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

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)
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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
2
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”
3
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”
4
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.
________________
3
 In short “MSPL”
4
 In short “AISL”
5
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
3
5
 In short “SHLCC”
6
 In short “KIADB”
6
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
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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
4
7
 In short KSPCB
8
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
9
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.
10
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
11
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
12
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
13
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
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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
15
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
16
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
17
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
18
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.
19
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.
20
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
21
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
22
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
23
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.
24
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
25
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
26
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
27
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
28
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.
29
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
30
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:
31
“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;
(c)   undertake   such   schemes   or
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;
32
(c)   to   provide   or   cause   to   be   provided   amenities
[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
33
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
34
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
35
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
36
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
37
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?
38
(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.
39
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
40
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
41
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. 
42
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:
43
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
44
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”. 
45
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
46
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
47
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
48
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
49
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
50
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. 
51
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:
52
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
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
53
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
54
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:
55
 “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
56
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
57
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. 
58
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.
59
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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