judgement:
ivil Appeal No. 2458 and S.L.P. No. 9019 of 1980 From the Judgment and Order dated 7.12.
1979 of the Allahabad High Court in Civil Misc.
Writ Petition No. 3174 of 1975 R.N. Trivedi, Additional Advocate General, Gopal Subramaniam and Ms. Shobha Dikshit for the Appellants.
F.S Nariman, Raja Ram Agarwal, Yogeshwar Prasad, Mrs. Rani Chhabra and Ms. Suman Bagga for the respondent.
The Judgment of the Court was delivered by DESAI, J.
Respondent Raja Ram Jaiswal moved Civil Miscellaneous Writ Petition No. 3174 of 1975 under article 226 of the Constitution in the High Court of Judicature at Allahadad questioning the validity of the Notification dated February 6, 1975 issued under Sec.
4(1) of the Land Acquistion Act ( 'Act ' for short) as also a notice dated March 6, 1975 served upon him pursuant to the afore mentioned notification.
The impugned notification was published in the U.P. Government Gazette dated February 15, 1975.
By this impugned notification, land bearing Plot No. 62 approximately admeasuring 8265 sq.
was sought to be acquired as being needed for a public purposse namely for extension of Hindi Sangrahalaya of the Hindi Sahitya Sammelan Prayag.
A substances of this notification was published in the locality where the land sought to be acquired is situate.
On March 22, 1975, a corrigendum dated March 13, 1975 was published by which the impugned notification dated February 15, 1975 was to stand corrected Plot No. 26 instead of 62 and the area sought to be acquired to be read as 2865 sq.
1000 instead of 8265 sq.
After the publication of the corrigendum the petitioner sought amendment of the petition which was granted.
Validity of the amended notification was challenged on diverse grounds.
However, at the hearing of the petition, the challenge was confined to the following four grounds as summarised in the judgment of the High Court.
They may be extracted: "1.
Notification dated 6.2.75 issued under Sec.
4 of the Land Acquisition Act is invalid in as much as it had been issued without first complying with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
Acquisition proceedings are mala fide.
Notice under section 4(1) of the Act was served upon the petitioner on 6th March, 1975 when only two days time was left for filing objections under Section 5 A of the Land Acquisition Act.
This rendered the proceedings illegal.
The notification under Section 4(1) did not relate to plot No. 26 belonging to the petitioner.
Proceedings to acquire the said plot are therefore without jurisdiction.
" After the petition was amended two additional grounds of challenge were pressed on behalf of the respondent.
They are: "1.
The notification dated 13th March, 1975 is invalid for the very same reason for which the notification dated 6th February, 1973 is claimed to be invalid.
The Land Acquisition proceedings are invalid inasmuch as the notification dated 13th March, 1975 was neither published nor was its substance notified in the locality, as also because no notice thereof had been served upon the petitioner.
" Negativing all the challenges except the one that as there was failure to cause public notice of the substance of notification under Sec.
4(1) to be published at convenient place in the locality on 1001 this short ground, the impugned notification was quashed.
Hence this appeal by the Collector, Allahabad and the Land Acquisition Officer by special leave.
Respondent who was the original petitioner but is respondent in the appeal filed by the Collector will be referred to as the petitioner in this judgment.
Petitioner field Special Leave Petition No. 9019 of 1980 against the same judgment contending that the High Court committed an error in rejecting the challenge to the validity of the impugned notification on the ground of legal mala fides as also on the ground of non compliance with Rule 4 of the Land Acquisition (Companies) Rules, 1963.
As both these matters arise out of the same judgment, they were heard together and are being disposed of by a common judgment.
It may be mentioned that connected Civil Appeal No. 2437 of 1981 was to be taken up for hearing after the hearing concluded in D the present appeal and therefore, the judgment in this matter was postponed because the observations in one were likely to have some impact on the disposal on merits of the contentions in the cognate appeal.
Though very much delayed by circumstances beyond our control, few days back the hearing in the cognate appeal is over and therefore, both the appeals can now be disposed of though by separate judgments.
A brief resume of the facts leading to the writ petition field in the High Court would be quite instructive in this case.
The Hindi Sahitya Sammelan ( 'Sammelan ' for short) for whose benefit the land was sought to be acquired was initially formed as a voluntary organisation in 1910 and on January 8, 1914 it was registered as a society under the Societies Registration Act retaining the same name.
Some where in 1950 difference arose between the members of the society and the attempt to alter the constitution of the society, ultimately led to litigation.
U.P. Legislature enacted an Act styled as U.P. Hindi Sahitya Sammelan Act No. 36 of 1956 under which a statutory body was created under the name of Hindi Sahitya Sammelan.
The statutory body was to take over the management and properties of the society.
The Act was however struck down as unconstitutional in Damyanti Naranga vs Union of India & Ors.(l) The pre existing Sammelan which was a registered society (1) ; 1002 continued to function as such.
It is for the benefit of the Sammelan that the land involved in the dispute was sought to be acquired.
According to the Sammelan, it is in need of land for building 'Sangrahalaya ' which was roughly translated as museum cum library cum reading room.
At the instance of the Sammelan, Allahabad Municipal Board agreed to hand over the land and building in which a municipal school was located, situated at Kamta Prasad Kakkar Road adjacent to the Central office and Press of the Sammelan, on certain conditions.
The Sammelan needed the land, as it was then declared, to establish a museum.
The land with the school building thereon was transferred to the Sammelan in 1953.
It may be mentioned that even till today the area of land admeasuring 7315 sq.
in possession of the Sammelan is Lying vacant and for the quarter of a century, museum has not come up.
This aspect is mentioned in some detail as it has an impact on the contention canvassed in these appeals.
Petitioner Jaiswal along with the members of his family purchased land bearing plot No. 26 with a building thereon admeasuring 2978 sq.
situated at K. P. Kakkar Road in March 1970.
The petitioner wanted to build a sound proof air conditioned cinema theatre on the plot No. 26 purchased by him.
The plan for the proposed theatre was sanctioned both by the District Magistrate and the local municipality in December 1970.
It may be recalled here that the judgment of this Court holding Hindi Sahitya Sammelan Act unconstitutional was rendered on February 23, 1971.
The Sammelan was wholly opposed to the construction of a theatre near its campus as in its view a theatre and a research cum study centre can go ill together.
Therefore, when the petitioner applied for a certificate of approval under Rule 3 read with rule 7(2) of the U.P. Cinematograph Rules 1951 for construction of a cinema theatre, authorities of the Sammelan raised a storm of protest, sometimes peaceful occasionally likely to turn violent impelling authorities to impose restrictive orders under Sec. 144, Code of Criminal Procedure.
Sammelan also submitted a long memorandum setting out its objections with a view to persuading the authorities not to grant a certificate of approval for construction of a cinema II (1) ; 1003 building.
Overrullng the objections the District Magistrate, the Licencing Authority under the U.P. Cinemas (Regulation) Act, 1955 granted the requisite certificate of approval under Rule 3 which would in law imply that having regard to the provisions of the 1955 Act and 1951 Rules, there was no legal impediment to constructing a cinema theatre on plot No. 26.
Thereupon, Secretary of the Sammelan addressed a letter to the Chief Minister of State of U.P. complaining against the grant of the permission by the District Magistrate and requesting the Chief Minister to cancel the permission.
Ultimately, having failed to thwart the grant of certificate of approval.
the Sammelan wrote a letter on October 13, 1971 for acquiring land bearing Plot No. 26.
It may be recalled that the certificate of approval for constructing a cinema building was granted by the District Magistrate on March 24, 1972.
The Sammelan addressed various letters to various authorities including the then Prime Minister of India requesting them to cancel the certificate of approval granted to the petitioner.
Ultimately on January 31, 1974, a notification under Sec.
4(1) of the Land Acquisition Act, 1894 was issued stating therein that the land bearing plot No.
`26 admeasuring approx.
2865 sq.
was needed for a public purpose namely for extension of Hindi Sangrahalaya of Hindi Sahitya Sammelan Prayag '.
This notification was published in the U.P. Government Gazette on February 9, 1974.A notice under Sec.
4(1) bearing the same date was served upon the petitioner as also the same was published in the locality.
The petitioner challenged the validity of this notification on diverse grounds in Writ Petition No. 1932174 and as a measure of interim relief, the High Court stayed further proceeding that may be taken to acquire the land.
In the meantime by notification dated February 6, 1975, the earlier notification under Sec.
4(1) dated January 31, 1974 was cancelled and a fresh notification was issued to acquire 'land bearing plot No. 62 admeasuring 8265 sq.
yds for the earlier mentioned public purpose '.
Consequently, the writ petition in which the validity of the earlier notification was questioned was disposed of as infructuous.
The second notification dated February 6, 1975 was published in the U.P. Gazette on February 15, 1975.A notice dated March 6, 1975 under Sec.
5A of the Land Acquisition Act was served upon the petitioner inviting him to file his objection, if there be any, against the proposed acquisition.
The petitioner filed detailed objections on March 8, 1975 inter alia contending that the acquisition is for a 1004 company and the pre requisite for acquisition for a company having not been carried out, the acquisition is bad in law.
It was also contended that the petitioner is not the owner of plot No. 62 admeasuring 8265 sq.
Promptly on March 13, 1975, a corrigendum was issued and published in the Gazette on March 22, 1975 correcting the notification dated February 6, 1975 to read that instead of plot No. 62, plot No. 26 be read and instead of area 8265 sq.
2865 sq.
be read.
In between the issue of the notification and the corrigendum, the petitioner filed Writ Petition 3174/75 questioning the validity Or the notification dated February 6, 1975.
The High Court struck down the notification as invalid and during the pendancy of the writ petition in the High Court, further continuance e of the acquisition proceedings were stayed.
If the petitioner questioned the validity of the notification on ground of mala fides, he ought to have joined Sammelan as respondent.
Having failed to implead a proper party, he behaved curiously in opposing the application of the Sammelan for being impleaded as a party.
The High Court was in error in rejecting the application.
Therefore, when the Sammelan moved an application for intervention under Order XX rule 3 of the Supreme Court Rules, 1966, we granted the same and Mr. S.N. Kacker learned counsel appeared for the Sammelan at the hearing of these appeals and addressed his oral arguments and submitted written submissions.
The High Court struck down the notification holding that in order to be a valid notification under Sec.
4(1), it has to be published or notified for general information in the Official Gazette and for purposes of Sec.
SA of the Act, it would be taken to have been published on the date of such publication in the Official Gazette, and the second part of Sec.
4(1) requires the publication of the substance of the notification in the locality ' This having not been complied with, the notification was bad and invalid.
The correctness of this view is questioned on behalf of the appellants.
After scruitinising the evidence placed on record, the High Court has recorded a finding that the substance of the notification was not published in the locality either after 15th February, 1975 when the notification dated February 6, 1975 was first published in the Official Gazette or after March 22, 1975 when the corrigendum was 1005 published in the Official Gazette and thus the requirement of the second part of Sec.
4(1) has not been complied with.
The finding that there was no such publication as herein indicated was not seriously questioned and in fact could not be questioned.
A few facts will affirmatively establish it.
The first notification dated January 31, 1974 was published in the official Gazette dated February 9, 1974 and in respect of which a notice was published in the locality in March, 1974.A copy of the notice was served on the petitioner on March 6, 1974.
This notification bore the number 78 VIII LAQ and it was in respect of plot No. 26 admeasuring 2865 sq.
This notification was cancelled and superseded by another notification No. 552 VIII LAQ dated February 6, 1975, which was published in the Official Gazette dated February 15, 1975.
This latter notification clearly recites that the earlier notification dated February 9, 1974 is thereby cancelled.
In the latter notification dated Feb. 6, 19751 the land proposed to be acquired was shown to be plot No. 65 admeasuring 8265 sq.
Admittedly notice of the substance of this notification was not published in the locality.
The petitioner had nothing to do with land bearing plot No. 62 admeasuring 8265 sq.
As the previous notification was cancelled, he had nothing to worry about the second notification which has no relevance to the plot belonging to him.
The corrigendum dated March 13, 1975 was issued and published in the Official Gazette dated March 22, 1975 correcting the plot number and the area and the corrected entry was to be in reference to plot No. 26 and area to be acquired was to be 2865 sq.
Admittedly, there was no notice of publication of the substance of the notification dated February 15, 1975 nor of the corrigendum dated March 22, 1975 in the lacality.
The High Court was therefore, right in holding that in respect of the later notification and corrigendum, no notice was published in the locality and latter part of Sec.
4(1) was not complied with.
4(1) in its application to the State of U.P. read as under: "4(1): Whenever it appears to the appropriate Government or Collector that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and the Collector shall cause public notice of the substance of 1006 such notification to be given at convenient places in the said locality.
" By Land Acquisition (U.P. Amendment And Validation) Act Vlll of 1974, the section was amended to read as under: "4(1): Whether it appears to the appropriate Government and the Collector that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and except in the case of any land to which by virtue of a direction of the State Government under Sub section (4) of Sec. 17, the provisions of Sec.
5 A shall not apply, the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.
" Though this amendment of 1974 is subsequent to the impugned notification, yet some reference was made to it to buttress the sub mission that the only purpose of a notification under Sec.
4(1) and the public notice in the locality is to make functionally effective the provisions of Sec.
5A so that the persons interested in the land sought to be acquired can canvass his objections against the proposed acquisition.
We shall presently deal with it.
Mr. S.N. Kacker for the intervener and Mr. Dikshit for the State of U.P. urged that ordinarily courts do not interfere at the ,.
stage of Sec.
4 notification because it merely constitutes a proposal which will be meticulously examined after the objections are filed under Sec.
5A by the person interested in the land wherein all aspects of the matter can be threadbare gone into and examined.
Broadly stated, one cannot take serious exception to this submission.
However, as a notification under Sec. 4 (1) initiates the proceedings for acquisition of land aud uses the expression 'shall ' the mandate of the legislature becomes clear and therefore, the infirmities therein cannot be wholly overlooked on the specious plea that the courts do not interdict at the stage of a mere proposal.
bare perusal of Sec. 4 (1) clearly shows that in order to comply with the statutory requirements therein set out, a notification 1007 stating therein the land which is needed or is likely to be needed for a public purpose ' has to be published in the official Gazette.
The second part of the sub section provides that 'the Collector has to cause public notice of the substance of such notification to be given at convenient places in the locality in which the land proposed to be acquired is situated.
Both the conditions are held by a catena of decisions to be mandatory Whether the second condition is mandatory or directory is no more res integra.
In Khub Chand and Ors.
vs State of Rajasthan and Ors.(1), Subba Rao, CJ speaking for the court observed that 'the statutory intention is, therefore, clear, namely, that the giving of public notice is mandatory.
If so, the notification issued under section 4 without complying with the said mandatory direction would be void and the land acquisition proceedings taken pursuant thereto would be equally void. ' While reaching this conclusion, the Court distinguished the decision in Babu Barkya Thakur vs The State of Bombay(2) wherein it was held that 'any defect in the notification under Sec. 4 is not fatal to the validity of the proceedings, particularly when the acquisition is for a company and the purpose has to be investigated under section 5A or section 40 necessarily after the issue of the notification under section 4 of the Act '.
The Court pointed out that the defect with which the notification in Bahu Barkya Thakur 's case sufferred was of a formal nature and did not go to the root of the matter.
However, the decision is not an authority for the proposition that if a public notice of the notification was not given as prescribed by section 4, it can be ignored.
The pertinent observation of the court is that such an approach would constitute rewriting The section.
The court also referred to Smt.
Somavanti and Ors.
vs The State of Punjab & Ors.(3) and quoted with approval the statement therein made that a valid notification under sub section
(I) of Sec. 4 is a condition precedent t ) the making of a declaration under sub section
(1) of Sec. 6.
This view has been consistently followed and was approved in State of Mysore vs Abdul Razak Sahib(4), wherein it was observed that in the case of a notification under Sec. 4 of the Land Acquisition Act, the law has prescribed that in addition to the publication of the notification in the Official Gazette, the Collector must also give publicity of the substance of the notification in the concerned locality.
Unless both these conditions are satisfied, section 4 (1) ; at 125.
(2) (3) (4) ; 1008 of the Land Acquisition Act cannot be said to have been complied with.
The publication of a notice in the locality is a mandatory requirement.
Mr. Kacker however, drew our attention to a few more observations in the judgment wherein it was said that there is an important purpose behind publication of the substance of the notification in the locality because in the absence of such publication, the interested persons may not be able to file their objections challenging the proposed acquisition and they will be denied an opportunity afforded by section 5A which confers a very valuable right.
Relying on this observation Mr. Kacker urged that if the underlying purpose behind publication of a notice in the locality is to give an opportunity to the person interested in the land to object to the acquisition, where in a case the purpose is achieved as in this case the petitioner having filed his objections, the failure to publish the substance of the notification in the locality need not be treated fatal and cannot invalidate the proceedings.
The submission as presented is very persuasive and but for binding precedents, we would have accorded considerable attention to it.
But we would not whittle down a mandate of legislation recognised by a long line of decisions solely depending upon the facts of a given case.
Further the submission is predicated upon an assumption that the sole purpose behind publication of substance of notification in locality is to make requirements of Sec.
5A functionally effective.
The assumption as would be pointed out is not well founded.
In fact, the court in the last mentioned case went so far as approving the decision of the Mysore High Court in Gangadharaih vs State of Mysore & Ors.(l) wherein it was ruled that 'when a notification under section 4 (1) is published in the official Gazette and it is accompanied by or immediately followed by the public notice, that a person interested in the property pro posed to be acquired can be regarded to have had notice of the proposed acquisition. ' This is a mandatory requirement for legal compliance with requirements of Sec. 4 (1).
In Narendra Bahadur Singh and Anr.
vs State of U.P. & Ors(2) this Court reiterated that a publication of the notice in the locality as required by the second part of section 4 (1) is mandatory and unless that notice is given in accordance with the provisions contained therein, the entire acquisition proceedings are vitiated.
Repelling the contention, that (1) (2) ; 1009 the only purpose behind publication of a notice in the locality is to give opportunity to the person interested in the land to prefer objections under Sec.
5A which confers a valuable right, it was held that even though in the facts of that case, the inquiry under section 5A was dispensed with by a direction under Sec.
17 (4) of the Act, the failure to comply with the second condition in Sec. 4 (1) is fatal.
It was pertinently observed that provisions of Sec.
4(1) cannot be held to be mandatory in one situation and directory in another and therefore, it cannot be said that the only purpose behind making the publication of notice in the locality mandatory is to give an opportunity to the persons interested in the land to file objections under Sec.
Of course, what other object it seeks to subserve has been left unsaid.
But the answer is not far to seek.
At least we have no doubt that the only visible and demonstralle purpose behind publication of the substance of the notification under Sec. 4 (1) in the locality where the land proposed to be acquired is situated, is to give the persons interested in the land due opportunity to submit their considered objections against the proposed notification.
Incidentally, it may be pointed out that after the 1974 amendment, Sec. 4 (1) on its true interpretation may unmistakably indicate that where the enquiry under Sec.
5A is not dispensed with by resorting to Sec. 17 (4), compliance with the second part of Sec. 4 would be mandatory.
We however do not propose to go into this aspect because the amendment is subsequent to the notification.
Mr. Kacker however on behalf of the interveners while conceding that there cannot be a valid acquisition unless a notification is published in the Official Gazette and a substance of the notification is published in the locality, urged that publication in locality need not necessarily follow the publication of the notification in the Official Gazette but it may even precede the same because what is of importance is the decision to acquire, the notification and publication of the notice are mere formal expressions of the decision of the Govt.
to start acquisition proceedings.
Proceeding along it was said that the second requirement of Sec.
4 (1) v z. publication of the notice in the locality is only to make effective the provisions of Sec.
5A and that such minor defect cannot invalidate notification under Sec. 4.
To substantiate this submission, reliance was placed upon the decisions in Babu Barkya Thakur 's case, State of Madhya 1010 Pradesh & Ors.
vs Vishnu Prasad Sharma & Ors.(l) and Narendra Bahadur Singh 's case.
All these decisions do not bear out or substantiate the submission of Mr. Kacker for the reasons already mentioned.
Assuming that a notification in the Official Gazette is a formal expression of the decision of the Government, the decision of the Government is hardly relevant, unless it takes the concrete shape and form by publication in the Official Gazette.
Where a decision of the Government to be effective and valid has to be notified in the Government Gazette, the decision itself does not become effective unless a notification in the Official Gazette follows.
In Mahendra Lal Jaini vs The State of Uttar Pradesh & Ors.(2) it was held that a notification under Sec.
4A of the is required to be published in the Gazette and unless it is so published, it is of no effect.
Logically, the same view must be adopted for a notification under Sec. 4.
Therefore assuming that a notification is a formal expression of a decision of the Government to acquire land, unless the decision is notified in the Government Gazette by an appropriate notification, the proceedings for acquisition cannot be said to have been initiated and the decision would remain a paper decision.
Sec. 4 (1) further requires that 'the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality. ' The expression 'such notification. ' in the latter part of Sec. 4 (1) and sequence of events therein enumerated would clearly spell out that first the Government should reach a decision to acquire land, then publish a notification under Sec.4 (1) and simultaneously or within a reasonable time from the date of the publication of the notification cause a notice to be published containing substance of such notification meaning thereby that notification which is published.
Obviously, therefore, there cannot be a publication in the locality prior to the issuance of the notification.
The submission of Mr. Kacker does not commend to us.
In this context, it was next contended that at any rate the petitioner has not suffered any prejudice by the failure of the Government to publish a notice in the locality because the petitioner has filed detailed objections against the proposed acquisition.
If the (1) (2) [1963] Supp, 1 S.C.R. 912.
1011 only purpose behind publishing the notice in the locality was to give an opportunity to the persons interested in the laid to file their objections, the submission would have merited consideration, but the same has been expressly negatived and therefore, it is futile to examine the same.
To be brutally frank if this was the only ground for invalidating the notification, in the backdrop of facts we would have our serious reservations in upholding the decision, though as the law stands, the High Court was perfectly justified in reaching this conclusion.
Our reservations have nothing to do with the perfectly legal view taken by the High Court.
They stem from the facts of this case and our understanding of the purpose behind publication of notice as set out by us earlier.
In such a situation, we would have developed the concept of prejudice and the absence of it resulting in negativing the contention.
But there are other formidable challenges to the validity of the impugned notification, which of course have not found favour with the High Court but we are inclined to take a different view of the matter.
Therefore we let the decision of the High Court on this point stand.
Turning to the petition for special leave filed by the petitioner, we grant special leave to appeal and proceed to examine the two challenges to the validity of the notification under Sec.
4(1) which have been negatived by the High Court.
The petitioner questioned the validity of the notification inter alia on the ground that the acquisition was malafide and that the acquisition being for a Company, it would be invalid for failure to comply with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
The High Court negatived both the challanges.
Mr. Nariman, learned counsel for the petitioner invited us to examine them.
The relevant averments on the question of mala fides as set out in the writ petition filed in the High Court may be briefly summarised.
As the objections by the Sammelan for not granting a certificate of approval for constructing a cinema building on Plot No. 26 were not accepted by the Licensing authority and a certificate of approval was subsequently granted to the petitioner, the Sammelan in order to achieve the same object, namely, not to permit a theatre to be constructed at the place, moved the authorities for acquiring the land.
It is averred that the genesis of the proceeding for acquisition is not in the need of the Sammelan but its failure to stop the cinema theatre coming up and thus the purported need is non 1012 existent and the initiation of the acquisition proceedings was mala fide.
Its sole purpose is to deprive the petitioner of the cinema business which he would legally carry on.
Frankly, the averments are not very specific, clear, precise and to the point.
But the comulative effect of the allegations is that Sammelan being actuated by the ulterior motive to thwart the petitioners ' project to construct a cinema building resorted to the dubious method of seeking acquisition of the land even though it had no need present or in near future of the land in question.
Obviously, if such be the allegation, the Sammelan ought to have been impleaded as a party to the writ petition Not only the Sammelan was not impleaded as the party, but when the Sammelan moved an application for intervention or for being joined as a party, the petitioner was ill advised to object to the same and unfortunately the objection prevailed with the High Court.
We are unable to appreciate both the objections and the view taken by the High Court.
Therefore, when Nariman pressed his petition for special leave to appeal against the rejection of the challenge on the afore mentioned two grounds, we made it abundantly clear that we would be least interested in examining the challenge founded on the ground of mala fides in the absence of the Sammelan.
The Sammelan had moved a petition for intervention which, it must be stated in fairness to Mr. Nariman, was not objected in this Court and we made it abundantly clear that the request for being impleaded as a party in the High Court ought not to have been objected.
Accordingly, the petition for intervention was granted and the Sammelan was given an opportunity to file its affidavit as well as any material that it chooses to place on record.
According to the rules, the interveners are not entitled to address oral submissions to the court but in the background of the facts of this case, we gave full opportunity to Mr. Kacker to address oral submissions.
It is in the backdrop of these facts that we propose to examine the challenge founded on the ground of mala fides.
A few facts will have to be recapitulated.
After the petitioner purchased the Plot No. 26 and submitted an application on July 6, 1971 to the licensing authority for grant of a certificate of approval as envisaged by rule 3 read with rule 7 of U.P. Cinematograph Rules, 1951 ( '1951 Rules ' for short) for constructing a cinema building on Plot No. 26, the Sammelan promptly objected to the grant of certificate of approval on the ground that existence of a cinema theatre within the vicinity of the campus of the institute of culture learning 1013 and research like the Sammelan would be destructive of the environment and the atmosphere of the institute, and existence of a cinema theatre at such a place would be an incongruity.
May be, it might be the honest and genuine belief of the office bearers of the Sammelan that an institute of learning and research cannot co exist with a cinema theatre in its vicinity, and that the latter may pollute the educational and cultural environment The District Magistrate as the licensing authority after corresponding with the State authorities granted the certificate of approval on February 24, 1974.
On October 13, 1971, the Sammelan sent a communication addressed to the Chief Minister of U.P. in which it was stated that a cinema building should not be permitted to be constructed in the vicinity of the campus of the Sammelan.
The letter also refers to an earlier application addressed to the Chief Minister requesting him to intervene so that the proposed cinema house may not be permitted to be constructed near the campus of the Sammelan, because it is likely to cause nuisance and interfere with the activities and the academic environment of the Sammelan.
Further request was made in the letter that administrative sanction may be granted for acquisition of land on which the cinema building is proposed to be constructed offering that the Sammelan is ready to pay whatever compensation that may have to be paid for acquisition of the land and the building thereon.
The Ditrict Magistrate by his letter dated November 8, 1971 addressed to the Pradhan Mantri of the Sammelan pointed out that the Revenue Board had directed that no institution should be given land more than that required for its purpose and that where the land is to be acquired by a body, such a body itself must make an attempt to directly purchase the land.
Then comes a sentence which may be extracted: "It is also evident by your above referred letter that you stood in need of acquiring land because the owner of the land wants to construct a cinema house over it and the institution does not want that a cinema should be constructed over the same.
It is clear by the above circumstances that the land is not so much required by the institution as for the construction of the cinema house.
Therefore, I would request you to consider the matter and if your aim is that the cinema house is not constructed you may resort to other means." (underlining ours) 1014 In the meantime on December 16, 1971, Joint Secretary to the Government of U.P. wrote to the District Magistrate enquiring as to 'whether in granting the certificate of approval, Rule 7 (2) of the 1951 Rules was violated; What is the sphere of the activities of the Sammelan; does it undertake teaching or other such activities by virtue of which it may be placed in the category of Educational Institutions; if for some other reasons, construction of cinema house on proposed site is against public interest, seek Government 's approval in this respect specifying the reasons thereon; obtain written objections from the Sammelan; if required take Government 's approval making recommendations; and intimate whether cinema building will be sound proof. ' On March 24, 1972, the District Magistrate as the licensing authority sent a detailed reply inter.
alia stating that the Sammelan is not an educational institution nor a residential institution and it has no regular programme of class teaching and it cannot be styled as an educational institution within the meaning of the expression in rule 7.
He also opined that having regard to all relevant factors and other circumstances construction of a cinema building on the proposed site is not against the public interest.
He also opined that the approved plans of the building show an air conditioned sound proof cinema theatre which would enhance the beautification of the locality and would enrich the coffers of the State.
It was lastly pointed out that the distance between the proposed cinema building and the campus of the Sammelan was about 95 feet as crow fly measure.
He concluded by saying that having regard to all the circumstances, he was of the opinion that public interest in no way would be damaged if the permission is granted for construction of the cinema house in question on the proposed site, and that he was proceeding to grant permission to the applicant which is being forwarded to the Government.
After the receipt of the permission, the old existing building on Plot No. 26 was demolished by the petitioner and construction of a modern cinema theatre fully air conditioned and sound proof was commenced On August 7, 1983, the Sammelan moved a formal application requesting for initiating acquisition proceedings of land included in Plot No. 26 as it was needed by the Sammelan for the purpose of extension of Hindi Sangrahalya (Museum '.
Skipping over some of the intermediate steps including a request to the then 1015 Prime Minister to intervene and thwart the cinema project, when the first notification under Sec. 4 (1) was published, the purpose for which the land was to be acquired was shown to be 'extension of Hindi Sangrahalya at Hindi Sahitya Sammelan Prayag '.
Way back on July 22, 1949, the Sammelan with a view to establishing a museum in connection with a Hindi University approached the Allahabad Municipal Board to transfer a middle school building along with the Gymnacia attached to it.
The Municipal Board unanimously sanctioned the proposal to handover the building of the school with appurtenant land situated at Kanta Prasad Kakkar Road (that is the road on which the irritating cinema theatre has come up) to the Sammelan subject to the condition that the Sammelan would construct a school building at South Malaka at a cost of Rs. 30,000.
The Sammelan accepted the condition and complied with it.
The Government accorded sanction to the proposal on September 9, 1953 and since then the school building with the land over which it is standing and the Gymnacia were transferred to the Sammelan.
It is an admitted position that an area of 7315 sq.
Of land in the Sammelan campus is lying vacant, open and unutilised till today, that is for thirty two years.
This will have a direct impact on the alleged need of the Sammelan of the land propsed to be acquired.
At the time of taking over the school building, the Sammelan had contemplated putting up a museum.
That again is the purpose for which the land involved in this appeal is sought to be acquired at the instance of the Sammelan.
When this rather disturbing position emerged on analysis and evaluation of uncontroverted facts, it was suggested that the Sammelan wanted to construct a building for Natyashala and Rangmanch for which plans have not been prepared.
All these inconvenient facts found reflection in the order sheet of the Collector dated September 3, 1973 in which it is stated that "since the authorities of the Sammelan have capacity to approach the highest authority of the democratic Government as is evident from the letters received from their office, the office is not capable to offer any comments whatever might be the proposal whether it is according to the rules or against the rules or the same should be allowed to remain as it is etc.
" Later on the Sammelan stated that after the land is acquired, it would be utilised for implementation of some new schemes.
Thus though the Sammelan indisputably had and has open land in its possession from 1953 till 1973, it did not construct the museum for which it had obtained land from the 1016 Allahabad Municipal Board.
That apart it again moved the Government for acquiring the land of the petitioner under the pretext that it is needed for constructing a museum.
When the facts counter indicated the purported need, it came out with a suggestion that it proposed to construct Natyashala and Rangmanch.
One may in passing, a bit humourously note that Natyashala is a place where dramatic performances are staged and Rangmanch is a place where dances are performed.
The Sammelan would put up with them.
That would show that such performances would not be destructive of educational and cultural environment of the campus of the Sammelan but a modern air conditioned sound proof cinema building would.
We leave this without comment.
But as these proposals failed to carry conviction, its latest stand is that let the land come, they would devise schemes for its proper utilisation as and when the land is made available.
This demonstrates the hollowness of the alleged need and removes the veil thereby disclosing the real purpose for acquiring the land.
Mr. Kacker urged that quitting the quibbling so far resorted to, the Court may examine a forthright submisson that the Sammelan 's interest in getting the land acquired is not merely to construct Sangrahalya but it is equally if not more interested in not having a cinema theatre at the place where it is being constructed.
Shorn of embellishment, the Sammelan would not tolerate the theatre and therefore when it failed to thwart the grant of certificate of approval and cinema theatre came up, it took the second step to achieve the first mentioned object viz. seek acquisition of land to satisfy an imaginary or non existent need.
The challenge on the ground of legal mala fides to the validity of the notification under Sec. 4 (1), a preliminary step in the process of acquisition has to be examined, evaluated and answered in the backdrop of these facts.
It can be stated without fear of contradiction that need of the land for Sangrahalya is a figment of imagination conjured up to provide an ostensible purpose for acquisition.
There is enough land roughly admeasuring 7315 sq.
Lying vacant and unutilised with the Sammelan for over a quarter of a century.
The Sangrahalya has not come up though this was the land which was taken from the Municipal Board for the avowed object of putting up a Sangrahalya.
The Sammelan moved on to Rangamanch and Natyashala and then ultimately adopted a position that when the land is made available, 1017 schemes will be devised for its proper use.
Could it be said with confidence that the Sammelan was ever interested in acquiring the land for effectuating any of its objects.
It has neither the plans nor the wherewithals nor any specific object for which it needs land and it is unable to use over years the land already available at its disposal.
Therefore, Mr. Kacker took bold and to some extent an imaginative stand.
He said that in seeking acquisition of the land, the Sammelan is actuated by a desire not to have the cinema theatre in its vicinity or if it has come into existence, to do away with the same.
When these facts stare into the face, can it be said with confidence that the Government or the Collector in whom the power to acquire land is vested, exercised the power for the purpose for which it is vested or are they guilty of legal mala fides.
The High Court disposed of the contention by an over simplification of this tangled web of facts without making the least attempt at unearthing the real motives of the Sammelan The tell tale facts disclose motives and unravel hidden objects The High Court by passed them by simply observing that there is nothing on record to indicate that the Collector or the State Government are inclined to act against the petitioner for any improper motives.
The High Court unfortunately missed the real contention of legal mala fides, as also an important piece of evidence that the Collector on whom the statute confers power to initiate proceeding for acquisition himself was satisfied that Sammellan sought acquisition not because it requires the land but it wants to stop or do away with the cinema theatre.
This becomes evident from the letter of the District Magistrate dated November 8, 1971.
It is well settled that where power is conferred to achieve a certain purpose, the power can be exercised only for achieving that purpose.
Sec. 4 (1) confers power on the Government and the Collector to acquire land needed for a public purpose.
The power to acquire land is to be exercised for carrying out a public purpose.
If the authorities of the Sammelan cannot tolerate the existence of a cinema theatre in its vicinity, can it be said that such a purpose would be a public purpose ? May be the authority of the Sammelan may honestly believe that the existence of a cinema theatre may have the pernicious tendency to vitiate the equcational and cultural environment of the institution and therefore, it would like to wish 1018 away a cinema theatre in its vicinity.
That hardly constitutes public purpose.
We have already said about its proclaimed need of land for putting up Sangrahalya.
It is an easy escape route whenever Sammelan wants to take over some piece of land.
Therefore, it can be fairly concluded that the Sammelan was actuated by extraneous and irrelevant considerations in seeking acquisition of the land the statutory authority having known this fact yet proceeded to exercise statutory power and initiated the process of acquisition.
Does this constitute legal mala fides 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 colourableq 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 vs Compbell(1) it was observed that irrelevant considerations on which power to acquire land is exercised, would vitiate compulsory purchase orders or scheme depending on them.
In State of Punjab vs Gurdial Singh & Ors (2) acquisition of land for constructing a grain market was challenged on the ground of legal malafides Upholding the challenge this Court speaking through Krishna Iyer, J. explained the concept of legal malafides in his hitherto inimitable language, diction and style and observed as under: "Pithily 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 the fulfilment of a legimate object the actuation or cataly (1) at 375.
(2) ; 1019 sation 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 considerations, good or bad, but irrelevant to the entrustment.
When the custdian 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." After analysing the factual matrix, it was concluded that the land was not needed for a Mandi which was the ostensible purpose for which the land was sought to be acquired but in truth and reality, the Mandi need was hijacked to reach the private destination of depriving an enemy of his land through back seat driving of the statutory engine.
The notification was declared invalid on the ground that it suffers from legal mala fides.
The case before us is much stronger, far more disturbing and unparalelled in influencing official decision by sheer weight of personal clout.
The District Magistrate was chagrined to swallow the bitter pill that he was forced to acquire land even though he was personally convinced there was no need but a pretence Therefore, disagreeing with the High Court, we are of the opinion that the power to acquire land was exercised for an extraneous and irrelevent purpose and it was colourable exercise of power, namely, to satisfy the chagrin and anguish of the Sammelan at the coming up of a cinema theatre in the vicinity of its campus, which it vowed to destroy.
Therefore, the impugned notification has to be declared illegal and invalid for this additional ground.
The validity of the impugned notification was also challenged on the ground that even though the acquisition is for the Sammelan, a company, the notification was issued without first complying with the provisions of rule 4 of the Land Acquisition (Companies) Rules, 1963.
The High Court has negatived this challenge.
We must frankly confess that the contention canvassed by Mr. Nariman in this behalf would necessitate an indepth examination of the contention.
However, we consider it unnecessary in this case to undertake this exer 1020 cise because the judgment of the High Court is being upheld for the additional reason that the acquisition in this case was mala fide.
Therefore, we do not propose to examine the contention under this head.
For the reasons which appealed to the High Court and for the additional reasons herein stated, the appeal preferred by the Collector and the District Magistrate and another fails and is dismissed while the appeal on the grant of special leave to the petitioner is hereby partly allowed to the extent herein indicated.
Substantially, the Civil Appeal No. 2458 of 1975 fails and is dismissed with no orders as to costs.
S.R. Appeal dismissed and Petition allowed.

summary:
Raja Ram Jaiswal along with the members of his family purchased land bearing plot No. 26 with a building thereon admeasuring 2978 sq.
situated at K.P. Kakkar Road in March 1971.
The plan for a sound proof air condition ed cinema theatre on the said plot submitted by him was sanctioned both by the District Magistrate and the local municipality in December, 1970 and thereafter he applied for a certificate of approval under Rule 3 read with Rule 7 (2) of the U.P. Cinematograph Rules.
1951 for construction of a Cinema theatre.
The Hindi Sahitya Sammelan which was initially formed as a voluntary organisation in 1910 and registered as a society under the Societies Registration Act on January 8, 1914 retaining the same name had earlier acquired and taken possession from the Allahabad Municipal Board land admeasuring 7315 sq.
and in which a municipal school was located for purpose of building "Sangrahalaya" or a museum cum library cum reading room.
However no museum has come up and the land lies vacant.
This Sammelan raised objections to the grant of a permit for the constructions of the cinema theatre as in its view a theatre and a research cum study center can go ill together.
Overruling the objections, the District Magistrate, the Licensing Authority under the U.P. Cinema (Regulation) Act, 1955 granted the requisite certificate of approval, on March 24, 1972, under Rule 3 which would in law imply that having regard to the provisions of the 1955 Act, and 1951 Rules, there was no legal impediment to the construction of a cinema theatre on plot No. 26.
Having failed to thwart the grant of certificate of approval, the Sammelan wrote a letter on October 13, 996 1971 for acquiring land bearing plot No. 26 admeasuring approximately 2865 sq.
On the ground that it was needed for a public purpose namely for extension of Hindi Sangrahalaya of Hindi Sahitya Sammelan Prayag.
This Notification was published in the U.P. Government Gazette on February 9, 1974.A notice under section 4 (1) bearing the same date was served upon the petitioner as also the same was published in the locality.
The petitioner challenged the validity of the notification on diverse grounds in Writ Petition No. 1932/74 and obtained interim stay of taking over possession.
In the meantime, by Notification dated February 6, 1975, the earlier Notification dated January 31, 1974 was cancelled and a fresh Notification was issued to acquire "land bearing No. 62 admeasuring 8265 sq yds." and published in the U.P. Gazette on February lc. 1975.
Consequently Writ Petition No. 1932174 was got dismissed as infructuous.
A notice dated March 6. 1975 under section 5 of the Land Acquisition Act was served upon the petitioner inviting him to file his objections, if any.
The petitioner filed detailed objections on March 8, 1975 inter alia contending that the acquisition is for a company and the pre requisite for acquisition for a company having not been carried out, the acquisition is had in law.
It was also contended that the petitioner is not the Owner of plot No. '2 admeasuring 8265 sq.
yds Promptly on March 13, 1975, a corringendum was issued and published in the Gazette on March 22, 1975 correcting the notification dated February 6, 1975 to read that instead of plot No. 62 Plot No. 26 be read and instead of area 8265 sq.
yds., 2865 sq.
be read.
The substance of Gazette the notifications dated 15.2.1975 March 22, 1975 were not published in the locality as required under section 4 (1).
Tn between the issue of the notification and the corrigendum, the petitioner filed Writ Petition 3174175 questioning the validity Or the notification dated February 6, 1975 and duly amending the grounds after issue of the corrigendum.
The High Court negatived the challenges namely, (a) that the Notification was bad for non compliance first with the provisions or the Land Acquisition ((Companies)) Rules, 1953; and (b) that the acquisition proceedings are malafide but quashed the impugned notification on the ground of failure to cause public notice of the substance of Notification under section 4 (1) to be published is the locality.
Hence the State appeal (CA No. 2458/80) by special leave and the Special Leave Petition No. 9019/80 by Raja Ram.
Dismissing the State appeal and allowing in part the Special Leave Petition.
the Court.
^ HELD: 1.
When the validity of a Notification is questioned on the ground of malafides, proper parties affected by such an allegation must be impleaded in the petition.
In this case, Sammelan 's application for intervention under Order XX Rule 3 of the Supreme Court Rules 1966 must be granted though the Sammelan has not moved this Court against the High Court 's order rejecting the application for impleading.
[1004D E] 2.1 It is true that ordinarily courts do not interfere at the stage of Sec.
4 notification because it merely constitutes a proposal which will be meticulously examined after the objections arc filed under Section SA by tho person interested 997 in the land wherein all aspects of the matter can be threadbare gone into and examined.
However, as a notification under section 4 (I) initiates the proceedings for acquisition of land and uses the expression 'shall ' the mandate of the legislature bcomes clear and therefore, the infirmities therein cannot be wholly overlooked on the specious plea that the courts do not interdict at the stage of a more proposal.
11006 G] 2.2 A bare perusal of section 4 (1) clearly shows that in order to comply with the statutory requirements therein set out, a notification stating 'therein the land which is needed or is likely to be needed for a public purpose has to be published in the official Gazette.
The second part of the sub section provides that 'the Collector has to cause public notice of the substance of 'such notification to be given at convenient places in the locality in which the land proposed to be acquired is situated.
Both the conditions are mandatory.
Unless both these conditions are satisfied, section 4 of the Land Acquisition Act cannot be said to have been complied with.
Nor can Court whittle down a mandate of legislation recognised by a long line of decisions solely depending upon the facts of a given case; as is herer Further after the 1974 (U.P. Amendment and Validation Act VIII of 1974), Section 4 (1) on its true interpretation may unmistakably indicate that where the enquiry under Section 5 A is not dispensed with by resorting to Sec.
17 (4), compliance with the second part of Section 4 would be mandatory.
[1006H, 1007A D, 1009D E] Khub Chand and Ors.
vs State of Rajasthan and Ors.
, [1967] I SCR 120 at 125; Babu Barkya Thakur vs The State of Bombay, [1961] I SCR 128: Smt.
Somavanti and Ors.
vs The Sf are of Punjab & Ors., ; State of Mysore vs Abdul Razak Sahib, [1973] I SCR 856 referred to.
Gangadharaih vs State of Mysore &: Ors., (1961) Mys.
L.J. 883 approved.
2.3 It is not correct assume that the sole purpose behind publication of substance of Notification in locality, as required secondly in section 4 (1) of the Land Acquisition Act is to make requirement of section 5 A 'functionally effective.
[1009G] Where a decision of the Government to be effective and valid has to be notified in the Government Gazette, the decision itself does not become effective unless a notification in the Official Gazette follows.
Therefore, assuming that a notification is a formal expression of a decision of the Government to acquire land, unless the decision is notified in the Government Gazette by an appropriate notification, the proceedings for acquisition cannot be said to have been initiated and the decision would remain a paper decision, Section 4 (1) further requires that 'the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality ' The expression 'such notification ' in the latter part of Section 4(1) and sequence of events therein enumerated would clearly spell out that first the Government should reach a decision to acquire land, then publish a notification under section 4 (1) and simultaneously or within a reasonable time from the date of the publication of the notification cause a notice to be published containing substance of such notification meaning thereby that notification which is pub 998 lished.
Obviously, therefore, there cannot he a publication in the locality prior to the issuance of the notification.
[1010B G] Babu Barkya Thakur vs The State of Bombay, [1961] I SCR 128; Narendra Bahadur Singh and Anr.
vs State of U.P. & Ors, ; ; State of Madhya Pradesh & Ors.
vs Vishnu Prasad Sharma & Ors, ; held in applicable.
Mahendra Lal Jaini vs The State of Uttar Pradesh & Ors, [1963] Supp.
I SCR 912 relied on.
3.1 Where power is conferred to achieve a purpose the power must be exercise reasonably and in good faith to effectuate the purpose.
And in this context 'in good faith ' means for legitimate reasons.
Where it is exercised for extraneous or irrelevant consideration 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 malafides.
In such a situation there is no question of any personal ill will or motive [1018C E] Municipal Council of Sydney vs Compbell, [1925] A.C. 338 at 375 quoted with approval.
State of Punjab vs Gurdial Singh & Ors, [1980] I SCR 1071 explained and followed.
3.2 Where power is conferred to achieve a certain purpose, the power can be exercised only for achieving that purpose.
Section 4(1) confers power on the Government and .
the Collector to acquire land Deeded for a public purpose.
The power to acquire land is (o be exercised for carrying out a public purpose.
If the authorities of the Sammelan cannot tolerate the existence of a cinema theatre in its vicinity it cannot he said that such a purpose would be a public purpose.
The authority of the Sammelan may honestly believe that the existence of a cinema theatre may have the pernicious tendency to vitiate the educational and cultural environment of the institution and therefore.
it would like to wish away a cinema theatre in its vicinity.
That hardly constitutes public purpose.
The proclaimed need of land for putting up Sangrahalya is an easy escape route whenever Sammelan wants to take over some piece of land.
Need of the land for Sangrahalya is a figment of imagination consured up to provide an ostensible purpose for acquisition.
There is enough land roughly admeasuring 7315 sq.
Lying vacant and unutilised with the Sammelan for over a quarter of a century.
The Sangrahalya has not come up though this was the land which was taken from the Municipal Board for the avowed object of putting up a Sangrahalya.
The Sammelan moved on to Rangamanch and Natyashala and then ultimately adopted a position that when the land is made available, scheme will be devised for its proper use.
The Sammelan was ever interested in acquiring the land for effectuating any of its objects.
It was neither the plans nor the wherewithal nor any specific object 999 for which it needs land and it is unable to use over years the land already available at its disposal.
Therefore, the Sammelan was actuated by extraneous and irrelevant considerations in seeking acquisition of the land and the statutory authority having, 'known this fact yet proceeded to exercise statutory pwoer and initiated the process of acquisition.
[1017F H, 1018A B] 3.3 The power to acquire land was a exercised for an extraneous and irrelevant purpose and it was colourable exercise of power, namely, to satisfy the chagrin and anguish of the Sammelan at the coming up of a cinema theatre in the vicinity of its campus, which vowed to destroy.
There fore, the consideration dated 6 2.1975 is illegal and invalid.
[1019E F]


judgement:
N: Criminal Appeal Nos.
452 453 of 1984.
Appeals by Special leave from the Judgment and Order dated the 1st July, 1983 of the Madhya Pradesh High Court in Criminal Revision No. 105 of 1983 and Misc.
Case No. 366 of 1983.
S.T. Desai, M.S. Ganesh and S.C. Dagadiya, for the appellants.
Ravindra Bana and A.K. Sanghi for the respondents.
The Judgement of the Court was delivered by CHINNAPPA REDDY, J. Special Leave granted.
A complaint was laid by the State of Madhya Pradesh through the Inspector, Food and Civil Supplies, Dewas against the two petitioners Sheoratan Agarwal and Raghunandanlal Chaturvedi, the Managing Director and the Production Manager of M/s 5 S Limited, a public Limited Company with its registered office at Calcutta, for alleged violations of clause 2 (c)(i) and 3 of the Madhya Pradesh Pulses, Edible Oil Seeds and Edible Oil Dealers Licensing Order, 1977 and clause 3 of the Madhya Pradesh Essential Commodities (Price Exhibition and Price Control) Order, 1977 read with sections 3 and 7 of the Essential Commodities Act.
The petitioners moved the High Court of Madhya Pradesh under sections 397 and 482 of the Code of Criminal Procedure to quash the Proceedings against them on the ground that they could not, in law, be prosecuted unless the Company itself was prosecuted.
The High Court overruled the contention raised on behalf of the petitioners.
Hence these two appeals by Special Leave under Article 136 of the Constitution.
721 Shri S.T. Desai, learned counsel for the petitioners, urged the same contention before us, relying for that purpose upon the language of section 10 of the Essential Commodities Act, and the decision of this Court in State of Madras vs C. V. Parekh and another and the decision of some High Courts: State of Gujarat vs Chandulal Jethalal, Mirji Brothers Oil Mill vs State of Karnataka, Santi Kumar Agarwala vs State.
We do not think that the language of section 10 of the Essential Commodities Act justifies the submission made on behalf of the petitioners that if it is alleged that the person contravening the order made under the Essential Commodities Act is a Company, the prosecution of the Directors, the officers, and servants of the Company or other persons is precluded unless the Company itself is prosecuted.
We are afraid the submission made on behalf of the petitioners proceeds upon a misunderstanding of the decision of this Court in State of Madras vs C.V. Parekh.
(supra).
So do the various other decisions of High Courts cited before us.
Section 10 of the Essential Commodities Act is as follows: "(1) If the person contravening an order made under Sec.
3 is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable 722 to any neglect on the part of, any director, manager, secretary or other officer of the company such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation For the purpose of this section, (a) "company" means any body corporate, and includes a firm or other association of individuals; and (b) "director" in relation to a firm means a partner in the firm.
" The Section appears to our mind to be plain enough.
If the contravention of the order made under Section 3 is by a Company, the persons who may be held guilty and punished are (1) the Company itself (2) every person who, at the time the contravention was committed, was in charge of, and was responsible to, the Company for the conduct of the business of the Company whom for short we shall describe as the person in charge of the Company, and (3) any director, manager, secretary or other officer of the Company with whose consent or connivance or because of neglect attributable to whom the offence has been committed, whom for short we shall describe as an officer of the Company.
Any one or more or all of them may be prosecuted and punished.
The Company alone may be prosecuted.
The person in charge only may be prosecuted.
The conniving officer may individually be prosecuted.
One, some or all may be prosecuted.
There is no statutory compulsion that the person in charge or an officer of the Company may not be prosecuted unless he be ranged alongside the Company itself.
Section 10 indicates the persons who may be prosecuted where the contravention is made by the Company.
It does not lay down any condition that the person in charge or an officer of the Company may not be separately prosecuted if the Company itself is not prosecuted.
Each or any of them may be separately prosecuted or alongwith the Company.
Section 10 lists the person who may be held guilty and punished when it is a Company that contravenes an order made under Section 3 of the Essential Commodities Act.
Naturally, before the person in charge or an officer of the Company is held guilty in that capacity it must be established that there has been a contravention of the order by the Company.
That should be axiomatic and that is all that the Court laid down in State of Madras vs C. V. Parekh (supra) as a careful reading of that case will show and 723 not that the person in charge or an officer of the Company must be arraigned simultaneously along with the Company if he is to be found guilty and punished.
The following observations made by the Court clearly bring out the view of the Court: "It was urged that the two respondents were in charge of, and were responsible to, the company for the conduct of the business of the Company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of clause 5 of the Iron and Steel (Control) order.
This argument cannot be accepted, because it ignores the first condition for the applicability of section 10 to the effect that the person contravening the order must be a company itself.
In the present case, there is no finding either by the Magistrate OR by the High Court that the sale in convention of clause 5 of the Iron & Steel (Control) order was made by the Company.
In fact, the Company was not charged with the offence at all.
The liability of the persons in charge of the Company only arises when the contravention is by the Company itself.
Since, in this case, there is no evidence and no finding that the Company contravened Cl.
5 of the Iron & Steel (Control), order the two respondents could not be held responsible.
The actual contravention was by Kamdar and Villabhadas Thacker and any contravention by them would not fasten responsibility on the respondents.
" The sentences underscored by us clearly show that what sought to be emphasised was that there should be a finding that the contravention was by the Company before the accused could be convicted and not that the Company itself should have been prosecuted along with the accused.
We are therefore clearly of the view that the prosecutions are maintainable and that there is nothing in section 10 of the Essential Commodities Act which bars such prosecutions.
The learned counsel also invited our attention to the decisions in Durgamata Oil Mill vs Calcutta Municipality, D.K. Jain vs State and Chander Bhan vs The State.
None of these cases has any application.
They arose under the Prevention of Food Adulteration Act and it is unnecessary for us to consider them.
The appeals are rejected.
M.L.A. Appeals dismissed.

dataset_name: IN-Abs

summary:
The two appellants, who were the Managing Director and the Production Manager of a public limited company, were prosecuted by the respondent for alleged violations by their company of clauses 2 (c) (i) and 3 of the Madhya Pradesh Pulses, Edible Oil Seeds and Edible Oil Dealers Licensing Order, 1977 and clause 3 of the Madhya Pradesh Essential Commodities (Price Exhibition and Price Control) Order, 1977 read with sections 3 and 7 of the Essential Commodities Act (the Act, for short).
The appellants moved the High Court under sections 397 and 482 of the Code of Criminal Procedure to quash the proceedings against them on the ground that they could not, in law, be prosecuted unless the company itself was prosecuted.
The High Court over ruled this contention and hence these appeals by special leave.
Dismissing the appeals, ^ HELD: 1.
Section 10 of the Act lists the persons who may be held guilty and punished when it is a company that contravenes an order made under Section 3 of the Act.
They are: (1) the company itself (2) every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, that is, the person in charge of the company, and (3) any director, manager, secretary or other officers of the company with whose consent or connivance or because of neglect attributable to whom the offence has been committed, that is, an officer of the company.
[722C F] 2.
It is clear from the language of Section 10 that there is no statutory compulsion that the person in charge or an officer of the company may not be prosecuted unless he be ranged alongside the company itself.
Each or any of them may be separately prosecuted or along with the company if there is a contravention of an order made under Section 3 of the Act by the company.
It does no lay down any condition that the person in charge or an officer of 720 the company may not be separately prosecuted if the company itself is not prosecuted.
Therefore the prosecutions of the appellants are maintainable and that there is nothing in Section 10 of the Act which bars such prosecution [722 G,H, 723F] State of Madras v C.V. Parekh and another, AIR 1971 S.C. 447, State of Gujarat vs Chandulal Jethalal, (1980) 21 Gujarat Law Reporter 353, Mirji Brothers Oil Mill vs State of Karnataka, and Santi Kumar Agarwala vs State, ILR.
1975 Cuttack 86, distinguished.
Durgamata Oil Mill vs Calcutta Municipality, 1978 Crl.
L.J. 222, D.K. Jain vs State, AIR 1965 All.
525 and Chander Bhan vs The State, 1975 All India Prevention of Food Adulteration, held inapplicable.


judgement:
Civil Appeal No. 2231 of 1985.
From the Judgment and Order dated 8.3.1983 of the Madhya Pradesh High Court in Misc.
Petition No. 1124 of 1982.
R. Satish for the Appellants.
S.K. Mehta for the Respondents.
The Judgment of the Court was delivered by DESAI, J.
Special leave granted.
A trivial dispute disposed of by an eminently just and legally correct order by the Labour Court was unnecessarily interfered with by the Industrial Court, Madhya Pradesh which has forced employees working in a comparatively lower grade to knock at the doors of this Court.
Urban Family Planning Clinic ( 'Clinic ' for short) was set up at Bhilai for implementation of family welfare schemes of the Government of India in accordance with approved pattern set out in the letter of Ministry of Health dated May 16, 1963.
The Chief Medical Officer of the Bhilai Steel Plant was to be the administrative officer for the Clinic The entire expenditure of the Clinic was met by the Government of India by giving 100% grant though it was stated as a fact that this amount was not brought into the bank account of Bhilai Steel Plant but was deposited in a separate bank account in the State Bank of India under the name and style of Bhilai Steel Plant Urban Family Planning Clinic Grant in aid Account.
Subsequently on the recommendation of Bureau of Public Enterprises, the Clinic was treated as an integral part of the 1052 administration of Bhilai Steel Plant and the employees working in the Clinic were absorbed as employees of the Bhilai Steel Plant effective from February 4, 1976.
Usha Rani Datta and 11 others who were serving as Aaya/Attendants etc.
(presumably Class IV employees) moved an application before the Labour Court for a relief that they are being wrongly treated as fresh employees from the date of absorption and that their services since the commencement of employment somewhere in 1964 be treated as continuous for the purpose of gratuity, retrenchment and leave etc.
The application was moved in the Labour Court, Durg but it came to be transferred to Labour Court at Raipur.
The management of the Bhilai Steel Plant contested the application contending that the Clinic was an independent unit set up by the Government of India and that it was not an integral part of the administration of Bhilai Steel Plant and therefore the services rendered prior to the absorption on February 4, 1976 could not be treated as service under the Bhilai Steel Plant and therefore the application deserves to be dismissed.
The learned Presiding Officer of the Labour Court after hearing both sides and taking into consideration the evidence produced before it held that the Clinic had hardly any independent existence and that the employees of the Clinic were in reality and for all practical purposes the employees of the Steel Plant.
Accordingly the application was allowed and the necessary relief was given.
Two revision petitions came to be filed before the Industrial Court at Madhya Pradesh set up under the Madhya Pradesh Industrial Relations Act.
One Revision Petition being No. 10/MPlR/81 was filed by the Executive Director, Bhilai Steel Plant questioning the correctness of the decision of the Labour Court.
Original applicants before the Labour Court Smt.
Usha Rani Datta and others filed a Revision Petition being No. 2/MPIR/81 praying for relief not granted by the Labour Court.
` Both the revision petitions were disposed of by a learned Member of the Industrial Court by a common judgement.
Taking up the revision petition of the management it was held 1053 family planning centres were run by different public undertakings and it was started as part of the general policy of the Government of India and even though the entire expenditure of the Centre was reimbursed by the Government of India, the clinic of the centre could not be said to be an industry within the meaning of the expression in the Act nor could it be said to be incidental to the main business of the Bhilai Steel Plant.
The learned Member further held that the prayer in the application before the Labour Court was that the petitioners before the Labour Court who were formerly employed in the Family Planning Clinic should be given additional and better wages and service conditions and this subject was beyond the competence of the Labour Court, and for these reasons the application was not maintainable.
Accordingly the revision petition filed by the management was allowed and the revision petition of the original petitioners was dismissed with a further direction that the application before the Labour Court was liable to be dismissed.
After an unsuccessful writ petition No. 1124/82 in the High Court of Madhya Pradesh at Jabalpur, theoriginal applicants have filed this appeal by special leave.
The findings of facts as recorded by the Labour Court and which have neither been departed from nor questioned by the High Court clearly point to the inescapable conclusion that the Clinic had no independent existence of its own and that for all practical purposes it was under the administrative control of the Bhilai Steel Plant.
Let us recapitulate those findings, of facts.
The Clinic was set up at Bhilai somewhere in 1964 according to the approved pattern set out in the letter of the Ministry of Health dated May 16, 1963.
This letter was annexed as Annexure R l to the writ petition, in the High Court.
Bhilai Steel Plant is an wholly owned Government of India undertaking.
It received grant to meet the entire expenditure of the Clinic.
After the independent existence on paper from 1964 to 1976, the pretence was removed and the reality accepted in that all the employees of the Clinic were absorbed as employees of the Bhilai Steel Plant.
This becomes clear from the letter of the Senior Personnel Manager, Bhilai Steel Plant dated February 4, 1976.
It provides that the General Manager has approved absorption of Family Planning staff as regular employees of the Bhilai Steel Plant under Chief Medical Officer with imme 1054 diate effect, against posts and scales set out in the letter.
It was further stated that the posts, designations and scales are personal to the existing incumbents and on finalisation of standard manning & designations, the absorbed personnel would be suitably adjusted, to the extent feasible.
Therefore till the absorption, the pretence was that the Clinic even though it wholly under the administrative control of the Chief Medical Officer, Bhilai Steel Plant who was none other than a full time employee of the Bhilai Steel Plant, was treated independent.
Absorption erased the pretence.
These facts are not in dispute and were not controverted before us.
The learned Member of the Industrial Court with whom High Court appears to have agreed, was of the opinion that when the Clinic had its separate existence it was not covered in the expression 'industry ' and that even though Bhilai Steel Plant is an industry, the Clinic could not be styled as industry.
In our opinion this distinction drawn is entirely meaningless.
If Bhilai Steel Plant is an industry and if under the decision of this Court in Bangalore Water Supply & Sewerage Board etc.
v R. Rajappa & others (1) an hospital is an industry, this distinction drawn between two branches of administration of Bhilai Steel Plant attaches importance to a shadow without substance and substance without significance The Clinic had no independent existence In fact it was an euphimism to call it an independent undertaking.
lt was part and parcel of Bhilai Steel Plant administrative set up.
May be for purpose of accounting 100% grant received from the Government of India was kept in a separate account but that does not clothe the Clinic with any independent existence.
lt was nowhere suggested that the employees of the Clinic were employees of the Government of India This aspect did agitate the mind of the High Court when it observed that: 'it is a moot question whether the employees in the Clinic were employees of the Government of India or of the Plant.
The undisputed fact is that the Clinic was managed by Chief Medical Officer of Bhilai Steel Plant with a designation of Administrative Officer of the Clinic and was accountable for the money received from the Government of India as grant to the Undertaking called Bhilai Steel Plant and if it was never contended that the employees of the Clinic were the employees of the Government of India, indisputably the Labour Court was perfectly justified in holding that the employees of the Clinic were the employees of the Bhilai Steel (l) ; 1055 Plant working in a department called Clinic under the administrative control of Chief Medical Officer who was under the overall administrative control of the management of Bhilai Steel Plant.
In our opinion, therefore the Labour Court was perfectly justified in holding that since the inception of the Clinic the employees were the employees of the Bhilai Steel Plant and that the absorption was an acceptance of reality avoiding the pretence.
The learned Member of the Industrial Court was in error in concluding that whether the application as made was not maintainable.
The reasons which appealed to the Labour Court for holding that the application was maintainable are indisputably unquestionable and the view to the contrary does not commend to us.
Lastly we may refer to one observation of the High Court which may create confusion in future and therefore requires to be properly understood.
Says the High Court that the Clinic was not a canteen or a hospital run for the welfare of the employees in the main industry and it was not opened as an operation incidental to the main industry The High Court concluded that for this reason the employees working in the Clinic, could not be taken to be the employees employed i`n the Iron and Steel Industry carried on by the Plant.
Unfortunately the High Court overlooked that family planning scheme has to be implemented in larger national interest.
Public, Sector undertakings owned by the Government of India may be directed to carry out this scheme.
Probably imbued with this idea, the Clinic was set up under the administrative control of the Chief Medical Officer of the Plant.
If a hospital can be said to be run for the welfare of the employees of the plant as observed by the High Court one fails to understand, how a clinic which could also be described as a hospital for giving advice in family planning could be differentiated from a hospital modern hospital can as well have a family planning clinic.
The distinction drawn by the High Court lacks logic.
Therefore also one can safely conclude that the clinic was an integral department of the, Plant and had hardly any independent existence.
The independent paper existence was found unworkable in the long run and therefore the Public Enterprises Committee directed public enterprise to absorb the employees of the Clinic in the establishment of the Plant.
Accordingly no other view is possible than the one taken by the Labour Court.
1056 Accordingly this appeal is allowed and the decision of the learned Member of the Industrial Tribunal as well as the judgment of the High Court are set aside and the one given by the Labour Court is restored with costs throughout.
The total costs is quantified at Rs. 5,000 A.P.J. Appeal allowed.

summary:
Urban Family Clinic was set up by a Steel Plant for implementation of family welfare schemes.
The Chief Medical Officer of The Plant was the administrative officer for the Clinic.
The financial expenditure of the Clinic was borne by the Government of India.
Subsequently the Clinic was treated as an integral part of the administration of the Plant and its employees were absorbed with effect from February 4, 1976.
The appellants who were serving as Aaya/Attendants moved an application before the Labour Court for a relief that they are being wrongly treated as fresh employees from the date of absorption and that their services since the commencement of employment be treated as continuous for the purpose of gratuity, retrenchment and leave etc.
The management of the Plant contested the application contending that the Clinic was an independent unit set up by the Government of India and that it was not an integral part of the administration and, therefore, the services rendered prior to the absorption could not be treated as service under the Plant and, therefore, the application deserves to be dismissed.
The Labour Court allowing the application held that the Clinic had hardly any independent existence and that the employees of the Clinic were in reality and for all practical purposes the employees of the Plant.
Two revision petitions were filed before the Industrial Court one on behalf of the Plant, and the other on behalf of the appellants.
The Industrial Court dismissed the revision petition of the appellants with a further direction 1050 that the application before the Labour Court was liable to be dismissed.
While allowing The revision petition of the management, the Industrial Court held that family planning centers were run by different public undertakings and it was started as part of the general policy of the Government of India and even though the expenditure of the centre was reimbursed by the Government, the Clinic of the centre could not be said to be an industry within the meaning of expression in the Act nor could it be said to be incidental to the main business of the Plant.
The prayer in the application before the Labour Court that the appellants should be given additional and better wages and service conditions was beyond the competence of the Labour Court and consequently the application was not maintainable.
The writ petition filed by the appellants was dismissed by the High Court, Allowing the Appeal, ^ HELD: 1.
The findings of facts as recorded by the Labour Court and which have neither been departed from nor questioned by the High Court clearly point to the inescapable conclusion that the Clinic had no independent existence of its own and that for all practical purposes it was under the administrative control of the Plant.
[1053 F] 2.
The Clinic had no independent existence.
In fact it was an euphemism to call it an independent undertaking.
It was part and parcel of the administrative set up.
The Clinic was managed by tho Chief Medical Officer of the Plant with a designation of Administrative Officer, and was accountable for the money received from the Government of India.
The labour Court was perfectly justified in holding that the employees of the Clinic were the employees of the Plant working in a department under the administrative control of Chief Medical Officer who was under the overall administrative control of the management of the Plant.
The Labour Court was perfectly justified in holding that since the inception of the Clinic the employees were the employees of the Plant and that the absorption was an acceptance of reality avoiding the pretence.
[1054 E; G H; 1055 A B] 3.
The Industrial Court was in error in concluding that whether the application as made was not maintainable.
The reasons which appealed to the Labour Court for holding that the application was maintainable are indisputably unquestionable and the view to the contrary is untenable.
[1055 C] 4.
The High Court has overlooked that Family Planning Scheme has to be implemented in larger national interest.
Public sector undertakings owned by the Government of India may be directed to carry out the scheme.
For this purpose the Clinic was set up under the administrative control of the Chief Medical Officer of the Plant.
If a hospital can be said to be run for the welfare of the employees of the Plant how the Clinic which would also be described as a hospital for giving advice in family planning could be differentiated from a hospital.
A modern hospital can as well have a family planning clinic.
The distinction drawn by the High Court lacks logic.
The Clinic was an integral 1051 department of the Plant and had hardly any independent existence.
The independent paper existence was found unworkable in the long run and therefore the Public Enterprises Committee directed to absorb the employees of the Clinic in the establishment of the Plant.
Accordingly no other view is possible than the on taken by the Labour Court.
[1055 E H] Bangalore water Supply &.
Sewerage Board etc.
vs R. Rajappa & others, 11978] 3 SCR 207, referred to.