Use of power for a purpose different from the one for which power is conferred is colourable exercise of power. Statutory and public power is trust and the authority on whom such power is conferred is accountable for its exercise. Fraud on power voids the action of the authority. There could be no objection to acquisition of land for a compelling public purpose nor to regulated development of colonies, but entertaining an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounted to transfer of resources of poor for the benefit of the rich; permitting profiteering at the cost of livelihood and existence of a farmer.
The Principal question before the Court for adjudication was to determine as to whether the power of the State to acquire land for a public purpose was used in the present case to facilitate transfer of title of the land of original owners to a private builder to advance the business interest of the said builder which is not legally permissible.
High Court had held that in view of the scheme of relevant Act, the notified public purpose for acquisition was covered by Section 3(f)(ii) and (iv) of the 1894 Land Acquisition Act, but the events following the notification for acquisition unfolded different story. After receipt of notices by the land owners under Section 9 of the 1894 Act, calling upon them to appear before the Collector for determination of compensation, the builder suddenly surfaced and applied for grant of licences for setting up colony on the land covered by the notification and paid full sale consideration to the land owners. The Government files deceptively projected the initiative to release land at the instance of farmers and owners while the real fact was to transfer the title of land to the builder.
It was concluded that though the proposal to acquire land for the development relevant area was mooted, approved and was taken to a logical conclusion for a bona-fide public purpose. However, during the interregnum and before passing the Award, an unholy nexus to promote the private interest of Respondent concerned sprouted which de-railed the public purpose of acquisition and led to the misuse of power under Section 48 of the 1894 Act. The said Respondent exploited the moments of suspense and succeeded in entering into distress-sale agreements with the desperate owners who were sandwiched and had no other choice but to give in for a comparatively better offer.
The Land Acquisition Collectors never assessed the compensation as per actual market value of the land and the only yardstick to be followed was the Collector’s rate fixed for the purpose of registration charges. The farmer cannot sell the land in open market as on issuance of Section 4 notification all sale transactions are invariably banned. For the farmers the offer was like ‘better you give the wool than the whole sheep’. There was no free trade for the farmers. Their choice was limited i.e. to accept the State compensation at the Collector’s rate or a better offer given by State sponsored private builder. There was inequality of bargaining power. The determination of land value was not at all in the control of farmers and thus they accepted the unreasonable and unfair unilateral terms and lost their land.
Power of land acquisition vested under the 1894 Act could be invoked only in public interest and not for creating land-bank in favour of any third private party through distress sales. The State cannot force the landowners to surrender their title in favour of and at a price to be dictated by a private beneficiary. The notified public purpose was only a ruse to enable concerned private Respondent to purchase the land at the lowest possible price for maximizing the profiteering.
An action to be taken in a particular manner as provided by a Statute, must be taken, done or performed in the manner prescribed or not at all. When an action is taken in furtherance of explicit power given by a Statute, the legitimacy of invoking such power shall depend entirely upon the extent of achieving the net-end object for which the Statute enables the exercise of such power. These principles have been violated in whole-some in the case in hand as the pretended public purpose was neither intended nor was finally achieved.
The Court observed that the High Court has held that the transfer of title of land, covered by the notification for acquisition, in favour of a builder, who sought release of land for setting up of a colony, was clearly to defeat the law and the notified purpose of acquisition. It was observed that on this undisputed factual position, the plea of alternative remedy of seeking annulment of sale deed by a suit could not be entertained. Relief of setting aside of sale transaction was incidental and consequential to the finding of illegal exercise of power to release the land covered by acquisition proceedings to the builder who was not the original owner. It became necessary to undo the illegality and systematic fraud. It was undisputed that the builder did not own an inch of land prior to acquisition and it was only the land acquisition proceedings coupled with the capacity of the builder to seek licences for colonization of land covered by acquisition which enabled it to acquire title. Contrary to the legal mandate of requirement of a colonizer owning of its own land, ownership of land could not be allowed to be acquired by the sword of acquisition on the head of the original owners.
In the above factual backdrop, the issue before Court was whether state is right to go ahead with the policy to permit colonization by a private builder and the said policy is not under challenge.
Court observed that the factual position indicated clear fraud and abuse of power. The present case was held as a gross abuse of law on account of unholy nexus of the concerned authorities and the builder to enable the builder to profiteer. The land could either be taken by State for a compelling public purpose or returned to the land owners and not to the builder.
There could be no objection to acquisition of land for a compelling public purpose nor to regulated development of colonies, but entertaining an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounted to transfer of resources of poor for the benefit of the rich; permitting profiteering at the cost of livelihood and existence of a farmer. This was held as against the philosophy of the Constitution and in violation of guaranteed fundamental rights of equality and right to property and to life. What cannot be done directly cannot be done indirectly also.
If State is to be party to directly or indirectly select beneficiary of State largess – which in present fact situation the State certainly is – objectivity and transparency are essential elements of exercise of public power which are required to be followed. It is patent that the State has enabled the builder to enter the field after initiation of acquisition to seek colonization on the land covered by acquisition. In absence of State’s action, it was not possible for the builder to enter into the transactions in question which was followed by withdrawal from acquisition. But for assurance from some quarters, the builder could not have made investment nor land owners could have executed the transactions in question. Such fraudulent and clandestine exercise of power by the State is not permitted by law. This is in violation of Public Trust Doctrine.
It is well settled that use of power for a purpose different from the one for which power is conferred is colourable exercise of power. Statutory and public power is trust and the authority on whom such power is conferred is accountable for its exercise. Fraud on power voids the action of the authority.
The impugned finding however was partially modified. Instead of quashing the acquisition in entirety, what was needed to be quashed, as was held, was the abuse of power and illegal consequential actions which took place after the acquisition notifications. Notifications and awards in question were upheld.
Uddar Gagan Properties Ltd. vs. Sant Singh & Ors.
Civil Appeal No. 5072 of 2016