Babu Barkya Thakur vs The State of Bombay and Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Petition No. 134 of 1959

Decision Date: 8 August 1960

Coram: Bhuvneshwar P. Sinha, Syed Jaffer Imam, A.K. Sarkar, K.N. Wanchoo, J.C. Shah

In this case the Supreme Court of India considered a petition filed by Babu Barkya Thakur challenging a preliminary notification issued under section 4 of the Land Acquisition Act 1894 by the State of Bombay, which is presently the State of Maharashtra. The notification sought to acquire certain parcels of land that included the petitioner’s property on the ground that the land was likely to be required by a company that intended to establish a factory for manufacturing steel bars and rods and for erecting associated buildings. The State also appointed a Special Land Acquisition Officer to act as a Collector pursuant to section 5A of the Act. The petitioner objected to the proposed acquisition before the officer, contending that the lands were not required for a public purpose and requesting that the acquisition proceedings be set aside. He thereafter instituted a petition under article 32 of the Constitution before this Court, asserting that the notification was illegal because it failed to state expressly that the acquisition was for a public purpose and that the proceedings infringed the fundamental rights guaranteed by articles 19 and 31 of the Constitution. The Bench hearing the matter consisted of Chief Justice Bhuvneshwar P. Sinha together with Justices Syed Jaffer Imam, A. K. Sarkar, K. N. Wanchoo and J. C. Shah. The judgment, reported as 1960 AIR 1203 and cited in numerous subsequent decisions, addressed the question of whether a section 4 notification must expressly mention a public purpose when the land is intended for use by a private company. The Court held that the law does not require the notification itself to contain an explicit statement of public purpose; it is sufficient that the appropriate Government, after considering a report made under section 5A(2) or after conducting an inquiry under section 40, is satisfied that the purpose of the acquisition falls within the definition of public purpose contained in section 40. The Court observed that the definitions of “company” and “public purpose” in section 3 of the Act are expansive, with “company” covering a broad category of entities and “public purpose” being used in its generic sense to include any purpose that may benefit even a fraction of the community, thereby embracing purposes described in section 40 of the Act.

The Court observed that any purpose that is specified in section 40 of the Land Acquisition Act must be within the scope of that provision, and it referred to the decision in State of Bombay v. Bhanji Munji, reported in 1955 S.C.R. 777, for support. It further explained that a notification issued under section 4 of the Act merely initiates a preliminary inquiry, whereas a definitive declaration by the Government is made only under section 6. Consequently, the Court held that a flaw in the section 4 notification cannot be fatal to the acquisition process, especially when the acquisition is intended for a company and the required investigations are to be conducted under section 5A or section 40 after the notification has been issued. On that basis, the Court considered the present application to be premature. The Court also stated that clause 6 of article 31 of the Constitution does not apply to the Land Acquisition Act of 1894, and therefore the provision is protected by article 31(5)(a) of the Constitution even if the acquisition is for a company that may or may not serve a public purpose, citing Lilavati Bai v. State of Bombay, 1957 S.C.R. 721. Moreover, the challenge raised under article 19(1)(f) of the Constitution was dismissed, relying again on the earlier authority of State of Bombay v. Bhanji Munji.

The judgment recorded that the matter arose under original jurisdiction as petition No. 134 of 1959, filed under article 32 of the Constitution of India for the enforcement of fundamental rights. Counsel for the petitioner were J. C. Bhatt, R. Ganapathy Iyer and G. Gopalakrishnan, while the respondents were represented by N. S. Bindra, R. H. Dhebar and T. M. Sen for respondents 1 and 2, and by S. K. Kapur, P. M. Mukhi and B. P. Maheshwari for respondent 3. The judgment was delivered on 8 August 1960 by Chief Justice Sinha. The petition challenged the constitutional validity of land acquisition proceedings, specifically the notification issued under section 4 of the Land Acquisition Act concerning land located in the Thana district of the State of Bombay, presently the State of Maharashtra. To understand the controversy, the Court set out the factual background: on 3 April 1959, the State of Bombay, as the first respondent, issued a notification under section 4 of the 1894 Act stating that the lands listed in the attached schedule were likely required for the purposes of the third respondent, Messrs. Mukund Iron & Steel Works Limited, a company incorporated under the Indian Companies Act of 1913 with its registered office at Kurla, Bombay No. 37, for the construction of factory buildings and related structures. The notification also indicated that, pursuant to clause (c) of section 3 of the Act, the Government had appointed the Special Land Acquisition Officer, the second respondent, to act as the Collector under section 5A of the Act. The petitioner, an Indian citizen, claimed an interest as owner in the land included in the schedule.

In the present proceedings the petitioner’s land is listed in the schedule annexed to the notification. The petitioner appeared before the Special Land Acquisition Officer, the second respondent, after several adjournments and lodged formal objections on 9 June 1959. On that same day and on the following day the petitioner, through his counsel, made oral submissions and asked the second respondent to set aside the acquisition proceedings on the ground that the lands mentioned in the notification were not required for any public purpose and that the proceedings were vexatious and malicious. It was further asserted before the second respondent that the third respondent had already negotiated, by private treaty, to purchase the area covered by the notification.

The second respondent therefore postponed the hearing to give the petitioner and the third respondent an opportunity to reach an amicable settlement. A subsequent hearing was held before the second respondent on 15 July 1959. At that hearing the petitioner sought permission to adduce evidence from the owners of several parcels of land situated in the notified area. The purpose of such evidence was to demonstrate that, as a matter of fact, the lands listed in the schedule were not needed by the third respondent for any public purpose and that the third respondent had also negotiated to buy those lands by private treaty. The second respondent declined to allow the petitioner to lead that evidence.

Subsequently the petitioner raised a series of constitutional questions challenging the validity of the land‑acquisition process. The petitioner prayed that the State Government be directed not to give its consent to the acquisition under section 39 of the Land Acquisition Act, not to enter into any agreement with the third respondent under section 41, and not to issue a declaration under section 6 stating that the land is required for a public purpose, on the basis that such a declaration would deprive the petitioner of the chance to contest the claim that the land is not needed for a public purpose.

The third respondent, through its Business Manager, filed an affidavit in response to the petition. In that affidavit the third respondent contended that the writ petition was premature and not maintainable. It noted that, to date, only a notification under section 4 of the Act had been issued and that the objections filed by the petitioner under section 5A had been heard by the second respondent. The third respondent further asserted that the State Government had not yet been satisfied that the acquisition fell within the purposes specified in section 40, and that until the prior consent of the appropriate Government is obtained, the provisions of sections 6 to 37 cannot be brought into operation. The third respondent denied that the acquisition was not for a public purpose and denied that the proceedings were vexatious or malicious. It also denied that the second respondent had refused permission to the petitioner to lead any evidence, and it repudiated the substantive allegations made in the petition. It is stated on behalf

The third respondent asserted that the public had a vital interest in the production of the Company, whose chief products were steel bars and rods. These items were described as being in great public demand and of such essential necessity to the country that their production, distribution, supply and price were controlled by the Government. The respondent explained that the Company’s products were consumed in large quantities for public utility projects such as dams, hydro‑electric schemes, roads, railways, industrial plants and housing programmes, both in the public and private sectors, and that these projects formed the core of several five‑year plans of the Government. The respondent further claimed that the Company, identified as respondent No. 3, had incorporated extensive provisions for employee welfare in its proposed industrial expansion on the land sought to be acquired. Those provisions allegedly included housing for a large number of workers’ families, parks, gardens, playgrounds, a medical relief centre and other amenities intended for the welfare of employees and their dependents. The third respondent characterized all of these initiatives as a “highly commendable public purpose,” arguing that the benefits derived from them were far greater for the community at large than for the Company’s shareholders. It was also stated that the first respondent had carried out a detailed investigation into the public usefulness of the Company’s expansion, including the housing schemes and welfare projects. Upon being satisfied with the bona‑fides of the Company, the genuineness, urgency and public utility of its projects, the first respondent had issued a notification under section 4 of the Act on 3 April 1959. An affidavit sworn by the second respondent, who was the Special Land Acquisition Officer at Thana, was noted to question the maintainability of the writ petition and to generally support the position of the third respondent. The officer’s affidavit also observed that the petitioner and any other interested parties had not produced any evidence, and it denied the allegation that the officer had prevented anyone from leading evidence. The Special Land Acquisition Officer made several categorical statements, denying that the acquisition of the lands for the purpose of the third respondent was useless to the public or that the public were denied the use of the Company’s works, as claimed by the petitioner. He affirmed that the products being produced and those to be produced were intended for use in public undertakings that contributed to the country’s overall industrial development. He further denied that the proposed acquisition was solely for the benefit of a few individuals, namely the shareholders of the Company, as alleged by the petitioner. The officer then added another denial, referring to paragraph 13 of the petition, stating that he did not deny the petitioner the opportunity to lead evidence, a claim he described as absolutely dishonest and false.

The Special Land Acquisition Officer responded to the allegation that the petitioner was prevented from leading any evidence before him. He asserted that the claim was completely dishonest and false. He further denied that the notification issued by the Government under section 4 of the Act was anything but bona‑fide, and he rejected the suggestion that the Government had abused the powers conferred upon it. He also rejected the contention that the notification was illegal or that it had not been made in good faith.

The petitioner, relying on these allegations and the counter‑allegations, approached the Court under article 32 of the Constitution. The petition sought relief on the ground that the section 4 notification was illegal, that the land‑acquisition proceedings violated articles 14, 19 and 31 of the Constitution, and that the acquisition was not for a public purpose but was undertaken mala fide. To resolve the dispute, the Court considered it appropriate to examine the relevant provisions of the governing Act. The preamble of the Act states that it is expedient to amend the law concerning the acquisition of land needed for public purposes and for Companies, and to determine the amount of compensation payable for such acquisition. In section 3, the definitions of “Company” and “public purpose” are highlighted. “Company” is defined broadly to include not only companies incorporated under various Indian and English statutes but also societies registered under the Societies Registration Act of 1860 and societies within the meaning of the Co‑operative Societies Act. The term “public purpose” is defined to include the provision of village sites in districts where the appropriate Government, by official gazette notification, has declared such provision customary. Thus, “public purpose” is interpreted in a generic sense, encompassing any purpose that may interest or benefit even a portion of the community.

The acquisition process commences with a Government notification under section 4 indicating that land in a particular locality is needed or is likely to be needed for a public purpose. Upon issuance of such a notification, it is permissible for public servants and workmen to enter the land to perform the acts prescribed in the notification, with the aim of ascertaining whether the land is suitable for the proposed purpose and of determining the boundaries of the land to be included in the acquisition scheme. Although the preamble of the Act refers both to public purposes and to Companies, the preliminary notification under section 4 refers solely to a public purpose and not to a Company. Section 5A, inserted by the amending Act of 1923, provides for the hearing of objections to the notification, thereby introducing a procedural safeguard in the acquisition process.

In this case the Court observed that a notification made under section 4 could refer not only to a public purpose but also to a company. Section 5A therefore required that a notification under section 4(1) might be issued for land needed for a public purpose as well as for land required by a company. After the inquiry prescribed by section 5A was completed, the Collector was obliged to hear any objections raised by interested persons. Having heard such objections, the Collector had to forward a report to the Government together with the complete record of the proceedings and his recommendations on how to deal with the objections. The Government then had to consider whether the objections were well‑founded; the decision of the appropriate Government on those objections was to be regarded as final. If the Government chose to reject the objections and was satisfied that the land concerned was required either for a public purpose or for a company, it was required to issue a declaration to that effect. That declaration had to be published in the official Gazette and had to state the particulars of the land, including its approximate area and the purpose for which it was needed. Once a declaration under section 6 was made, it became conclusive proof that the land was required for a public purpose or for a company. Thereafter the usual proceedings followed: after notice was given to the affected parties, they could claim compensation for any interest they had in the land; an award was then made after investigating any conflicting title claims, determining the amount of compensation payable for the land, and, if necessary, apportioning that amount among the persons deemed to be interested in the land under acquisition. The Court noted that it was not concerned with the subsequent proceedings that arose after the Collector’s award or with the matters that might be challenged in those later stages. From the preamble and from the provisions of sections 5A, 6 and 7, it was clear that the Act drew a distinct line between acquisition of land for a public purpose and acquisition of land for a company, as though land required by a company were not also for a public purpose. The Act further dedicated Part VII to acquisitions for companies, and subsection 2 of section 38, which commences Part VII, provided that in an acquisition for a company the words “for such purpose” were to be read as “for purposes of the company”. Section 39 then stipulated that the machinery of the Land Acquisition Act, beginning with section 6 and ending with section 37, could not be set in motion unless two precedent conditions were satisfied: first, prior consent of the appropriate Government had to be obtained; and second, an agreement had to be executed.

The Company was required to execute an agreement in accordance with section 41 of the Act before any further step could be taken. The government could give its consent only after it was satisfied that the enquiry report prescribed by section 5A(2) or the enquiry conducted under section 40 itself demonstrated that the acquisition was intended to obtain land for the erection of dwelling houses for work‑men employed by the Company, for the provision of amenities directly connected with the Company, or for the construction of a work which was likely to be of use to the public. Once the government was satisfied that one of these purposes applied to the acquisition in question, the appropriate government was obliged to require the Company to enter into an agreement that provided for three matters: first, the payment by the Company of the cost of the acquisition to the government; second, the transfer of the land to the Company upon receipt of that payment; and third, the terms on which the Company would hold the land. The agreement also had to specify the period within which the conditions governing the manner and timing of the erection of dwelling houses or the provision of amenities were to be complied with, and, where the acquisition concerned the construction of any other kind of work, the period and conditions for execution, maintenance and public use of that work. These provisions of the Act form the basis for the Court’s examination of the constitutionality of the land‑acquisition proceedings that are being challenged. The first constitutional objection raised by the petitioners relies on article 31(2) of the Constitution, which unequivocally requires that any compulsory acquisition of property must be for a public purpose and must be authorised by law. However, article 31(5)(a) provides that nothing in clause (2) shall affect the provisions of any existing law, except where the provisions of clause (6) apply; the Land Acquisition Act is clearly not a law to which clause (6) is relevant. Consequently, even if the Act allowed acquisition for a company that might not be for a public purpose, the Act would nevertheless be protected as an existing law under article 31(5)(a), as noted in the decision of Lilavati Bai v. State of Bombay. Moreover, although the wording of Part II of the Act— which contains the operative procedures leading up to acquisition by the Collector— might suggest that acquisition for a company could be unrelated to a public purpose, the provisions of Part VII make it explicit that the appropriate government may not activate the mechanism of the Act unless it is convinced, as described above, that the acquisition is intended to enable the company to erect dwelling houses for its work‑men, to provide related amenities, or to construct a work of public utility.

It was observed that the acquisition of land for a company may be justified when the land is required either for the provision of amenities that are directly connected with the company or when the land is needed for the construction of some work of public utility. These conditions demonstrate that, in substance, an acquisition made for a company also serves a public purpose, because it cannot be convincingly argued that the construction of dwelling houses, the provision of amenities for the benefit of the workmen employed by the company, or the erection of a public‑utility work fails to serve a public purpose. The Court noted that, for the purposes of the present case, it was unnecessary to examine in detail the question of whether an acquisition for a company—apart from the provisions of section 40—constitutes a public purpose or is justifiable under the Act, even assuming hypothetically that such an acquisition might not serve a public purpose. The factual circumstances of the present matter had not been fully investigated, since the petition was filed when only a notification under section 4 of the Land Acquisition Act had been issued and the purpose of the proposed acquisition was still at the enquiry stage. By section 38A, inserted by the amending Act of 1933, it became clear that an industrial concern that is not a company, and that ordinarily employs not less than one hundred workmen, may also avail itself of the land‑acquisition process if the purpose of the acquisition is the same as that contemplated by section 40 for companies. The Court recalled the decision in The State of Bombay v Bhanji Munji and Another, where it was held that providing housing accommodation to the homeless constitutes a public purpose. In an industrial concern employing a large number of workmen away from their homes, it is a social necessity that proper housing be made available to such workmen; when a substantial segment of the community is affected, its welfare becomes a matter of public concern. In the same vein, if a company is generous enough to erect a hospital, a public reading room, a library, or an educational institution that is open to the public, there can be no doubt that such works are of public utility and fall within the scope of the Act. The Court acknowledged that it did not possess all the relevant facts concerning the precise purpose for which the land was sought to be acquired, because the investigation was still underway when the petitioner approached the Court. Consequently, the respondents’ contention that the application was premature was not entirely without merit. Nonetheless, the principal challenge to the constitutionality of the proceedings stemmed from the notification issued under section 4, which read in the following terms: “Ex. A. NOTIFICATION REVENUE DEPARTMENT. Sachivalaya, Bombay, 3rd April, 1959. LAND ACQUISITION ACT, 1894 (1 of 1894). District Thana. No. LTH. 15‑59/42051‑H‑Whereas it appears to the Government of Bombay that the lands specified in the schedule hereto are likely to be needed for…”

The notification stated that the lands listed in the schedule were likely to be required for the purposes of the company, specifically for factory buildings of M/s. Mukund Iron and Steel Works Limited, Bombay. It declared that, under section 4 of the Land Acquisition Act, 1894 (I of 1894), the lands were probably needed for the purpose mentioned. The notification warned all persons having an interest in the lands not to obstruct or interfere with any surveyors or other persons employed on the lands for the purpose of the acquisition. It further provided that any contracts for the disposal of the lands by sale, lease, mortgage, assignment, exchange or otherwise, or any outlay or improvements made therein, without the sanction of the Collector after the date of the notification, would be disregarded by the officer assessing compensation under section 24 (seventhly) of the Act. The notification explained that if the Government of Bombay became satisfied that the lands were needed for the stated purpose, a final notification under section 6 would be published in the Bombay Government Gazette in due course, and that any abandonment of the acquisition, in whole or in part, would likewise be notified in the Gazette. Under clause (c) of section 3, the Government of Bombay appointed the Special Land Acquisition Officer, Thana, to perform the functions of a Collector under section 5‑A in respect of the lands.

The submissions argued that the notification did not expressly state that the land was needed for a public purpose. The Court observed that such an explicit statement was not indispensably required for the validity of the acquisition proceedings. It held that the legal requirements would be satisfied if, upon investigation, the appropriate Government was convinced that the land was needed for the purposes of the company, which would amount to a public purpose within Part VII of the Act. The Court referred to the decision in The State of Bombay v. Bhanji Munji and Another (1), where it had been held that the Bombay Land Requisition Act was not invalid merely because the purpose was not expressly described as a public purpose, provided that the overall tenor and intent of the enactment showed that the property was being acquired for the purpose of the State or any public purpose. The argument that section 4(1) deliberately omitted the words “for a Company” and insisted on a public purpose was noted, but the Court found that the absence of those words from the section‑4 notification was not fatal to the proceedings.

In this case the Court observed that the mere fact that a notification issued under section 4 of the Act states a purpose “for a public purpose” is not fatal to the proceedings. The Court explained that the purpose of a notification made under section 4 is to authorise a preliminary investigation, which includes carrying out the necessary survey, taking of levels and, if required, digging or boring into the sub‑soil, in order to determine whether the land is suitable for the purpose for which acquisition is being considered. The Court further noted that only under section 6 is the Government required to make a firm declaration that a specifically described and identifiable parcel of land is needed either for a public purpose or for a company. Accordingly, what begins as a mere proposal under section 4 later becomes the subject matter of a definite acquisition proceeding under the Act. The Court therefore held that it is incorrect to say that any defect in the notification issued under section 4 automatically invalidates the proceedings, especially where the acquisition is intended for a company and the purpose must be investigated under section 5A or section 40 after the section 4 notification. The Court also rejected the challenge based on article 19(1)(f) of the Constitution, describing it as equally futile in view of the decisions in State of Bombay v. Bhanji Munji and Another (1) and Lilavati Bai v. State of Bombay (2). While the petition raised article 14 of the Constitution, the Court observed that no argument was advanced with reference to that provision. For these reasons, the Court dismissed the petition and ordered costs against the contesting parties. Petition dismissed. (1) [1955] 1 S.C.R. 777. (2) [1957] S.C.R. 721.