Case Note & Summary
The appeal by special leave arose from a judgment of the Madhya Pradesh High Court dated August 8, 1961, which dismissed a writ petition filed by landowners challenging notifications under Section 6 of the Land Acquisition Act, 1894. The acquisition proceedings were initiated at the instance of Premier Refractories of India Private Limited, Katni, a company, for the purpose of constructing buildings for godowns and an administrative office, and later for a Premier Refractory Factory and work connected therewith. A notification under Section 4 was issued on July 8, 1960, declaring that certain land in village Chhaparwah was required for a public purpose. After an inquiry under Section 5-A, the Collector recommended a declaration under Section 6 and submitted a draft agreement under Section 41. On December 3, 1960, the State Government issued a notification under Section 6 stating that the land was required for a public purpose, namely for the construction of buildings for godowns and administrative office. The notification did not state that the land was needed for a company. Subsequently, the appellants filed a writ petition in the High Court on March 20, 1961, contending that the notification under Section 6 did not describe the land with sufficient particularity and that although it mentioned public purpose, the land was actually required for a company, which was different from Government. Soon after, on April 19, 1961, the State Government issued a fresh notification mainly under Section 17(1) read with Section 17(4), again declaring under Section 6 that the land was required for a public purpose, namely for the Premier Refractory Factory and work connected therewith. This notification also did not mention any company. The High Court held that the public purpose declaration was ineffective because the compensation was to be paid wholly by the company and no part from public funds, but it read the notifications in substance and in law as being for acquisition of land for the company and dismissed the writ petition. The Supreme Court examined Section 6(1) and its proviso. It observed that Section 6(1) requires a declaration to be made either that land is needed for a public purpose or for a company. The proviso makes it clear that a declaration for a public purpose requires that compensation be paid wholly or partly out of public revenues or some fund controlled or managed by a local authority, whereas a declaration for a company requires the entire compensation to be paid by the company. Relying on Pandit Jhandu Lal v. State of Punjab, the Court held that no notification under Section 6 can be made declaring acquisition for a public purpose where the entire compensation is to be paid by a company, because such a declaration requires public funding. In the present case, it was undisputed that no part of the compensation was to come from public revenues or a local authority fund; the whole compensation was to be paid by the company. Therefore, the notifications under Section 6 had to declare that the land was needed for a company. The Court found that neither the notification of December 3, 1960 nor that of April 19, 1961 contained any such declaration; both only stated that the land was needed for a public purpose and did not mention any company. The High Court's attempt to read the notifications in substance as for a company was incorrect because the specified public purpose of constructing a factory could as well have been undertaken by Government or a local body; a factory is different from a company. The Court thus held the notifications invalid and set aside the High Court's judgment, allowing the appeal and declaring all proceedings following the invalid notifications to be of no effect.
Headnote
A) Land Acquisition - Declaration under Section 6 - Correct Purpose Declaration - Land Acquisition Act, 1894, Sections 6(1) proviso, 4, 17(1), 17(4) - When entire compensation borne by company, notification must state land needed for company, not public purpose. Notification declaring public purpose invalid; cannot be read in substance as for company. The Supreme Court held that under the proviso to Section 6(1), a declaration for public purpose requires at least partial payment from public revenues or a fund controlled or managed by a local authority, while a declaration for a company requires the entire compensation to be paid by the company. In the present case, no part of compensation was to come from public revenues and the whole compensation was to be paid by a company, so the notifications under Section 6 should have declared the land needed for a company, not for a public purpose. The High Court erred in reading the notifications, which only mentioned a public purpose and did not mention any company, as in substance a declaration for a company. Held that the notifications were invalid and all subsequent proceedings were of no effect (Paras not mentioned).
Issue of Consideration
Whether notifications under Section 6 of the Land Acquisition Act, 1894 declaring acquisition for a public purpose are valid when the entire compensation is to be paid by a company, and whether the High Court could read such notifications as in substance declaring the land was needed for a company.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court judgment, and quashed the notifications under Section 6 dated December 3, 1960 and April 19, 1961 as invalid. The Court held that where the entire compensation is to be paid by a company, the notification under Section 6 must declare that the land is needed for a company; a notification declaring acquisition for a public purpose is invalid in such circumstances. The High Court erred in reading the notifications as in substance for a company; there was no mention of a company in either notification. All proceedings following on the invalid notifications were of no effect.
Law Points
- Under Section 6(1) proviso of Land Acquisition Act
- 1894
- declaration for public purpose requires compensation wholly or partly from public revenues or local authority fund
- declaration for company requires entire compensation paid by company
- where whole compensation paid by company
- notification under Section 6 must declare land needed for company
- notification declaring public purpose in such case invalid
- substance of notification cannot be read as declaring for company when no company mentioned
- factory different from company.
