RAMESHWAR & OTHERS v. STATE OF HARYANA & OTHERS

A issuance of notification under Section 4 of the Act. Similarly para 18 of the interim report submitted by CBI shows that over 444 Acres of land was purchased by various builders/private entities after such notification under Section 4 of the Act. Going by the relevant policies holding the field and the law laid down by this Court in para 21 of its judgment in Uddar Gagan (Supra), such purchases did not entitle the concerned builders/private entities to prefer any application for licence, nor could pendency of such applications be taken as a relevant factor while arriving at a decision whether acquisition initiated pursuant to notification dated 27.08.2004 be proceeded further or not. However, the record indicates that such purchases and the pendency of applications for licence under the Haryana Act, was a factor which did weigh while decisions dated 24.08.2007 and 29.01.2010 were taken. A factor which ought to have been discarded in terms of the declared policy statements, became the fulcrum for said decisions. We have therefore, no hesitation in holding that said decisions are inconsistent with and opposed to relevant policy statements. We also reject the submission advanced on behalf of builders/ D private entities that these decisions were consistent with the Regional Plan under the NCR Act and the Final Development Plan for Gurgaon- Manesar.

23Copy pinpoint23. But the issues raised in the present case go way beyond mere invalidity or illegality of those decisions dated 24.08.2007 and 29.01.2010. E What is being projected is that those decisions dated 24.08.2007 and 29.01.2010 were part of a well devised and designed attempt to deprive the landholders and enrich builders/private entities, which would broadly depend upon answers to the following questions:- a] Whether the transactions entered into between the landholders and the concerned builders/private entities in the present case could be said to be voluntary and free from any influence. b] Whether the decisions on part of the state machinery arrived at on 24.08.2007 and 29.01.2010 could be said to be guided by considerations other than those for which the power was conferred; or in other words: was there a fraud on power.

24Copy pinpoint24. Before we deal with the aforesaid issues, certain crystalized facets of the matter as evident from facts as narrated above and the statutory framework, need to be noted:-

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(a) The concerned lands fall in National Capital Region to which the provisions of Regional Plan, 2021 prepared under the NCR Act and Final Development Plan for Gurgaon-Manesar Urban Complex prepared by Government of Haryana do apply. The Explanatory Note set out in Annexure A to said Final Development Plan brings out the potential of the lands in Gurgaon-Manesar and acknowledges its proximity with Delhi, locational advantages and importance of said lands. (b) Though Regional Plan, 2021 and Final Development Plan for Gurgaon-Manesar Region Complex were notified on 19.09.2005 and 05.02.2007 respectively, it can well be assumed that stages anterior to preparation and notification of said plans coincided with the initiation of acquisition in the present case. In any case, the potential of said lands was not something which arose out of the blue for the first time in 2007 and it can safely be inferred that such potential was to the knowledge of everybody concerned. (c) All the transactions in the present case under which the builders/ D private entities purchased the lands, were entered into after the initiation of acquisition on 27.08.2004. As disclosed in the material placed on record by Mr. Vikas Singh, learned Senior Advocate, his client alone had purchased more than 235 acres of land while as per interim report of CBI, an extent of 444 acres of land was E purchased by builders/private entities after the initiation of acquisition. Thus, substantial portion of land out of 688 acres of land as specified in declaration under Section 6 of the Act was purchased by builders/private entities. (d) Around the time when those purchases were made by builders/ F private respondents, Awards were declared on 09.03.2006 and 24.02.2007 in respect of lands from adjoining Villages where the acquisition was also initiated for the same public purpose. The compensation awarded was at the rate Rs.12.5 lakhs per acre. (e) Although the relevant policies did not permit anyone who G purchased the concerned lands after initiation of acquisition to prefer an application for licence, the builders/private entities merrily went about purchasing the interest of concerned landholders after such initiation. Most of these companies were incorporated after the acquisition was initiated and had no experience in colonization. H

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A Yet substantial and sizeable holding was purchased by them. This is reflective of the intent to cash in on an opportunity made available and garner as much holding as possible. The subsequent transactions of sale by them are also indicative of the attempts to profiteer in the matter rather than any bona fide attempt to develop and colonize the property. B (f) Faced with impending acquisition initiated on 27.08.2004, the landholders were persuaded to enter into transactions with builders/ private respondents. The Tabular Chart as set out by way of example in paragraph 8 hereinabove shows that the average price was initially in the region of Rs.25 lakhs per acre which rose to C Rs.40 lakhs per acre or above after the issuance of declaration under Section 6 of the Act. The price so received was greater than the rate awarded in Awards dated 09.03.2006 and 24.02.2007. (g) Notices under Section 9 of the Act were issued by the Authorities on 02.08.2007 calling upon the landholders to appear for pronouncement of award on 26.08.2007. The record indicates that the price paid by the builders/private entities just before 24.08.2007 was in the region of Rs.80 lakhs per acre. This further discloses, as rightly submitted by Mr. Dhruv Mehta, learned Senior Advocate that builders/private entities were aware that the award would not be declared but the land acquisition proceedings would be dropped. (h) At least 60 sale deeds were executed between the issuance of Notifications under Sections 4 and 6 of the Act, four sale deeds were executed on the day the declaration under Section 6 was issued and 50 sale deeds were executed after the issuance of Notification under Section 6 and prior to the dropping of acquisition on 24.08.2007. Thus about 114 sale deeds were executed after the initiation of acquisition and prior to the dropping of acquisition vide decision dated 24.08.2007.

G (i) The sale deeds in favour of the builders/private entities do not even mention the factum about the issuance of any Notification under Section 4 of the Act, nor any urgency or necessity for the family to dispose of its holdings find any specific clear mention. The sales in question were effected only because of impending acquisition. H

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(j) The material placed on record by Mr. Vikas Singh, learned A Senior Advocate discloses a disturbing feature. The lands which were purchased for a price ranging from Rs.25 lakhs per acre soon after the initiation of acquisition which price rose to Rs.80 lakhs per acre just before dropping of the acquisition, were finally purchased by DLF Home Developers Ltd. at the rate of Rs.4½ B crores per acre. Further, the fact that settlement money at the rate of Rs.3½ crores per acre was made over to entities which apparently had done nothing in the matter is quite shocking. Neither had these entities procured the lands from the original landholders nor were they ultimate developers who wanted to develop the property. Such entities can certainly be termed as “middle men” C who walked away with tremendous amount of money or benefit at the rate of Rs.3½ crores per acre. Was that a mere bonanza or a deal denoting quid pro quo? (k) It is true that the price of Rs. 4½ crores per acre was paid in respect of land as well as the licences and well after the dropping D of the acquisition and withdrawal of writ petitions pending in the High Court. However this price or the rate shows the tremendous difference between the return received by the original landholders and the actual potential of the land. (l) In terms of paragraph VIII of Annexure B to the Final E Development Plan for Gurgaon-Manesar Urban Complex the extent of private participation was extremely limited and in terms of relevant policy under the Haryana Act no licence could be issued in case any purchase of land was made after the initiation of the acquisition. Yet the concerned Authorities not only entertained such applications for licence but pendency of such applications was taken as a factor for withdrawal from acquisition. Something which ought to have been rejected and discarded outright became the foundation for decision in favour of builders/ private entities. (m) The interim report of CBI in para 21 indicates that objection was taken by HSIIDC and it was prayed that application for licence be rejected. Going by aforesaid paragraph VIII of Annexure B and the relevant policy, such application could never have been entertained but it was so done favourably. H

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25Copy pinpoint25. In cases where the power conferred under the provisions of the Act was utilized to favour a private person or entity, this Court has always come down heavily. In Uddar Gagan (supra) which was relied upon by Mr. Dhruv Mehta, learned Senior Advocate and the learned Amicus Curie, the question which arose for consideration inter alia, was whether the power of the State to withdraw from acquisition under B Section 48 of the Act after the award had been passed, was utilized to facilitate transfer of title of the land of original owners to a private builder to advance the business interest of the builder. In that case, the builder had purchased the interest of the original landholders after the acquisition was initiated like in the present case and at his instance the lands were C released from acquisition at which stage the original landholders had invoked writ jurisdiction and challenged the entire action. The High Court set aside the release orders, quashed the acquisition and went on to direct that the lands be restored to the original land-owners. While considering the matter in an appeal at the instance of the builder, this Court dealt with the observations of the High Court in Paragraph 5. D Paragraphs 70 and 80 of the High Court judgment which were inter alia quoted by this Court were as under:- “70. To say that the landowners entered into varied contracts with Respondent 11 voluntarily, willingly or without undue pressure is too farcical to be believed. There is a natural and conventional bondage between the land and its tiller. A farmer seldom sells the land save for the compelling reasons. Agriculture being their only source of survival, the loss of land is a terrible nightmare for any farmer. The Land Acquisition Collectors never assess the compensation as per actual market value of the land and the only yardstick to be followed is the Collector’s rate fixed for the purpose of registration charges. The farmer cannot sell the land in open market as on issuance of Section 4 notification all sale transactions are invariably banned. These moments of fear and anxiety must have prompted Respondent 11 to indulge in the best bargain. For the farmers the offer was like “better you give the wool than the whole sheep”. There was no free trade for the farmers. Their choice was limited: to accept the State compensation at the Collector’s rate or a better offer given by State-sponsored private builder. There was inequality of bargaining power. The determination of land value was not at all in the control of farmers. H

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They were groping in the dark. They had no clue that the land will A be released. They accepted the unreasonable and unfair unilateral terms and lost their land.

80. … Secondly, it is not a case of challenging the sale deeds for the breach of any bilateral terms and conditions or on the conventional grounds where a question of fact has to be proved. B The incidental relief to declare the sale deeds as null and void is an offshoot of the broader issues raised by the petitioners including those hovering around the systematic colourable exercise of power by the State apparatus. A constitutional court while performing its solemn duty as a trustee of the fundamental rights of the citizens shall thus be well within its right to lift the veil and unmask the private object behind an acquisition carried out in disregard to the mandate of Articles 14 and 300-A of the Constitution.”

26Copy pinpoint26. This Court affirmed the view taken by the High Court as regards quashing of release orders but upheld the acquisition and awards. It further directed that the lands in question vested in State free from all encumbrances. In the context of the present case, the following observations of this Court in Uddar Gagan (supra) in paragraphs 18, 19, 22 and 23 are quite crucial:- “18. …. entertaining an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounts to transfer of resources of poor for the benefit of the rich. It amounts to permitting profiteering at the cost of livelihood and existence of a farmer. This is against the philosophy of the Constitution and in violation of guaranteed fundamental rights of equality and right to property and to life. What cannot be done directly cannot be done indirectly also.

19. ….. It is patent that the State has enabled the builder to enter the field after initiation of acquisition to seek colonisation on the land covered by acquisition. In the absence of the State’s action, it was not possible for the builder to enter into the transactions in question which was followed by withdrawal from acquisition.

22. ….. When the land sought to be acquired for a public purpose is allowed to be transferred to private persons, any administrative action or private transaction could be held to be vitiated by fraud. H

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A 23. …. Fraud on power voids the action of the authority. Mala fides can be inferred from undisputed facts even without naming a particular officer and even without positive evidence.”

27Copy pinpoint27. For the present purposes, contents of paragraphs 29 and 30 of the decision in Uddar Gagan (supra) and the directions issued in paragraph 33 are extracted:- “29. Once release of land under acquisition is found to be mala fide or arbitrary exercise of power, acquisition of released land stands revived. The operative direction of the High Court to quash the acquisition to the extent it has neither been challenged nor concerns the land transferred to a private builder by abusing the power of acquisition or on account of any extraneous considerations does not appear to be justified. Similarly the direction of permitting the builder to retain the land of those landowners who are not able to refund the sale consideration received by them may permit the builder to illegally retain the land. Moreover, D it may not be practicable in the present fact situation to restore the land to the landowners but they can be duly compensated while restoring the land to the State to use it for notified public purpose. Person whose land is taken for houses for others cannot be rendered homeless and unemployed. This will be sheer exploitation. In view of the conduct of the builder, agreeing with the view of the High Court, we do not propose to allow any interest to the builder while permitting refund/reimbursement to it. From the impugned judgment there is nothing to show that the developments which are now relied upon had taken place on the date of filing of the writ petition. It has been specifically held in para 89 of the impugned judgment that no development had taken place till the judgment of the High Court. Any subsequent transactions or development are of no consequence for rights of parties. Any subsequent transactions entered into by the builder cannot be taken into account and are hit by the principle of lis pendens. In any case it was for the builder to inform the third parties to whom the plots have been sold, that the land was under litigation. If the third parties have purchased the land knowing fully about the litigation, they have clearly taken risk and their remedy will be only against the builder. If pendency of litigation was suppressed, the third parties can take their remedies against H

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the builder. Without prejudice to their said private remedies, the court may try to balance equities to the extent possible. We are also of the view that if the authorities have proceeded to entertain applications for licence to give undue benefit to the builder by way of helping him to take over land under the cloud of acquisition, it may call for action against those who have misused their power and to find out the considerations for such misuse.

30. Land is scarce natural resource. Owner of land has guarantee against being deprived of his rights except under a valid law for compelling needs of the society and not otherwise. The commercial use of land can certainly be rewarding to an individual. Initiation of acquisition for public purpose may deprive the owner of valuable land but it cannot permit another person who may be able to get permission to develop colony to take over the said land. If the law allows the State to take land for housing needs, the State itself has to keep the title or dispose of land consistent with Article 14 after completion of acquisition. If after initiation of acquisition, process is not to be completed, land must revert back to owner on the date of Section 4 notification and not to anyone else directly or indirectly. This is not what has happened. ………..

33. Keeping the above in mind, we are of the view that ends of justice will be served by moulding the relief as follows: 33.1. Notifications dated 11-4-2002, 8-4-2003 and awards dated 6-4-2005 are upheld. The land covered thereby vests in HUDA free from all encumbrances. HUDA may forthwith take possession thereof. F 33.2. All release orders in favour of the builder in respect of land covered by the award in exercise of powers under Section 48 are quashed. 33.3. Consequently, all licences granted in respect of the land G covered by acquisition will stand transferred to HUDA. 33.4. Sale deeds/other agreements in favour of the builder in respect of the said land are quashed. The builder will not be entitled to recover the consideration paid to the owners but will be entitled to reimbursement as indicated hereinafter. Creation of any third- H

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A party rights by the builder also stands quashed. 33.5. The sale consideration paid by the builder to the landowners will be treated as compensation under the award. The landowners will not be required to refund any amount. The landowners who have not received compensation will be at liberty to receive the same. The landowners will also be at liberty to prefer reference under Section 18 of the 1894 Act within a period of three months, if such reference has not been earlier preferred. 33.6. The builder will be entitled to refund/reimbursement of any payments made to the State, to the landowners or the amount spent on development of the land, from HUDA on being satisfied about the extent of actual expenditure not exceeding HUDA norms on the subject. Claim of the builder will be taken up after settling claim of third parties from whom the builder has collected money. No interest will be payable on the said amount. D 33.7. The third parties from whom money has been collected by the builder will be entitled to either the refund of the amount, out of and to the extent of the amount payable to the builder under the above direction, available with the State, on their claims being verified or will be allotted the plots at the price paid or price prevalent, whatever is higher. No interest will be payable on the E said amount. 33.8. The State shall give benefit of “Rehabilitation and Resettlement of Land Acquisition Oustees” policy of the State/ HUDA to the landowners. Area so required shall be reserved out of the acquired land itself. F 33.9. The State Government may enquire into the legality and bona fides of the action of the persons responsible for illegally entertaining the applications of the builder and releasing the land to it, when it had no title to the land on the date of the notification under Section 4 of the 1894 Act and proceed against them in G accordance with law. 33.10. This judgment be complied with within one year. 33.11. Quarterly progress report of the action taken in pursuance of this judgment be filed by the State in this Court and final report of compliance may be filed within one month after expiry of one H

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year from today for such further direction as may become A necessary.”

28Copy pinpoint28. Apart from the decisions of this Court in Uddar Gagan (supra) following decisions of this Court are noteworthy: a] In Collector (DM) v. Raja Ram Jaiswal8, it was observed by this Court:- B

“26. Where power is conferred to achieve a purpose it has been repeatedly reiterated that the power must be exercised reasonably and in good faith to effectuate the purpose. And in this context ‘in good faith’ means ‘for legitimate reasons’! Where power is exercised for extraneous or irrelevant considerations or reasons, it is unquestionably a colourable exercise of power or fraud on power and the exercise of power is vitiated. If the power to acquire land is to be exercised, it must be exercised bona fide for the statutory purpose and for none other. If it is exercised for an extraneous, irrelevant or non-germane consideration, the acquiring authority can be charged with legal mala fides. In such a situation there is no question of any personal ill-will or motive. In Municipal Council of Sydney v. Campbell9 it was observed that irrelevant considerations on which power to acquire land is exercised, would vitiate compulsory purchase orders or scheme depending on them…….” E

b] In Royal Orchid Hotels Limited and Another v. G. Jayarama Reddy and Others10, this Court was called upon to consider question whether land acquired by the State Government for specified purpose namely Golf-cum-Hotel Resort could be transferred to a private individual. The observations in paragraph 38 are relevant for the present purposes:- “38. The courts have repeatedly held that in exercise of its power of eminent domain, the State can compulsorily acquire land of the private persons but this proposition cannot be overstretched to legitimize a patently illegal and fraudulent exercise undertaken for depriving the landowners of their constitutional right to property with a view to favour private persons. It needs no emphasis that 8 (1985) 3 SCC 1 9 1925 AC 338 at p. 375 10 (2011) 10 SCC 608 H

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A if land is to be acquired for a company, the State Government and the company is bound to comply with the mandate of the provisions contained in Part VII of the Act. Therefore, the Corporation did not have the jurisdiction to transfer the land acquired for a public purpose to the companies and thereby allow them to bypass the provisions of Part VII. The diversification of the purpose for which B land was acquired under Section 4(1) read with Section 6 clearly amounted to a fraud on the power of eminent domain. This is precisely what the High Court has held in the judgment under appeal and we do not find any valid ground to interfere with the same……” C c] In Greater Noida Industrial Development Authority v. Devendra Kumar and Others11, validity of acquisition of about 156 hectares of land and subsequent transfer of acquired land to the builders and whether such transfer was colourable exercise of power came up for consideration of this Court. In paragraph 43 this Court quoted the D observations of Krishna Iyer J in State of Punjab v. Gurdial Singh12 and later made following observations in paragraph 49:- “43. In this context, it will be useful to notice the observations made in State of Punjab v. Gurdial Singh. In that case, while pronouncing upon the correctness of the order passed by the E Punjab and Haryana High Court which had quashed the acquisition of the respondents’ land on the ground of mala fide exercise of power, this Court observed: (SCC p. 475, para 9) “9. … Legal malice is gibberish unless juristic clarity keeps it separate from the popular concept of personal vice. Pithily F put, bad faith which invalidates the exercise of power— sometimes called colourable exercise or fraud on power and oftentimes overlaps motives, passions and satisfactions—is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal. If the use of the power is for G the fulfilment of a legitimate object the actuation or catalysation by malice is not legicidal. The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous 11 (2011) 2 SCC 375 12 H (1980) 2 SCC 471

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considerations, good or bad, but irrelevant to the entrustment. When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark even in law when he stated: ‘I repeat … that all power is a trust—that we are accountable for its exercise—that, from the people, and for the people, all springs, and all must exist.’ Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act.” ………

49. Before concluding, we consider it necessary to reiterate that the acquisition of land is a serious matter and before initiating the proceedings under the 1894 Act and other similar legislations, the Government concerned must seriously ponder over the consequences of depriving the tenure-holder of his property. It must be remembered that the land is just like mother of the people living in the rural areas of the country. It is the only source of sustenance and livelihood for the landowner and his family. If the land is acquired, not only the present but the future generations of the landowner are deprived of their livelihood and the only social security. They are made landless and are forced to live in slums in the urban areas because there is no mechanism for ensuring alternative source of livelihood to them. Mindless acquisition of fertile and cultivable land may also lead to serious food crisis in the country.”

29Copy pinpoint29. The decisions referred in the preceding paragraphs were delivered in the context of exercise of power under the provisions of the H

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A Act. In addition, there are few other decisions which were rendered in other fields but considered the issues regarding “fraud on power”; notable amongst them being: S. Pratap Singh v. The State of Punjab13, Express Newspapers Pvt. Ltd. and others v. Union of India and others14and observations by R.M. Sahai J in Shrisht Dhawan (Smt) v. Shaw Bros.15 The issue concerning unjust enrichment was dealt with by this B Court very succinctly in Indian Council for Enviro-Legal Action v. Union of India16 as under : “151. Unjust enrichment has been defined as: “Unjust enrichment.—A benefit obtained from another, not intended as a gift and not legally justifiable, for which the beneficiary must make restitution or recompense.” See Black’s Law Dictionary, 8th Edn. (Bryan A. Garner) at p.

1573. A claim for unjust enrichment arises where there has been an “unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience”.

152. “Unjust enrichment” has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

F 153. Unjust enrichment is “the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience”. A defendant may be liable “even when the defendant retaining the benefit is not a wrongdoer” and “even though he may have received [it] honestly in the first instance”. (Schock v. G Nash17, A 2d, 232-33.) 13

(1964) 4 SCR 733

14 (1986)1 SCC 133 15 (1992) 1 SCC 534, at page 553 : 16 (2011) 8 SCC 161, at page 234 17 732 A 2d 2017 (Delaware 1999) H

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154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd.18, Lord Wright stated the principle thus: (AC p. 61) “… Any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution.”

155. Lord Denning also stated in Nelson v. Larholt19 as under: (KB p. 343) D “… It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to E equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution, if the justice of the case so requires.”

156. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment. F …..…

159. Unjust enrichment is basic to the subject of restitution, and is indeed approached as a fundamental principle thereof. They are usually linked together, and restitution is frequently based upon G the theory of unjust enrichment. However, although unjust enrichment is often referred to or regarded as a ground for restitution, it is perhaps more accurate to regard it as a prerequisite, for usually there can be no restitution without unjust enrichment. 18 1943 AC 32 19 (1948) 1 KB 339 H

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A It is defined as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or B benefits which in justice and equity belong to another.

160. While the term “restitution” was considered by the Supreme Court in South Eastern Coalfields Ltd. v. State of M.P.20 and other cases excerpted later, the term “unjust enrichment” came to be considered in Sahakari Khand Udyog Mandal Ltd. v. C CCE & Customs21. This Court said: (Sahakari Khand case, SCC p. 748, para 31) “31. … ‘unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. ‘Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.”

161. The terms “unjust enrichment” and “restitution” are like the two shades of green—one leaning towards yellow and the other towards blue. With restitution, so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains. Which label is appropriate under which circumstances would depend on the facts of the particular case before the court. The courts have wide powers to grant restitution, and more so where it relates to misuse or non-compliance with court orders.”

30Copy pinpoint30. As held in State of Punjab v. Gurdial Singh (Supra) when a F custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, such exercise is nothing but colourable exercise of power and that the power of the State to acquire lands of private persons compulsorily cannot be overstretched to legitimize a patently illegal and fraudulent exercise undertaken to favour G certain private persons. This principle has been followed consistently. While dealing with fact situation arising in the context of exercise of power under the provisions of the Act and its interplay with the power under the provisions of the Haryana Act and the concerned policies, the 20 (2003) 8 SCC 648 21 (2005) 3 SCC 738 H

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observations of this Court in the decision in Uddar Gagan (supra) are crucial. They cull out principles that entertaining an application for releasing of land in favour of a builder who came into picture after acquisition had been initiated amounts to transfer of resources of poor for the benefit of the rich and that no legitimacy can be conferred to an abuse of power to advance such purpose. Further, mala fides could be inferred from undisputed facts even without naming a particular officer. But the salutary principle discernable from Uddar Gagan (supra) lies in the relief granted by this Court in paragraph 33. This Court agreed with the High Court that there was fraud on power but did not sustain the relief of return of lands to the landholders. The real victim of abuse of power or fraud on power was “public interest”; for furtherance of which the acquisition was sustained and appropriate directions were passed. This Court therefore severed that part which was found to be bad but sustained acquisition to sub-serve “public interest”.

31Copy pinpoint31. If we consider the established or crystallized facets of the matter as stated above, in the light of the principles emerging from the decisions rendered by this Court, in our considered view the decisions dated 24.08.2007 and 29.01.2010 were taken to confer advantages and benefits upon the builders/private entities rather than to carry out or effectuate public purpose. The record indicates that various entities including certain “middlemen” cornered unnatural gains and walked away with huge profits taking the entire process of acquisition for a ride. E Substantial sums have exchanged hands in the form of settlement money. All the steps and stages show that the builders/private entities were well aware that the acquisition would not go through but the landholders were confronted with the smoke screen of acquisition and were cornered and persuaded in entering into transactions with the builders/private entities. F The transactions so entered into between the landholders and the concerned builders/private entities could not be said to be voluntary and free from any influence. The unnatural and unreasonable bargain was forced upon the landholders by creating façade of impending acquisition. Public Interest was not the underlying concern or objective behind those decisions dated 24.08.2007 and 29.01.2010 but the motive was to confer G undue advantage on the builders/private entities. It is clear that considerations other than those which were required to be bestowed, guided the exercise of power in arriving at decisions dated 24.08.2007 and 29.01.2010. The inescapable conclusion, therefore, is that there was H

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A an unholy nexus between the governmental machinery and the builders/ private entities in devising a modality to deprive the innocent and gullible landholders of their holdings and jeopardize public interest which the acquisition was intended to achieve. Mr. Dhruv Mehta, learned Senior Advocate is right in his submission that the entire mechanism was deliberately employed so that gullible landholders could be deprived of their holdings by a set of builders/private entities and after having seen that the desired result was achieved, the acquisition was dropped and later completely withdrawn. The decisions on the part of the State arrived at on 24.08.2007 and 29.01.2010 were clearly a result of fraud on power and cannot be said to be bona fide exercise of power. In our view, the initiation of class action and filing of Writ Petition in the present matter was perfectly justified and we reject all the submissions made by the learned Counsel appearing for various builders/private entities.

32Copy pinpoint32. We thus hold that:- a] The transactions entered into between the landholders and the concerned builders/private entities in the present case were not voluntary and were brought about by fraudulent influence. Certain ‘middlemen’ and builders enriched themselves at the expense of the landholders and public interest which was to be achieved by acquisition. b] The decisions dated 24.08.2007 and 29.01.2010 as well as entertaining of applications for grant of licence from those who had bought the lands after the acquisition was initiated, were not bona fide exercise of power by the State machinery. The exercise of power under the Act was guided by considerations extraneous to the provisions of the Act and as a matter of fact, was designed to enrich the builders/private entities. These decisions were nothing but fraud on power.

33Copy pinpoint33. Having so found that the exercise of power in arriving at decisions dated 24.08.2007 and 29.01.2010 as well as entertaining of applications for licence from those who had bought the lands after the acquisition was initiated, to be fraud on power; we now have to consider what relief be granted in the present matter. The relief to be granted must depend upon who the real victim is and to what extent solace can be granted to such real victim. If the landholders are considered to be the real victim, Mr. Dhruv Mehta, learned Senior Advocate is absolutely right in his submissions. If the result of forcing land holders to enter into unnatural and unreasonable bargain was achieved by wrongful utilization H

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of the power conferred under the Act, in its writ jurisdiction a superior court would be justified in granting the relief of invalidating such transaction as a consequential relief, while holding the State action to be bad and invalid. The law laid down by this Court is quite clear and the objection that instead of a class action in the realm of public law, each individual land holder must make good his submissions on individual facts and seek relief of annulment of transaction entered into by him has to be rejected. To the extent the unnatural and unreasonable bargain was forced upon the landholders, there would be justification in granting such relief. But in the circumstances, the public interest which the acquisition was intended to achieve will never be sub-served. It is nobody’s case that public interest was adequately achieved and therefore the acquisition was required to be dropped. The fact that other acquisitions have been completed and have attained the required objective is a pointer in the direction that there was nothing wrong with the initiation but somewhere along while the process was on, it was completely hijacked by vested interests. We cannot, therefore, grant mere declaration invalidating the transaction and grant relief of restoring status ante. The real and substantial relief would be in restoring the situation where the process of acquisition is made free from such supervening vested interests and is enabled to achieve the objective that the acquisition was intended to sub-serve.

34Copy pinpoint34. At this stage an aspect needs elaboration and clarification. In E Uddar Gagan (supra) the proceedings for acquisition under the Act had culminated in passing of an award. After the declaration of award, the lands were withdrawn from acquisition under the provisions of Section 48 of the Act. In terms of the directions issued by this Court in paragraph 33 in Uddar Gagan (supra) the withdrawal under Section 48 of the Act F was set aside and the acquisition and award were sustained by this Court. In essence therefore, the lands in question continued to be under acquisition and appropriate directions were thereafter passed by this Court adjusting the competing claims of the concerned parties. In the present case, unlike Uddar Gagan (supra) the acquisition was dropped just two days before the day the award was to be pronounced. It is true G that the entire process right upto publishing the date for pronouncement of award was validly undertaken, every possible submission was placed on record and all contentions were taken by the persons or parties interested. It was not as if any person or any party was denied any H

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A chance of raising objections or making submissions. The acquisition was dropped for reasons, which in our considered view were not germane at all and the entire exercise of dropping the acquisition was fraud on power. If that fraud on power is to be invalidated, the real and substantial restoration would be to ensure that the acquisition proceeds in the logical direction and the public purpose is sub-served. In a way, the directions B required in the present matter may go beyond what Uddar Gagan (supra) did.

35Copy pinpoint35. In certain cases this Court, considering typical fact situation has passed directions to complete the process of acquisition, for instance: (a) In Bhimandas Ambwani (Dead) through Lrs. V. Delhi C Power Company Limited 22 it was found, “there had been no proceedings regarding acquisition of the land in dispute”. However, as the authorities had taken over possession of the land and developed the same, this Court observed : “In such a fact situation, the only option left out to the respondents D is to make the award treating Section 4 notification as, on this date i.e. 12.02.2013 and we direct the Land Acquisition Collector to make the award after hearing the parties within a period of four months from today.” (b) In K.B. Ramachandra Raje Urs(Dead) by L.Rs. V. State E of Karnataka and Others 23, having held that the acquisition and allotment of 55 acres of land to respondent No.28- Society to be contrary to law, it was noted that a full-fledged campus had come up in an area admeasuring 40 acres of land out of said 55 acres. It was therefore observed: “Insofar as the remaining 40 acres of land allotted to Respondent F 28 is concerned, we direct that compensation, in respect thereof, to the person/persons entitled to receive such compensation under the Land Acquisition Act, will follow the outcome of Writ Appeal No.1654 of 2008. The compensation under the Act will be paid by taking the date of the order of the learned Single Judge of the G High Court i.e. 22-2-2001.” Thus, in cases where there was no valid acquisition but the land was taken possession of and developed, restoration of land to the landholders was not found to be the appropriate, adequate and complete 22 (2013) 14 SCC 195 23 H (2016) 3 SCC 422

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relief and this Court directed that process of acquisition be initiated taking or treating certain date to be the relevant date for initiation of the acquisition. If the power can go to the extent of directing acquisition in such manner, in a case where an acquisition having been properly and validly initiated if the supervening circumstances show that there was complete fraud on power in dropping the acquisition, can the power of the superior court not extend to/not be extended for passing appropriate directions to complete the acquisition and sub-serve the public interest. But for such fraud on power, the matter in the present case was ripe for pronouncement of award when the acquisition was dropped just two days before the date of pronouncement. All the steps leading to the publication of date for pronouncement of award having been validly and correctly undertaken, can a direction not be passed that there was a deemed award and completed acquisition.

36Copy pinpoint36. Wherever there has been fraud on power, the duty of the Court is not only to set aside such exercise of power but to see that there is no unjust enrichment directly or indirectly as a result thereof and there is full and substantial restoration. Going by the principles laid down by this Court in Indian Council for Enviro-Legal Action (Supra) unjust retention of benefit would be completely against the fundamental principles of justice, equity and good conscience. It was observed therein that so long as the deprivation of a party has not been fully compensated for, injustice to that extent continues. Having found that there was a E clear case of fraud on power as a result of which unnatural and unreasonable gains have been derived by certain builders/private entities, we consider it our duty to grant full restitution. The restoration in real and substantial terms has to ensure that the public purpose, the acquisition was intended to achieve, stands sub-served. In our considered view, this is an appropriate case where this Court has to declare that there was a completed acquisition and the award deemed to have been passed on the date when it was supposed to be pronounced i.e. on 26.08.2007. The suggested relief by the learned Amicus Curiae is also on similar lines.

37Copy pinpoint37. There are certain other elements which need attention at this stage. The Act now stands replaced by “The Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013”. In terms of Section 24(1)(b) of said 2013 Act, where an award had been made under Section 11 of the Act, the proceedings under the provisions of the Act would continue as if the Act had not H

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A been repealed. Thus, even if a direction is passed that an award be deemed to have been made on 26.08.2007, the provisions of the Act would still continue to operate in respect of such acquisition in question. There is however, one point which may pose some difficulty. Out of 688 acres of land which was covered by Declaration under Section 6 of the Act in the present matter, majority of the lands were taken over by builders/private entities and as such presently the concerned landholders are not in possession of their holdings. However, in case of certain other lands where no transactions were entered into, as a result of dropping of the acquisition, those land holders are presently in occupation without there being any cloud of acquisition. If we restore status ante where the entirety of 688 acres of land continues to be under acquisition, the interest of such landholders is bound to be put to some prejudice. Those landholders are not parties to this litigation, nor their interest in any manner, is represented in the proceedings. They would now be visited with the prospect of losing their holdings. Those who sold away their holdings to the builders/private entities after the acquisition was initiated, naturally would not be prejudiced at all nor can the builders/ private entities who purchased the land after the land was initiated can put up a plea of prejudice. However those who had never sold the holdings and continued to face the prospect of acquisition will certainly be put to prejudice. It is possible that some such landholders may have sold away their holdings or may have applied and secured licences for construction. In cases, where third party interests have thus intervened, there would be some more concern.

38Copy pinpoint38. The relief to be granted in the matter has therefore to take care of all the aforesaid aspects. On one hand, the real and substantial relief to be granted in the matter would be not just restoring the status ante and invalidating of the transactions but the relief ought to be that the process of acquisition is taken to its logical end and the objective that said acquisition was to achieve must be sub-served. On the other hand, even while passing appropriate directions in the nature that there was a deemed Award, the interest of those landholders who had not parted with their holdings and had faced the acquisition and had not participated in the proceedings ought to be secured. Further, the interest of purchasers of individual apartments is also required to be protected. It is axiomatic that wherever a superior Court finds that the exercise of power by the executive was mala fide or that there was fraud of power, the full and substantial relief must be granted. The principles of restitution and concept H

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of unjust enrichment as explained in cases referred to hereinabove show that no person who directly or indirectly was a party to the fraud of power be allowed to reap or retain any unjust enrichment. Though, it is through the acts on part of the landholders that the builders/private entities were brought on the scene, we don’t hold them to be pari delicto alongwith builders/private respondents. But at the same time they cannot be given benefit of annulment of transactions and restoration of their holdings. The greater victim in the matter was the public interest. The land holders in any case had received considerations which were greater than what was awarded in Awards dated 09.03.2006 and 24.02.2007, which were the most proximate awards in terms of time. However, even when we propose to take the matter to its logical end and say that there was a deemed award, those who had not sold away their holdings and had not in any manner either directly or indirectly, tried to jeopardize the process of acquisition, cannot at this length of time be subjected to any prejudice. We will therefore have to exclude that body of landholders who had not transferred their holdings unlike the writ petitioners and similarly situated landholders, so also the purchasers of individual apartments from the width of our directions. Though fraud vitiates every resultant action and on that principle every beneficiary/purchaser in subsequent transaction must restore such benefit, an exception has to be made in favour of individual purchasers of flats or apartments who are being left undisturbed while moulding the relief. Any payments made by them can be adjusted towards the amounts payable to the colonizer and their possession can be regularized by HUDA/HSIDC on suitable conditions by making allotment to them. This aspect will stand covered by directions issued hereafter.

39Copy pinpoint39. Having bestowed our attention to various competing elements and issues we deem it appropriate to direct: (a) The decisions dated 24.08.2007 and 29.01.2010 referred to hereinabove are set aside as being brought about by mala fide exercise of power. In our considered view, those decisions were clear case of fraud on power and as such are annulled. G (b) The decision dated 24.08.2007 was taken when the matters were already posted for pronouncement of the award on 26.08.2007. Since all the antecedent stages and steps prior thereto were properly and validly undertaken, and since the decision dated 24.08.2007 has been held by us to be an exercise of fraud on power, it is directed that an Award is deemed to have been passed on 26.08.2007 in respect of lands H

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A (i) which were covered by declaration under Section 6 in the present case and (ii) which were transferred by the landholders during the period 27.08.2004 till 29.01.2010. The lands which were not transferred by the landholders during the period from 27.08.2004 till 29.01.2010 are not governed by these directions. B (c) Subject to the directions issued hereafter, the lands covered under aforementioned direction (b) shall vest in the HUDA/HSIDC, as may be directed by the State of Haryana, free from all encumbrances. HUDA/HSIDC may forthwith take possession thereof. Consequently all licences granted in respect of lands covered by the deemed Award dated 26.08.2007 will stand transferred to HUDA/HSIDC. C (d) Since the dropping of acquisition on 24.08.2007 and subsequent decision dated 29.01.2010 have been set aside, the period between 24.08.2007 and upto the date of this judgment shall not be counted for the purposes of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, D 2013. (e) All transactions entered into during the period from 24.08.2007 till 29.01.2010, pursuant to which the original landholders transferred their holdings in favour of builders/private entities or third parties shall be subject to and the interest of the respective parties shall be governed by the directions issued hereafter. (f) Consistent with directions issued in Para 33 of Uddar Gagan (Supra), the builders/private entities will not be entitled to recover the consideration paid by them to the landholders. The sale consideration paid by the builders/private entities to the landholders shall be treated towards compensation under the award and the landholders will not be required to refund any amount to such builders/private entities. The landholders will be at liberty to prefer Reference under Section 18 of the Act within a period of three months from today. For the purposes of maintaining such Reference the reasoning that weighed while passing Awards dated 09.03.2006 and 24.02.2007 shall be the basis. If the G Reference Court were to enhance the compensation, the amounts received by the landholders by way of consideration from the builders/ private entities shall be appropriated towards such sum awarded by the Reference Court. If the landholders are still entitled to something more than what they had received from the builders/private entities, the differential sum shall be made over to them by the State of Haryana H towards acquisition of their interest in the lands in question. If however,

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what the landholders had received towards consideration from the builders/private entities is found to be in excess of what is awarded by the Reference Court, the remainder shall not be recovered from them. (g) Consistent with the directions issued by this Court in Paragraphs 33.6 and 33.7 in Uddar Gagan (supra), the builders/private entities will be entitled to refund/reimbursement of any payment made to the landholders or the amounts that had been spent on development of the land, such payments shall be made by HUDA or HSIDC on being satisfied about the extent of actual expenditure not exceeding HUDA or HSIDC norms on the subject as the case may be. Refund will however be in respect of amount at which the landholders sold the land and not of subsequent sales. As regards subsequent transactions, the subsequent purchasers will have remedies against their respective vendors. Claims of builders/private entities entitled to refund will be taken up after settling claims of third parties from whom the builders/private entities had collected monies. No interest will be payable on such amounts. (h) The third parties from whom money had been collected by the builder/private entities will either be entitled to refund of the amount from and out of and to the extent of the amount payable to the builder/ private entities in terms of above direction, available with the State, on their claims being verified or will be allotted the plots or apartments at the agreed price or prevalent price, whichever is higher. Every such claim shall be verified by HUDA or HSIDC. In cases where, constructions have been erected and the entire project is complete or is nearing completion, upon acceptance of the claim, the plots or apartments shall be made over to the respective claimants on the same terms and conditions. Except for such verified and accepted claims, the remaining area or apartments will be completely at the disposal of HUDA or HSIDC, F as the case may be, which shall be free and competent to dispose of the same in accordance with the prevalent policy and procedure. In order to facilitate such exercise all third parties who had purchased or had been allotted the plots or apartments shall prefer claims within one month from today, which claim shall be verified within two G months from today. (i) As found by us in the preceding paragraphs, substantial sums were made over to “middle men”. In the pending investigation, the CBI may do well to unravel the truth. In any case, such hefty sums which were made over to “middle men” cannot be said to be rightfully earned by and belonging to them. In fact, this actually represents the return for H

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A being able to garner the lands in question and getting requisite licences under the provisions of the Haryana Act and a benefit derived out of fraud on power. In our view this money rightfully belongs to the State and none other. We direct the authorities of the State as well as the Central Government to reach the depths of such transactions and recover every single pie and make it over to the State Government. A complete B investigation in the transactions including unearthing unnatural gains received by “middle men” shall be undertaken by the CBI. (j) If CBI has filed charge sheet before the concerned Court, the same may be dealt with as per law.

C (k) The State shall give benefit of “Rehabilitation and Resettlement of Land Acquisition Oustees” policy of the State/HUDA/HSIDC to the landholders. Area so required shall be reserved out of the acquired land itself. (l) The State may revisit its policy of change of land use and D giving colonization licence in respect of land which is subject matter of acquisition. (m) We are given to understand that a Commission of Enquiry was appointed by the State of Haryana to enquire into certain facts concerning acquisitions in respect of lands in Gurgaon Manesar Urban Complex and that the matter is presently subject matter of challenge in E a pending writ petition in the High Court of Punjab and Haryana on account of which further steps are held up. Without expressing any opinion on the merits or demerits of such challenge, we request the High Court to deal with and dispose of the matter as early as possible and preferably within two months from the date of receipt of a copy of this F order so that public interest may not suffer by delay in such decision.

40Copy pinpoint40. Before we close, we must record our sincere appreciation for the efforts put in and for the invaluable assistance rendered by the learned Amicus Curiae. His analytical approach and suggestions have helped us immensely in resolving the issues. G

41Copy pinpoint41. The appeals stand allowed in the aforesaid terms. There shall be no order as to costs.

Kalpana K. Tripathy Appeal allowed.