BANGALORE CITY COOPERATIVE HOUSING SOCIETY LTD. v. STATE OF KARNATAKA AND OTHERS

(x) Writ Petition No. 38745/1995 - A.K. Erappa v. State of Karnataka was dismissed by the learned Single Judge mainly on the ground that the writ petitioners had participated in the award proceedings and agreed that the compensation be disbursed to his power of attorney and also approached the society for allotment of a site. Writ Appeal No. 6914/1996 filed by the appellant was dismissed by the Division Bench on 7.10.1996. SLP (C) No. 1528/1997 was summarily dismissed by this Court on 3.2.1997.

(xi) Writ Appeal Nos. 7122-34/1996 - Smt. Hanumakka v. State of Karnataka were dismissed by the Division Bench of the High Court vide order dated 12.9.1996 on the ground of delay and also on the ground that the appellant had not approached the Court with clean hands. SLP (C) Nos. 23256- 6811996 were summarily dismissed by this Court on 9.12.1996.

31Copy pinpoint31. In Kanaka Gruha Nirmana Sahakara Sangha's case, two questions were considered by this Court. The first question was whether there was any inconsistency between the Land Acquisition (Mysore Extension and Amendment) Act, 1961 and the 1894 Act. After examining the relevant constitutional H

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A provisions and the two enactments, this Court answered the question in negative. The second question considered by the Court was whether the Government had approved the housing scheme framed by the appellant. The Court noted that Assistant Registrar of Cooperative Societies, Three Men Committee and B the State Level Committee had recommended the acquisition of land on behalf of the appellant and the Government had directed Special Deputy Commissioner, Bangalore to initiate acquisition proceedings by issuing Section 4(1) Notification and proceeded to observe:

C "Considering the fact that the State Government directed the Assistant Registrar of Cooperative Societies of Bangalore to verify the requirement of the members of the Society and also the fact that the matter was placed before the Committee of three members for scrutiny and thereafter the State Government has conveyed its approval for initiating the proceedings for acquisition of the land in question by letter dated 14-11-1985, it cannot be said that there is lapse in observing the procedure prescribed under Section 3(f)(vi). Prior approval is granted after due verification and scrutiny."

32Copy pinpoint32. In our view, none of the orders and judgments referred to hereinabove can be relied upon for holding that even though the appellant had not framed any housing scheme, the acquisition in question should be deemed to have been made for a public purpose as defined in Section 3(f)(vi) simply because in the representation made by him to the Revenue Minister of the State, the Executive Director of the appellant had indicated that the land will be used for providing sites to poor and people belonging to backward class and on receipt of the recommendations of SLCC the State Government had directed Special Deputy Commissioner to issue notification under Section 4(1) of the 1894 Act and that too by ignoring the ratio of the judgments of three Judge Benches in 1st and 2nd H.M.T. cases and the judgment of two Judge Bench in Vyalikawal H

BANGALORE CITY COOP. HOUSING SOCIETY LTD. 379 v. STATE OF KARNATAKA [G.S. SINGHVI, J.] House Building Cooperative Society's case. In majority of the cases decided by the High Court to which reference has been made hereinabove, the petitioners were non-suited on the ground of delay and !aches or participation in the award proceedings. In Muniyappa's case, the judgment in 1st H.M.T. case was distinguished on the premise that a scheme had been framed and the same had been approved by the State Government and further that the petitioner had failed to show that the approval was vitiated due to intervention of the extraneous consideration. In Sumitramma's case, this Court noted that in 1st H.M.T. case, no separate order was made by c the Government for grant of approval whereas in Sumitramma's case an order has been passed on 14.10.1985 conveying the Government's approval for the issuance of Notification dated 21.1.86 under Section 4 of the 1894 Act. In Kanaka Gruha's case also, this Court treated the direction contained in letter 0 dated 14.11.1985 of the Revenue Commissioner and Secretary to Government to Special Deputy Commissioner, Bangalore to initiate the acquisition proceedings by issuing Notification under Section 4(1) as an approval within the meaning of Section 3(f)(vi). In none of the three cases, this Court was called upon to consider whether the decision taken by the Government to sanction the acquisition of land in the backdrop of an agreement executed by the society with a third party, as had happened in the H.M.T. cases and the present case whereby the Estate Agent agreed to ensure the acquisition of land within a specified time frame subject to payment of huge money and the fact that agreement entered into between the society and the Government was in the nature of an agreement contemplated by Part VII. While in 1st H.M.T.'s case, the amount paid to M/s. S. R. Constructions was rupees one crore, in the present case, the appellant had agreed to pay more than rupees five crores for facilitating issue of Notifications under Sections 4(1) and 6(1) and sanction of the layouts and plans by the BOA within a period of less than one year. Therefore, we have no hesitation to hold that the appellant's case is squarely covered by the ratio of the H.M.T. cases and the High H

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A Court did not commit any error by relying upon the judgment in 1st H.M.T case for declaring that the acquisition was not for a public purpose.

33Copy pinpoint33. Another facet of the appellant's challenge to the judgment in the case of respondent No. 3 is that even if there 8 was no express approval by the State Government to the acquisition of land, the approval will be deemed to have been granted because the State Government had contributed Rs.100 towards the acquisition of land. Shri Vishwanatha Shetty relied upon the judgments of this Court in Smt. Somavanti and others v. The State of Punjab and others (1963) 2 SCR 774, Pratibha Nema v. State of M.P. (2003) 10 SCC 626 and agreement dated 8. 7.1988 and argued that the decision of the State Government to execute an agreement with the appellant should be construed as its approval of the proposal made for the acquisition of land. In our view, this argument of the learned senior counsel lacks merit. At the cost of repetition, we consider it appropriate to mention that the agreement was signed by the Executive Director of the appellant and the State Government in compliance of Section 41, which finds place in E Part VII of the 1894 Act. Therefore, a nominal contribution of Rs.100 by the Special Deputy Commissioner cannot be construed as the State Government's implicit approval of the housing scheme which had never been prepared. In Smt. Somavanti's case, the appellants had challenged the F acquisition of their land by the State Government on the ground that the provisions of the 1894 Act could not be invoked for the benefit of respondent No. 6, who was interested in setting up an industry over the acquired land. The majority of the Constitution Bench held that the declaration made by the State G Government that the land is required for a public purpose is conclusive and the same was not open to be challenged. The argument made on behalf of the petitioners that there could be no acquisition for a public purpose unless the Government had made a contribution for the acquisition at public expense and H that the contribution of Rs.100 was insignificant was rejected

BANGALORE CITY COOP. HOUSING SOCIETY LTD. 381 v. STATE OF KARNATAKA [G.S. SINGHVI, J.] and it was held that a small quantum of contribution by the State A Government cannot lead to an inference that the acquisition was made in colourable exercise of power. In Pratibha Nema's case, the challenge was to the acquisition of 73.3 hectares dry land situated at Rangwasa village of Indore district for establishment of a diamond park by Madhya Pradesh B Audyogik Kendra Vikas Nigam Ltd. It was argued that the Nigam did not have sufficient amount for payment of compensation. While dealing with the argument, this Court observed:

"It seems to be fairly clear, as contended by the learned counsel for the appellants, that the amount paid by the Company was utilized towards payment of a part of interim compensation amount determined by the Land Acquisition Officer on 7-6-1996 and in the absence of this amount, the Nigam was not having sufficient cash balance to make such payment. We may even go to the extent of inferring that in all probability, the Nigam would have advised or persuaded the Company to make advance payment towards lease amount as per the terms of the MOU on a rough-and-ready basis, so that the said amount could be utilized by the Nigam for making payment on account of interim compensation. Therefore, it could have been within the contemplation of both the parties that the amount paid by the Company will go towards the discharge of the obligation of the Nigam to make payment towards interim compensation. Even then, it does not in any way support the appellants' stand that the compensation amount had not come out of public revenues. Once the amount paid towards advance lease premium, maybe on a rough-and- ready basis, is credited to the account of the Nigam, G obviously, it becomes the fund of the Nigam: Such fund, when utilized for the purpose of payment of compensation, wholly or in part, satisfies the requirements of the second proviso to Section 6(1) read with Explanation 2. The genesis of the fund is not the determinative factor, but its H

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A ownership in praesenti that matters."

34Copy pinpoint34. Neither of the aforesaid decisions has any bearing on the issues arising in these appeals, i.e., whether the acquisition of land was for a public purpose within the meaning of Section B 3(f)(vi) and whether the acquisition was vitiated due to manipulations, malafides and extraneous considerations.

35, The following are the three ancillary grounds of challenge:

c i. The finding recorded by the Division Bench that respondent No. 3 had not been given opportunity of hearing under Section 5A is ex facie incorrect and is liable to be set aside because her son Sandip Shah had appeared before the Special Land Acquisition Officer along with Shri S.V. D Ramamurthy, Advocate and he was given opportunity of personal hearing.

ii. The judgment in P. Ramaiah's case is vitiated by an error apparent because the Division Bench relied upon the judgment of this Court in 1st H.M.T. case without taking note of the fact that no evidence was produced to show that the Estate Agent had indulged in malpractices for facilitating the acquisition of land on behalf of the appellant and, in any case, such a finding could not have been recorded without impleading the Estate Agent as a party respondent and giving him opportunity to controvert the allegation.

iii. in view of the provisions contained in Sections 17, 18 and 19 of the Mysore High Court, 1884 and Sections 4, 9 and 1O of the Karnataka High Court Act, 1961, the Division Bench G did not have the jurisdiction to decide the appeal by relying upon the judgment in 1st H.M.T. case because that was not the ground on which the learned Single Judge had quashed the acquisition proceedings. Shri Vishwanatha Shetty argued that if the Division Bench was of the vie~ that the order of the learned Single Judge should be sustained on a new ground by H relying upon the judgment of this Court in 1st H M.T. case, then

BANGALORE CITY COOP. HOUSING SOCIETY LTD. 383 v. STATE OF KARNATAKA [G.S. SINGHVI, J.] it should have remitted the matter to the learned Single Judge A for fresh disposal of the writ petition. Shri Shetty relied upon the judgment of the larger Bench of the Karnataka High Court in State of Karnataka v. B. Krishna Bhat 2001 (2) [Karnataka Law Journal 1] to show that the approach adopted by the learned Presiding Officer of the Division Bench in taking up the B cases, which are required to be heard by the Single Bench was not approved by the larger Bench.

36Copy pinpoint36. We shall first take up the last ground, which, in our considered view, deserves outright rejection because the C Division Bench had decided the writ appeal preferred by the appellant by relying upon the judgment in 1st H.M.T. case because learned counsel appearing for the parties had agreed for that course. This is evident from the following extracts of the opening paragraph of the judgment: D "When the appeal came up for hearing before us, all the learned counsel submitted that by virtue of the subsequent decision of the Supreme court, that the order of the learned Single Judge would no longer survive and that consequently, the writ petition itself would have to be heard on merits. A request was conveyed to the Court that instead of remanding the case to the learned Single Judge at this late stage for a haring on merits, and depending on the view taken the matter once again coming up to the appeal court that it was far from desirable that the appeal court itself should hear the parties on merits and dispose of the writ petition."

37Copy pinpoint37. It is nobody's case that the advocate who appeared on behalf of the appellant had not made a request that instead of remanding the case to the Single Bench, the Division Bench G should hear the parties on merits and dispose of the matter. Therefore, it is not open for the appellant to make a grievance that the Division Bench had acted in violation of the provisions · of the Mysore High Court Act, 1884 and the Karnataka High Court Act, 1961. H

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38Copy pinpoint38. The appellant's challenge to the finding recorded by the Division Bench that respondent No. 3 had not been given opportunity of hearing under Section SA is well-founded. We have carefully gone through the proceedings of the Special Land Acquisition Officer and find that Shri Sandip Shah (son B of respondent No. 3), had appeared along with his Advocate and after hearing him along with other objectors, the concerned officers submitted report to the State Government. However, this error in the impugned judgment of the Division Bench is not sufficient for nullifying the conclusion that the acquisition of land c was not for a public purpose and that the exercise undertaken by the State Government was vitiated due to the influence of the extraneous considerations. The appellant's challenge to the judgment in P. Ramaiah's case on the ground that no evidence had been produced by the writ petitioner to show that the Estate Agent had indulged in malpractices deserves to be rejected in 0 view of the conclusion recorded by us in relation to the case of respondent No.3.

39Copy pinpoint39. Shri Vishwanatha Shetty also criticized the decision of the State Government to entertain the representation made E by respondent No. 3 for withdrawal of the notification and argued that notification under Section 48 could not have been issued without hearing the beneficiary, i.e., the appellant. He supported this argument by relying upon the judgments in Larsen & Toubro Ltd. v. State of Gujarat (1998) 4 SCC 387 F and State Government Houseless Harijan Employees' Association v. State of Karnataka, (2001) 1 SCC 610. This argument of the learned senior counsel appears to have substance, but we do not consider it necessary to examine the same in detail because the appellant's challenge to notification G dated 3.9.1991, vide which the acquisition of land comprised in Survey No. 50/2 was withdrawn, was negatived by the learned Single Judge and the Division Bench of the High Court and the appellant is not shown to have challenged the judgment of the Division Bench and insofar as notification dated H 25.6.1999 is concerned, the State Government had withdrawn

BANGALORE CITY COOP. HOUSING SOCIETY LTD. 385 v. STATE OF KARNATAKA [G.S. SINGHVI, J.] the same on 15.11.1999. A

40Copy pinpoint40. In the end, Shri Dave and Shri Shetty referred to the additional affidavit of Shri A.C. Dharanendraiah,.filed on behalf of the appellant, to show that the appellant has already spent Rs. 18.73 crores for formation of the layouts and 1791 plots were allotted to the members, out of which, 200 have already constructed their houses. They pointed out that 50% of the land has been given to the BOA for providing civil amenities and 16154 sq. ft. has been given to Karnataka Power Transmission Corporation. Learned counsel submitted that this is a fit case for invoking the doctrine of prospective overruling so that those who have already constructed houses may not suffer incalculable harm. In support of this submission, the learned counsel relied upon the judgments in ECIL v. B. Karunakar, (1993) 4 SCC 727, Abhey Ram v. Union of India, (1997)·5 SCC 421, Baburam v. C.C. Jacob, (1999) 3 SCC 362, D Somaiya Organics (India) Ltd. v. State of U.P., (2001) 5 SCC 519, Padma Sundara Rao v. State of T.N., (2002) 3 SCC 533, Sarwan Kumar v. Madan Lal Aggarwal, (2003) 4 SCC 147, Girias Investment Private Limited v. State of Karnataka, (2008) 7 SCC 53, G. Mallikarjunappa v. Shamanur E Shivashankarappa, (2001) 4 SCC 428, Uday Shankar Triyar v. Ram Kalewar Prasad Singh, (2006) 1 SCC 75.

41Copy pinpoint41. We have given serious thought to the submission of the learned counsel but have not felt convinced that this is a fit case for invoking the doctrine of prospective overruling, which was first invoked by the larger Bench in /. C. Golak Nath v. State of Punjab AIR 1967 SC 1643 : (1967) 2 SCR 762 while examining the challenge to the constitutionality of Constitution (Seventeenth Amenclment) Act, 1964. That doctrine has been applied in the cases relied upon by learned counsel for the appellant but, in our opinion, the present one is not a fit case for invoking the doctrine of prospective overruling because that would result in conferring legitimacy to the influence of money power over the rule of law, which is the edifice of our H

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A Constitution. The finding recorded by the Division Bench of the High Court in Narayana Reddy's case that money had played an important role in facilitating the acquisition of land, which was substantially approved by this Court in three cases, is an illustration of how unscrupulous elements in the society use B money and other extraneous factors for influencing the decision making process by the Executive. In this case also the Estate Agent, namely, M/s. Rejendra Enterprises with whom the appellant had entered into an agreement dated 21.2.1988 had played crucial role in the acquisition of land. The tenor of that c agreement does not leave any manner of doubt that the Estate Agent has charged huge money from the appellant for getting the notifications issued under Sections 4(1) and 6(1) of the 1894 Act and sanction of layout plan by the BOA. The respondents could not have produced any direct evidence that D the Estate Agent had paid money for facilitating the acquisition of land but it is not too difficult for any person of reasonable prudence to presume that the appellant had parted with crores of rupees knowing fully well that a substantial portion thereof will be used by the Estate Agent for manipulating the State E apparatus. Therefore, we do not find any justification to invoke · the doctrine of prospective overruling and legitimize what has been found by the Division Bench of the High Court to be ex- · facie illegal.

42Copy pinpoint42. Before concluding we consider it necessary to observe that in view of the law laid down in the 1st H.M .T. case (paragraphs 19, 21 and 22), which was followed in 2nd H.M:T. case and Vyalikawal House Building Cooperative Society's case, the view taken by the Division Bench of the High Court in Narayana Raju's case that the framing of scheme and approval thereof can be presumed from the direction given by the State Government to the Special Deputy Commissioner to take steps for issue of notification under Section 4(1) cannot be treated as good law and the mere fact that this Court had revoked the certificate granted by the High Court cannot be H

BANGALORE CITY COOP. HOUSING SOCIETY LTD. 387 v. STATE OF KARNATAKA [G.S. SINGHVI, J.] interpreted as this Court's approval of the view expressed by the High Court on the validity of the acquisition.

43Copy pinpoint43. In the result, the appeals are dismissed. However, keeping in view the fact that some of the members of the appellant may have built their houses on the sites allotted to them, we give liberty to the appellant to negotiate with the respondents for purchase of their land at the prevailing market price and hope that the landowners will, notwithstanding the judgments of the High Court and this Court, agree to accept the market price so that those who have built the houses may not suffer. At the same time, we make it clear that the appellant must return the vacant land to the respondents irrespective of the fact that it may have carved out the sites and allotted the same to its members. This must be done within a period of three months from today and during that period the appellant shall not change the present status of the vacant area/sites. The D members of the appellant who may have been allotted the sites shall also not change the present status/character of the land. The parties are left to bear their own costs.

N.J. Appeals dismissed. E