M/S. M.S.P.L. LIMITED VERSUS THE STATE OF KARNATAKA AND ORS.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No(s). 4678 OF 2021

(arising out of SLP (Civil) No. 23353 of 2012)

M/S. M.S.P.L. LIMITED …Appellant(s)

VERSUS

THE STATE OF KARNATAKA AND ORS. …Respondent(s)

WITH

CIVIL APPEAL No(s). OF 2022

(arising out of SLP (Civil) No. 23351 of 2012)

SRI SYED AHMED …Appellant(s)

VERSUS

THE STATE OF KARNATAKA AND ORS. …Respondent(s)

CIVIL APPEAL No(s). 46994719 OF 2021

(arising out of SLP (Civil) Nos. 2086620886 of 2012

THE KARNATAKA INDUSTRIAL AREA

DEVELOPMENT BOARD AND ANOTHER …Appellant(s)

VERSUS

SRI KAKARAL RAVIKUMAR AND OTHERS …Respondent(s)

CIVIL APPEAL No(s). 46794698 OF 2021

(arising out of SLP (Civil) Nos. 2131021329 of 2012

M/S. AARESS IRON & STEEL LTD. …Appellant(s)

VERSUS

THE STATE OF KARNATAKA AND ORS.

ETC. …Respondent(s)

AND WITH

CIVIL APPEAL No(s). 47454747 OF 2021

(arising out of SLP (Civil) Nos. 2191521917 of 2013

THE STATE OF KARNATAKA AND ANOTHER …Appellant(s)

VERSUS

SRI KAKARAL RAVIKUMAR AND OTHERS …Respondent(s)

J U D G M E N T

Vikram Nath, J.

1. Leave granted in SLP(C) No. 23351/2012.

2. The State of Karnataka (Civil Appeal No. 47454747 of

2021), the Karnataka Industrial Area Development Board (Civil

Appeal No. 46994719 of 2021), M/S MSPL Limited (Civil Appeal

No. 4678 of 2021) and AARESS Iron & Steel Limited (Civil Appeal

No. 46794698 of 2021) have jointly assailed the correctness of

the judgement and order dated 22.03.2012 passed by the

Division Bench of the Karnataka High Court, Circuit Bench at

Dharwad in a group of writ appeals filed by the land owners. By

the said judgment, the Division Bench allowed the writ appeals,

set aside the order of the learned Single Judge dated 17.03.2009

and the writ petitions were allowed. The notifications under

Sections 3(1), 1(3) and 28(1) of the Karnataka Industrial Areas

Development Act, 19661

were quashed.

3. Civil Appeal @ SLP (C) No. 23351 of 2012 is filed by a land

owner Syed Ahmed challenging the judgment dated 14.12.2011

passed by the Division Bench of the Karnataka High Court,

Circuit Bench at Dharwad in Writ Appeal No. 6098 of 2009

whereby the writ appeal was dismissed and the judgement of the

learned Single Judge dated 23.06.2008 dismissing the writ

petition {bearing number W.P.No. 18617 of 2007 (LAKIDAB)} was

affirmed. As the argument of the appellant is based upon the

Division Bench Judgement of the Karnataka High Court dated

22.03.2012 which is impugned in the group of Civil Appeals

referred to above, this matter has been taken up analogous with

the above said appeals.

Background

1 In short “the 1966 Act”

4. Two State Acts legislated in the State of Karnataka are

relevant for determination of issues in the present case.

Karnataka Industrial Areas Development Act, 1966 and the

Karnataka Industries (Facilitation) Act, 20022

(i) The 1966 Act came up with the following

preamble/object:

“An Act to make special provisions for securing the

establishment of industrial areas in the 1 [State of

Karnataka]1 and generally to promote the establishment

and orderly development of industries therein, and for that

purpose to establish an Industrial Areas Development

Board and for purposes connected with the matters

aforesaid. WHEREAS it is expedient to make special

provisions for securing the establishment of industrial areas

in the 1 [State of Karnataka]1 and generally to promote the

establishment and the orderly development of industries in

such industrial areas, and for that purpose to establish an

Industrial Areas Development Board and for purposes

connected with the matters aforesaid;”

(ii) The 2002 Act was enacted with the following

preamble/object:

“An Act to provide for the promotion of industrial

development and facilitation of new investments to simplify

the regulatory frame work by reducing procedural

requirements and rationalising documents and to provide for

an investor friendly environment in the State of Karnataka.

Whereas, it is expedient to provide for speedy

implementation of industrial and other projects in the State

by providing single point guidance and assistance to

promoters, reducing the procedural requirements,

rationalising documents and to ensure smooth

operation;”

2 In short “the 2002 Act”

5. The acquisition is for two companies viz. M/s MSPL

Ltd.3 and M/s AARESS Iron and Steel Ltd.4

, for setting up an

iron ore palletisation plant and an integrated steel plant

respectively.

6. Before setting out the facts it is relevant to note that

challenge to the notifications under Section 1(3) and 3(1) of

1966 Act is made only in W.P. No.6304 of 2008. This

petition relates to the land acquired for MSPL. The land

owner in this petition S. Narayana Reddy owned only 4.35

acres whereas the total land acquired for MSPL was approx:

110 acres. Thus, S.Narayana Reddy owned a fraction of land

being less than 4% of the total acquisition for MSPL. Rest of

the 10 petitions challenged the notification under Section 28

of 1966 Act. The writ petitioners therein in all the 10

petitions held less than 10% of the total land acquired for

AISL. For sake of convenience facts from the appeal of MSPL

have been recorded. It covers the relevant facts of the AISL

appeal also.

________________

In short “MSPL”

In short “AISL”

Chronology of events:

i. MSPL moved an application on 23.03.2005 before the

State High Level Clearance Committee5

under the 2002

Act for approval of project to set up palletisation plant

and an integrated steel plant in Koppal Taluk of

Koppal District in the State of Karnataka.

ii. The SHLCC in its meeting dated 06.06.2005 approved

the proposal of the project of MSPL to establish 1.20

million TPA iron ore pellet plant and 1 million TPA

speciality steel plant (an integrated steel plant with an

initial capacity of 1 million TPA) with a total cost of Rs.

2296.26 Crores for both the plants.

iii. The SHLCC also approved infrastructural facilities for

the aforesaid project which included acquisition of

1034 acres of land by Karnataka Industrial Area

Development Board63

setup under the 1966 Act.

iv. Government of Karnataka on the aforementioned

recommendations issued a Government Order dated

In short “SHLCC”

In short “KIADB”

22.12.2005 permitting MSPL to setup the project

and also approved the infrastructural facilities,

including 1034 acres of land to be acquired by the

KIADB.

v. MSPL on 04.01.2006 transferred all applications

made to the Government of Karnataka for setting up

of palletisation and iron and steel plant to AISL.

vi. Consequent to the above, AISL on 09.01.2006

applied for all applications submitted by MSPL to be

transferred in its name.

vii. On 16.01.2006, a further restructuring was made

by MSPL and it was communicated to the

Department of Industries that the palletisation

project was to be done by MSPL whereas the iron

and steel project was to be done by AISL.

viii. On 28.01.2006, the Land Audit Committee granted

approval of 1034 acres of land for acquisition.

ix. On 15.02.2006, Karnataka Udyog Mitra conveyed

the

decision dated 28.01.2006 to KIADB to give 1034

acres of land for the project.

x. The Government of Karnataka issued another

Government Order dated 22.03.2006 modifying

already approved project for pellet plant in favour of

the MSPL and integrated steel plant in the name of

AISL.

xi. The State Government issued notifications under

Section 1(3), 3(1) and 28(1) of the 1966 Act somewhere

between 09.11.2006 till 07.05.2007.

xii. The Karnataka State Pollution Control Board7 4on

19.10.2006 forwarded its inspection report for the

palletisation plant of MSPL.

xiii.The Special Land Acquisition Officer, KIADB on

20.11.2006 issued notice to the land owners under

Section 28(2) of 1966 Act inviting their objections.

xiv. On 12.04.2007, the Special Land Acquisition Office,

KIADB issued an order under Section 28 (3) of 1966

Act after dealing with each of the objections.

xv. Thereafter, notifications under Section 28(4) of 1966

Act was issued on 17.05.2007, 13.03.2008 and

17.04.2007 for a total area of 110 acres 24 guntas

In short KSPCB

required by MSPL. (Similar notifications were issued

for the land required for AISL)

xvi. The compensation under Section 29 (2) of 1966 Act

was determined at a sum of Rs. 3,64,98,000/ for

MSPL.

xvii. The Special Land Acquisition Officer, KIADB issued its

orders determining compensation of land in two

categories: Rs. 3 lac per acre for dry land and Rs. 3.50

lacs per acre for irrigated lands. The land owners were

requested to collect their compensation.

xviii. Writ Petition No. 10501 of 2007 and 10 other

petitions were filed praying for quashing of the

notifications issued under Section 28(4) of the 1966

Act for MSPL and AISL. It would be relevant to

mention that more than 90 per cent of the land owners

covering 90 per cent of the area acquired accepted the

compensation. It was only 10 per cent or less of the

land owners who had filed the above 11 petitions. In

Writ Petition No. 6304 of 2008 challenge was also

made to the grant under Sections 1(3) and 3(1) of the

1966 Act. The area of petitioners therein sought to be

acquired is only 4 acres and 34 guntas. Further the

Writ Petition No. 6304 of 2008 was with respect to the

land for the pelletisation plant being set up by MSPL

The other 10 petitions were for the land acquired for

AISL.

xix. On 31.01.2008, the Government of Karnataka issued

an order for transfer of land with respect to 110 acres

and 24 guntas.

xx. The transfer of possession took place on 10.03.2008

and both the companies MSPL and AISL were handed

over possession.

xxi. MSPL entered into an agreement with KIADB on

11.03.2008.

xxii. KSPCB gave its consent to MSPL to establish pellet

plant on 02.08.2008 and 01.12.2008.

xxiii. Further the Ecology and Environment Department of

Government of Karnataka gave environmental

clearance on 01.10.2010.

xxiv. On 17.03.2009, the learned Single Judge dismissed

all the 11 petitions.

xxv. Judgment of the Single Judge was challenged by way

writ appeals before the Division Bench.

xxvi. The Division Bench vide judgment dated 22.03.2012

allowed the appeals and quashed the acquisition

proceedings for the entire areas which was not even

challenged.

xxvii. Special Leave Petitions filed in this Court with a

request for interim order in favour of MSPL. This

Court granted interim protection on 27.07.2012 by

staying operation of the impugned judgment of the

Division Bench.

xxviii. The Ministry of Environment and Forest issued an

order dated 08.09.2014 providing that the plant may

be continued to operate.

xxix. The KSPCB issued an order dated 16.10.2014 asking

MSPL to apply for Terms of Reference (TOR) by

07.12.2014 and also to obtain environment clearance

within one year.

xxx. The Ministry of Environment and Forest vide letter

dated 23.09.2016 communicated environmental

clearance to MSPL.

7. The above chronology of events is part of the written note of

the appellant MSPL. No objection has been taken by the

respondents to the said chronology.

Proceedings before the High Court:

8. Before the learned Single Judge, the learned counsels for

land owners had raised two points as recorded in paragraph 3

thereof; the same is reproduced below:

“Sri Mahabaleshwar Goud, learned counsel appearing on

behalf of some of the petitioners canvassed mainly two

points: (a) The State Government has not issued Notification

under Section 1(3) of the KIADB Act and consequently,

Chapter 7 of the KIADB Act has not come into force in so far

as it relates to the present acquisition is concerned and

therefore, the acquisition notifications issued under Section

28(1) and 28(4) of the KIADB Act are bad in the eye of law,

and (b) the acquisition is in respect of only one company and

therefore, the same is not for public purpose. According to

him, it is the case of colourable exercise of power and the

action of the respondents is fraudulent and therefore, the

acquisition proceedings vitiate.”

9. Insofar as the first point was concerned regarding the

absence of notification under Section 1(3) of the 1966 Act, the

learned counsel appearing for KIADB produced the notification of

the Government dated 09.01.2006 notifying that chapter VII of

the 1966 Act would come into force in the relevant area. Insofar

as the second point is concerned that the acquisition was only for

one company and as such it could not be for public purpose, the

exercise being colourable exercise of power and the action of

respondents is fraudulent was dealt with by the learned Single

Judge in detail and relying upon the judgments of the Karnataka

High Court under the 1966 Act held that the second argument

would also fail. The learned Single Judge has also recorded in

the last paragraph that only 1/10 i.e. 10% of the land owners

submitted their grievances by filing the writ petitions. It further

gave reasons for not accepting their challenge in larger public

interest relying upon a judgment of this Court. The last

paragraph of the judgment of learned Single Judge is reproduced

hereinbelow:

“As aforementioned, the owners of only 1/10th of the lands

which are sought to be acquired are agitating their

grievances by filing these writ petitions. If the Notifications

under Section 28(1) and Section 28(4) of the KIADB Act are

set aside, qua these pockets of lands, then the entire

development activity in the industrial area will come to a

grinding halt and that would not be in the interest of anyone.

It is not advisable nor feasible to interfere with the

acquisition of such a large tract of lands when the occupants

of 9/10th of the acquired lands have not thought it fit to

challenge the acquisition proceedings. The aforesaid view of

mine is supported by the judgement of the Apex Court in the

case of OM PRAKASH AND ANOTHER vs STATE OF U.P.

AND OTEHRS ((1998) 6 SCC PAGE1). The individual’s right

of the land owner must yield place to the larger public

purposes. In view of the same, this Court declines to

interfere I the acquisition proceedings.”

10. The Division Bench allowed the appeals, and after setting

aside the judgement of the learned Single Judge proceeded to

quash the acquisition proceedings. In paragraph 127, the

Division Bench recorded its conclusions which are reproduced

hereunder:

“127. In the result, we sum up our conclusions as under:

i) In the Indian context, Judicial review of administrative

action is much more precise, pervasive and accurate than as

contemplated either under the English legal system or as

developed in the American legal system. In the wake of our

country having a written Constitution and laws made by

competent legislatures, judicial review of administrative

action is not merely confined to the question of decision

making process on the parameters of the same being

affected or vitiated due to unreasonableness, arbitrariness or

irrationality, which concepts are not capable of a precise

definition though many erudite authors have made good

contributions and administrative law is very much part of

jurisprudence but is on more substantial and precise

parameters such as on the touchstone of the statutory

provisions and the constitutional provisions and therefore

any decision and the process of making such a decision, if is

not in conformity with the relevant statutory provisions and

the constitutional provisions, the decision is affected and

cannot be sustained.

ii) Acquisition of private lands even for a public purpose,

while should always be in conformity with the laws

governing acquisition proceedings and existence of public

purpose which subserve a public interest is a sine quo none

of such acquisition proceedings, in a situation where

acquisition is of private agricultural lands belonging to

agriculturists and has the effect of affecting their very

livelihood and depriving them of their avocation, then the

acquisition proceedings will have to be tested even on the

touchstone of the constitutional provisions such as Articles

14, 21 and 300A of the Constitution of India and though

there is no corresponding safeguard as is provided under

Article 22 of the Constitution of India visavis violations of

Article 21, nevertheless, Courts will have to apply the test of

strict compliance with procedural requirements and any

deviation even from procedural requirement will vitiate

acquisition proceedings.

iii) Acquisition of lands under the provisions of the Karnataka

Industrial Areas Development Act, 1966 can only be for the

purpose of developing the subject lands as an industrial area

and by the Board and cannot be for the benefit of a private

industry or company or companies, particularly as the

notifications issued under the provisions of 1, 3 and 28 of the

Act, proclaiming that the subject lands are notified for

acquisition for the purpose of the board and when once it is

so, handing over of such lands to a private industrialist

amounts to an instance of improper exercise of power and for

a purpose other than the published and stated purpose, but

more importantly, distribution of such acquired land, whether

after development or before development, being in the nature

of distribution of largesse of the State, amounts to depriving

equal opportunity to all aspirants, who propose to set up

industries in industrial areas and when the State hands over

acquired lands to a private individual, it is therefore violative

of the equality clause in the Constitution of India. In this

regard, statement of law as enunciated in the single bench

decision of this Court in the case of Heggappanavara [supra],

later followed by another learned Single Judge in the case of

N. Somashekar [supra], on the basis of the judgment of the

Supreme Court in the case of RAMTANU [supra], does not

state the correct legal position as indicated in para 21 of the

judgment of the constitutional bench of the Supreme Court,

reading as under:

21. Counsel on behalf of the petitioners contended that

there was procedural discrimination between the Land

Acquisition Act and the Act in the present case. It was

said that there was a special procedure designed by

the Land Acquisition Act for acquisition of land for the

companies whereas in the present case the State was

acquiring land for companies without adopting the

procedure of the Land Acquisition Act. It is to be

remembered that the Act in the present case is a

special one having the specific and special purpose of

growth, development and organisation of industries in

the State of Maharashtra. The Act has its own

procedure and there is no provision in the Act for

acquisition of land for a company as in the case of

Land Acquisition Act. In the present case, acquisition

under the Act is for the purpose of development of

industrial estates or industrial areas by the

Corporation or any other purpose in furtherance of the

objects of the Act. The policy underlying the Act is not

acquisition of land for any company but for the one

and only purpose of development, organisation and

growth of industrial estates and industrial areas. The

Act is designed to have a planned industrial city as

opposed to haphazard growth of industrial areas in all

parts of the State. The Act is intended to prevent,

growth of industries in the developed parts of the

State. Industries are therefore to be set up in the

developing or new parts of the State where new

industrial towns will be brought into existence. The

object of the Act is to carve out planned areas for

industries. On one side there will be engineering

industries and on the other there will be chemical

industries. There will be localisation of industries with

the result that the residents and dwellers of towns and

cities will not suffer either from the polluted air or

obnoxious chemicals of industries or the dense growth

of industries and industrial population, within and

near about the residential areas. The Land Acquisition

Act is a general Act and that is why there is specific

provision for acquisition of land by the State for public

purpose and acquisition of land by the State For

companies. The present Act on the other hand is

designed the sole purpose of development of industrial

areas and industrial estates and growth and

development of industries within the State. Industrial

undertakings or persons who are engaged in

industries all become entitled to the facilities on such

industrial growth. Under the Land Acquisition Act

acquisition is at the instance of and for the benefit of a

company whereas under the present Act acquisition is

solely by the State for public purposes. The two Acts

are dissimilar in situations and circumstances.

though the examination by the Supreme Court of the

Maharashtra Act was in the context of the Constitutional

validity of the Maharashtra Act as being repugnant to the

Central Enactment Land Acquisition Act as we find the

purpose of acquisition of lands under the Maharashtra Act as

well as the Karnataka Act is both for the purpose of

developing industrial areas in the State, and therefore cannot

be held to be laying down the correct law and ratio as

indicated in the two single bench decisions of this Court to

this effect is hereby overruled.

iv) An approval of the project proposed by an entrepreneur

and cleared by the State high level clearance committee

under Section 5 of the Felicitation Act by itself cannot act as

an insurance against any possible violations, infractions,

illegalities or irregularities in the matter of acquisition of

private lands by the State Government in exercise of its

power under any enabling acquisition Acts including the

present act (KIAD Act, 1966). Such clearance cannot and

does not absolve the State Government from adhering to the

procedural requirements envisaged tinder the Acquisition Act

and in the instant case, under the provisions of the KIAD Act

and the legality or otherwise of the proceedings for

acquisition of lands has to bear scrutiny independently and

the mere approval of the project by the State high level

clearance committee cannot and will not validate the

illegalities or irregularities in the matter of acquisit ion of

land. On such an independent examination in the instant

case, we find from the records that the State Government as

an acquiring authority and the board as a statutory

development board, have not, only committed infractions of

statutory provisions of Sections 3(1) and 28 of the Act but

having also merely surrendered to the decision of the State

high level committee and have thereby abdicated their duties

and responsibilities under the acquiring Act.

v) Simultaneous issue of notifications by the State

Government for declaring an area as industrial area under

Section 3(1) of the Act for notifying the applicability of

ChapterVII of the Act in respect of an industrial area under

Section 1(3) of the Act and the State Government issuing the

notification of its intention to acquire any extent of land in an

industrial area for the purpose of development by the board,

particularly when different extent of lands are mentioned in

these notifications, betrays a clear lack of understanding of

the statutory provisions as well as lack of awareness to the

legislative scheme in making provisions in the Act for issuing

of not only notifications but also to gazette the same under

these three different statutory provisions and unless it is

factually and on record that the State Government is able to

establish a commensurate application of mind to the three

different enabling sections of the Act, a presumption that

either the notifications are validly issued or that the

notifications are fully in conformity with the procedural

requirement does not arise. For a valid acquisition of lands

by the State Government in exercise of its powers under

Section 28 of the Act, unless the State Government has

adhered to the procedural requirement under subsections (2)

to (8) of Section 28 of the Act, the acquisition proceedings get

vitiated, as the acquisition results in deprivation of not

merely land of agriculturists but also their livelihood and

denial of their avocation, and therefore the present

acquisition of land becomes unsustainable as procedural

requirements under these statutory provisions are not

adhered to in the present cases.

vi) Proceedings for acquisition of lands notified under Section

28 of the Act are also vitiated for the reason that the State

Government has not shown its awareness to the mandate of

subrule (3) of Rule 5 of the Environment (Protection) Rules,

1986, imposing restrictions and prohibitions on new projects

or activities based on their potential environmental impacts

in respect of the industries and the nature of industries

proposed to be set up by the fourth respondent in the subject

lands before embarking on acquisition proceedings. The

amended Rule has come into force as per notification dated

1492006 and in clear and emphatic terms envisages the

procedure for either granting or rejecting of prior

environmental clearance. In terms of the notification, even

before construction of new projects, it has to be

approved/permitted or cleared by the central government or

by the State level environment impact assessment authority,

constituted by the Central Government under subsection (3)

of Section 3 of the Environment (Protection) Act. The

industries proposed to be set up by respondents 4 and 5

having an annual production capacity far exceeding 20000

tonnes are a class of industries/activities within the meaning

of column 3(a) of the schedule to the notification and

therefore prior clearance by the Central Government was

essential. The State Government having embarked on the

acquisition proceedings by issue of preliminary notification

dated 9112006 i.e., subsequent to the publication of the

notification dated 1492006 under the provisions of the

Environment (Protection) Act, indicates that the State

Government had embarked on acquisition proceedings for the

benefit of a private company to set, up industries covered by

the notification even before it was known as to whether a

project of this nature can be cleared by the Central

Government and therefore the acquisition proceedings get

vitiated. Acquisition of private agricultural lands by the State

Government and in the name of a public purpose cannot be

either casual or without being aware of the suitability and

possibility of the acquired lands being available or otherwise

for the proposal. In this view of the matter the State action

affecting rights of citizens under Articles 21 and 300A of the

Constitution of India and in turn violating Article 14 also,

cannot pass muster before a constitutional Court.”

11. Based on the above conclusion, the Division Bench allowed

the bunch of appeals and quashed the notifications issued under

Sections 1(3), 3(1) and 28(1) of the 1966 Act. Aggrieved by the

same, the appeals have been preferred by not only the companies

for whose benefits the land was acquired but also by the KIADB

and the State of Karnataka. At the cost of repetition, it is pointed

out that Civil Appeal @ SLP (C) No. 23351 of 2012 has been

preferred by a land owner aggrieved by judgment dated

14.12.2011, whereby the writ appeal of the said petitioner was

dismissed, confirming the dismissal of the writ petition by the

learned Single Judge with respect to a challenge relating to

similar acquisition for a company BMM Ispat Ltd. on similar

grounds.

12. We have heard the learned counsel for the parties and

perused the material on record. Shri Krishnan Venugopal,

learned Senior counsel appearing for the MSPL, after taking us

through the chronology of events, summarised the findings and

reasonings given in the impugned judgment as follows:

a. The appellant being a ‘private’ company, its interests are not

public.

b. The appellant MSPL multiplied into two or three entities

even during the process of acquisition proceedings.

c. The 2002 Act cannot lead to a situation that ‘at the same

time it can never be by giving a go by to other statutory

requirements and procedural compliances.

d. The process followed in terms of Section 28 of the 1996 Act

was not proper and many land owners were complaining

about being dispossessed or thrown out of their land as

procedural requirements were not complied.

e. Section 28(7) of the 1996 Act is ‘draconian’.

f. There is no ‘public purpose’ when land is acquired for one

entity.

g. The KIADB has not examined the issue of Environmental

Clearance.

h. Acquisition proceedings, in the background of the 2002 Act,

are not in accordance with law and not for public purpose.

13. Mr. Venugopal also briefly summarised the conclusions

given in paragraph 127 of the impugned judgment, which have

already been reproduced above as follows:

i. KIADB cannot acquire lands for a single company/private

industrialist and the same is improper exercise of power. It

is also not in public interest.

ii. Approval of project by SHLCC under the 2002 Act is not

immunity against illegalities/irregularities in land

acquisition.

iii. Simultaneous issuance of Notifications under Sections 1(3),

3(1) and 28(1) of the 1966 Act for declaration of the land as

‘industrial area’ and its acquisition, ‘betrays a clear lack of

understanding of the statutory provisions as well as lack of

awareness to the legislative scheme’ and further, ‘unless it

is factually and on record that the State Government is able

to establish a commensurate application of mind to the

three different enabling sections of the 1966 Act, a

presumption that either the notifications are validly issued

or that the notifications are fully in conformity with the

procedural requirement does not arise’.

iv. State Government has not complied with the EIA

Notification for Environmental Clearance.

14. Shri Krishnan Venugopal, learned Senior Counsel then

advanced his submissions which are briefly summarised

hereunder:

a. Failure to appreciate following facts and material on

record

Approval of Project was after due consideration of material

i. The initiation of the entire process is based on an

application filed by Appellant and its consideration under

the 2002 Act. The Application was considered on

06.06.2005.

ii. The Government Order approving the Project was on

22.12.2005. The approval was not hastily done and the

Government Order in fact notes key features of the project.

iii. The approval for modification of the Government Order by

inclusion of AISL was based on an application filed by

MSPL. The details and relation between AISL and MSPL are

set out in additional documents, which discloses that MSPL

and AISL had common shareholders and were under same

management and ultimately, AISL was a wholly owned

subsidiary of MSPL.

iv. Full and complete disclosure was made by Applicant and

the same was duly considered and not mechanically

approved by Government of Karnataka. The High Court has

observed:

“106…..There is absolutely no application of mind at the

subsequent levels. A notification issued under Section 3 of the

Act in the name of the Act and for declaring an area mentions

names of respondent Nos. 4 and 5. Respondent No. 5 was

never an applicant before the State High Level Clearance

Committee, but, nevertheless, figures in the notification under

Section 3 of the Act. Even mentioning of the names do not

reveal or spell out as to how they figure there. No preamble or

legend is given to it. Then follows the application of chapterVII

in respect of the land notified.”

v. The above observations have not taken into consideration

the Government Order dated 22.03.2006. The grant of

land is also approved by the Land Audit Committee in its

meeting on 28.01.2006.

Objections of land owners duly considered

vi. Upon approval to the Project under the 2002 Act, the

notifications for land acquisition are issued under the 1966

Act. The Notifications for acquisition of land were issued on

09.11.2006: (A) declaration under Section 1(3) that Chapter

VII would apply (B) declaration under Section 3(1) that an

area is ‘industrial area’ for the 1966 Act and (C) acquisition

of land.

vii. Notice is only thereafter issued under Section 28(1) of the

1966 Act to the individual landowners to show cause as to

why land should not be acquired. In the present case, notice

under Section 28(2) was issued on 20.11.2006 and the

objections were duly considered. The Special Land

Acquisition Officer passed an order under Section 28(3) of

the KIAD Act after considering these objections.

viii. Sample Panchnama has also been placed before this

Hon’ble Court. Without any basis and despite material on

record, the High court has concluded that procedure in

terms of Section 28(3) was violated.

b. Failure to appreciate law

Scope of Facilitation Act

i. The High Court has erroneously concluded that the 2002

Act ‘virtually leaves no option to all other agencies of the

State whether statutory or otherwise and has produced in

them a state of submissiveness and they have mechanically

like robots acted in a compliant manner.’ It is submitted

that the very purpose of a SHLCC and Single Window

Clearance Committee would be defeated if the approval

granted by such committee is reviewed again and again by

other departments. The approach of the High Court will not

only render the text of the 2002 Act otiose and unworkable,

but will defeat the very purpose of the 2002 Act as set out in

the Statement of Object and Reasons.

ii. Further, the Hon’ble High Court has completly exceeded its

jurisdiction to review the very approval of the Project when

the only issue to have examined was – whether the mandate

of Section 28 of the 1966 Act was complied.

iii. The High Court’s conclusion that the 2002 Act leads to a

complete ‘go by’ to ‘statutory requirements and procedural

compliances’ is manifestly contrary to the record. The

approval of the project by the SHLCC, the State Government

Order along with the compliances in terms of site inspection

by KPSCB and even obtaining Environmental

Clearance, the approval in terms of the 2002 Act has not

given a ‘go by’ to statutory requirements and procedural

compliances.

iv. It is submitted that the High Court has erred in

appreciating the scope of the Facilitation Act. It is

submitted that the same is only for approval of proposal of a

project and not for construction and operation itself, which

are only subject to various other approvals.

Process under section 28 of 1966 Act

v. The High Court has concluded that the power of State

Government to take possession of land under Section 28(7)

of the 1966 Act is draconian. However, this power is

conferred only in the scenario that orders are passed after

considering objections and further notice to the landowners

in terms of Section 28(6) of the 1966 Act.

vi. It is only on the refusal in such an event that the power to

forcibly acquire land is conferred on the State Government.

Single entity being eligible Applicant

vii. It is submitted that the High Court has committed a grave

error of jurisdiction in reconsidering the approval granted to

the Project which was cleared by the SHLCC and also by

the Land Audit Committee. It is submitted that the High

Court could not have secondguessed the policy decision to

approve a palletisation and integrated steel plant.

viii. Without prejudice to the above contention, in any event, it is

submitted that a single applicant can be an eligible

applicant and there is no bar for the same.

ix. The conclusions fail to appreciate the socioeconomic

benefit to the State of Karnataka and the scope of what

constitutes ‘public purpose’.

15. Learned counsels appearing for AISL, State of Karnataka

and KIADB have majorly adopted the arguments advanced by Mr.

Krishnan Venugopal and have submitted that the impugned

judgment of the Division Bench be set aside. It is their

submission that the procedure as prescribed under the law has

been strictly adhered to.

16. On behalf of the respondent no.8 in the Appeal of MSPL,

Shri Shekhar S. Naphade, learned Senior counsel made

submissions. Other counsels appearing for other land owners in

the appeal of AISL have adopted the same. Briefly the arguments

advanced on behalf of the private respondents are reproduced

below:

a. MSPL and AISL did not have any Environmental Clearance,

in the absence of which the land could not have been

acquired for setting up the plant.

b. The land owner–respondents have not accepted any

compensation.

c. Just because 90% of acquirees have accepted

compensation, that does not validate an illegal acquisition.

d. This is a colourable exercise of power since the 1996 Act

does not contemplate acquisition for a private party directly.

An area has to be set up as an industrial area in which

private industry can be set up later. In the present case, the

procedure has been shortened at the behest of private

parties.

e. AISL was not even before the SHLCC and the only applicant

was MSPL. Hence, the acquisition for AISL is bad in law.

f. Division Bench considered the issues in detail and has

rightly quashed the notifications under 1966 Act. It does not

call for any interference. The appeal deserves to be

dismissed.

17. In so far as Civil Appeal @ SLP (C) No. 23351 of 2012 is

concerned, Shri Ankur S. Kulkarni, learned counsel, supported

the arguments of Mr. Shekhar S. Naphade. He has further

submitted that judgment of the Division Bench dated 22.03.2012

is correct on law and facts as such the Division Bench dismissing

the writ appeal by the impugned judgement dated 14.12.2011

committed an error and, therefore, needs to be set aside.

18. It may be noted here that depending upon the outcome of

the decision in the appeals filed by MSPL, AISL, KIADB and State

of Karnataka in which the judgment of the Division Bench dated

22.03.2012 is under challenge, the fate of the aforesaid Civil

Appeal of Syed Ahmad would rest.

19. Before proceeding to deal with the respective submissions, a

brief outline of the two state enactments i.e. 1966 Act and the

2002 Act, is spelled out.

1966 Act.

20. The object of the 1966 Act is already reproduced in the

earlier part of this order. It is for securing the establishment of

industrial areas and generally to promote the establishment and

orderly development of industries therein within the state of

Karnataka.

(i) Under section 1(3), it is provided that the Act would come

into force at once except Chapter VII which shall come into

force in such area and from such date as the State Government

may from time to time by notification specify on this behalf.

(ii) Section 2 deals with the definitions of the various words and

phrases used in the Act.

(iii) Under section 3(1), the State Government by Notification

may declare any area in the State to be an industrial area for

purposes of the Act.

(iv)Under section 6, a Board is to be established chaired by the

Secretary, Commerce and Industries Department. Its

constitution is provided therein and comprises of the following

as members:

● The Secretary, Finance Department;

● The Secretary, Housing and Urban Development;

● The Commissioner, Industrial Development;

● Director, Industries and Commerce;

● The Chairman and Managing Director, Karnataka State

Industrial Investment and Development Corporation

Limited;

● The Chairman, Karnataka State Pollution Control Board;

● The Director, Town Planning;

● The Managing Director, Karnataka State Small Industries

Development Corporation Limited;

● The Managing Director, Karnataka State Financial

Corporation;

● The Executive Member of the Board; and

● Two nominees of the Industrial Development Bank of India;

(v) The functions of the Board are enumerated in section 13

and further general powers of the Board are spelled out in

section 14 of the 1966 Act. The same are reproduced

hereunder:

“13. Functions. The functions of the Board shall

be,

(i) generally to promote and assist in

the rapid and orderly establishment,

growth and development of industries

[and to provide industrial infrastructural

facilities and amenity] in industrial

areas, and

(ii) in particular, and without prejudice

to the generality of clause (i), to,

(a) develop industrial areas

declared by the State Government and

make them available for undertakings to

establish themselves;

(b) establish, maintain, develop,

and manage industrial estates within

industrial areas;

programmes of works, either jointly with

other corporate bodies or institutions, or

with the Government or local or

statutory authorities, or on an agency

basis, as it considers necessary or

desirable, for the furtherance of the

purposes for which the Board is

established and for all purposes

connected therewith.

14. General powers of the Board. Subject to the

provisions of the Act, the Board shall have power,

(a) to acquire and hold such property, both movable

and immovable as the Board may deem necessary

for the performance of any of its activities and to

lease, sell, exchange or otherwise transfer any

property held by it on such conditions as may be

deemed proper by the Board;

(b) to purchase by agreement or take on lease or

under any form of tenancy any land, to erect such

buildings and to execute such other works as may

be necessary for the purpose of carrying out its

duties and functions;

[industrial infrastructural facilities] and common

facilities in industrial areas and construct and

maintain or cause to be maintained works and

buildings therefor;

(d) to make available buildings on lease or sale or

leasecumsale to industrialists or persons intending

to start industrial undertakings;

(e) to construct buildings for the housing of the

employees of industries;

(f) (i) to allot to suitable persons [premises or parts

thereof] including residential tenements in the

industrial areas established or developed by the

Board;

(ii) to modify or rescind such allotments,

including the right and power to evict the

allottees concerned on breach of any of the

terms or conditions of their allotment;

(iii) to resume possession of premises or part

thereof including residential tenements in the

industrial area, or industrial estate in the

manner provided in section 34B.

(g) to delegate any of its powers generally or

specially to the Executive Member;

(h) to enter into and perform all such contracts as it

may consider necessary or expedient for carrying out

any of its functions; and

(i) to do such other things and perform such acts as it

may think necessary or expedient for the proper

conduct of its functions, and the carrying into effect

the purposes of this Act.

(vi) Chapter VII deals with the acquisition and disposal of the

land. Section 27 provides that the areas notified by the State

Government under section 1(3) would be applicable to this

Chapter with effect from the date specified in the notification.

Section 28 and its subsections (i) to (viii) provide the

procedure for acquisition of land. Section 29 provides for

determination of compensation of the land acquired. Section 30

provides that Land Acquisition Act, 1894 would mutatis

mutandis apply with respect to the provisions therein for

inquiry and award by the Deputy Commissioner, reference to

Court, apportionment and payment of compensation. Section

40 confers powers on the State Government to make rules and

section 41 confers power on the Board to frame regulations

with the previous approval of the State Government.

2002 Act:

21. This Act was promulgated for promotion of industrial

development and facilitation of new investments to simplify the

regulatory framework. Statement of objects and reasons is

reproduced below:

“STATEMENT OF OBJECTS AND REASONS. It is

considered necessary to provide for the promotion of

industrial development and facilitation of new

investments, to simplify the regulatory frame work,

by reducing the procedural requirements and

rationalising documents and to provide for an

investor friendly environment in the State of

Karnataka. The Bill among other things provides for

the following, namely:

1. Constitution of State High Level Clearance

Committee, State Level Single Window Clearance

Committee and District Level Single Window

Clearance Committee for consideration of application

from entrepreneurs intending to establish industries

in the State.

2. Appointment of Karnataka Udyoga Mitra as a

Nodal Agency at State Level and the District

Industries Centre at Nodal Agency at the District

level to undertake investment promotional activities

and to render necessary guidance and assistance to

entrepreneurs to setup industrial undertaking in the

State.

3. Providing Combined Application Form in lieu of

existing forms prescribed under various laws.

4. Facilitating entrepreneurs by furnishing a self

certification at the time of submitting the combined

application form to the Nodal Agency.

5. Rationalising inspections by various authorities.

6. Providing for deemed approval by the departments

or authorities in case of delay.

7. Penalty for entrepreneurs who fail to comply with

the conditions of undertaking in the self certification.

”

(i) Section 3(1) provided for establishment of a SHLCC

consisting of such members as may be notified by the State

Government to work as a single point clearance committee.

Under subsection (2), the SHLCC was to examine and consider

such proposals received from any entrepreneur relating to

setting up of any industrial or any other project in the State

with the minimum investment of Rs.100 Crores or above. The

functions of the SHLCC are provided in section 4 and its

powers are provided in section 5.

(ii) Under section 6, a State Level Single Window Clearance

Committee (SLSWCC) is to be notified by the State Government

which has the power to deal with the proposals with the

investment of more than Rs.15 Crores but less than Rs.100

Crores.

The powers of SLSWCC are provided in section 7 and section 8.

(iii)Similarly, there would be a District Level Single Window

Clearance Committee (DLSWCC) dealing with investments up

to Rs.15 Crores and its functions and powers spelled out in

paragraphs 10 and 11.

(iv)Under section 11(A), the Government could constitute a

State Level Empowered Committee which was to be chaired by

the Chief Secretary of the State, with Principal Secretaries of 10

different departments, Chairman of KSPCB, DirectorGeneral

and InspectorGeneral of Police & State Fire Extinguishing and

Emergency Services, Chief Executive Officer & Executive

Member of KIADB and the Commissioner for Industrial

Development & the Director for Industries and Commerce as its

members.

(v) There was also provision made for Nodal Agencies,

Karnataka Udyog Mitra at the State Level under section 12 and

its functions enumerated under section 13.

(vi)Section 14 provides for a Combined Application Form for

use of entrepreneurs for obtaining clearance to be prescribed

by the State Government to all the Clearance Committees.

(vii) Section 17 provides for deemed approval in case

clearance is not issued within stipulated time.

(viii) Section 18 provided for an appeal by any person

aggrieved by the decision of the abovementioned committees.

22. In the present case as stated in the chronology of events,

the MSPL had initially moved an application under the 2002 Act.

During the consideration of the said application by the State

Government, MSPL shared its projects of the two industries by

inducting AISL a fully owned subsidiary of MSPL. The

introduction of AISL was accepted by the State Government and

necessary applications were given by AISL also. The SHLCC had

earlier approved both the projects and one of the

recommendations was for acquisition of land under the 1966 Act.

The KIADB considered the recommendations of the SHLCC,

Karnataka Udyog Mitra & the State Government and accordingly

acquired the land as per the procedure prescribed under section

28 of the 1966 Act.

23. It is this acquisition of land for MSPL and AISL which is

under challenge in these proceedings. The Division bench having

quashed the acquisition as also the notifications under section

1(3) and section 3(1) along with section 28 of 1966 Act is now for

consideration in the present group of appeals.

24. Based upon the arguments advanced by the learned

counsels, the following issues arise in these appeals for our

consideration:

(I) Whether in the absence of environmental clearance, the

acquisition in question could have taken place?

(II) Whether the acquisition was vitiated in view of the

undue haste and nonapplication of mind by the competent

authorities?

(III) Whether the procedure prescribed under the 1966 Act

was duly followed?

(IV) Whether the acquisition for a single company could be

said to be for public purpose and could be made under the 1966

Act?

(V) Whether acquisition could be made for a nonapplicant

AISL under the 1966 Act without its application being routed

through SHLCC.

(VI) Whether the comparison with the Maharashtra

Industrial Development Act, 1962, placing reliance on the

judgment of this Court in the case of Shri Ramtanu Coop.Housing Society Ltd. Vs. State of Maharashtra, reported in

(197) 3 SCC 323 in the impugned judgment is correct?

(VII) Whether the conclusions arrived at in the impugned

judgment are vitiated on account of inclusion of value judgments

of policy views by the High Court?

(VIII) Whether the entire acquisition could be quashed upon

a petition by a fraction of landowners holding a fraction of

acquired land which is only 10 % or less of the total acquired

land?

A. Environmental Clearance.

25. On record environmental clearance has been given on

23.09.2016 by the Ministry of Environment and Forests,

Government of India, copy of which has been filed along with I.A.

No.118035 of 2017 in the appeal of MSPL. Prior to it, the Ministry

itself vide paragraph2 of the Notification dated 14.09.2006

provided that no Environment Clearance from MOEF was

required for securing land. It may also be relevant to note here

that KSPCB had given its clearance and no objection much

earlier for setting up the plant vide communication dated

02.08.2008. Further, the Ecology and Environmental Department

of Government of Karnataka had given clearance on 01.10.2010.

Further, the Ministry of MOEF had issued an order dated

08.09.2014 providing that the plant may be continued to operate.

Thereafter, the KSPCB issued an order dated 16.10.2014

requiring MSPL to apply for Terms of Reference by 07.12.2014

and to obtain environment clearance from MOEF within one year.

The MSPL accordingly applied as per the Terms of Reference and

was granted the environment clearance by MOEF vide

communication dated 23.09.2016. In view of the above facts, as

of date, no objection can be raised that there is no environmental

clearance certificate from the Ministry of Environment and Forest

as the same has already been issued on 23.09.2016.

B. Nonapplication of mind and undue haste.

26. From the chronology of events what is to be noted is that

the SHLCC after considering all aspects of the matter had

resolved to approve the project and had made recommendations

accordingly. Thereafter, the KIADB accepted the

recommendations of the SHLCC and the same also had due

approval of the Government at the highest level. The division

made by MSPL (the initial applicant) for setting up the two

industries by two different entities also had due approval of the

KIADB and the Government.

27. The original writ petitioners (land owners) had challenged

the notifications under Section 1(3), 3(1) and 28(1) of the 1966

Act on the ground of nonapplication of mind and undue haste.

No grounds were raised nor any foundation laid in the petitions

alleging mala fide. The object of the 2002 Act was primarily to

provide a Single Window Clearance by the High Level Committees

constituted under the 2002 Act. We have gone through the

reports and recommendations of the different Committees as also

the State Government and we find that all aspects of the matter

have been considered and a conscious decision has been taken

on the overall conspectus of the project and the proposals

submitted.

28. The meeting of the SHLCC dated 06.06.2005 was chaired by

the Chief Minister, State of Karnataka, the concerned Ministers

and Secretaries were also present in the meeting. The complete

project was discussed under different heads including the

background of the promoters, background of the company,

means of finance, infrastructure facilities, environment and

pollution control clearances, local employment, water

consumption, electricity consumption and incentives &

concessions.

29. The Government Order, thereafter, was issued on

22.12.2005 detailing the different facets of the proposal and

granting due approval for establishment of the palletization plant

as also the integrated steel plant with a total investment of

2292.26 crores and generating employment to one thousand

persons.

30. Thereafter, under the provisions of 1966 Act, the Land Audit

Committee in its meeting of 28th January, 2006, which was

chaired by the Principal Secretary, Department of Commerce &

Industries and Secretaries of other relevant Departments with

special invitees also took a conscious decision with respect to the

project submitted by MSPL for both the plants at subject Item

No.2.5 and recommended for acquisition of 1034 acres of land

and to intimate the same to the KIADB. It was thereafter that the

Nodal Agency of the State level i.e. Karnataka Udyog Mitra in its

meeting dated 15.02.2006 after considering the proceedings of

the SHLCC dated 6th June, 2005 and that of the Land Audit

Committee dated 28.01.2006 accepted the recommendation for

acquisition of 1034 acres of land.

31. These aspects were examined by this Court in Chairman &

MD, BPL Ltd. Vs. S.P. Gururaja, reported in (2003) 8 SCC 567.

This Hon’ble Court was dealing with a similar situation where a

State High Level Committee was constituted to grant approvals

and acquire land to the appellant therein. This process was

challenged in a public interest litigation. This Court was pleased

to dismiss the writ petition finding that:

17. The Company intended to set up more than one unit.

For the purpose of achieving the objective of economic

development of the State, the State is entitled to deal with

the applications of the entrepreneurs in an appropriate

manner. For the said purpose a High Level Committee was

constituted. The said Committee held its meeting on

10.10.1994 wherein not only the members referred to

hereinbefore but also various other officers were present.

Presumably, prior thereto the applications filed by the

Company were scrutinized by the competent authorities.

After detailed discussions, the High Level Committee

resolved: (a) to permit the unit to change the location from

Malur Indl. Area. to Dobespet Industrial Area; (b) to allot a

total of 500 acres of land for the three projects viz., Colour

Picture Tube, Colour Televisions and Battery, in Dobespet

Industrial Area, Nelamangala to, in lieu of the earlier

allotment of 100 acres of land at Malur Indl Area for the

Colour TV sets project, subject to the promoters indicating

the individual land requirement for Colour Picture Tube

project, Colour TV project and the battery project duly

justifying the requirement with necessary plans, block

diagrams, etc.

18. Similar considerations were made in respect of Colour

Television Picture Tube Project of the Company and

Manufacture of Batteries. The matter relating to allotment

of land is a statutory function on the part of the Board. In

terms of the provisions of the Act, consultations with the

State Government is required if Regulation 13 of the

Regulations in place of Regulation 7 is to be taken

recourse to. Does it mean that consultations must be held

in a particular manner, i.e. by exchange of

correspondences and in no other? Answer to the said

questions must be rendered in negative. The High Level

Committee was chaired by the Minister who in terms of

the Rules of Executive Business framed under Article 166

of the Constitution of India was entitled to represent the

State. Once a consultation takes place by mutual

discussion and a consensus is arrived at between

different authorities performing different functions under

the statutes, the purpose for which consultation was to be

made would stand satisfied. Under the Act or the

Regulations framed thereunder, no procedure for holding

such consultations had been laid down. In that situation it

was open to the competent authorities to evolve their own

procedure. Such a procedure of taking a decision upon

deliberations does not fall foul of Article 14 of the

Constitution of India. No malice of fact has been alleged in

the instant case.”

32. In view of the above, the finding in the impugned judgment

regarding nonapplication of mind and the submission of Mr.

Naphade to the aforesaid effect cannot be sustained.

33. Insofar as the notifications under Section 1(3), 3(1) and

28(1) of 1966 Act being issued on the same date, it may be noted

that there is no embargo on the same. The statutes do not

prohibit the same. Moreover, this issue has also been dealt with

by this Court in the case of Deputy General Manager (HRM) and

another Vs. Mudappa and others reported in 2007 (9) SCC

768. Para 30 of the said judgment is reproduced hereunder:

“In our judgment, the learned Single Judge was

wholly in error in taking such view and quashing the

notification. Upholding of such view would make

statutory provisions under the Act or similar

provisions in other laws, (for example, the Land

Acquisition Act, 1894) nugatory and otiose. We are

also of the view that the learned Single Judge

was not right in finding fault with the State

Authorities in issuing notifications under

Section 1(3), Section 3(1) and Section 28(1)

simultaneously. There is no bar in issuing such

notifications as has been done and no provision has

been shown to us by the learned counsel for the

contesting respondents which prevented the State

from doing so. Even that ground, therefore, cannot

help the landowners”.

34. The above view has the approval of this Court in its recent

order dated 28.01.2020 passed in Special Leave Petition (c)

No(s).9662 of 2013 (C. Jayaram and others Vs. The State of

Karnataka and others).

C. Procedure Prescribed under the 1966 Act duly followed:

35. As already noted above from the chronology of events given

in the earlier part of the judgment, the due procedure had been

followed. It is also to be noticed that the objections were invited

under the procedure prescribed in Section 28 of the 1966 Act and

the same were duly considered and disposed of, as such, it

cannot be alleged that the objections have not been considered

vitiating the acquisitions. In this respect it would be relevant to

mention that the Land Audit Committee approved the grant of

1034 acres of land in its meeting dated 28.01.2006, which was

duly accepted and approved by the State Nodal Agency,

Karnataka Udyog Mitra in its meeting dated 15.02.2006 and duly

communicated vide letter of even date to the KIADB to start the

process for acquisition. It was thereafter that the notifications

were issued under Section 3(1), 1(3) and 28(1) of the 1966 Act, on

09.11.2006. Simultaneous publication of the said notifications

has already been upheld to be not suffering from any illegality or

irregularity.

36. Pursuant to the notification under Section 28(1) of the 1966

Act, further steps were taken and after inviting objections and

disposing of the same, final declaration was made, compensation

was determined and thereafter possession taken. It would be also

relevant to state here that from the material on record, it is

apparent that the land was acquired in the name of the State,

thereafter transferred to the KIADB, which proceeded to allot the

same to MSPL and AISL respectively and, accordingly, lease

deeds were executed. The entire process as provided under the

Act has been strictly followed. The Division Bench in the

impugned judgment apparently was swayed by its own personal

views based on assumptions and having no material backing

which led to the quashing of the notifications.

D. Acquisition for a Single Company.

37. Section 28(1) of the KIAD Act is reproduced below:

“28. Acquisition of land. (1) if at any time, in the

opinion of the State Government, any land is required

for the purpose of development by the Board, or for

any other purpose in furtherance of the objects

of this Act, the State Government may by

notification, given notice of its intention to acquire

such land.” [Emphasis Provided]

The words for the purpose of development by the Board, and

or for any other purpose in furtherance of the objects of this Act

make it amply clear that the intention to acquire land in the

opinion of the State Government could be not only for the

purpose of development by the Board but for any other purpose

in furtherance of the objects of this Act. This gives power to

acquire land beyond development by KIADB. Further, the

regulations framed by the Board under Section 41 particularly

deal with this aspect in Regulation 13 which reads as under;

“Allotment of Plots in Special Cases: Notwithstanding

anything contained in these regulations, the Board

in consultation with the State Government may allot

any plot or area other than those in respect of

which applications are called for under Regulation 7

to any individual or company for the

establishment of an industry or for the provision of

any amenity required in the Industrial area.”

[Emphasis Provided]

38. Under the above regulations, the Board is empowered to

allot any plot or area to any individual or company for

establishment of an industry in consultation with the State

Government. This provision also contemplates acquiring land for

the purpose of allotment to a single company to set up an

industry. In the present case, the allotment by the Board is duly

approved by the State Government.

39. In the same context, it would be relevant to refer to a

judgment of this Court in the case of P. Narayanappa Vs. State

of Karnataka reported in (2006) 7 SCC 578, where it upheld the

acquisition of land in favour of a private company under the 1966

Act. Paragraphs 6, 13 and 14 of the said judgment are

reproduced below:

“6. Shri Shanti Bhushan, learned senior counsel for

the appellants, has challenged the impugned

notifications on several grounds and the principal

ground is that the land has been acquired in order to

benefit a company, namely, Vikas Telecom (P) Ltd.

(respondent no.9) who had submitted a project report

for setting up a software technology park which

included an I.T. Training Institute/Engineering

College, Research and Development Centre,

Educational Centre, Commercial and Residential

Buildings and Service Apartments, Convention

Centre, Hotel, Shopping Mall, etc……

…………

13. The provision for acquisition of land under the Act

is contained in Section 28 which is somewhat

different from the provisions contained in Sections 4,

5A and 6 of the Land Acquisition Act. The legislature

in its wisdom thought it proper to make a specific

provision for acquisition of the land in the Act itself

rather than to take recourse to Sections 4 and 6 of the

Land Acquisition Act. A plain reading of sub

section (1) of Section 28 would show that land

can be acquired for the purpose of (i)

development by the Board, or (ii) for any other

purpose in furtherance of the objects of the Act.

Subsection (3) of Section 28 is similar to Section 5A

of the Land Acquisition Act and the final notification

is issued under subsection (4) of Section 28. The

necessary precondition for a valid notification

under subsection (4) of Section 28 is that the

State Government should be satisfied that the

land is required for the purpose specified in the

notification issued under subsection (1), viz., for

the purpose of (i) development by the Board, or (ii) for

any other purpose in furtherance of the objects

of the Act. Therefore, in order to judge the validity of

the notification what is to be seen is whether the

acquisition of land is being made for securing the

establishment of industrial areas or to promote the

establishment or orderly development of industries in

such areas. In view of wide definition of the

words "industrial infrastructural facilities" as

contained in Section 2 (7a) of the Act, making of

a technology park, research and development

centre, townships, trade and tourism centres or

making provisions for marketing and banking

which would contribute to the development of

industries will meet the objectives of the Act

and acquisition of land for such a purpose

would be perfectly valid.

14………. Subsection (1) of Section 28 clearly

shows that the land can be acquired for (i)

development by the Board; or (ii) for any other

purpose in furtherance of the objects of the Act.

Under subsection (8) of Section 28, the State

Government is empowered, after it has taken

possession of land, to transfer the same to the Board

for the purpose for which the land has been acquired.

Section 32 empowers the State Government to place

at the disposal of the Board any land vested in it and

the Board is enjoined to deal with the land in

accordance with the regulations made and directions

given by the State Government in this behalf. This

stage when the Board gets the authority to deal with

the land comes at a later stage which is after the

land has been developed by it. An entrepreneur or

a company may give a proposal to the State

Government for setting up an industry or

infrastructural facility and the Government may

thereafter acquire the land and give it to the

Board. It is also possible that after the land has

already been acquired and developed by the

Board, it may be allotted to an entrepreneur or

a company for setting up an industry or

infrastructural facility. Therefore, the scheme of

the Act does not show that at the time of acquisition

of the land and issuing a preliminary notification

under Section 28(1) of the Act, the complete details of

the nature of the industry or infrastructural facility

proposed to be set up should also be mentioned. At

that stage what is to be seen is whether the land is

acquired for development by the Board or for any

other purpose in furtherance of the objects of the Act,

as mentioned in subsection (1) of Section 28 of the

Act. In fact, if the contention raised by the learned

senior counsel for the appellants is accepted, it would

mean that even at the stage of preliminary

notification under Section 28(1) of the Act, the nature

of the activity which may be done by some

entrepreneur or a company which may give a

proposal for setting up an industry or infrastructural

facility much after land has been acquired should

also be taken note of and specifically mentioned in

the notification, which is well nigh impossible. While

interpreting the provisions of the Act, the Court should

not only take into consideration the facts of the

present case but should also have in mind all

possible contingencies. Therefore, on a plain

reading of the language used in the Act, it is not

possible to accept the contention of the learned

senior counsel for the appellants that the

impugned notification is vague or cryptic as the

complete details of the project which was

proposed to be established by Vikas Telecom (P)

Ltd. (respondent no.9) were not mentioned and

on account of the aforesaid lacuna, the landowners

were deprived of their right to make a proper

representation or to show cause against the proposed

acquisition.” [Emphasis Provided]

40. Therefore, the view expressed by the Division Bench that

no acquisition could be made for a single company cannot be

sustained.

E Acquisition for a nonapplicant (AISL).

41. It is not disputed that AISL (nonapplicant) is fully owned

subsidiary of MSPL (applicant). In effect, AISL is a new Company

promoted by the same promoters. The State Government

examined the request of MSPL and also AISL for modification of

its Government Order dated 22.12.2005. It examined the

bifurcation under various heads. State Government issued

Government Order dated 22.03.2006 splitting the infrastructures

required with further stipulation that all other terms and

conditions mentioned in the Government Order dated 22.12.2005

would apply as it is to both the Companies. The only change

sought by MSPL was the integrated steel plant be set up by AISL

which was its own subsidiary. These are commercial matters and

the State after examining the proposal for change in its wisdom

accepted the same. There was no change in the project, as such,

regarding the finance, employment and other infrastructures. The

objection raised by Mr. Naphade to the aforesaid effect does not

merit consideration.

F. Relevance of Shri Ramtanu judgment:

42. The impugned judgment has placed reliance upon the

judgment in the case of Shri Ramtanu (supra) for the proposition

that the acquisition under the 1966 Act was in pari materia to the

Maharashtra Industrial Development Act, 1962 and, therefore,

the acquisition has to be for public purpose only and not for a

private company. At the outset, it may be recorded that validity of

the 1962 Act was being considered in the case of Shri Ramtanu

(supra). In the present litigation, there is no challenge to the

validity of the 1966 Act or the 2002 Act. Further, the object and

purpose of the 1962 Act was for securing the orderly

establishment in industrial areas and industrial State of

industries in the State of Maharashtra whereas the 1966 Act, the

object and preamble was to promote the establishment and

orderly development of industries (in industrial areas). This Court

while dealing with the 1962 Act discussed this aspect in para 21

of Shri Ramtanu (supra), which is reproduced hereunder:

Counsel on behalf of the petitioners contended that

there was procedural discrimination between

the Land Acquisition Act and the Act in the present

case. It was said that there was a special procedure

of land for the companies whereas in the' present

case the State was acquiring land for companies

without adopting the procedure of, the Land

Acquisition Act. It is to be remembered that the Act in

the present case is a special one having the specific

and special pur pose of growth, development and

Organisation of industries in the State of

Maharashtra. The Act has its own procedure and

there is no provision in the Act for acquisition of land

for a company as in the case of Land Acquisition Act.

In the present case, acquisition under the Act is

for the purpose of development of

industrial estates or industrial areas by the

Corporation or any other purpose in furtherance

of the objects of the Act. The policy underlying,

the Act is not acquisition of land for any

company but for the one. and only purpose of

development, Organisation and growth of

industrial estates and industrial areas. The

Act is designed to have a planned industrial

city as opposed to haphazard growth of

industrial areas in all parts of the State. The

Act is intended to prevent ,.growth of industries

in the developed parts of the State. Industries are

therefore to be set up in the developing or, new parts

of the State where new industrial towns will be

brought into existence. The object of, the Act is to

carve out planned areas for industries. On one

side there Will be engineering industries and on the

other there will be chemical industries. There will be

localisation of industries with the result that the

residents and dwellers of towns and cities will not

suffer either from the polluted air or obnoxious.

chemicals of industries or the dense growth of

industries and industrial population, within and near

about the residential areas. The Land Acquisition

Act is a general Act and that is why there is specific

provision for acquisition of land by the, State for

public purpose and acquisition of land by the State

for companies. The present Act on the other hand

is designed the sole purpose of development of

industrial areas and industrial estates and

growth and development of industries within

the State. Industrial undertakings or persons who

are engaged in industries all become entitled to the'

facilities on such industrial growth. Under the Land

Acquisition Act acquisition is at the instance of and

for the benefit of a company whereas under the

present Act acquisition is solely by the State for public

purposes. The two acts are dissimilar in situations

and circumstances." [Emphasis Provided]

43. Thus, it is to be noticed that the purpose in 1962 Act was

for establishment of industrial areas whereas in the other statute

i.e 1966 Act, it was for promotion of the establishment and

orderly development of industries. Thus, the reliance by the

Division Bench in the impugned judgment on the case of Shri

Ramtanu (supra) is misplaced.

G. Value judgments of policy views.

44. The Division Bench in the impugned judgment seems to

have been swayed by its own philosophy in due deference to the

principles of statutory interpretation. The statute is to be read in

its plain language. Setting up of industries is part of

development. There has to be a sustainable growth and existence

of all facets and, that is why, laws have been framed, cheques

and balance have been imposed so that development takes place

side by side with the protection and preservation of nature and

environment. Certain extracts from the impugned judgment

wherein the Division Bench had expressed its personal policy

views and value judgments are reproduced hereunder:

“Though the word ‘development’ is used, when this word

is examined in an objective manner, in an impassionate

manner, it is nothing but interference with the existing

state of nature and destroying naute !” (P.9091)

“Any industry inevitably creates and causes pollution of

the land, air and water….” (P.91)

“Unfortunately, by and large,….courts have been pro

acquisition and have generally approved or upheld

acquisition proceedings in the name of public interest.”

(P.96)

“When examined on such a touchstone and such tests are

applied, we find that the present acquisition proceedings

cannot stand. The affectation is very adverse and the

benefit if at all is a return because of future development

of any industry with some potential for employment and

may be a little revenue to the State. The affectation to the

livelihood and dignified life of thousands of people which

is not examined even it is not the focal point, it should be

at least be given due attention which it deserved” (P.105)

“…..[A]nd with the history of limited companies being too

wellknown, though the British claim the invention of joint

stock company is the genius of English legal mind when

the concept is examined from the perception as it prevails

in this country and in the society and examine from the

ethos of our society, it is nothing short of deception or

playing fraud.” (P.106)

“A joint stock company is invented only to defraud

creditors.” (P.106107)

“Let us not lose our souls in the name of development by

depriving land holders of their land holdings.” (P.108)

45. A perusal of the above makes it amply clear that the

Division Bench introduced several value judgments and policy

views in order to interpret the provisions of the 1966 Act and the

2002 Act. It is only as a measure of caution that the said aspect

is being taken note of. Such value judgments and policy views are

beyond the domain of the Courts. The Courts should refrain itself

from expressing value judgments and policy views in order to

interpret statutes. Statutes are to be read in their plain language

and not otherwise. Reference may be had to the following

decisions:

(i) Regina Vs. Barnet London Borough Council;

(1983) 1 AII ER 226;

(ii) Union of India Vs. Elphinstone Spinning and

Weaving Company Ltd.; (2001) 4 SCC 139 (Para

17)

(iii) D.R. Venkatachalam Vs. Transport

Commissioner; (1977) 2 SCC 273 (Para 29)

(iv) Padma Sundara Rao Vs. State of Tamil Nadu;

(2002) 3 SCC 533 (Para 13);

(v) Harbhajan Singh Vs. Press Council of India;

(2002) 3 SCC 722 (Para 11) and

(vi)Unique Butyle Tube Industries Vs. U.P.

Financial Corporation; (2003) 2 SCC 455 (Para

12).

H. Challenge to acquisition by a minority (10%) of land

owners.

46. It is admitted position that the challenge to the acquisition

of more than a thousand acres was made by a small fraction of

land owners having land less than 10% of the total acquisition.

Compensation for rest of the 90% land acquired had been

accepted by their respective land owners. The Division Bench has

quashed the entire acquisition of more than a thousand acres at

the instance of such a small fraction. This aspect has been dealt

with by this Court in the case of Amarjit Singh Vs. State of

Punjab reported in (2010) 10 SCC 43 and Om Prakash Vs.

State of U.P. reported in (1998) 6 SCC 1. The learned Single

Judge had placed reliance on the judgment of Om Prakash

(supra). It is also worthwhile to mention that out of approx 110

acres of land acquires for MSPL, only one land owner possessing

only 4.34 acres of land, had filed the writ appeal before the

Division Bench. Quashing the entire acquisition at the instance

of one land owner having 4.34 acres of land out of total

acquisition for MSPL of 110 acres, would be against the public

policy and public interest. The MSPL alone provides employment

to 292 persons with a substantial investment of Rs.200 crores.

The employment to approximately 300 persons by MSPL is also

alleged to be double of the number of employees as projected in

the proposal. Further, in the case of AISL acquisition of 914 acres

is challenged by a fraction of less than 10% land owners. The

estimated project of AISL is approx Rs.2092 crores and would

employment to at least one thousand persons.

47. In view of the above analysis, we are of the view that the

Division Bench committed an error in quashing the acquisition

proceedings. Accordingly, the appeals filed by MSPL, AISL, KIADB

and State of Karnataka are allowed.

48. The judgment of the Division Bench dated 22.03.2012 is

set aside and the writ petitions stand dismissed as ordered by the

learned Single Judge vide judgment dated 17.03.2009.

49. Insofar as the claim of Syed Ahmed is concerned, which is

in respect of similar acquisition for M/S BMM Ispat Ltd. on

similar grounds based upon the judgment of the Division Bench

dated 22.03.2012 impugned in the other appeals, deserves to be

dismissed as we have already set aside the said judgment.

Relevant to state here that Syed Ahmed was owner of 14.35 acres

out of total land measuring 705.99 acres acquired for M/S BMM

Ispat Ltd., which is less than 2%. The appeal of Syed Ahmed is

accordingly dismissed.

50. There shall be no order as to costs.

51. Pending application(s), if any, is/are disposed of.

…..……..........................J.

[HEMANT GUPTA]

………….........................J.

[VIKRAM NATH]

NEW DELHI

OCTOBER 11, 2022.

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M/S. M.S.P.L. LIMITED VERSUS THE STATE OF KARNATAKA AND ORS.

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