Land Acquisition; Uddar Gagan Properies Ltd. Vs. Sant Singh [13-05-2016] SC

Whether the power of the State to acquire land for a public purpose has been used in the present case to facilitate transfer of title of the land of original owners to a private builder to advance the business interest of the said builder which is not legally permissible.


IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

[ ANIL R. DAVE ] AND [ ADARSH KUMAR GOEL ] JJ.

MAY 13, 2016

CIVIL APPEAL NO. 5072 OF 2016

(ARISING OUT OF SLP (Civil) NO.5455 OF 2014)

UDDAR GAGAN PROPERIES LTD. …APPELLANT

VERSUS

SANT SINGH & ORS. …RESPONDENTS

WITH

CIVIL APPEAL NOs. 5073-5077 OF 2016

(ARISING OUT OF SLP (Civil) NOS.5630-5634 OF 2014)

WITH

CIVIL APPEAL NOs. 5079-5085 OF 2016

(ARISING OUT OF SLP (Civil) NOS.5641-5647 OF 2014)

WITH

CIVIL APPEAL NO. 5086 OF 2016

(ARISING OUT OF SLP (Civil) N.5656 OF 2014)

WITH

CIVIL APPEAL NO. 5100 OF 2016

(ARISING OUT OF SLP (Civil) NO.25843 OF 2014)

WITH

CIVIL APPEAL NOs. 5087-5099 OF 2016

(ARISING OUT OF SLP (Civil) NO.19931-19943 OF 2014)

J U D G M E N T

ANIL R. DAVE, J.

1. Leave granted. Principal question which has fallen for consideration is whether the power of the State to acquire land for a public purpose has been used in the present case to facilitate transfer of title of the land of original owners to a private builder to advance the business interest of the said builder which is not legally permissible. Further question is whether on admitted facts, the acquisition of land is entirely or partly for a private company without following the statutory procedure for the said purpose. Further question is how in the facts and circumstances relief could be moulded.

2. Vide notification dated 11th April, 2002, 850.88 acres of land was proposed to be acquired for residential/commercial Sector 27-28, Rohtak, Haryana by the Haryana Urban Development Authority under the

Haryana Urban Development Authority Act, 1977

(‘the 1977 Act’). However, the final notification dated 8th April, 2003 under

Section 6 of the Land Acquisition Act, 1894

(‘the 1894 Act’), according tothe impugned order of the High Court, was in respect of 441.11 acres. Award dated 6th April, 2005 was for 422.44 acres. Appellant –Uddar Gagan Properties Limited (‘the Builder’) who is a Builder-cum-Developer entered into collaboration agreements with some of the farmers – owners whose land was under acquisition on 02nd March, 2005 for development of a Colony in accordance with the

Haryana Development and Regulation of Urban Areas Act, 1975

(‘the 1975 Act’). The Builder made applications on and around 21st March, 2005 to the Director, Town and Country Planning, Chandigarh, Haryana for grant of licence to develop a colony on land covering about 280 acres. The licences were granted on and around 12th June, 2006 and corresponding land was released from acquisition. The licences were addressed to the owners but remitted to the builder. This was followed by execution of sale deeds in favour of the builder through power of attorney holder of the land owners.

3. It was on these undisputed facts that the High Court was called upon to examine the questions on a group of petition/s by the land owners which are framed in the impugned judgment as follows :-

[i] Whether the object behind the subject-acquisition was to achieve a bona-fide public purpose or to use it as a cloak for the private benefit of Builder-cum-Developer?

[ii] Whether the power of ’eminent domain’ has been exercised in violation of Articles 14, 21 and 300-A of the Constitution?

[iii] Whether it is lawful to enter into ‘Agreement to Sell’ or ‘Collaboration Agreement’ in respect of the land under acquisition and can an instrument of sale be executed in respect of such land?

[iv] Whether a writ court in exercise of its powers under Article 226 of the Constitution is competent to annul a sale-transaction executed in violation of and on playing a fraud on the Statute?

[v] Whether the orders granting Licenses or releasing the acquired land have been passed in favour of 11th respondent in accordance with provisions of 1975 State Act?

[vi] Whether the petitioners have got locus standi to challenge the ‘licences’ or the orders of release of the acquired land in favour of respondent No. 11?

[vii] Whether writ petitions suffer from inordinate delay and latches?”

4. It was held that in view of the scheme of the 1977 Act, the notified public purpose for acquisition was covered by Section 3(f)(ii) and (iv) of the 1894 Act, but the events following the notification for acquisition unfolded different story. After receipt of notices by the land owners under Section 9 of the 1894 Act, calling upon them to appear before the Collector for determination of compensation, the builder suddenly surfaced in March, 2005 and applied for grant oflicences for setting up colony on the land covered by the notification and paid full sale consideration to the land owners. The Government files deceptively projected the initiative to release land at the instance of farmers and owners while the real fact was to transfer the title of land to the builder. Factual matrix based on record noticed in the judgment of the High Court is as follows :-

“[60]. Awards No. 1, 2 and 3 were admittedly passed on 06th April, 2005 i.e. a day before the expiry of the statutory period of two years. As per the categoric stand taken by the Land Acquisition Collector in the written statement initially filed, he took over the possession of land and handed-over it to the Estate Officer, HUDA, Rohtak on that very day, i.e., 06th April, 2005. The official record also substantiates this plea of the respondents. On doing so, the acquired land stood vested absolutely in the State Government, free from all encumbrances by virtue of Section 16 of the 1894 Act.

xxx xxx

[62]. The Government Files pertaining to the grant of licence or release of land in favour of 11th respondent have been deceptively captioned as if the entire initiative to seek the release of land is at the instance of the farmer–owners of the acquired land. That very record, however, falsifies this facade. The application dated 21st March, 2005 [receipt No. 2461] is on the letter-head of respondent No. 11. It is signed by one of its Directors. Form ‘LC-I’, however, earlier thumb impressions of previous owners along with the attested copies of ‘Power of Attorney’ and ‘Collaboration Agreements’ executed by them in favour of respondent No. 11. The Application Forms refer to deposits of demand drafts of lacs of rupees. Who paid that requisite fee or statutory charges?Was it by the farmers whose land already stood acquired and who had not received even a single penny of compensation? OR was it deposited by respondent No. 11? The copies of Demand Drafts answer this query as every penny was deposited by respondent No. 11 only. The illiterate or semi-illiterate farmers had no knowledge except that their land was under acquisition and there was a Builder willing to pay them a price which was much more than the Government compensation.

[63]. It is quite unfortunate and misleading that every relevant Government file recites, say for example, that “Shri Surat Singh and other individuals have submitted request on LC-I for setting up of Residential Plotted Colony over an area measuring 84.04 Acres……. the applicants have deposited an amount of ‘`34,09140/- towards Scrutiny Fee and `42,02000/- towards Licence Fee’. The said application was dealt with first time vide office note dated 19th August, 2005 yet no where it is disclosed that the land had already been acquired, award passed and it stood vested in the State free from all encumbrances. In the subsequent notings, the so-called ‘applicants’ disappeared and all the Officers starting from the District Town Planner onwards, have worked over-board to contribute in favour of the claim of 11th respondent.”

5. It was concluded :-

“[69]. From the facts noticed above, there can be no different conclusion but to infer that though the proposal to acquire land for the development of Urban Sectors at Rohtak was mooted, approved and was taken to a logical conclusion for a bona-fide public purpose. However, during the interregnum and before passing the Award, an unholy nexus to promote the private interest of respondent No. 11 sprouted which de-railed the public purpose of acquisition and led to the misuse of power under Section 48 of the 1894 Act. Respondent No. 11 exploited the moments of suspense and succeededin entering into distress-sale agreements with the desperate owners who were sandwiched and had no other choice but to give in for a comparatively better offer.

[70]. To say that the landowners entered into varied contracts with Respondent No.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. Agricultural 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 can not 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 No. 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. They were gropping in the dark. They had no clue that the land will be released. They accepted the unreasonable and unfair unilateral terms and lost their land.

[71]. The sale price of the land was determined by respondent No. 11 and not by the market forces. Given a choice between retaining their land or selling it to the Builder for the offered-price, not a single farmer would have agreed to sell it. The circumstances forced the landowners to accede to the offer made by 11th respondent made. It is a proven case of unconscionable bargain exerted through undue influence and fraud, both. The sample ‘agreements’ on record truly reveal that illiterate/semi-literate farmers were asked to sign thedocuments on dotted-lines forcing them to sell out most of their ancestral holdings. The en-mass ‘Agreements’ conclusively belie the plea of need-based bona-fide sales. How the Courts should deal with the unconscionable contracts which are injurious to public good and public interest, has been eloquently answered by the Supreme Court in