1997 (12) TMI 656 - SC - Indian Laws

Summary

Issues Involved:
1. Legality of the State Government's withdrawal from land acquisition.
2. Whether the acquisition was for a public purpose or for a company.
3. The necessity of the State Government bearing part of the acquisition cost.
4. Justiciability of the State Government's discretion under Section 48 of the Land Acquisition Act.
5. The impact of the State Government's decision on the appellant society.

Detailed Analysis:

1. Legality of the State Government's Withdrawal from Land Acquisition:
The appellant, a registered society running a public school, sought adjacent land for a playground and moved the State Government to acquire it. The Government agreed and issued a Notification under Section 4 of the Land Acquisition Act, followed by a Declaration under Section 6. However, during the pendency of a writ petition by the landowner, the Government denotified the land under Section 48. The appellant challenged this denotification, which the High Court upheld. The Supreme Court found that the Government's decision to withdraw was based on a misconception of law and thus arbitrary and not bona fide.

2. Whether the Acquisition was for a Public Purpose or for a Company:
The Supreme Court clarified that the acquisition was for a company (the appellant society) and not for a public purpose. The entire cost of acquisition was to be borne by the appellant society, making it an acquisition under Part VII of the Act. The notification under Section 6 supported this, stating the land was needed for the construction of a playground for students by the Amar Nath Ashram Trust.

3. Necessity of the State Government Bearing Part of the Acquisition Cost:
The Court reiterated that if the cost of acquisition is borne wholly or partly by the Government, it is for a public purpose. However, if the cost is entirely borne by the company, it is an acquisition for a company under Part VII. The Government's belief that it needed to bear part of the cost to avoid the charge of colorable exercise of powers was misplaced. The Court emphasized that the provisions of Part VII, particularly regarding the payment of the entire costs of acquisition, would become redundant if the Government's view were accepted.

4. Justiciability of the State Government's Discretion under Section 48 of the Land Acquisition Act:
The Supreme Court held that the State Government's discretion under Section 48 is not absolute and is justiciable. The Government must exercise its power bona fide and not arbitrarily, especially when the decision affects another party prejudicially. The Court rejected the State's argument that it could unilaterally withdraw from acquisition without giving reasons or for any reason whatsoever.

5. Impact of the State Government's Decision on the Appellant Society:
The Court noted that while the landowner might not suffer irreparable loss from the withdrawal, the appellant society could suffer substantial loss. The decision to withdraw was based on an incorrect legal position, making it arbitrary and not bona fide. The Court allowed the appeal, quashing the impugned order but left it open for the State Government to reconsider the withdrawal in accordance with the law.

Conclusion:
The Supreme Court allowed the appeal, quashing the State Government's order to withdraw from the acquisition. The Court emphasized that the Government's decision was based on a misconception of law and was arbitrary. It clarified the distinction between acquisitions for public purposes and for companies under the Land Acquisition Act, underscoring the justiciability of the Government's discretion under Section 48. The writ petition was dismissed as not pressed, with the petitioner reserving the right to challenge the validity of Section 48 if necessary in the future.