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Issues Involved
1. Validity of the requisition and acquisition proceedings under the Punjab Requisitioning & Acquisition of Immoveable Property Act and the Land Acquisition Act. 2. Compliance with the procedure laid down in Chapter VII (Part VII) of the Land Acquisition Act. 3. Determination of whether the acquisition was for a public purpose or for a company. 4. Applicability of Article 31 of the Constitution in the context of the Land Acquisition Act. Detailed Analysis 1. Validity of the Requisition and Acquisition Proceedings The appellants challenged the requisition of their agricultural land by the Additional District Magistrate of Ambala under the Punjab Requisitioning & Acquisition of Immoveable Property Act (XI of 1953) for the construction of houses by the Thapar Industries Co-operative Housing Society Ltd. The possession of the land was taken on November 5, 1954. The appellants filed a suit which was decreed, and possession was restored to them. Subsequently, the State of Punjab issued notifications under Sections 4 and 6 of the Land Acquisition Act (1 of 1894), stating the land was needed for constructing a Labour Colony under a Government-sponsored Housing Scheme. The appellants again challenged this acquisition, but their suit was dismissed on the preliminary ground of not serving a notice under Section 59 of the Punjab Co-operative Societies Act, 1955. The appellants' appeals were dismissed at various judicial levels, including the High Court. 2. Compliance with Chapter VII (Part VII) of the Land Acquisition Act The appellants argued that the acquisition proceedings were void due to non-compliance with the procedure laid down in Part VII of the Land Acquisition Act. The High Court initially dismissed this contention, stating that the acquisition was for a public purpose, thus Part VII did not apply. However, the Letters Patent Bench acknowledged considerable authority for the view that compliance with Part VII is obligatory for acquisitions for a company. Despite this, the Bench concluded that the acquisition was for a public purpose, thus not requiring Part VII compliance. 3. Public Purpose vs. Company Acquisition The Supreme Court clarified that the Land Acquisition Act contemplates two categories of acquisitions: (1) for a public purpose at the cost of the Government, and (2) for a purpose akin to a public purpose at the cost of a company. The Court emphasized that acquisition for a public purpose, even if it benefits a company, does not necessitate compliance with Part VII if the cost is borne wholly or partly out of public funds. The Court found that the acquisition in question was for a public purpose, as it aimed to construct residential quarters for industrial workers, and a substantial part of the compensation was to come from public funds. 4. Applicability of Article 31 of the Constitution The High Court's reasoning was flawed due to a misunderstanding of Article 31(5) of the Constitution. The Supreme Court corrected this by stating that the Land Acquisition Act, including Part VII, is immune from attack under Article 31(2) due to the saving clause in Article 31(5)(a). The Court held that the acquisition was for a public purpose, and thus, the provisions of Part VII did not apply as the compensation was partly funded by public revenues. Conclusion The Supreme Court upheld the High Court's decision, dismissing the appeal. The Court concluded that the acquisition was for a public purpose, and the procedure under Part VII was not required since the compensation was partly funded by public revenues. The appeal was dismissed with costs.
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