DEVINDER SINGH AND ORS v. STATE OF PUNJAB AND ORS

Citation: [2007] 11 S.C.R. 475

Court: Supreme Court of India

Bench: S.B. SINHA, H.S. BEDI

Case summary

DEVINDER SINGH AND ORS v. STATE OF PUNJAB AND ORS.pdf

Judgment text

" ) ~ * ~ ~ DEVINDER SINGH AND ORS v. STATE OF PUNJAB AND ORS OCTOBER 12, 2007 [S. B. SINHA AND HARJIT SINGH BEDI, JJ. ] ~ y Land Acquisition: Land Acquisition Act, 1894; Ss. 3, 5, 6 and 41 and Provisions under Part IIand Part VIIofthe Act/CompaniesAct, 1956; s. 617/Land Acquisition (Companies) Rules, 1963; r.

4: Acquisition ofland by State for establishing an industry by a private company-Requirement of-Held: State mustform an opinion ascertaining the purpose ofacquisition-And it must also form an opinion that the land in question is not an agricultural land-If acquisition is for public purpose, procedure laid down under Part II ofthe Act applies, else Part VIIofthe Actwould be applicable-Public purpose not to be assumed-Formation ofopinion must be on the basis ofmaterial on record and the authority boundtofollow the procedure strictly-Agreement entered into between landowners and the State does not mention about payment ofcompensation or part thereofin lieu ofacquisition-Since, there was no material on record, State formed an opinion after execution of the agreement ignoring mandatory requirements ofthe Act-Statutory requirements in terms --~ of r. 4 of the Rules imperative in character, thus, calls for strict compliance-Since there was non-compliance ofr.

4, exercise of jurisdiction by the State Government under Part VII of the Act erroneous-Hence, impugnedjudgment cannot be sustained, thus set aside. Interpretation ofStat_utes: .... ( Exproprietory Legislature-Construction of Land Acquisition Act, 1894-Land acquisition-Purpose- Procedure under Part II or Part VII-Applicability of LandAcquisition (Companies) Rules, 1963; Rule 4-Applicability of Words andphrases: 'Company, ' 'Corporation owned by State ', 'public purpose '- Meaning ofin the context ofSection 3 ofthe Land Acquisition Act. Appellants were owners ofvarious tracts of agricultural lands situate in a Village in the State ofPunjab where respondent No. 5, a Company intended to set up a project. It requested the State Government to acquire lands in question in terms ofthe provisions of the Land Acquisition Act, 1894.

The State Government issued a notification purported be under Section 4 ofthe Act for acquisition of the lands in question; a declaration was issued in terms ofSection 6 of the Act and later, an agreement was entered into by and between the Company and the State. Appellants filed \Vrit petitions questioning the purported acquisition proceedings. During pendency ofthe petitions, notices in terms ofSection 9 ofthe Act were issued and an award was made. Later, a sum ofRs. 100/- was deposited by the State as a token amount for acquisition ofthe said lands in question. By reason ofthe impugned judgment,the High Court held that the acquisition was for a public purpose; that acquisition of the lands in question was not a colourable exerciseofpowerand itwas made in terms ofthe provisions contained in Part II ofthe Act and not Part VII thereof, as the State had also contributed a sum ofRs. 100/- for the purposeofacquisition of ~ lands; that execution ofthe agreementwith Respondent No.

5-Company and declaration under Section 6 ofthe Act although made on the same day, the same did not suffer from thevice ofnon-application ofmind; that since respondent No. 5 was not a private company, statutory limitations contained in s. 44B ofthe Act are not attracted; and thatRule 4 ofthe Land Acquisition (Companies) Rules, 1963 being directory in >-- _ nature, itwas not necessary to comply with it Hence the present appeals. Appellant-land owners contended that the High Court erred in } DEVINDER SINGH v. STATE 477 ... . ,,,. _ r opining that the lands in question could be compulsorily acquired for a company, other than privatecompany,inaccordancewith the provisio~ ofPart II of the Land Acquisition Act; that in view ofthe insertion ot clause(viii) ofsub-section (f) in s. 3, provision ofPartIlwere not available for acquisition ofland for companies; and that action on the part ofthe State in entering into the agreement and issuing a declaration undet s.

6 ofthe Act on the same day was in excess ofits power under the Act. f y RespondentNo. 5-Company submittedthat acquisition havingbeen made for a public purpose, and a part ofthe expenses having been made from the public exchequer, provisions ofPart VII ofthe Act were not attracted; that principles ofnatural justice as contained in Section SA oftheAct having been complied with, the Statewas not required to ca~ out any inquiry as envisaged under Rule 4 of the Companies Rules; that declaration made under Section 6 of the Act in regard to the existence ofpublic purpose beingconclusive in nature, the court cannot go beyond thesame; and that r. 4 ofthe CompaniesRules beingdirectory _.. in nature, strict compliance thereofwas not necessary. Allowing the appeals, the Court HELD: 1. 1. When a request is made by any wing ofthe State or a Government company for acquisition of land for a public purpose, differentprocedures are adopted.

When; however, an application is filed for acquisition ofland at the instance ofa 'company', the procedures to be adopted therefor are laid down in Part VII ofthe Act. Although it may not be decisive but the conduct ofthe State as to how it intended to -~ deal with such a requisition, is a relevant factor. The action ofthe State I providesfor an importantconditionto consideras towhetherthe purpose wherefor a company requests itforacquisition ofland is a public purpose and/or which could be made at public expenses either as a whole or in part, wherefor evidently provisions laid down in Part II of. the Actshall be resorted to. On the other hand, ifthe State forms an opinion that the ,.. I acquisition ofland at the instance ofthe company may not befor public purpose or, the expenses to be incurred therefor either in whole or iq. part shall not be borne by the State, the procedures laid down in Part VII thereofhave to be resorted to.

The procedures laid down underPart A VII ofthe Act are exhaustive. Rules have been framed prescribing the mode and manner in which the State should proceed. [Para 15] [489-E-H; 490-A] f J DEVINDER SINGH v. STATE 479 .... r 2. 4. In the instant case, apart from the inquiry conducted by the Land Acquisition Committee in terms ofthe provisions ofPartVII of the Act, admittedly an agreement had also been entered into between the Company and the'Government, and a satisfaction oftheGovernment in that behalffor acquisition ofthe piece ofland described therein was arrived at on the premise that the said work is likely to be useful for the 8 company. [Paras 23 and 24] [494-G-H; 495-A] f 3. 1. The Government reserved the right ofresumption ofthe land, ...... -iftime schedule prescribed therein is not adhered to; in which eventland shall vest in the Government. The opinion ofthe Government in ti. at behalfis said to be final. [Para 26] [495-C] 3. 2.

It is a well-settled principle oflaw that where an action tak~n is without jmisdiction,even an orderwhich is conclusive may besubj~t to judicial review. Jurisdictional errors, as is well-known, are divided in two broad categories - (i) an order passed which is wholly without jurisdiction; and (ii) Although the action is not ultra vires, the ~' jurisdictional error has been committed while exercising jurisdiction. [Para 29] [495-E-F) R. L. Arora v. State of UP. , [1962] Supp 2 SCR 149 and Smt. Somawanti andOrs. v. The State ofPunjab andOrs. , AIR (1963) SC 151 : [1963} 2 SCR 774, referred to. John v. Rees andOrs. , [1969] 2 All ER 274, referred to. 3. 3. When an order is passed without jurisdiction it amounts to . ~r colourable exercise of power. Formation of opinion must precede application ofmind. Such application ofmind must be on the matelials brought on records. The materials should be such which are required to he collected by the authorities entitled therefor.

The authorities must act within the four-corners ofthe statute. An opinion formed even on the basis ofan advice by an authority which is not contemplated under ~1 . the statute would render the decision bad in law. Astatutory authority is bound by the procedure laid down in the statute and must actwithin the four-corners thereof. [Para 32] [496-H; 497-A-B] •. [2007] 11 S. C. R. ...... }_ --( 4. 1. In this case, the purported contribution had been made only after thewrit petitions werefiled. Ordinarily, this Courtwould not have gone into the said question but the agreement provides for payment of entire compensation by the company. Itis not known as to atwhatstage the State thought it tit to meet a part ofthe expenses for acquisition of land. Such an opinion on the part of the State having regard to the statutory scheme should have been formed prior to entering into the agreement itself. The agreement does not mention about any payment ~ ofa part ofcompensation by the State.

In absence ofany other material ~ on record, it must be held that the State had not formed any opinion in that behalfat least when the agreement was executed. [Para 35] (498-G-H; 499-A-B] Jage Ram and Ors. v. The State ofHaryana and Ors. , AIR (1971) SC 1033 :· (1971] 1 SCC 671, referred to. 4. 2. Satisfaction on the part ofthe State required to be arrived at upon formation ofopinion on the basis ofmaterials broughton records ~ for the purpose ofPart II ofthe Act are different from that ofPart VII. Once the appropriate Government arrives at a decision that the land sought to be acquired is needed for a public purpose, the court would notgo behind it, as thesamemayfurnish avalid argument for upholding an acquisition under PartII. Butwhen an acquisition is made under Part VII, the conditions precedent therefor as contained in the Companies Rules must be satisfied.

On the face ofrecord, ifitcan be shown that the Government had ignored the mandatory provisions ofthe Act, the acquisition would have to be struckdown. [Para36) [499-C-D) -1- Shyam BehariandOrs. v. State ofMadhya Pradesh atidOrs. , [1964) 6 SCR 636, referred to. 4. 3. Distinction between acquisition under Part II and Part VII of G the Act are self-evident. · The State was not only obligated tO issue a notification clearly stating as to whether the acquisition is for a public purpose or for the company. Section 6 ofthe Act categorically states ,>. so, as would appear from the second proviso appended thereto. [Para 38] [499-H; 500-A] t DEVINDER SINGH v. STATE 'r 4. 4. A declaration is to be made either for a public purpose or for a company. It cannot be for both. It is furthermore trite that Land Acquisition Act is an expropriatory legislation. [Paras 39 and 40] [500-B] Hindustan Petroleum Corporation Ltd v. Darius Shapur Chenai & t Ors.

, (2005] 7 SCC 627 and Chairman, Indore Vikas Pradhikaran v. Ml s. Pure Industrial Cock& Chem. Ltd & Ors. , (2007)8SCALE 110,relied on. ·~ 4. 5. Expropriatory legislation, as is well-known, must be strictly ,C construed. When the properties of a citizen is being compulsorily acquired by a State in exercise of its power of Eminent Domain, the essential ingredients thereof, namely, existence ofa public purpose and payment ofcompensation are principal requisites therefor. In the case ofacquisition ofland for a privatecompany,existenceofapublic purpose being not a requisite criteria, otherstatutory requirements callfor strict 0 compliance, being imperative in character. [Para41] [500-C-D] ~ 4. 6. Rule 4ofthe Rules employs the word 'shall' not once buttwice. Ordinarily, it is imperative in character. No reason has been shown before this Court as to why it should be held to be directory provision particularly when the Land Acquisition Act is an expropriatory legislation.

[Para 43] [500-F] State ofGujarat andAnr. v. Patel Chaturbhai Narsibhai and Ors. , AIR (1975) SC 629 and General Government Servants Cooperative HousingSocietyLtd, Agra etc. v. Sh Wahab Uddin andOthers etc. , (1981] ) -->-- 2sec 352, held inapplicable. Mis. Fomento Resorts and Hotels Ltd v. Gustavo Ranato Da Cruz Pinto and Ors. , [1985] 2 SCC 152; Collector (District Magistrate) Allahabad and Another etc. v. Raja Ram Jaiswal etc. , (1985] 3 SCC 1; Abdul Husein Tayabali & Ors. v. State ofGujarat & Ors. , [1968] 1 SCR _j 597 and Srinivasa Cooperative House Building Society Ltd v. Madam Gurumurthy Sast1y and Ors. , [1994) 4 SCC 675, referred to. 4. 7. The approach of the High Court is totally erroneous. A provision of a statute is either mandatory or directory. Even if a provision is directory, the same should be substantially complied with. t:- ' It cannot be ignored in its entirety only because the provision is held to be directory and not an imperative one.

In this case admittedly there has been no compliance ofRule 4. IfRule 4 has not been complied with, the exercise ofjurisdiction under Part VII must be held to have been erroneous. Hence, the impugned judgment cannot be sustained, which is set aside accordingly. [Paras 53, 54 and 55] [505-C-E] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4843 of 2007. ') Fromthe Judgment and final Order dated 8. 5. 2006 ofHigh Court ·ofPunjab and Haryana at Chandigarh in Civil Writ Petition No. 5648 of 2004. WITH C. A. No. 4844 of 2007. P. N. Lekhi, Jaspreet Rai, Rajan Chaurasia, Rohit Nagpal, Rakesh Kumar, M. K. Garg, Virender Goswami, Vijayalakshmi Menon and Nitish Massey for the Appellants. Soli J. Sorabjee, Dhruv Mehta, Harshvardhan Jha, Yashraj Singh Deora, H. S. Munjral, Ajay Pal, Kulraj Rai, Sunil Roy and D. S. Mahra for the Respondents. The Judgment ofthe Court was delivered by S. B. SINHA, J. 1. Leave granted in both the Special Leave ~ _ Petitions. 2.

Appellants herein are owners ofvarious tracts ofagricultural lands situate in Village Chak Gujran, Tehsil and District Hoshiarpur in the State of Punjab. Respondent No. 5, M/s International Tractors Limited, is a Company incorporated under the Companies Act, 1956. It intended to set up a project named 'Ganesha Project'. It requested the State to acquire lands in question in tenns ofthe provisions ofthe Land Acquisition } Act, 1894 (for short, 'the Act'). A notification was issued by the State purported to be under Section 4 ofthe Act on 15. 02. 2002, stating: "Whereas it appears to the Governor ofPunjab that Land is likely to be required to be taken by the Government at the public expense, for a public purpose namely for setting up ofGanesha Project, Mis. International Tractors Ltd. at Village Chak Gujran, Tehsil & Distt. Hoshiarpur, it is hereby notified that the land in locality described below is likely to be required for the above purpose.

This notification is made under the provisions ofSection 4 of C: the Land Acquisition Act, 1894 to all whom it may concern. In exercise ofpowers conferred by the aforesaid section, the Governor ofPunjab is pleased to authorize the officers for the time being engaged in undertaking with their servants and workmen to O enter upon and survey any land in the locality and do all other acts required or permitted by that section. Any person interest who has any objection to the acquisition ofany land in the locality may within thirty days ofthe publication ofthis notification file an objection in writing before the Collector, Land Acquisition Department oflndustries & Commerce, Punjab, 17-Bays Building, Chandigarh. " 3. Objections having been called for, the appellants herein filed their objections in terms of Section SA ofthe Act, inter alia, stating: p --- r "5. That the proposed acquisition by the Punjab Government is unconstitutional, uncalled for and against law and fact ofthe.

case, just in order to cause loss to the objectors and to give unlawful gain to other party, i. e. , the proposed 'Ganesha Projectors Mis. International Tractor Ltd. 7. That the acquisition of the proposed land belonging to the objectors is against the interest ofthe objectors keeping in view the policies ofthe State. The land in question is cultivable fertile \ land and the proposed project if any can be shifted some where else at some barren land as well as in the ingustrial zone according to Industries Master Plan and in this way, it is in the interest ofthe Pollution Control Department. 9. That the objectors are cultivating the land for the last over 25 years, it is consolidated at one place where in the objector has installed electric motors and planted popular trees around the fields. The objectors do not want that the land in question be acquired since it is against their interest and objectors are dependent on this Acquisition lahd.

The Agriculturist/Farmer is entirely dependent on his land for his livelihoo~. There are various projects in the name ofEscorts Tractors, Mohindra Tractors, Massy Furgon Tractors and so many other tractors companies/industries fulfilling the needs ofthe public and as such there is no need at all ofthe proposed industry to be set up in the lands ofthe objectors. 10. That in any way the proposed acquisition is against the rules ofthe acquisition and the act itselfkeeping in view the interest ofthe objectors thus causing wrongful loss to the objectors and causing wrongful gain to the proposed objectors. " 4. Indisputably, a declaration was·issued in terms of Section 6 of the Act and an agreement was entered into by and between the Company and the State on 27. 02. 2003. 5. Writ petitions were filed by the appellants herein queSt:ioning the ·said purported acquisition proceedings praying, inter alia, for the following relief: "(b) Quash the notifications dated 15. 02.

2002 (Annexure P-2) and 27. 02. 2003 (Annexure P-5) issued by the respondent No. 1 under Sections 4 and 6 of the Land Acquisiii. on Act, 1894, respectively. " 6. During the pendency ofthe said writ petitions, notices in terms of )' Section 9 of the Act were issued on 31. 05. 2004. An award was made on 18. 02. 2005. Allegedly, during the pendency ofthe said writ petitions, a sum ofRs. 100/- was deposited by the State as a token amount for acquisition ofthe said lands in question. 7. By reason ofthe impugned judgment, the High Court opined : (i) ·The acquisition was for a public purpose in view ofthe report , submitted under the Act, relevant portion whereofis as under: "';! ·"' "In case ofMis. International Tractors Ltd. the company has entered into an agreement with a Fresh company named Mis. Renault Agriculture France for manufacture oflatest technology . tractors. Mis. Renault Agriculture France holds 20% equity in the company.

Production ofthese latest technology tractors will boost · export, which will contribute to the general welfare and prosperity ofthe whole community. Therefore, in view ofthe facts and the relevant lawas mentioned above, it is proved beyond doubt that the profits have actually gone to the general public...... " (ii) Acquisition of the lands in question was not a colourable exercise ofpower. (lii) Acquisition was made in terms ofthe provisions contained in Part II of the Act and not Part VII thereof, as the State had also contributed a sum of Rs. l 00/- for the purpose of acquisition oflands. -·. Y (iv) Execution ofthe agreement with Respondent No. 5-Company and declaration made under Section 6 ofthe Act although were made on the same day, the same did not suffer from the vice ofnon-application ofmind. (v) Respondent No. 5 being not a private company, statutory limitations contained in Section 44B of the Act are not - ---' attracted.

(vi) Rule 4 ofthe Land Acquisition (Companies) Rules, 1963 (for short, 'the Companies Rules') being directory in nature, it was not necessary to comply with the provisions thereof 8. Mr. P. N. Lekhi, learned Senior Counsel appearing on behalfof the appellants, in support ofthese appeals, would, inter alia, submit : (l) The High Court erred in opining that the lands in question could be compulsorily acquired for a company, other than private company, in accordance with the provisions ofPart II of the Act. '11" (ii) In view ofthe insertion of clause (viii) of sub-section (f) in Section 3 by Act No. 3 of 1984, provision of Part II were not available for acquisition ofland for companies. (Iii) Action on the part ofthe State in entering into the agreement and issuing a declaration under Section 6 ofthe Act on the same day was in excess of its power under the Act. 9. Mr. Soli J. Sorabjee, learned Senior Counsel appearing on behalf ofRespondent No.

5, on the other hand, submitted : (i) Acquisition having been made for a public purpose, and a part ofthe expenses having been made from the public exchequer, provisions ofPart VII ofthe Act were not attracted. (ii) Principles ofnatural justice as contained in Section SA ofthe Act having been complied with, the State was not required to carry out any inquiry as envisaged under Rule 4 of the Companies Rules. ~ (iii) Declaration made under Section 6 ofthe Act in regard to the ~existence ofpublic purpose being conclusive in nature, the court cannot go beyond the same. (iv) Rule 4 ofthe Companies Rules being directory in nature, strict compliance thereofwas not necessary. 10. The Act was enacted to amend the law for the acquisition of >-- ~ land for public purposes and for companies. Section 3 ofthe Act provides for interpretation clauses.

Clause (cc) of Section 3 ofthe Act defined the expression "corporation owned or controlled by the State" in the following )· tenns: "(cc) the expression "corporation owned or controlled by the State" means any body corporate established by or under a Central, Provincial or state Act, and includes a Government company as defined in Section 617 ofthe Companies Act, 1956 (I of 19$6), a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any corresponding law for the time being in force in a State, being a society established or administered by Government and a co-operative society within the meaning ofany law relating to co-operative societies for the time being in force; in any State, being a cooperative society in which not less than fi~one per centum ofthe paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments. " 11.

Th~ expression 'company' has been defined under clause (e) of Section 3 ofthe Act to mean : "(i) a company as defined in section 3 ofthe Companies Act, 1956 (I of 1956), other than a Government company referred to in clause (cc); (ii) a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any corresponding law for the time being in force in a State, other than a society referred to in clause (cc); --Y (tii) a co-operative society within the meaning ofany law relating to co-operative societies for the time being in force in any State, other than a co-operative society referred to in clause (cc)) The expression 'Public purpose' has been defined in Section 3(f) __j ofthe Act to mean : "(f) the expression "public purpose" includes - (i) the provision of village-sites, or the extension, planned development or improvement ofexisting village-:sites; (ii) the provision ofland for town or rural planning; (Iii) the provision of land for planned development ofland from public funds in pursuance of any scheme ot policy of Government and subsequent disposal thereof in whole or in part by lease, assignment or outright sale with the object of securing further development as planned; (iv) the provision of land for a corporation owned or controlled by the State; (v) the provision ofland for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation ofany scheme undertaken by Government, any local authority or a corporation owned or controlled by the State; (vi) the provision ofland for carrying out any educational, housing, health or slum clearance scheme sponsored by Government, or by any authority established by Government for carrying out any such scheme, or, with the prior approval of the appropriate Government, by a local authority, or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any corresponding law for the time being in force in a State, or a co-operative society within the meaning ofany law relating to co-operative societies for the time being -...

(__ in force in any State; (vii) the provision of land for any other scheme ofdevelopment sponsored by Government or, with the prior approval ofthe appropriate Government, by a local authority; (viii) the provision ofany premises or building for locating a public office, . >--but does not include acquisition ofland for companies. ;" 12. Indisputably, the Land Acquisition Act is an expropriatory i t .... )' legislation. The State ordinarily can acquire a property in exercise ofits power of'Eminent Domain' subject to existence ofpublic purpose and on payment ofreasonable compensation in terms ofthe provisions ofthe Act. However, the State has been empowered to acquire land also for 'companies' and for purposes other than public purpose. 13. Companies Act, 1956 provides for different types ofcompany. A Government Company is defined in Section 617 thereof. Respond¢nt .... , No. 5 may be a public limited company, but it is not a Government Company.

When it filed an application requesting the State to acquire the ·"' lands for its purpose evidently an inquiry was caused to be made. 14. It its counter affidavit, the State has, inter alia, contended that Respondent No.. 5 is an existing ullit for manufacturing tractors and lands sought to be acquired are adjoining their factory. The State appointed Sub-Committee ofLand Acquisition Committee constituted by the State recommending acquisition of 30 acres oflands. Approval ofthe State, therefor was sought for. 'Ganesha Project' was not a project ofthe Staie but one undertaken by Respondent No. 5. Such a project would come ' within the purview ofclause (aa) ofSection 40(1) ofthe Act. 15. When a request is made by any wing of the State or ,a Government company for acquisition ofland for a public purpose, diffe~t procedures are adopted.

Where, however, an application is filed for acquisition ofland at the instance ofa 'company', the procedures to be adopted therefor are laid down in Part VII ofthe Act. Although it may not be decisive but the conduct ofthe State as to how it intended to deal --Y with such arequisition, is a relevant factor. The action ofthe State provides for an important condition to consider as to whether the purpose wherefor a company requests it for acquisition ofland is a public purpose and/o~ which could be made at public expenses either as a whole or in part, wherefor evidently provisions laid down in Part II shall be resorted to~ On the other hand, ifthe State forms an opinion that the acquisition of land at the instance of the company may not be for public purpose or, . ,.... __,( ther~for the expenses to be incurred therefor either in whole or in part shall not be borne by the State, the procedures laid down in Part VII thereofhave to be resorted to.

The procedures laid down under Part VII t / .... "r lands by negotiation with the persons interested therein on paym~nt ofreasonable price and such efforts have failed; (iii) that the land proposed to be acquired is suitable for the pw:pose; (iv) that the area ofland proposed to be acquired is not excessive; (v) that the company is in aposition to utilise the land expeditiously; and y (vi) where the land proposed to be acquired is good agricultural land, that no alternative suitable site can be found so as to avoid acquisition ofthat land.

(2) The Collector shall, after giving the company a reasonable opportunity, to make any representation in this behalf, hold an inquiry into the matters referred to insub-rule (1) and while holding such enquiry he shall - (i) in any case where the land proposed to be acquired is agricultural land consult the Senior Agricultural Officer ofthe district whether or not such land is good agricultural land; (ii) determine, having regard to the provisions ofSecs. 23 and 24 ofthe Act, the approximate amount ofcompensation likely to ~e payable in respect ofthe land, which, in the opinion ofthe Collector, should be acquired for the company; and (iii) ascertain whether the company offered a reasonable price (not being less than the compensation so determined), to the persons - 'r interested in the land proposed to be acquired.

Explanation - For the purpose ofthis rule "good agricultural land'' means any land which, considering the level of agricultural production and the crop pattern ofthe area in which it is situated, is ofaverage or above average productivity and includes a garden ~-.... or grove land. (3) As soon as may be after holding the enquiry under sub-rule (2), the Collector shall submit a report to the Appropriate \ Government and a copy ofthe same shall be forwarded by the Government to the Committee. (4) No declaration shall be made by the Appropriate Government under Sec. 6 of the Act unless - (i) the Appropriate Government has consulted the Committee and has considered the report submitted under this rule and the report, ifany, submitted under Sec. 5-A ofthe Act; and (ii) the agreement under Sec. 41 ofthe Act has been executed by the company. " 17. The State is also enjoined with a duty to make an inquiry wherefor an opportunity ofhearing to the company is required to be given.

When the State intends to proceed with the acquisition of land it must form an opinion that the lands which are going to be acquired are not good agricultural lands. The rules by and large lay down a statutory policy in that behalfand question of ignoring the same by the State does not anse. 18. We would consider the question as to whether Rule 4 aforementioned is mandatory or directory or at what stage an inquiry is required to be made, a little later. But we must record that it is not the case ofthe State that Rule 4, despite the fact that acquisition is made in terms ofPart VII of the Act, can be ignored. 19. The High Court proceeded on the basis that as the State formed an opinion that the purpose for which the provisions ofthe Act were taken "'-. ( recourse to is a public purpose, the provisions ofPart II would apply in the instant case. We are not unmindful ofthe fact that the definition of 'public purpose' as contained in Section 3(f) ofthe Act is an inclusive one.

Therefore, the said definition need not be kept confined to the matters referred to therein. But with a view to ascertain as to what should be a public purpose, we may notice its dictionary meaning as contained in Black's Law Dictionary, Fifth Edition which is as under: "Public purpose: In the law oftaxation, eminent domain, etc. , this is a term of classification to distinguish the objects for which, .... )' according to settled usage, the government is to provide, from those which, by the like usage, are left to private interest, inclination, or liberality. The constitutional requirement that the purpose ofany tax, police regulation, or particular exertion ofthe power ofeminent domain shall be the convenience, safety, or welfare ofthe entire community and not the welfare ofa specific individual or class of persons. t The tenn is synonymous with governmental purpose.

As employed -r· to denote the objects for which taxes may be levied, it has no relation to the urgency ofthe public need or to the extent ofthe. public benefit which is to follow; the essential requisite being that a public service or use shall affect the inhabitants as a community, and not merely as individuals. A public purposeor public business has for its objective the promotion ofthe public health, safety, morals, general welfare, security, prosperity, and contentment of . all the inhabitants or residents within a given political division, as, for example, a state, the sovereign powers ofwhich are exercised to promote such public purpose or public business. " 20. General meaning ofthe word 'public policy' has always been held to be an unruly horse by this Court. [See Gherulal Parakh v. Mahadeodas Maiya and Ors. , See AIR (1959) SC 781]. 21. Our attention has been drawn to a recent decision ofthis Court in Pratibha Nema and Ors. v. State ofMP. and Ors. , [2003] 10 SCC 626.

Therein, for establishment ofa diamond park, 73. 3 hectares ofdry land was to be acquired. The proposal emanated from the General -Y Manager of the District Industries Centre. Sanction in principle for acquisition was given by the Government of Madhya Pradesh; even Section 17 of the Act was taken recourse to. The State contributed a token sum ofRs. I00/- towards the cost ofacquisition. This Court clearly noticed that where the acquisition is for a company, its cost is to be borne entirely by the company itself, provisions ofPart 7 would apply. But we - .... 4. must hasten to add that the Bench did not have any occasion to consider the question as to whether the State is entitled to take recourse to the provisions ofboth Part II and Part VII ofthe Act simultaneously.

The \ -'( • • Bench furthennore proceeded to consider the requirements to hold that public purpose need not be ascertained only from the point ofview of applicability ofPart II but also the provisions of Part VII, stating: "22. Thus the distinction between public purpose acquisition and Part VII acquisition has got blurred under the impact ofjudicial interpretation ofrelevant provisions. The main and perhaps the deceive distinction lies in the fact whether cost ofacquisition comes 4 . ~ out ofpublic funds wholly or partly. Here again, even a token or T nominal contribution by the Government was held to be sufficient compliance with tl-ie second proviso to Section 6 as held in a catena ofdecisions. The net result is that by contributing even a trifling sum, the character and pattern ofacquisition could be changed by the Government.

In ultimate analysis, what is considered to be an acquisitionfor facilitating the setting up ofan industry in the private sector could get imbued with the character of public purpose acquisition ifonly the Government comes forward to sanction the payment ofa nominal sum towards compensation. In the present ~ state oflaw, that seems to be the real position. " 22. We need not go into the nicety ofthe question, keeping in view the fact that there are binding precedents in that behalfthat in a case of acquisition for a public company, public purpose is not to be assume~ and the point ofdistinction between acquisition oflands under Part II and Part VII would be the source offunds to cover the cost of acquisition. This Court in Pratibha Nema (supra) held : "... In other words, the second proviso to Section 6(1) is the main ~dividing ground for the two types ofacquisition... " 23.

The undisputed fact is that apart from the inquiry conducted by the Land Acquisition,Committee in terms ofthe provisions ofPart VII of the Act, admittedly an agreement had also been entered into on 27. 02. 2003. >- -- 24. The agreement in tenns of the provisions referred to above by the Company and the Government, a satisfaction ofthe Government in that behalffor acquisition ofthe piece ofland described therein was arrived DEVINDER SINGH v. STATE [SINHA, J. ] ~ ... 't at on the premise that the said work is likely to be useful for the company. 25. Section 41 ofthe Act has specifically been mentioned for the p~ose ofentering into the agreement.

The terms and conditions ofthe agreement envisaged : (i) the company was to pay to the Government of Punjab the amount of compensation; (ii) it was to deposit all the sums demanded by the Collector in anticipation, which may be necessary therefor; (iii) only on payment by the company it was to get possession wherefor also the Government reserved its discretion; (iv) use by the y' company ofthe land only for the purpose for which acquisition was made was insisted. ; (v) provision in regard to time for completion ofthe project. 26-. The Government reserved the right ofresumption ofthe land, if time schedule prescribed therein is not adhered to; in which event land shall vest in the Government. The opinion ofthe Government in that behalf is said to be final. 27. Whether in the aforementioned situation, thf! provisions ofPart II can be said to have been complied with, is the question. -~ 28. Submission ofMr.

Sorabjee is that any declaration that the land has been acquired for public purpose is conclusive. 29. We would proceed on the said assumption but it is a well-settled principle oflaw that where an action taken is without jurisdiction, even an order which is conclusive may be subject to judicial review. Jurisdictional errors, as is well-known, are divided in two broad categories - (i) an order passed which is wholly withoutjurisdiction; and (ii) Although the action is not ultra vires, the jurisdictional error has been committed - r while exercising jurisdiction. [See John v. Rees and Ors. , (1969) 2 All ER 274]. I 30. In R. L. Arora v. State ofUP. , [1962] Supp 2 SCR 149, this \ 6 Court held: "Then it was urged on behalfofthe respondents thats. 6(3) makes _. J.. the purpose noted in the notification under s. 6(1) not justiciable. We have not been able to understand how that provision helps the respondents. All that s. 6(3) says is that the declaration shall be -\ --'( ..

' conclusive evidence that the land is needed for a public purpose or for~ company. In this case the. declaration was that the land was needed for a company and that according. to s. 6(3) is conclusive evidence that the land is so needed. Now it is not the case ofthe appellant that the land was not needed for_the Works in the present case, nor does the appellant say that though the land was needed for some other purpose, the notification falsely declares that it was needed for the Works. In the circumstances the conclusiveness envisaged bys. 6(3) is ofno assistance to the solving ""( ofthe problem with which we are concerned in the present case. " . 31. Mr. Sorabjee has strongly relied upon a decision ofthis Court in Smt. Somawanti and Ors. v. The State ofPunjab and Ors. , [AIR (1963) SC 151 : [1963] 2 SCR 774.

In Somawanti (supra), this Court opined: "Though we are ofthe opinion that the courts are not entitled to go behind the declaration ofthe Government to the effect that a }particular purpose for which the land is being acquired is a public purpose we must emphasise that the declaration ofthe Government must be relatable to a public purpose as distinct from a purely private purpose. Ifthe purposefor which the acquisition is being made is not relatable to a public purpose then a question may well arise whether in making the declaration there has been, on the part ofthe Government afraud on the power conferred upon it by the Act. In other words the question would then arise whether that declaration was merely a colourable exercise ofthe "'( power conferred by the Act, and, therefore, the declaration is open to challenge at the instance of the party aggrieved. To such a declaration the protection of s. 6(3) will not extend.

For, the lequestion whether a particular action was the result ofa fraud or ( not is alwaysjusticiable, provisions such ass. 6(3) notwithstanding. " [Emphasis supplied] 32. When an order is passed without jurisdiction it amounts to colourable exercise of power. Formation of opinion must precede ) application ofmind. Such application ofmind must be on the materials brought on records. The materials should be such which are required',to be collected by the authorities entitled therefor. The authorities must ~ct within the four-comers ofthe statute. An opinion fonned even on the basis ofan advice by an authority which is not contemplated under the statute render the decision bad in law. A statutory authority is bound by the procedure laid down in the statute and must act within the four-comers thereof 33. The effect of contribution of a sum of Rs. 100/- by the State purported to be towards the amount of compensation, may not be noticed.

In Somawanti (supra) although this Court while upholding that contribution ofsun1 of Rs. l00/- as a part ofthe cost ofacquisition may •• subserve the requirement oflaw, proceeded to opined : "We would like to add that. the view taken in Senga Naicken's case [I. L. R. 50 Mad. 308 : AIR ~ 927 Mad. 245] has beeq followed by the various High Courts;oflndia On the basis ofthe correctness ofthat view the State Governments have been acquiring private properties all over the country by contributing only token a. 'tlounts to~ards the cost of acquisition. Titles to many such properties would be unsettled if we were now to take the view that 'partly at public expense' means substantially at public expense. Therefore, on the principle ofstare decisis the view taken in Senga Naicken's case [I. LR. 50 Mad. 308 : AIR 1927 Mad. 245] should not be disturbed.

We would, however, guard ourselves , - 'y against being understood to say that a token contribution by the State towards the cost of acquisition will be sufficient · compliance with the law in each and every case. Whether such contribution meets the requirements ofthe law would depend 'G upon the facts ofevery case. Indeed the fact that the State's contribution is nominal may well indicate, in particular circumstances that the action ofthe State was a colourable exercise ofpower. In our opinion 'part' does not necessarily mean a substantial part and that it wi,11 be open to the Court in every \ .. -{ case which comes up before it to examine whether the contribution made by the State satisfies the requirement ofthe law. In this case we are satisfied that it satisfies the requirement oflaw. What is next to be considered is whether the acqilisition was only for a company because·the compensation was to come almost entirely out ofits ,.

coffers and, therefore, it was-in reality for a private purpose as ---opposed to public purpose. In other·words, the question is whether there was on the part ofthe Government a colourable exercise of power. Elaborating the point it is said that the establishment ofa ~ factory for manufacturing refrigeration equipment is nothing but an \ . ordinary commercial venture and can by no stretch ofimagination fall within the well-accepted meaning of the expression 'public purpose'; that even ifit were t() fall within that expression the factory is to be established not by the Government, nor by Government J! J participation but solely by the respondentNo. 6, a public limited concern. and that, therefore, the concern could acquire land for such apUipose only after complying with the provisions ofPart VII and . )... that the use'ofthe provisions ofs. 6(1) is merely a colourable device to enable the respondent No. 6 to do something which, under tenns of s. 6(1), could not be done.

" [Emphasis supplied] 34. Strong reliance has also been placed by the High Court inJage Ram and Ors. v. The State ofHaryana and Ors. , AIR (1971) SC 1033: [1971] LSCC 671 for the proposition that once the Government had contributed any sum towards the cost ofthe acquisition ofland, it was not necessary for the Government to proceed under Part VII ofthe Act ~ -and, therefore, does not lie in the mouth ofState that acquisition was under Part II. 35. In this case we may notice that purported contribution had been made onlyafter the writ petitions were filed. Ordinarily, this Court would not have gone into the said question but the agreement provides for payment ofentire compensation by the company. We do not know as to at what stage the State thought it fit to meet a part ofthe expenses for . H acquisition ofland. Such an opinion on the part ofthe State having regard } J. }" to the statutory scheme should have been fonned prior to entering into the agreement itself.

The agreement does not mention about any paypient of a part of compensation by the State. We, in absence of any other material on record, must hold that the State had not fonned any opinion in that behalfat least when the agreement was executed. The wisdom in all probabilities dawned on the officers ofthe State at a later stage. 36. Satisfaction on the part of the State required to be arrived at y upon fonnation ofopinion on the basis of materials brought on records for the purpose of Part II ofthe Act are different from that ofPart VIL Once the appropriate Government arrives at a decision that the land so1:1ght _to be acquired is needed for a public purpose, the court would not go behind it, as the same may furnish a valid argument for upholding an acquisition under Part II. But when an acquisition is made under Part VII, -. __,;;_ the conditions precedents therefor as contained in the Companies Rules must be satisfied.

On the face of record, if it can be shown that the Government had ignored the mandatory provisions of the Act, 'the acquisition would have to be struck down. 37. In Shyam Behari and Ors. v. State ofMadhya Pradesh and Ors. , [1964] 6 SCR 636, it was held: " .. . In the second place, the declaration under s. 6 may be made that land is needed for a company in which case the entire compensation has to be paid by the company. It is clear therefore that where the entire compensation is to be paid by a compaI)y, the notification under s. 6 must contain a declaration that'the land --- 'r is needed for a company. No notification under s. 6 can be made where the entire compensation is to be paid by a company declarilig that the acquisition is for a public purpose, for such a declaration requires that either wholly or in the part, compensation must come out ofpublic revenues or some fund controlled or managed by local authority... " ___... 38.

Distinction between acquisition under Part II and Part VII are self-evident. The State was not only obligated to issue a notification clearcy stating as to whether the acquisition is for a public purpose or for the 'H \ A company. Section 6 categorically states so, as would appear from the second proviso appended thereto. 39. A declaration is to be made either for a public pwpose or for a company. It cannot be for both. · 40. It is furthermore trite that Land Acquisition Act is an expropriatory legislation. [See Hindustan Petroleum Corporation Ltd v. Darius Shapur Chenai & Ors. , [2005] 7 SCC 627; and Chairman, Indore Vikas Pradhikaran v. Mis Pure Industrial Cock & Chem. Ltd & Ors. , (2007) 8 SCALE 110] 41. Expropriatory legislation, as is well-known, must be strictly construed.

When the properties ofa citizen is being compulsorily acquired by a State in exercise of its power of Eminent Domain, the essential ingredients thereof, namely, existence ofa public purpose and payment ofcompensation are principal requisites therefor. In the case ofacquisition ofland for a private company, existence ofa public purpose being not a requisite criteria, other statutory requirements call for strict compliance, being imperative in character. 42. Another question which arises for our consideration is as to whether Rule 4 ofthe Companies Rules is mandatory or directory in nature. The High Court held it to be directory. 43. Rule 4 of the Rules employs the word 'shall' not once place but twice. Ordinarily, it is imperative in character. No reason has been shown before us as to why it should be held to be directory provision particularly when the Land Acquisition Act is an expropriatory legislation. "' -.. 44. In State ofGujarat and Anr. v. Patel Chaturbhai Narsibhai and Ors.

, AIR (1975) SC 629, this Court held: "15. The contention ofthe State that the enquiry under Rule 4 is administrative and that the owner ofthe land is not entitled to be given an opportunity to be heard at the enquiry cannot be accepted for these reasons. The enquiry under Rule 4 shows that the Collector is to submit a report among other matters that the Company has made all reasonable efforts to get such lands by } DEVINDER SINGH v. STATE [SINHA, J. ] SOl negotiation with the persons interested therein on payment of _reasonable price and such efforts have failed. The persons interested therein are the owners of the land which is proposed to be acquired. The Company at such an enquiry has to show that the company made negotiations with the owners of the land. The owners ofthe land are, therefore, entitled to be heard at such an enquiry for the purpose ofproving or disproving the reasonable ' efforts of the company to get such land by negotiation.

The contention on behalf ofthe State that the owners ofthe land will get an opportunity when an enquiry is made under Section SA of , the Act is equally unsound. Section 17 ofthe Act provides that the appropriate Government may direct that the provisions of Section SA shall not apply, and ifit does so direct a declaration may be made under Section 6 at any time after the publication of the notification under Section 4 ofthe Act. Therefore, the enquiry under Section SA may not be held. 45. In General Government Servants Cooperative Housing Society Ltd. , Agra etc. v. Sh. Wahab Uddin and Others etc. , [1981] 2 SCC 3S2, this Court held: "13. Sub-rule (1) requires the Government to direct the Collector to submit a report to it on the matters enumerated in Clauses (i) to (vi) ofthe Sub-rule (1) which is for the benefit of the Company. The purpose is to avoid acquisition of land not suitable for a Company.

Clause (ii) of Sub-rule (1) requires that the Company has to make all reasonable efforts to get such lands by negotiation with the person interested therein on payment of reasonable prices and that such efforts have failed. The purpose ofClause (ii) seems to be to avoid unnecessary land acquisition proceedings and payment of exorbitant prices. The purpose of Clauses (iii), (iv) and (v) is obvious. The purpose ofClause (vi) is O to avoid acquisition ofgood agricultural land, when other alternative land is available for the purpose. Sub-rule 2 of Rule 4 requires the Collector to give reasonable opportunity to the Company so that the Collector may hold an inquiry into the matters referred in Sub-rule (1). The Collector has to comply with Clauses (i), (ii) and ... --{ (iii) ofSub-rule 2 during the course ofthe inquiry under Sub-rule (1 ).

The Collector under Sub-rule 3 then has to send a copy of his report ofthe inquiry to the appropriate Government and a copy ofthe report has to be forwarded by the Government to the Land Acquisition Committee constituted under Rule 3 for the purpose ofadvising the Government in relation to acquisition ofland under Part VII ofthe Act, the duty ofthe Committee being to advise the Government on all matters relating to or arising out ofacquisition ofland under Part VII of the Act (Sub-rule (5) ofRule_3). No declaration shall be made by the appropriate Government under Section 6 ofthe Act unless the Committee has been consulted by ... the Government and has considered the report submitted by the Collector under Section 5A ofthe Act. In addition, under Clause (ii) of Sub-rule (4) of Rule 4, the Company has to execute an agreement under Section 41 ofthe Act.

The above consideration shows that Rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by Rule 4 are complied with, the notification under Section 6 will be invalid. A consideration ofRule 4 also shows that its compliance precedes the notification under Section 4 as well as compliance of Section 6 ofthe Act. " 46. In Mis Fomento Resorts and Hotels Ltd v. Gustavo Ranato Da Cruz Pinto and Ors. : [1985] 2 SCC 152, athree-Judge Bench of this Court categorically held : "17. Reading the Act and the Rules and keeping. in view the scheme of the Act, it is apparent, in our opinion, that before the issuance ofSection 4 notification, there is no requirement as such ""- -ofcompliance with the procedure contemplated by Rule 4 ofthe Rules. We are therefore unable to subscribe to the view that enquiry by Rule 4 must precede the issuance ofnotification mder Section 4(1) ofthe Act. Furthermore as indicated before certain matters which.

are required to be done under Rule 4 can not be done because the officer or the person authorised by him would have ,.. ____ . no authority unless notification under Section 4 is issued. " . 47. Repelling a contention that the. provisions of Sections 6 to 37 ) > are not required to be complied with in view of Section 39 thereof, it was held: "... This Section, in our opinion, has no relevance for determining whether to be a proper acquisition, enquiry contemplated under Rule 4 must precede issuance ofthe notification under Section 4 ofthe Act... " 48. The lands in question are recorded as Shahi lands. It is not in dispute that they are agricultural lands. The Act contemplates that such lands may not be acquired. 49. We may notice that in Collector (District Magistrate) Allahabad and Another etc. v. Raja Ram Jaiswal etc. , [1985] 3 SCC 1this Court held that such a contention requires an indepth study, stating: "27.

The validity of the impugned notification was also challenged on the ground that even though the acquisition is for the Sarnmelan, a company, the notification was issued without first complying with the provisions of Rule 4 ofthe Land Acquisition' (Companies) Rules, 1963. The High Court has negatived this challenge. We must frankly confess that the contention canvassed by Mr. Nariman in this behalf would necessitate an indepth examination ofthe contention. However, we consider it unnecessary in this case to undertake this exercise because the judgment ofthe High Court is being upheld for the additional reason that the acquisition in this case was mala fide. Therefore, we do not propose to examine the contention under this ~ead. " . - )' It is, on that premise, we have undertaken some studyin this behalf. 50.

The decision of this Court in Somawanti (supra) holding that the stage at which Rule 4 is required to be complied with is not the stage prior to issuance of a notification under Section 4 of the Act, but declaration under Section 6 does not appear to be correct from the ·- decisions of this Court in Patel Chaturbhai Narsibhai (supra) and Wahab Uddin (supra), the earlier binding precedent, with utmost respect, having not been taken into consideration in its entirety. 51. In Abdul Husein Tayabali & Ors. v. State ofGujarat & Ors. , [1968] 1 SCR 597, this Court observed : "... Next it was urged that the inquiry under Rule 4 has to be held after the notification under section 4 is issued and not before and therefore the inquiry held by Master was not valid. We do not find anything in Rule 4 or in any other Rule to WaITaI). t such a proposition.

The inquiry, the report to be made consequent upon such inquiry, obtaining the opinion of the Land Acquisition Committee, all these are intended to enable the Government to come to a tentative conclusion that the lands in question are or are likely to be needed for a public purpose and to issue thereafter section 4 notification.... " ... 52.. In Srinivasa Cooperative House Building Society Ltd. v. Afadam Gurumurthy Sastry and Ors. , (1994] 4 SCC 675, noticing Somavanti (supra) wherein it was held that the manufacturing of the articles was for the benefit ofthe community and to save substantive part offoreign exchange and staffquarters to workmen, it was held : "... On the other hand, in the case ofan acquisition for a company, the compensation has to be paid by the company. In such a case there can be an agreement under Section 41 for transfer of the land acquired by the Government to the company on payment of the cost of acquisition, as also other matters.

The agreement contemplated by Section 41 is to be entered into between the company and the appropriate Government only after the latter is satisfied about the purpose ofthe proposed acquisition, and subject to the condition precedent that the previous consent of the appropriate Government has been given to the acquisition. Section 6 is in terms, made subject to the provisions ofPart VII of the Act. The declaration for acquisition for a company shall not be made unless the compensation to be awarded for the property is to be paid -by a company. In the case of an acquisition for a company simipliciter, the declaration cannot be made without satisfying the requirements ofPart VII. But that does not necessarily mean that an acquisition for a company for a public purpose cannot > be made otherwise than under the provisions of Part VII, ifthe cost or a portion ofthe cost ofthe acquisition is to come out of public funds.

In other words, the essential condition for acquisition is for a public purpose and that the cost ofacquisition should be · borne, wholly or in part, out ofpublic funds. Hence an acquisition for a company may also be made for a public purpose, within the meaning ofthe Act, ifa part or the whole ofthe cost ofacquisition is met by public funds. If, on the other hand, the acquisition, for company is to be made at the cost entirely ofthe company itself, such an acquisition comes under the provisions ofPart VII. .. " · 53. The approach ofthe High Court in this behalf, in our opinion, is totally erroneous. A provision ofa statute is either mandatory or directory. Even ifaprovision is directory, the same should be substantially complieQ with. It cannot be ignored in its entirety only because the provision is helq to be directory and not an imperative one. 54.

In this case admittedly there has been no compliance ofRule 4, i IfRule 4 has not been complied with, the exercise ofjurisdiction unde11 Part VII must be held to have been erroneous. 55. For the reasons aforementioned, the impugned judgment cannot' be sustained, which is set aside accordingly. The appeals are allowed with' costs. Counsel's fee assessed at Rs. 25,000/- (Rupees twenty five' thousand only). S. K. S. Appeals allowed. - r