SOORARAM PRATAP REDDY & ORS. v. DISTRICT COLLECTOR, RANGA REDDY DISTT. & ORS.

_.,, 110. The Court, after referring the Preamble and the relevant provisions of the Act, held that acquisition for Company under the Act was for a 'public purpose' inasmuch as constructing dwelling houses and providing amenities for the E benefit of workmen employed by the Company would serve public purpose.

111Copy pinpoint111. The Court observed; "Further, though it may appear on the words of the Act F """" contained in Part II, which contains the operative portions of the proceedings leading up to acquisition by the Collector that acquisition for a Company may or may not be for a public purpose, the provisions of Part VII make it clear that the appropriate Government cannot permit the G bringing into operation the effective machinery of the Act unless it is satisfied as aforesaid, namely, that the purpose ~ of acquisition is to enable the Company to erect dwelling houses for workmen employed by it or for the provision of amenities directly connected with the Company or that the H

178 SUPREME COURT REPORTS [2008] 13 S.C.R

A land is needed for construction of some work of public utility. These requirements indicate that the acquisition for a Company also is in substance for a public purpose inasmuch as it cannot be seriously contended that constructing dwelling houses, and providing amenities B for the benefit of the workmen employed by it and construction of some work of public utility do not serve a public purpose".

(emphasis supplied) c 112. In Pandit Jhandulal & Ors. v. State of Punjab & Ors., (1961) 2 SCR 459, the land of the appellant was sought to be acquired for construction of houses by members of the Thapar Industries Co-operative Housing Society Ltd., Yamuna Nagar. Procedings were, therefore, initiated for acquisition of land under Part II of the Act. The action was challenged, inter alia, 0 on the ground that there was non-compliance with the provisions of Part VII of the Act and the proceedings were liable to be quashed as the said procedure had not been followed. The High Court held that the land was acquired for a public purpose and there was no need to comply with the provisions of Part VII, E even though the Company was to pay the entire amount of compensation (which according to this Court was not factually correct). The aggrieved land owner approached this Court.

113Copy pinpoint113. According to this Court, the main point for F determination was whether or not the acquisition proceedings had been vitiated by reason of the admitted fact ttiat there was no attempt made by the Government to comply with the requirement of Part VII of the Act. Referring to Babu Barkya, this Court held that the conclusion arrived at by the High Court G was 'entirely correct', though the process of reasoning by which it had reached the conclusion was erroneous. The Court observed that the Act contemplates acquisition for (i) a public purpose, and (ii) for a Company; thus, conveying the idea that acquisition for a Company, is not for a public purpose. It was also observed that the purposes of public utility, referred to in H

SOORARAM PRATAP REDDY & ORS. v. DISTRICT :179 COLLECTOR, RANGA REDDY OISTT & ORS. [C.K. THAKKER, J.]

Sections 40 and 41 of the Act were akin to public purpose. A Hence, acquisition for a public purpose as also acquisition for a Company are governed by considerations of public utility. But the procedure for the two kinds of acquisitions is different and if it is for a Company, then acquisition has to be effected in ·~ accordance with the procedure laid down in Part VII. B

114Copy pinpoint114. Considering the ambit and scope of Sections 6 and 39 to 41 and referring to Babu Barkya, the Court observed; "There is no doubt that, as pointed out in the recent decision of this Court, the Act contemplates for a public • c purpose and for a Company, thus conveying the idea that acquisition for a Company is not for a public purpose. It has been held by this Court in that decision that the purposes of public utility, referred to in Ss. 40-41 of th·e Act, are akin to public purpose. Hence, acquisition for a 0 public purpose as also acquisitions for a company are . governed by considerations of public utility. But the procedure for the two kinds of acquisitions is different, in so far as Part VII has made substantive provisions for acquisitions of land for Companies. Where acquisition is made for a public purpose, the cost of acquisition for payment of compensation has to be paid wholly or partly out of Public Revenues, or some fund controlled or managed by a locarauthority On the other hand, in the case of an acquisition for a company, the compensation has to be paid by the Company. But, in such a case, there has to be an agreement, under S. 41, for the transfer of the land acquired by the Government to the Company on payment of the cost of acquisition, as also other matters~ not material to our present purpose. The agreement contemplated by S.41 is to be entered into between the G Company and the appropriate Government only after the latter is satisfied about the purpose of the proposed acquisition, and subject to the condition precedent that the previous consent of the appropriate Government has been given to the acquisition. The 'previous consent' itself H

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A of the appropriate Government is made to depend upon the satisfaction of that government that the purpose of the acquisition was as laid down in S.40. It is, thus, clear that the provisions of Ss. 39-41 lay down conditions precedent to the application of the machinery of the Land Acquisition B Act, if the acquisition is meant for a company."

(emphasis supplied)

115Copy pinpoint115. The Court then dealt with the extent and applicability of Section 6 of the Act and stated: c "Section 6 is, in terms, made subject to the provisions of Part VII of the Act. The provisions of Part VII, read with section 6 of the Act, lead to this result that the declaration for the acquisition for a Company shall not be made unless the compensation to be awarded for the property is to be paid by a company. The declaration for the acquisition for a public purpose, similarly, cannot be made unless the compensation, wholly or partly, is to be paid out of public funds. Therefore, in the case of an acquisition for a Company simpliciter, the declaration cannot be made without satisfying the requirements of Part VII. But, that does riot necessarily mean that an acquisition of a Company for a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. F In other words, the essential condition for acquisition for a public purpose is that the cost of the acquisition should be borne, wholly or in part, out of public funds. Hence, an acquisition for a Company may also be made for a public purpose, within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. If, G on the other hand, the acquisition for a Company is to be made at the cost entirely of the Company itself, such an acquisition comes under the provisions of Part VII. As in the present instance, it appears that part at any rate of the compensation to be awarded for the acquisition is to come H

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 181 COLLECTOR, RANGA REDDY DISTT & ORS. [C.K. THAKKER, J.]

eventually from out of public revenues, it must be held that A the acquisition is not for a Company simpliciter. It was not, therefore, necessary to go through the procedure prescribed by Part VII. We, therefore, agree with the conclusion of the High Court, though not for the same reasons". ~ (emphasis supplied) B

116Copy pinpoint116. Reference was also made to R.L. Arora(/) v. State of Uttar Pradesh & Ors., (1962) Supp (2) SCR 149. In that case, land was sought to be acquired by the Defence Department of the Government of India for the construction of c textile machinery parts factory by Lakshmi Ratan Engineering Works Limited, Kanpur. Notifications were issued under the Act applying 'urgency' clause. Admittedly, no procedure laid down under Part VII of the Act was followed. A writ petition was, therefore, filed praying for quashing of Notifications and land _.., D acquisition proceedings. The main ground in support of the petition was that procedure under Part VII (Sections 38 to 42) of the Act had not been complied with.

117Copy pinpoint117. Referring to the relevant provisions of the Act and Babu Barkya and Pandit Jhandulal, Wanchoo, J. (as His E Lordship then was) for the majority stated; "Therefore, though the words 'public purpose' in Sections 4 and 6 have the same meaning, they have to be read in the restricted sense in accordance with s. 40 when the -~- acquisition is for a company under s. 6. In one case, the F Notification under s. 6 will say that the acquisition is for a public purpose, in the other case the Notification will say that it is for a company. The proviso to s. 6(1) shows that where the acquisition is for a public purpose, the compensation has to be paid wholly or partly out of public G revenues or some fund controlled or managed by a local authority. Where however the acquisition is either for a company, the compensation would be paid wholly by the company. Though therefore this distinction is there where · ~ the acquisition is either for a public purpose or for a H

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A company, there is not a complete dichotomy between acquisitions for the two purposes and it cannot be maintained that where the acquisition is primarily for a company it must always be preceded by action under Part VII and compensation must always be paid wholly by B the company. A third class of cases is possible where the acquisition may be primarily for a company but it may also be at the same time for a public purpose and the whole or part of compensation may be paid out of public revenues or some fund controlled or managed by a local authority. In such a case though the acquisition may c look as if it is primarily for a company it will be covered by that part of s. 6 which lays down that acquisition may be made for a public purpose if the whole or part of the compensation is to be paid out of the public revenues or some fund controlled or managed by a local authority. D Such was the case in Pandit Jhandu Lal v. State of Punjab. In that case the acquisition was for the construction of a labour colony under the Government sponsored housing scheme for the industrial workers of the Thapar Industries Co-operative Housing Society Limited and part of the compensation was to be paid out of the public funds. E In such a case this Court held that "an acquisition for a company may also be made for a public purpose within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds" and therefore it was not necessary to go through the procedure prescribed by Part F VII. It is only where the acquisition is for a company and ,.. its cost is to be met entirely by the company itself that the provisions of Part VII apply. In the present case it is not the case of the respondents that any part of the compensation is to be paid out of what may be called G public funds. It is not in dispute that the entire compensation is to be paid by the Works and therefore the provision of Part VII would apply to the present case; and it is in this background that we have to consider the contention raised on behalf of the appellant". H , (emphasis supplied) "

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 183 COLLECTOR, RANGA REDDY DISTT & ORS. [C.K. THAKKER, J.]

118Copy pinpoint118. Construing Sections 40 and 41 of the Act, the majority A conceded that it is no doubt true that it is for the Government to be satisfied that the work is likely to prove useful to the public. It is also true that it is for the Government to be satisfied that the terms in the agreement should provide that public shall be entitled -'I' to use the work. That does not, however, mean that ·it is B Government which has the right to interpret the words used in Section 40(1) (b) or clause (5) of Section 41. It is the Court which has to interpret what those words mean. It is only after the Court has interpreted the words that it is the Government which has to carry out the object of Sections 40 and 41 to its satisfaction. c

119Copy pinpoint119. The majority declared; "The Government cannot say that Ss.40 and 41 mean this and further say that they are satisfied that the meaning they have given to the relevant words in these sections has been carried out in the terms of the agreement provided by them. It is for the Court to say what the words in Ss. 40 and 41 mean though it is for the Government to decide whether the work is useful to the public and whether the terms contain provisions for the manner in which the public shall be entitled to use the work. It is only in this latter part that the Government's satisfaction comes in and if the Government is satisfied, that satisfaction may not be open to challenge; but the satisfaction of the Government must be based on the meaning given to the relevant words in Ss. 40 and 41 by the Court. The Government cannot ..... both give meaning to the words and also say that they are satisfied on the meaning given by them. The meaning has to be given by the court and it is only thereafter that the Government's satisfaction may not be open to challenge if they have carried out the meaning given to the relevant words by the Court." G (emphasis supplied) ,,,.._

120Copy pinpoint120. Sarkar, J. (as His Lordship then was}, in a dissenting judgment expressed regret in agreeing with the majority. His· r I Lordship stated: H

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A "I am unable to accept the appellant's reading of S. 41 (1) (b) as correct. The words "such work is likely to prove useful to the public" read by themselves seem to me plainly to imply a work the construction of which results in some benefit which the public would enjoy. They do not B contemplate only a work which itself can be put by the ..,.- public to its use. For example, a work producing electricity for supply to the public is a work which is useful to the public. So also a work producing any commodity like say, medicines or cloth would be a work which would be useful c to the pubic. Again, I feel no doubt that a radio broadcasting station would be work which would be useful to the public. Take another case, namely, a post-graduate college turning out a small number of highly qualified medical doctors. There can be no doubt that the building for the college can be said to be a work useful to the public. It would be so not D because the public would have a chance of getting training there and a small number of members of the public would after the training be able to make a good livelihood, but because an institution of this kind is useful to the public as it turns out men who give very useful service to the public. E In all the illustrations given the works would be useful to the public though the public might have no access to the works or any right to use them directly. I think it would be unduly restricting the meaning of the word 'useful' to say that a work is useful to the public only when it can directly be used by the public. The words are not "work which the public can use", in which case it might with some justification have been said that the work must be such as the public could use. In the Shorter Oxford Dictionary, among the meanings of 'useful' appear, '"having the qualities to bring about good or advantage", "helpful in effecting a purpose''. I {ind no reason not to apply these meanings to the word 'useful' in the section that I am considering." ..... (emphasis supplied) ~1 ,' 121. In R.L. Arora (II) V. State of Uttar Pradesh & Ors.,

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 185 ~ COLLECTOR, RANGA REDDY DISTT & ORS. [CK THAKKER, J]

(1964) 6 SCR 784, this Court held that in view of the amendment made in the Act, even if the acquisition did not satisfy conditions laid down under clause (a) and clause (b) of sub-sectio,. '1) of Section 40 of the Act, it would be valid, if they satisfy conditions in clause (aa) introduced by the amendment Act. It was also held ·1 that once the Government decided to acquire land for public purpose, such acquisition cannot be challenged on the ground that procedure laid down in Part VII had not been followed.

122Copy pinpoint122. The Court, keeping in view the Land Acquisition (Amendment) Act, 1962 (Act 31 of 1962), held that clause (aa) of sub-section (1) of Section 40 as inserted by Act 31 of 1962 c did not contravene Article 31 (2) or Article 19 (1) (f) of the Constitution. Accordingly the acquisition was held legal and valid.

123Copy pinpoint123. A special reference may be made to a decision of the Division Bench of the High Court of Gujarat in Motibhai D Vithalbhai Patel & Anr V State of Gujarat & Anr, AIR 1961 Guj

93. In Motibhai, land was sought to be acquired for a Company, namely, Sarabhai Chemicals for its expansion. It was contended that acquisition was not for public purpose under Section 4 of the Act and it was bad in law. .E

124Copy pinpoint124. Considering the relevant provisions of the Act as also leading cases on the point, the Court held that even if the acquisition of land is for a private concern whose sole aim is to make profit, the intended acquisition of land would materially -'( help in saving foreign exchange in which the public is also vitally concerned in our economic system. It can, therefore, be said to be a public purpose and would not be bad.

125Copy pinpoint125. The Court stated; "This is just as well. So diverse and varied can he the activities, engagements and operations which may redound to the general benefit of the public and in which the general interest of the public can be said to he really involved that it is Impossible to expect a definition exclusive or inclusive which will aptly meet every particular objective H

186 SUPREME COURT REPORTS [2008] 13 S.C.R

A within the matrix of public purpose and not fail in some circumstances. The expression is of convenient vagueness and the court can at best give temporary definiteness but not definitiveness to the undefined and shifting boundaries of a field which now seems likely to raise some frequent B and fighting issues and give rise to different problems for adjudication".

126Copy pinpoint126. It was also observed: "Public purpose is not a constant. The scope of an c expression which conjugates general interest of the public must necessarily depend inter alia on social and economic needs and broad interpretation of the democratic ideal. It must alter as social and economic conditions alter. The social and economic theorist may contend for an extremely wida application of this concept of public purpose and over-emphasise the element of the general interest of the public. The reactionary on the other hand may strive for stringent restraints on its shifting boundaries and oppose any shift in emphasis. The true rule of the matter would seem to lie midway. The Court will not attach too much weight to the apparent character of the activity or agency but would prefer to lean in favour of an application of the rule which has regard to the substance of the matter and embraces activities, engagements and operations which would serve the common good as being affected with public interest. The application of the rule must rest on the modem economic system of a welfare state having its own requirements and problems. The application of the rule would not be governed by right distinctions nor would the economic principle be allowed to be blurred by the blending of forms and interests". (emphasis supplied)

127Copy pinpoint127. The Court proceeded to state; "In the field of economic progress and interest of the public H

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 187 COLLECTOR, RANGA REDDY DISTI & ORS. [C.K. THAKKER, J] ~ the application of the rule would include operations which A are more or less indispensable to the community. The very lack of definitiveness of the expression pubiir, purpose, somewhat paradoxical though it may seem requires that the field of its coverage must extend to concerns which are fit to serve the common welfare. That B coverage can include activities open to the initiative of both private enterprise and public administration for private enterprise is certainly amenable to public control and can be an efficient instrument of economic benefit".

128Copy pinpoint128. Upholding the acquisition, the Court concluded; c "It cannot be ignored that Respondent No. 2 Company is a scheduled industry controlled by the provision of the Industries Development and Regulation Act, 1951. The price of its products is subject to these controls. We are D 1f also satisfied that the public is vitally concerned in the saving of foreign exchange in our present economic situation and that this is an aspect of the matter which has to be borne in mind. We are satisfied that the respondents are correct in their submission that the intended acquisition of lands in dispute would materially help in the saving of such exchange. We have to consider together all the aspects of the case which redound to and result in the benefit of the public and on an assessment of all the facts and circumstances of the case and the cumulative effect ->I of the same we are of the opinion that the land in dispute is needed for a public purpose as contended by the respondents. We may add that the Notifications under Sections 4 and 6 are not defective on any of the grounds urged before us on behalf of the petitioner as held by us and the declaration under Section 6 is conclusive evidence that the land in dispute is needed for a public purpose".

129Copy pinpoint129. In Arnod Rodricks, Wanchoo, J. (as His Lordship

I then was) stated that there is no reason why the State or local authority should have no power to get further development done H

188 SUPREME COURT REPORTS (2008] 13 S.C.R.

A through private agencies by lease, assignment or sale of acquired land.

130Copy pinpoint130. In Jage Ram & Ors. V State of Haryana & Ors. (1971) 1 SCC 671, a Notification under Section 4 of the Act was issued for acquisition of land for public purpose, namely, 8 for setting up of a factory for the manufacture of China-ware and Porcelain-ware. Urgency clause under Section 17 of the Act was also applied by dispensing with enquiry under Section 5A of the Act. The action was challenged by the land owners.

c 131. Rejecting the contention, upholding the acquisition and following Somawanti, the Court held that so long as it is not established that the acquisition is sought to be made for some collateral purpose, the declaration of Government that it is made for a public purpose is final, conclusive and not open to challenge.

132Copy pinpoint132. In Aflatoon & Ors. v. Lieutenant Governor of Delhi & Ors. (1975) 4 sec 285, land was sought to be acquired for "Planned Development of Delhi''. Neither the Master Plan nor the Zonal Plan was ready. The question before this Court was whether acquisition proceedings could have been initiated in the absence of Master Plan or Zonal Plan.

133Copy pinpoint133. Considering the relevant provisions of the Delhi Development Act, 1957, the Court held that the proceedings did not get vitiated in the absence of such Plan. The Court F observed that acquisition generally precedes development. If for proper development, land is sought to be acquired, such action could not be said to be illegal, unlawful or in colourable exercise of power.

134Copy pinpoint134. It was also contended that the acquisition was for G Company inasmuch as after acquisition, the Government proposed to hand over the property or a portion thereof to Cooperative Housing Societies and since procedure in Part VII of the Act was not followed, the acquisition was not valid.

135Copy pinpoint135. Even the said contention was negatived by the Court

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 189 )- COLLECTOR, RANGA REDDY DISTI & ORS. [C.K. THAKKER, J.]

observing that merely because the Government allotted a portion of the property to Cooperative Societies, Part VII did not get attracted and the acquisition could not be held invalid [See also Ajay Krishan Singhal v Union of India, (1996) 10 SCC 721].

-1 136. In S.S. Darshan v. State of Karnataka & Ors. (1996) •'I 7 SC 302, land was sought to be acquired under the Act for public purpose, namely, for setting up Information Technological Park. Challenging the acquisition, it was contended by the petitioners that the acquisition was ma/a fide and in colourable exercise of power since primarily the acquisition was for a I Private Limited Company and not for the State. c ...

137Copy pinpoint137. The relevant part of the Notification read thus: .,.-l "The lands shown in the annexed index are required for a public purpose, that is, to establish information ·< _., technological park through Karnataka Industrial Areas D Development Board."

_, (emphasis supplied)

138Copy pinpoint138. Emphasizing the fact that the acquisition was through Board, this Court ruled that acquisition was for a public purpose. E The notification stated about public purpose of establishment of information technological park through the Board.

139Copy pinpoint139. Considering various clauses in the Joint Venture Agreement, the Court held that the cumulative effect of all went t "( to show that acquisition was for the public purpose of setting up F ~ ' technological park by Government of Karnataka through Karnataka Industrial Areas Development Board and was, therefore, valid.

140Copy pinpoint140. In W.B. Housing Board Etc. v. Brijendra Prasad .J ' Gupta (1997) 6 SCC 207, land was acquired for providing G houses to poor people. The action was challenged, inter alia, .... on the ground that the Housing Board was to earn profit and hence it could not have been said to be a public purpose.

141Copy pinpoint141. Refuting the contention and upholding the acquisition, H

190 SUPREME COURT REPORTS [2008] 13 S.C.R.

A the Court took note of the fact that it was a matter of common knowledge that there is acute shortage of housing accommodation both in rural and urban areas of the country. The Court also stated that since late the prices of real estate have sky-rocketed making it beyond the reach of low income B and middle income group of people. Hence, the State has a duty to give shelter to homeless people, specially, to the people of the low income group. If for that purpose it sought to acquire land, it could not be said that acquisition was illegal or unlawful.

142Copy pinpoint142. Regarding earning of profit, the Court stated: c "Simply because there is an element of profit, it could not make the whole scheme illegal. A private entrepreneur wttl certainly look to some profit but to see that the profit motive does not lead to exploitation even of the rich and that the houses are available to the poor people and to middle class people at nominal or affordable prices, or even on no-profit-no-loss basis, the Housing Board exercises the necessary control. It is certainly a public purpose to provide houses to the community especially to poor people for whom the prices are beyond their means and they would otherwise never be able to acquire a house."

143Copy pinpoint143. The Court concluded:

"The Court must shake off its myth that public purpose is served only if the State or the Housing Board or the joint sector company does not earn any profit. There cannot be any better authority that the State or the statutory corporation to supervise or monitor the functions of the joint venture company. Courts will certainly step in if the public purpose is sought to be frustrated". G (emphasis supplied)

144Copy pinpoint144. Reference was also made to Pratibha Nema & Ors. _. v. State of Madhya Pradesh & Ors (2003] 10 SCC 626. There, a piece of dry land of the appellants and others was notified for acquisition under Section 4 of the Act for public purpose, namely,

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 191 COLLECTOR, RANGA REDDY DISTI & ORS. [C.K. THAKKER, J.]

for establishment of 'Diamond Park'. The acquisition was challenged on the ground that it was not for public purpose but was meant only to benefit a Company and its associates, and as such it was in colourable exercise of power and ultra vires the Act. -..t 145. Referring to earlier decisions of this Court and drawing B \

distinction between acquisition by State for 'public purpose' ~ covered by Part II and acquisition for a 'Company' under Part VII, the Court stated;

' "Thus the distinction between public purpose acquisition c ~ and Part VII acquisition has got blurred under the impact of judicial interpretation of relevant provisions. The main 1 \ and perhaps the deceive distinction lies in the fact whether cost of acquisition comes out of public funds wholly or partly Here again, even a token or nominal contribution D 1 by the Government was held to be sufficient compliance "'' with the second proviso to Section 6 as held in a catena of decisions. The net result is that by contributing even a trifling sum, the character and pattern of acquisition could { be changed by the Government. In ultimate analysis, what ~

:\ is considered to be an acquisition for facilitating the setting E up of an industry in private sector could get imbued with the character of public purpose acquisition if only the Government comes forward to sanction the payment of a nominal sum towards compensation. In the present state _,,,_ of law, that seems to be the real position''. F (emphasis supplied)

146Copy pinpoint146. Reliance was also placed on State of Kamataka & Anr. v. All India Manufacturers Organisation & Ors., (2006) 4 SCC 683. In that case, the Government of Karnataka undertook G i a mega project for developing its transport and communication '. system. A Memorandum of Understanding was entered into ... between State Government and a Company for implementation of the project and lands were acquired. A Public Interest Litigation (PIL) was filed in the High Court alleging that the land H

192 SUPREME COURT REPORTS (2008] 13 S.C.R.

A was not needed for public purpose and yet excess land was acquired and had been given to a Company. The action was, therefore, illegal, unlawful and mala fide.

147Copy pinpoint147. Negativing the contention and upholding the action, this Court observed that the project was an integrated B infrastructure development and not merely a highway project. As an integrated project, it required acquisition and transfer of lands even away from the main alignment of the road. Acquisition of land and giving it to the Company was, therefore, legal and lawful and did not suffer from mala fide. c

148Copy pinpoint148. The counsel for the appellants referred to Amarnath Ashram Trust Society & Anr. v. Governor of U. P & Ors., (1998) 1 sec 591. In that case, land was sought to be acquired for play ground for students of Amarnath Vidya Ashram (public school), Mathura. Notification under Section 4 of the Act was D issued stating that the land was to be acquired for 'public purpose'. The land-owner challenged the acquisition contending that the land was acquired for a Society and since procedure prescribed in Part Vil was not followed, the acquisition was bad in law. E

149Copy pinpoint149. Upholding the contention, quashing the proceedings and referring to Pandit Jhandu Lal, this Court observed; "It is now well established that if the cost of acquisition is borne either wholly or partly by the Government, the F acquisition can be said to be for a public purpose within the meaning of the Act. But if the cost is entirely borne ,. by the company then it is an acquisition for a company under Part VII of the Act.

G Admittedly, in the present case the entire cost of acquisition is to be borne by the appellant society and, therefore, it is ~ an acquisition for a company and not for a public purpose. That is also borne out by the notification issued under 1-1 Section 6 of the Act which states that "the land mentioned

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 193 COLLECTOR, RANGA REDDY DISTT & ORS. [C.K. THAKKER, J.]

in the schedule below is needed for the construction of play-ground for students of Amar Nath Vidya Ashram (public school), Mathura in district Mathura by the Amar , Nath Ashram Trust, Mathura". Therefore, simply because in the notification issued Under Section 4 of the Act it was "i stated that the land was needed for a public purpose, namely, for a play- ground for students of Amar Nath Vidya Ashram (public school), Mathura, it cannot be said that the acquisition is for a public purpose and not under Chapter (Part) VII for the appellant-society in view of subsequent events and the declaration made Under c Section 6".

(emphasis supplied)

150Copy pinpoint150. Finally, reference was made to a recent decision of this Court in Devi(lder Singh & Ors., v. State of Punjab & Ors., D -i (2008) 1 SCC 728. In DevinderSingh, land was sought to be acquired by the State to set up 'Ganesha Project', a Company registered under the Companies Act, 1956. The acquisition ~ was challenged on the ground that though land was sought to be acquired for a Company, procedure was followed under Part II and not under Part VII and hence it was bad in law. The E record revealed that the payment of entire amount of compensation was to be made by the Company. It was, therefore, incumbent to follow procedure laid down in Part VII. During the pendency of the writ petition, however, it was ~. contended by the State that it would be contributing Rs.100/- F and hence it was covered by Part II and the acquisition was legal and valid.

151Copy pinpoint151. Observing that the acquisition was for a Company and not by the State for a 'public purpose', the Court held that G the procedure laid down in Part VII was required to be followed. ~ Since it was not done, the acquisition was bad in law. ,I..

152Copy pinpoint152. Negativing the contention that the acquisition was .by the State, this Court said; H

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A "In this case we may notice that purported contribution had been made only after the writ petitions were filed. Ordinarily, this Court would not have gone into the said question but the agreement provides for payment of entire compensation by the company. We do not know as to at B what stage the State thought it fit to meet a part of the expenses for acquisition of land. Such an opinion on the part of the State having regard to the statutory scheme should have been formed prior to entering into the agreement itself. The agreement does not mention about c any payment of a part of compensation by the State. We, in absence of any other material on record, must hold that the State had not formed any opinion in that behalf at least when the agreement was executed. The wisdom in all probabilities dawned on the officers of the State at a later stage". D (emphasis supplied) Satisfaction of Government and Judicial Review

153Copy pinpoint153. In our judgment, in deciding whether acquisition is E for 'public purpose' or not, prima facie, Government is the best judge. Normally, in such matters, a writ Court will not interfere by substituting its judgment for the judgment of the Government.

154Copy pinpoint154. In Hamabai, the Judicial Committee of Privy Council stated; F "All that remains is to determine whether the purpose here is a purpose in which the general interest of the community is concerned. Prima facie the Government are good judges of that. They are not absolute judges. They cannot say: 'Sic volo sic jubeo' but at least a Court would not easily hold them to be wrong". (emphasis supplied) '

155Copy pinpoint155. This Court, in R.S. Nanji, reiterated the principle laid down by the Privy Council. The Constitution Bench observed;

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 195 ~ COLLECTOR, RANGA REDDY DISTT & ORS. [C.K. THAKKER, J.]

"Prima facie the Government is the best judge as to whether 'public purpose' is served by issuing a requisition order, but it is not the sole judge. The courts have the jurisdiction and it is their duty to determine the matter whenever a question is raised whether a requisition order --1 is or is not for a 'public purpose"'. B (emphasis supplied)

156Copy pinpoint156. In Somawanti, this Court interpreted sub-section (3) of Section 6 of the Act and held that the declaration made under Section 6 of the Act is 'conclusive evidence' that the land is c needed for public purpose.

157Copy pinpoint157. It was contended that the declaration can be made by the Government arbitrarily and if such declaration is irrational, unreasonable, mala fide or de hors the Act, it should be open to a Court to decide the question . D .J

158Copy pinpoint158. Dealing with the submission, the majority stated; "Now whether in a particular case the purpose for which land is needed is a public purpose or not is for the State Government to be satisfied about. If the purpose for which E the land is being acquired by the State is within the legislative competence of the State the declaration of the Government will be final subject, however, to one exception. That exception is that if there is a colourable exercise of power the declaration will be open to challenge at the F ·~ instance of the aggrieved party. The power committed to the Government by the Act is a limited power in the sense that it can be exercised only where there is a public purpose, leaving aside for a moment the purpose of a company. If it appears that what the Government is satisfied about is not G a public purpose but a private purpose or no purpose at all the action of the Government would be colourable as not being relatable to the power confirmed upon it by the Act and its declaration will be, a nullity". (emphasis supplied) H

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159Copy pinpoint159. The majority concluded; 'Though we are of the opinion that the courts are not entitled to go behind the declaration of the Government to the effect that a particular purpose for which the land is being acquired is a public purpose we must emphasise that the declaration B of the Government must be relatable to a public purpose as distinct from a purely private purpose. If the purpose for which the acquisition is being made is not relatable to a public purpose then a question may well arise whether in making the declaration there has been, on the part of the c Government a fraud on the power conferred upon it by the Act. In other words the question would then arise whether that declaration was merely a colourable exercise of the power conferred by the Act, and, therefore, the declaration is open to challenge at the instance of the party aggrieved. D To such a declaration the protection of s. 6 (3) will not extend. For, the question whether a particular action was the result -.. of a fraud or not is always justiciable, provisions such as S. 6(3) notwithstanding". (emphasis supplied) E

160Copy pinpoint160. In Srinivasa Cooperative House Building Society Ltd. v. Madam Gurumurthy Sastry & Ors, (1994) 4 SCC 675, this Court held that a token contribution from public revenue cannot ipso facto be treated as colourable exercise of power by the F State in acquisition of land. Each case must furnish its backdrop whether the action is for public purpose or for a private purpose.

161Copy pinpoint161. In Bajirao T Kate (dead) by LRs. & Anr. v. State of Maharashtra & Ors., (1995) 2 SCC 442, this Court held that satisfaction of the State Government regarding existence of public purpose is not open to judicial scrutiny unless there is ma/a fide or colourable exercise of power.

162Copy pinpoint162. The Court stated; "It is primarily for the State Government to decide whether there exists public purpose or not, and it is not for this

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 197 ~ COLLECTOR, RANGA REDDY DISTT & ORS. [C.K. THAKKER, J.]

Court or the High Courts to evaluate the evidence and come to its own conclusion whether or not there is public purpose unless it comes to the conclusion that itis a mala fide or colourable exercise of the power. In other words the exercise of the power serves no public purpose or it .__, serves a private purpose". B (emphasis supplied) ·

163Copy pinpoint163. In Laxman Rao Bapurao Jadhav v. State of Maharashtra, (1997) 3 SCC 493, this Court held that it is for ·the State Government to decide whether the land is needed or is likely to be needed for a public purpose and whether it is c suitable or adaptable for the purpose for which the acquisition was sought. The mere fact of empowering the authorized officer to inspect and find out whether the land would be adaptable for the public purpose does not take away the power of the D "' Government to take a decision ultimately.

164Copy pinpoint164. We may, however, recall Dau/at Singh once again at this state. There, referring to all leading cases and dealing with the ambit and scope of judicial review on the satisfaction by the State Government on 'public purpose', this Court stated; .E "Public purpose is bound to vary with times and prevailing conditions in the community or locality and, therefore, the legislature has left it to the State (Government) to decide what is public purpose and also to de·clare the need of a -\ given land for the purpose. The legislature has left the F - discretion to the Government regarding public purpose. The Government has the sole and absolute discretion in the matter'. -\

(emphasis supplied) G

165Copy pinpoint165. It was contended that the italicized portion quoted ,.... above (The Government has the sole and absolute discretion in the matter) is not in consonance with settled legal position or in accord with earlier decisions of this Court including decisions rendered by various Constitution Benches. We have H

198 SUPREME COURT REPORTS [2008] 13 S.C.R.

A already referred to R. S. Nanji wherein before more than half a century, Constitution Bench of this Court held that prima facie, the Government is the best judge to decide public purpose but it is not the sole judge. That was the view of the Privy Council in Hamabai. Again, in Somawanti, the Constitution Bench held that in case of colourable exercise of power by the State Government or fraud on statute, the declaration under Section 6 is open to challenge, notwithstanding the 'finality clause' under sub-section (3) of the said section.

166Copy pinpoint166. We would have indeed considered the contention of the learned counsel for the appellants closely in the light of earlier decisions of this Court. We are, however, of the view that on the facts and in the circumstances of the present case, the Government was right in forming an opinion and reaching a satisfaction as to 'public purpose' and in initiating proceedings under Sections 4 and 6 and in invoking Part II of the Act. 'Ne, therefore, refrain from undertaking further exercise. In our considered opinion, it is not necessary for us to enter into larger question in view of 'fact situation' in the instant case. Conclusions E

167Copy pinpoint167. Applying the aforesaid principles to the case on hand, in our considered opinion, it cannot be said that the proceedings initiated by the State for acquisition of land under the Land Acquisition Act, 1894 are illegal, unlawful, unwarranted, mala fide, fraud on statute or have been taken in colourable exercise of power.

168Copy pinpoint168. As already adverted to earlier, the State of Andhra Pradesh in the background of 'World Tourism Organization Report' and 'Vision 2020 Document' took a policy decision for the development of the City of Hyderabad. For the said purpose, it decided to establish an Integrated Project which would make Hyderabad a major Business-cum-Leisure Tourism Infrastructure Centre for the State. The project is both structurally -"" as well as financially integrated. It is to be implemented through Andhra Pradesh Infrastructure and Investment Corporation H (APllC) which has taken all steps to make Hyderabad a world-

SOORARAM PRATAP REDDY & ORS. v. DISTRICT 199 COLLECTOR, RANGA REDDY DISTI. & ORS. [C.K. THAKKER, J.]

class business destination. APllC is an instrumentality of State A and works as 'Nodal Agency' developing the project which would facilitate socio-economic progress of the State by generating ·revenues, weeding out unemployment and bringing new avenues and opportunities for public at large. Development of infrastructure is legal and legitimate 'public purpose' for B exercising power of eminent domain. Simply because a Company has been chosen for fulfillment of such public purpose does not mean that the larger public interest has been sacrificed, r ignored or disregarded. It will also not make exercise of power bad, ma la fide or for collateral purpose vitiating the proceedings. c

169Copy pinpoint169. In our judgment, the respondents are right in submitting that in case of integrated and indivisible project, the project has to be taken as a whole and must be judged whether it is in the larger public interest. It cannot be split into different components and to consider whether each and every component D will serve public good. A holistic approach has to be adopted in such matters. If the project taken as a whole is an attempt in the direction of bringing foreign exchange, generating employment opportunities and securing economic benefits to the State and the public at large, it will serve public purpose. E

170Copy pinpoint170. It is clearly established in this case that the Infrastructure Development Project conceived by the State and executed under the auspices of its instrumentality (A~llC) is one covered by the Act. The Joint Venture Mechanism for -"\ implementing the policy, executing the project and achieving lawful public purpose for realizing the goal of larger public good would neither destroy the object nor vitiate the exercise of power of public purpose for development of infrastructure. The concept of joint venture to tap resources of private sector for infrastructural development for fulfillment of public purpose has been recognized in foreign countries as also in India in several decisions of this Court.

171Copy pinpoint171. The entire amount of compensation is to be paid by State agency (APllC) which also works as nodal agency for H

200 SUPREME COURT REPORTS [2008] 13 S.C.R.

A execution of the project. It is primarily for the State to decide whether there exists public purpose or not. Undoubtedly, the decision of the State is not beyond judicial scrutiny. In appropriate cases, where such power is exercised mala fide or for collateral purposes or the purported action is de hors the Act, irrational or B otherwise unreasonable or the so-called purpose is 'no public purpose' at all and fraud on statute is apparent, a writ-court can undoubtedly interfere. But except in such cases, the declaration of the Government is not subject to judicial review. In other words, a writ court, while exercising powers under Articles 32, 226 or 136 c of the Constitution, cannot substitute its own judgment for the judgment of the Government as to what constitutes 'public purpose'.

172Copy pinpoint172. Taking the facts in their entirety, we are of the view that the action of the State in initiating acquisition proceedings for establishing and developing infrastructure project cannot be D held contrary to law or objectionable. The High Court was, therefore, right in dismissing writ petitions as also writ appeals and we find no infirmity therein. All the appeals, therefore, are liable to be dismissed and are accordingly dismissed, however, leaving the parties to bear their own costs. E K.K.T. Appeals dismissed.