Pandit Jhandu Lal and Ors vs The State Of Punjab and Ors

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 4 of 1960

Decision Date: 16 November 1960

Coram: Bhuvneshwar P. Sinha, J.L. Kapur, P.B. Gajendragadkar, K.N. Wanchoo

In the matter titled Pandit Jhandu Lal and others versus the State of Punjab and others, a judgment was delivered on 16 November 1960 by the Supreme Court of India. The judgment was authored by Justice Bhuvneshwar P. Sinha and the bench was composed of Justices Bhuvneshwar P. Sinha, J. L. Kapur, P. B. Gajendragadkar and K. N. Wanchoo. The case is reported in 1961 AIR 343 and 1961 S.C.R. (2) 459, with subsequent citations appearing in various law reports such as R 1962 SC 764, RF 1963 SC 151, R 1965 SC 427, RF 1965 SC 646, RF 1966 SC 1788, R 1970 SC 984, F 1977 SC 594, C 1980 SC 367. The statutory provision in issue was the Land Acquisition Act 1894, specifically sections 4, 6 and Part VII, together with the constitutional provisions of Articles 31(2) and 31(5)(a) of the Constitution of India.

The Punjab Government had issued a notification under sections 4 and 6 of the Land Acquisition Act, 1894, and had commenced proceedings to acquire land for the construction of a labour colony. This colony was to be part of a government‑sponsored housing scheme intended for the workers of the Thapar Industrial Workers’ Co‑operative Housing Society Ltd. The petitioners challenged these acquisition proceedings by invoking Article 226 of the Constitution, contending, among other grounds, that the procedure prescribed in Part VII of the Act had not been complied with. The Division Bench, while confirming the trial judge’s order of dismissal, held that Article 31 of the Constitution, by prohibiting compulsory acquisition of property except for a public purpose, rendered Part VII of the Act redundant, yet it saved the present proceedings because the acquisition was for a public purpose.

The Supreme Court held that the High Court erred in concluding that the Constitution had made Part VII of the Land Acquisition Act, 1894, redundant or void, even though the High Court was correct in dismissing the appeal. The Court explained that the Act, as an existing law, was preserved by Article 31(5)(a) from being displaced by Article 31(2). It further observed that acquiring building sites for residential houses for industrial labour qualifies as a public purpose, independent of section 17(2)(b) of the Act as amended by the Land Acquisition (Punjab Amendment) Act 1953. The Court referred to the decision in Babu Barkava Thakur v. State of Bombay [1961] 1 S.C.R. 128. The Court clarified that while a declaration under section 6 of the Act ordinarily requires compliance with Part VII when the acquisition is for a company simpliciter, it is not correct to assert that no acquisition for a company serving a public purpose can be made without Part VII. When the cost of acquisition is borne wholly or partially by the Government, the purpose is deemed a public purpose.

According to the Court’s analysis, an acquisition falls within the definition supplied by the Act when the expenditure for the acquisition is borne at least in part by the Government; in such a situation the special provisions of Part VII of the Act are not triggered. Conversely, if the entire cost of acquiring the land is shouldered by the private company, the acquisition is treated as one “for the company simpliciter,” and the procedural requirements of Part VII must be observed. In the present dispute, because a portion of the compensation for the land was to be paid by the Government, the Court concluded that compliance with Part VII was unnecessary.

The matter before the Court was a civil appeal, numbered 4 of 1960, filed under special leave. The appeal challenged the judgment and order dated 28 January 1959 of the Punjab High Court in Letters Patent Appeal No. 52 of 1958, which itself arose from the judgment and order dated 17 February 1958 in Civil Writ Application No. 124 of 1957. Counsel for the appellants included senior lawyers, while the State of Punjab was represented by the Advocate General, and respondents were also supported by counsel for the Solicitor General of India and the Attorney‑General for India as intervenor. The appeal was heard on 16 November 1960, and the opinion was delivered by the Chief Justice.

The Court noted that the special leave for this appeal had been granted on 29 May 1959 and that the relief sought was against the decision of the Letters Patent Bench comprising the Chief Justice and another Justice, which had affirmed the order of the learned single Judge who had dismissed the appellants’ writ petition under Article 226 of the Constitution. The appellants were identified as owners of approximately eighty‑six bighas of agricultural land situated in the village of Munda Majra, Tehsil Jagadhari, District Ambala. On 27 October 1954, the Additional District Magistrate of Ambala issued a requisition order under the Punjab Requisitioning & Acquisition of Immoveable Property Act, 1953, for the purpose of constructing houses for members of the Thapar Industries Co‑operative Housing Society Ltd., Yamunanagar. Possession of the land was taken on 5 November 1954.

In response, the appellants promptly instituted a suit on 14 November 1954 in the Subordinate Court at Jagadhari, contesting the requisition proceedings. That suit culminated in a decree on 21 June 1955, whereby the court restored possession of the disputed property to the petitioners. Subsequently, on 27 May 1955, the first respondent, the State of Punjab, through the Secretary of the Labour Department, issued a notification under section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as “the Act”). The notification, numbered 4850‑S‑LP‑55/14144, declared that the Governor of Punjab considered the land in question likely to be required for a public purpose, specifically the construction of a labour colony under a government‑sponsored housing scheme for the industrial workers of the Thapar Industrial Workers’ Co‑operative Housing Society Limited, Jamna Nagar, District Ambala. The notification cited the authority of section 4 read together with section 17 of the Act, as amended by the Punjab Amendment Act, 1953, and directed the Collector to give public notice of the notification’s substance at appropriate places in the locality. It further empowered the Governor to authorize the President of the Society and its members and servants to enter upon and survey any land in the area and to perform any other acts required or permitted by the respective provisions of the Act. The Governor also exercised the powers conferred by subsection (4) of section 17 to direct that, on grounds of urgency, the provisions of section 5(a) of the Act would not apply.

In the present matter, the Governor of Punjab issued a notification for the locality of Nagar in District Ambala stating that the land described in the accompanying specifications was likely to be required for the construction of a Labour Colony under a government‑sponsored housing scheme for the industrial workers of the Thapar Industrial Workers’ Co‑operative Housing Society Limited. The notification was made under Section 4 read with Section 17 of the Land Acquisition Act, 1894, as amended by the Land Acquisition (Punjab Amendment) Act, 1953, and was addressed to all persons concerned. It directed the Collector to give public notice of the substance of the notification at convenient places within the locality. Exercising the powers conferred by those sections, the Governor authorised the President of the Society, together with its members and servants, to enter upon and survey any land in the area and to perform any other acts required or permitted by the statute. Further, invoking sub‑section (4) of Section 17, the Governor declared that, because of urgency, the provisions of Section 5(a) would not apply to this acquisition. Later on the same day, a second notification was issued under Section 6 of the Act. That notice reiterated that the Governor considered the land necessary for the public purpose of building a Labour Colony for the society’s industrial workers and, under Section 7, directed the Collector of Ambala to take the appropriate order for acquisition. Consequently, the Patwari effected delivery of possession of the land to the second respondent on 21 August 1955.

Even before possession was formally delivered, the appellants filed a suit on 20 August 1955 in the Court of the Subordinate Judge, Class 1, Jagadhari, seeking a perpetual injunction to restrain the second respondent from entering upon, taking possession of, or undertaking any construction on the disputed land. The trial court dismissed the suit on 25 June 1956, holding that the suit was incompetent because a notice required by Section 59 of the Punjab Co‑operative Societies Act, 1955 (XIV of 1955) had not been given. The appellants appealed this dismissal to the Senior Sub‑Judge of Ambala, who affirmed the trial court’s decision, reiterating that the notice was a condition precedent to instituting the suit. A further appeal was made to the Punjab High Court, which also dismissed the appeal on 6 February 1957. Throughout the pendency of these civil proceedings, although the second respondent had obtained possession through the government agency, the Court’s order of injunction effectively stayed any construction activity. Only after the High Court rendered its decision in favour of the respondents did the situation change, as subsequently alleged in the petitioners’ writ petition.

The appellants alleged that the second respondent began constructing large buildings on the disputed land very quickly, as set out in their petition under Article 226 of the Constitution filed on 13 February 1957. They also obtained stay orders from the High Court that halted the building operations. In that writ petition the appellants, who were petitioners before the High Court, contested the acquisition proceedings on several grounds, but only the ground that formed the subject of the High Court’s decision needs to be mentioned. That ground was that the acquisition proceedings were void because the procedure prescribed in Chapter VII of the Act had not been followed. The other contentions raised in the writ petition are not required to be discussed because it is common ground that the entire controversy must be resolved by answering whether the acquisition was vitiated by the admitted fact that no proceedings under Part VII of the Act had been taken in making the acquisition. The case was first heard by Judge Bishan Narain, who dismissed the petition, holding that the acquisition was made by the Government for a public purpose, namely the construction of tenements for industrial workers, under a scheme authorized by an order to the Collector of the district or by any other officer who may be authorised by notification of the State Government. The judgment then set out several provisions of the Act. Section 6 restricts the transport of agricultural cattle for slaughter, providing that no person shall transport or cause to be transported any agricultural cattle from any place within the State to any place outside the State for the purpose of slaughter in violation of the Act or with knowledge that such slaughter is likely. Section 7 forbids the purchase, sale or other disposal of cows, calves of cows or calves of she‑buffaloes for slaughter, or the offering thereof, when the person knows or has reason to believe the animals will be slaughtered. Section 8 provides that, notwithstanding any other law, no person shall possess the flesh of any agricultural cattle that has been slaughtered in contravention of the Act. Section 10 imposes a penalty for contravention of section 4(l)(a) and section 11 imposes a penalty for violation of any other provision of the Act. On behalf of the petitioners it was submitted, and correctly in our

In the present case, the petitioners argued that clause (a) of sub‑section (2) of section 4 of the Act imposes an unreasonable restriction on their right to slaughter certain cattle. The clause, in its first part, requires that any cattle other than cows and calves must be more than twenty years old and also must be unfit for work or breeding; the second part adds that the animal may be slaughtered if it has become permanently incapacitated from work or breeding because of age, injury, deformity or an incurable disease. The Court found the juxtaposition of these two parts difficult to understand, and it observed that the combined requirement that an animal be both over twenty years of age and unfit for work or breeding is excessive and unreasonable, a conclusion already reached with respect to a similar provision in the Uttar Pradesh Act. The second part of the clause would not be objectionable if it stood alone, but when read together with the age limit, it raises the same objection because demanding permanent incapacitation in addition to the twenty‑year age makes the age criterion essentially meaningless. Moreover, the expression “due to age” in the second part loses its significance when the animal must already satisfy the age condition. The Court therefore held that clause (a) of sub‑section (2) of section 4, as drafted, is flawed because it imposes a disproportionate restriction on the slaughter of bulls, bullocks and buffaloes, a restriction that is excessive in nature and not in the general public’s interest. The test set by the clause is not merely permanent incapacity or unfitness for work or breeding; instead, it requires a combination of age and unfitness, which the Court found to be an undue burden. Counsel for the petitioners submitted an observation made by the Deputy Minister during the debate on the Bill in the Madhya Pradesh Assembly, recorded in the Assembly proceedings (Volume 5, Serial No. 34, dated 14 April 1959, page 3201), in which the Minister said that the age fixed in the provision was considerably higher than any animal could realistically survive. The Court noted that this observation was not offered to interpret the section but to demonstrate the Minister’s opinion on an appropriate age limit. On the other side, counsel for the respondent State referred to a book titled “The Miracle of Life” (Home Library Club), which states that oxen, when provided with good conditions, may live about forty years, and also cited extracts from a Hindi work called “Godhan” by Girish Chandra Chakravarti, which claim that cows and bullocks may live up to twenty or twenty‑five years. The Court recognized these references as part of the factual background already considered in earlier discussion of the matter.

In dealing with the matter before it, the Court observed that the issue was not to determine the extreme maximum age that bulls, bullocks or buffaloes might reach in exceptional cases. Rather, the point to be resolved was the typical life span of these animals and the age at which they cease to be of any economic use. On this point, the Court found that there was a near‑consensus view, and the opinion expressed by the Deputy Minister concerning the average longevity was not erroneous. Turning to Section 5 of the Act, the Court noted that this provision imposes a limitation on the time at which an animal may be slaughtered. The same objection that had been raised in relation to a comparable clause in the Uttar Pradesh Act was applicable here. The statute provides that any person who is dissatisfied with an order granting a slaughter certificate may file an appeal. Consequently, a member of the public who objects to such an order can initiate appellate proceedings, which may indefinitely postpone the slaughter of the animal. The Court pointed out that, in practical terms, this mechanism would effectively halt the petitioners’ trade in animal slaughter. Accordingly, the Court could not accept such a restriction as a “reasonable restriction” within the meaning of clause (6) of Article 19 of the Constitution.

The Court further examined Section 6 and held that, standing alone, that provision did not raise any serious objection. It is merely ancillary and serves to give effect to the broader prohibition of unlawful cattle slaughter contained in the Act. Section 7 deals with the prohibition of the sale and purchase of cows and calves; because a total ban on the slaughter of cows and calves is constitutionally valid, no objection can be taken to Section 7, which simply enforces that complete ban on both cows and she‑buffaloes. Similarly, Section 8 is ancillary in nature, and provided the other sections are upheld, no challenge can be made to Section 8. Sections 10 and 11 impose penalties that are subsidised by the Government from public funds; the Court found that Part VII of the Act was inapplicable to the present proceedings, and therefore the notification issued under Section 6 was not invalid. The appellants had filed an appeal under the Letters Patent, which the Letters Patent Bench dismissed for reasons distinct from those later considered. After reviewing the precedents of various High Courts relevant to the controversy, the Bench concluded that there was considerable authority supporting the view that compliance with the provisions of Part VII is mandatory in all acquisitions made for a company, and that the acquisition in the present case was undeniably for the benefit of a company.

In delivering its opinion, the Court stated that it could not agree with the views expressed by the lower bench. The Court observed that those views appeared to be influenced by the constitutional backdrop, particularly Article 31, which forbids compulsory acquisition of property except for a public purpose. Consequently, the Court explained that after the Constitution became effective, the State could no longer acquire land compulsorily for purposes that are not public. The Court also noted that it was undisputed that before the Constitution’s commencement the Government could acquire land compulsorily for non‑public purposes. The Court found no provision in the Land Acquisition Act that incorporates the limitation imposed by Article 31, and therefore concluded that the Act still contemplates two separate categories of acquisition. The Court then referred to the High Court’s examination of the statute, noting that the Land Acquisition Act was enacted at a time when there was no constitutional bar on compulsory acquisition for private purposes. The Court pointed out that the first constitutional restriction on such private acquisitions was introduced by Article 31. After the Constitution came into force, the High Court had held that Part VII of the Act had become redundant or void. However, the Court disagreed with that conclusion and held that the acquisition proceedings in the present case were not liable to attack merely because Part VII was not complied with. The High Court’s reasoning, according to the Court, was that since the land was being acquired for a public purpose, the statutory requirements of Part VII did not apply even though the expense of acquisition was to be borne by the private company. The Court identified the principal issue to be decided on appeal: whether the acquisition process was invalidated by the admission that the Government did not attempt to satisfy the procedural mandates of Part VII. The Court further observed that the High Court’s analysis was flawed because it had not considered all the relevant provisions of Article 31. The Court rejected the proposition that Part VII had become obsolete, emphasizing that Part VII expressly deals with acquisitions made for a private purpose. Relying on its recent decision in Babu Barkaya Thakur v. State of Bombay, the Court reiterated that the Act distinguishes between acquisitions for a public purpose, which are funded by the Government, and acquisitions for a purpose akin to a public purpose, which are funded by a private company, and that the latter category falls within Part VII. The Court also noted that in the cited case the acquisition of land for constructing residential houses for industrial labour was held to be a public purpose, and that the Land Acquisition Act was shielded from challenge under Article 31(2) of the Constitution.

The Court observed that clause 5(a) of the relevant constitutional article preserved the existence of a law such as the Land Acquisition Act that was already in force. While the High Court’s ultimate conclusion was deemed correct, the Court found the reasoning employed to reach that conclusion to be flawed. The flaw originated from the bench’s failure to consider the provisions of Article 31(5) of the Constitution, which had not been brought to its attention. Had the bench been aware that the entire Land Acquisition Act, including Part VII which governs acquisition of land for companies, was immune from challenge under Article 31(2), it would not have based its decision on the reasoning it had adopted. Consequently, there would have been no basis for the appellants’ persistent claim, throughout the protracted litigation, that the land could be saved from being used for the public purpose that had been identified.

The Court further noted that the Letters Patent Bench also erred in assuming that the compensation for the land had been paid in full by the Company. The Court clarified that this assumption was not supported by the facts. In the original writ petition filed in the High Court, the appellants did not expressly state that the compensation for the land in question had been paid, or would be paid, by the Company. It was, however, accepted as common ground that the second respondent qualified as a “Company” within the meaning of the Act, being a registered society under the Co‑operative Societies Act, and that the land was being acquired for the purpose of constructing residential quarters for industrial labourers who had organized themselves into the Co‑operative Housing Society, which was the second respondent.

The Court observed that it was only at a later stage of the proceedings—specifically, in the replication filed by the appellants in response to the Government’s written statement—that the appellants first alleged that “the entire amount of compensation has been borne by the respondent society.” This allegation, the Court pointed out, was not backed by any evidence, nor was it contradicted by evidence from the other side. The learned single judge, however, noted that the Government Housing Scheme clearly indicated that a substantial portion of the funds required for the scheme would be drawn from public revenues in the form of subsidies and loans. Moreover, counsel for the Government stated, with reference to the terms and conditions of the Government Housing Scheme, that between twenty‑five percent and fifty percent of the cost of the land and the structures to be erected upon it would be advanced by the Government out of public funds.

The Court observed that the High Court had erred in the assumption it had made. The record shows that respondent No. 2 is a “Company” as defined by the Act, that the land was acquired for the benefit of that Company and at its request, and that a substantial part of the compensation was to be paid from public funds while the remaining portion was to be provided by the Company or its members. It was also clear that the structures to be erected on the land would serve the members of the Co‑operative Society. Nevertheless, the Court noted that the private benefit accruing to a large number of industrial workers qualifies as a public benefit within the meaning of the Land Acquisition Act. In this regard, the Court referred to the amendment of section 17 by the Land Acquisition (Punjab Amendment) Act, 1954 (Act 11 of 1954), which inserted clause 17(2)(b). That clause provides that whenever, in the Collector’s opinion, it is necessary to acquire immediate possession of any land for purposes such as a library, an educational institution, the construction, extension or improvement of any building or structure in a village for the common use of its inhabitants, any godown for a society registered under the Co‑operative Societies Act, 1912, a dwelling‑house for the poor, the construction of labour colonies under a Government‑sponsored Housing Scheme, an irrigation tank, drainage channel, well or public road, the Collector may, after publishing the notice required under sub‑section (1) and with prior sanction of the appropriate Government, take possession of the land, which then vests absolutely in the Government free from all encumbrances. From this amended provision, the Court inferred that the construction of labour colonies under a Government‑sponsored Housing Scheme falls within the category of “works of public utility.” The Court also mentioned its recent decision (1) [1961] 1 S.C.R. 128, where it held that building residential quarters for industrial labour constitutes a public purpose. Accordingly, irrespective of the amendment to section 17, authorities clearly indicate that the purpose for which the land was acquired was a public purpose.

Having established that foundation, the Court turned to consider the provisions of section 6, which the appellants had heavily relied upon. The Court affirmed, as also pointed out in the recent decision (1), that the Act contemplates acquisitions both for a public purpose and for a Company, thereby implying that an acquisition intended for a Company does not, by itself, constitute a public purpose. The Court further observed that, in that decision, it had held that the purposes of public utility referred to…

The Court observed that sections 40 and 41 of the Act described purposes that were comparable to a public purpose. Accordingly, both acquisitions made for a public purpose and acquisitions made for a Company fell within the ambit of public utility. Nevertheless, the Court noted that the procedural regime differed for the two categories because Part VII contained substantive provisions that applied specifically to acquisitions of land for Companies. When land was acquired for a public purpose, the Court explained, the amount required for payment of compensation had to be met either wholly or partially out of public revenues or from a fund that was controlled or managed by a local authority. By contrast, where the acquisition was intended for a Company, the compensation was required to be paid by the Company itself. In such cases, however, the Court said that section 41 required the parties to enter into an agreement for the transfer of the land acquired by the Government to the Company upon payment of the cost of acquisition and other matters that were not material to the present discussion. The Court further explained that the agreement contemplated by section 41 could be executed only after the Appropriate Government was satisfied about the purpose of the proposed acquisition and only on condition that the Appropriate Government had previously given its consent to the acquisition. That prior consent, the Court noted, was itself conditioned upon the satisfaction of the Appropriate Government that the purpose of the acquisition complied with the description set out in section 40. Thus, the provisions of sections 39 to 41 imposed conditions precedent to the operation of the Land Acquisition Act when the acquisition was intended for a Company. The Court then turned to section 6, which contained a prohibition on making the declaration required under that section unless the compensation to be awarded for the property was to be paid either by a Company or wholly or partially out of public revenues or a fund controlled or managed by a local authority. Accordingly, section 6 was read as being subject to the provisions of Part VII of the Act. The Court concluded that, read together with Part VII, section 6 led to the result that a declaration for acquisition for a Company could not be made unless the compensation was to be paid by that Company, and a declaration for acquisition for a public purpose could not be made unless the compensation, in whole or in part, was to be funded from public resources. Consequently, the Court held that for a simple acquisition for a Company, the declaration could not be issued without satisfying the requirements of Part VII. However, the Court clarified that this did not necessarily preclude an acquisition for a Company that also served a public purpose from being effected outside the framework of Part VII, provided that the cost or a portion of the cost of the acquisition was to be borne by public funds.

In other words, the essential condition for an acquisition to qualify as being for a public purpose is that the cost of acquiring the property must be borne, either wholly or in part, out of public funds. Therefore, a Company may acquire land for a public purpose under the Act when a part or the whole of the acquisition cost is provided by public funds. On the contrary, if the acquisition by a Company is to be financed entirely by the Company itself, that transaction falls under the provisions contained in Part VII of the Act. In the present case, the record shows that at least a portion of the compensation payable for the acquisition will ultimately be drawn from public revenue sources. Accordingly, the Court held that the acquisition cannot be characterized as being for a Company simpliciter, and therefore the procedural requirements of Part VII were not applicable. Consequently, it was unnecessary for the authorities to follow the detailed procedure prescribed by Part VII in the present matter. The Court therefore affirmed the High Court’s conclusion, although it arrived at that conclusion on substantially different reasoning. Accordingly, the appellate court dismissed the appeal and ordered that the parties each bear the costs of the proceedings. The final decree of the Court formally recorded the dismissal of the appeal and confirmed that no further relief would be granted.