subject of his property in an arbitrary
manner; but giving him a full indemnification and
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equivalent for the injury thereby sustained. The public is now
considered as an individual, treating with an individual for an
exchange. All that the legislature does, is to oblige the owner to
alienate his possession for reasonable price: * * *
The British Parliament is supreme and its powers are not subject
to any constitutional limitations. But the British Parliament has
rarely, if at all, exercised power to take property without payment
of the cash value of the property taken. In Attorney-General v. De
Keysers Royal Hotel, 1920 AC 508, the House of Lords held that the
Crown is not entitled as of right either by virtue of its
prerogative or under any statute, to take possession of the land or
building of a subject for administrative purposes in connection
with the defence of the realm, without compensation for their use
and occupation.
The concept of eminent domain is a continental principle and was
adopted by the United States of America and became part of their
constitutional law. According to this doctrine the State in the
exercise of its sovereign power may take over any private property
if it was needed for public purpose and upon payment of just
compensation. This constitutional principle was embodied in the 5th
Amendment to their Constitution as stated by our Supreme Court in
the case of State of Bihar vs. Kameshwar Singh (Supra) (See J.
Mahajan J. para 40 and S.R. Das J. para 91). This constitutional
principle of acquisition of England and eminent domain of the
United States of America was embodied in our constitution at the
time of its adoption and enforcement as Article 31. It was not new.
It was there, as Section 299 in the Government of India Act, 1935.
This Article recognised the famous doctrine that no person was to
be deprived of his property save in accordance with law. Upon
deprivation of property the person deprived would be provided
compensation to be provided in the law making such deprivation or
according to principles for calculation of such compensation to be
provided in that law. In Kameshwar Singhs and Bella Banerjees case
the Supreme Court interpreted compensation to mean a just
equivalent of what the holder of the property had been deprived of.
In paragraph 41 of Kameshwar Singh, Mahajan J. pronounced as
follows:
..I agree with the Learned Attorney General that the concept of
acquisition and that of compensation are two different notions
having their origin in different
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sources. One is founded on the sovereign power of the State to
take, the other is based on the natural right of the person who is
deprived of property to be compensated for his loss. One is the
power to take, the other is the condition for the exercise of that
power. Power to take was mentioned in Entry 36, while the condition
for the exercise of that power was embodied in Art. 31(2) and there
was no duty to pay compensation implicit in the content of the
entry itself.
In paragraph 6 of Bella Banerjee the Suprme Court through
Patanjali Sastri C.J. opined:
(6) It is significant to note that prior to the enactment of
Bombay Act 6 of 1952, Sections 305 and 306 of the Criminal
Procedure Code were applicable to the Court of Session for Greater
Bombay. It was intended as stated in the objects of the bill to
provide for a case of disagreement with a unanimous verdict of the
jury and enable the Sessions Judge for Greater Bombay to make a
reference under Section 307 of the Criminal Procedure Code even in
the case of a unanimous verdict with which he disagreed. In making
the amendment however by the Bombay Act 6 of 1952 the Legislature
took away the powers of the Sessions Judge of Greater Bombay to
discharge the jury and order a retrial of the accused by another
jury even in the case of a majority verdict so much so that even in
a verdict of five to four which was not till then an effective
verdict the case would have to be submitted to the High Court under
Section 307 of the Criminal Procedure Code.
In 1955 by the Fourth Amendment the Constitution was amended.
The amendment added a rider that the adequacy of the compensation
could not be gone into by the Court. But the Supreme Court
continued to hold that the term compensation imported the principle
of just equivalent and that compensation to be provided in the law
should be so. Only the amount of compensation could not be
challenged. (See paragraphs 90 to 100 of R.C. Cooper vs. Union of
India, reported in AIR 1970 SC 564) Parliament enacted a further
amendment to the Constitution in 1972, called the 25th Amendment.
By this amendment the word compensation was deleted and replaced by
the word amount, apparently to prevent the courts from construing
the meaning or import of the word compensation.
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In the case of His Holiness Kesavananda Bharati Vs. State of
Kerela reported in AIR 1973 SC 1461 the Supreme Court held that
although the word compensation had been replaced by the word amount
and the adequacy of compensation could not be challenged,
nevertheless, the amount awarded could not be arbitrary or illusory
and should have a fair relationship with the value of the property
sought to be taken. In paragraph 759 of the judgment Hegde and
Mukherjea JJ inter alia held:
759.. (5) (A) The newly substituted Article 31(2) does not
destroy the right to property because (i) the fixation of amount
under that Article should have reasonable relationship with the
value of the property acquired or requisitioned; (ii) the
principles laid down must be relevant for the purpose of arriving
at the amount payable in respect of the property acquired or
required; (iii) the amount fixed should not be illusory and
(iv) the same should not be fixed arbitrarily.
(5) (B) The question whether the amount in question has been
fixed arbitrarily or the same is illusory or the principles laid
down for the determination of the same are relevant to the subject
matter of acquisition or requisition at about the time when the
property in question is acquired or required are open to judicial
review. But it is no more the amount fixed or to be determined on
the basis of the principles laid down is adequate.
Parliament went further. By the 44th Amendment of 1978 it
repealed Section 31 altogether except the first part of Section 31,
which provided that no person would be deprived of his property by
the State without the authority of law, which was retained, not as
a fundamental right but as a constitutional right. A new Article
300-A was inserted. It is as follows:
300-A. Persons not to be deprived of property save by authority
of law. No person shall be deprived of his property save by
authority of law.
Let us see what the Supreme Court said post Kesavananda. The
Supreme Court in the case of The State of Karnataka vs. Shri
Ranganatha Reddy and Another reported in (1977) 4 SCC 471 in
paragraph 15 did not depart
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from the basic principle enunciated in the case of Kesavananda
Bharati Vs. State of Kerela that the amount awarded as compensation
should not be illusory or arbitrary.
While differentiating between acquisition and requisition, in
the case of H. D. Vora vs. State of Maharashtra and Others reported
in (1984) 2 SCC 337 the Supreme Court said that acquisition meant
acquiring the entire title of the expropriated owner whatever may
be the nature and extent of that title, relying on Chiranjit Lal vs
Union of India, reported in AIR 1951 SC 41. In the case of
Hindustan Petroleum Corpn. Ltd. vs. Darius Shapur Chenai And Others
reported in (2005) 7 SCC 627, the Supreme Court opined that
reasonable compensation had to be given. (See para 6). This
doctrine of eminent domain was continued to be recognised in
Sooraram Pratap Reddy and others vs District Collector, Ranga Reddy
District and others, reported in (2008) 9 SCC 552 (See paragraphs
43 to 50); Anand Singh and another vs State of Uttar Pradesh and
other, reported in (2010)11 SCC 242 (paragraphs 40, 41 and 42)) If
property is acquired by the state without compensation it
tantamounts to its confiscation, because in confiscation, the
property is taken by way of penalty levied by the state. (see His
Holiness Kesavananda Bharati Sripadagalvaru vs State of Kerala and
another, reported in (1973) 4 SCC 225para 705 = AIR 1973 SC 1461)
Payment of compensation is not a condition precedent to vesting or
taking possession as held in Nader Chand Mallick vs State of West
Bengal and others, reported in AIR 1952 Cal 67 (paragraph 19 and
20). However, the language of Section 31 of the Land Acquisition
Act, 1894 and the judgment of the Supreme Court in R.L. Jain(D) by
Lrs. vs DDA and others, reported in (2004)4 SCC 79 from paragraph
11 to 17 tend to suggest that compensation should be paid more or
less contemporaneously with taking of land. Now, I come to two
latest decisions of the Supreme Court. This judgment has provided
me with the most invaluable guidance to decide this case. In an
appeal before the Supreme Court arising out of the Kuzalr Act,
Rajiv Sarin & Anr. vs. State of Uttarkhand & Ors. and
decided by a five Judges bench of it on 9th August, 2011, and so
far unreported, there were hissedars of private forests who were
not commercially using them. The
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Kuzalr Act amongst other forest lands acquired those forests
also. The Act contained principles for computation of compensation
in Sections 18 (cc) and 19(b). Compensation was to be calculated
according to those sections as the product of the average annual
income multiplied by a multiplier. The private forest owners who
were not utilizing the land were not awarded any compensation
because according to the principles mentioned in those sections
compensation was payable only on the basis of annual income. They
had no annual income. They were aggrieved by this determination.
The highest court refused to believe that because these owners had
no income, they could not be compensated for the acquisition of
their forest lands. According to the Supreme Court these forest
lands were valuable or productive assets in a different sense. It
provided guidelines for computation of compensation based on the
principles provided in the statute, for award of compensation to
those hissedars who were commercially using their forest land. In
another so far unreported five Judges bench of the Supreme Court
delivered on 9th August, 2011, K.T. Plantation vs State of
Karnataka, the Court maintained that Article 300A recognised the
principles of eminent domain to a substantial extent. Acquisition
could be made for public purpose and upon payment of compensation
which was not illusory. ACQUISITON OR RECLAMATION AND REHABILATION:
What is the nature of the impugned Act? Is it reclamation of land
and rehabilitation as argued by the Learned Counsel for the State.
What is the nature of the impugned Act? The pith and substance of
it is that by its operation the unexpired term of the lease granted
to the Tatas is extinguished. The result is that the State gets
back the land it had given on long lease to the Tatas. It is argued
on their behalf that the legislature exercised power exclusively
under List II entry no. 18. Let me read this entry:
18. Land, that is to say, right in or over land, land tenures
including the relation of landlord and tenant, and the collection
of rents; transfer and alienation of agricultural land; land
improvement and agricultural loans; colonization.
It is said that the legislature was exercising its powers with
regard to land tenure by extinguishing it and was by the Act
determining the relationship between
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35
landlord and tenant. The land belonged to the State. The Tatas
were mere lessees. The concept of acquisition was taking of private
property. This property belonged to the State. It could not take
its own property. The Act got rid of the lease by making the
property free of it and vesting it in the state, by getting rid of
the lessee. A four Judges bench of the Supreme Court has held in
the case of Collector of Bombay vs Nusserwanji Rattanji Mistri and
others, reported in AIR 1955 SC 298 that a property may have
various interests created in it including lease. When an
acquisition is made those interests which are not owned by the
state, are only acquired, as the state may own some of these
interests on the land. Paragraphs 12 to 15 of the report enunciates
the following principles:
(12) We are unable to accept this contention. When the
Government acquires lands under the provisions of the Land
Acquisition Act, it must be for a public purpose, and with a view
to put them to that purpose, the Government acquires the sum total
of all private interests subsisting in them. If the Government has
itself an interest in the land, it has only to acquire the other
interests outstanding therein, so that it might be in a position to
pass it on absolutely for public user. In In the Matter of the Land
Acquisition Act: Govt. of Bombay v. Esufali Salebhai, 34 Bom 618 at
p. 636 (D), Batchelor J., observed:
In other words Government, as it seems to me, are not debarred
from acquiring and paying for the only outstanding interests merely
because the Act, which primarily contemplates all interests as held
outside Government, directs that the entire compensation based upon
the market value of the whole land, must be distributed among the
claimants.
There, the Government claimed ownership of the land on which
there stood buildings belonging to the claimants, and it was held
that the Government was bound to acquire and pay only for the
superstructure, as it was already the owner of the site. Similarly
in Deputy Collector, Calicut Division v. Aiyavu Pillay, 9 Ind Cas
341 (Mad) (E), Wallis, J. (as he then was) observed:
It is, in my opinion, clear that the Act does not contemplate or
provide for the acquisition of any interest which already belongs
to Government in land which is being acquired under the Act, but
only for the acquisition of such interests in the land as do not
already belong to the Government.
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With these observations, we are in entire agreement. When
Government possesses an interest in land which is the subject of
acquisition under the Act, that interest is itself outside such
acquisition, because there can be no question of Government
acquiring what is its own. An investigation into the nature and
value of that interest will no doubt be necessary for determining
the compensation payable for the interest outstanding in the
claimants, but that would not make it the subject of acquisition.
The language of S. VIII of Act No. 6 of 1857 also supports this
construction. Under that section, the lands vest in the Government
free from all other estates, rights, titles and interests, which
must clearly m