Gujarat High Court
State Of Gujarat & 2 vs Page 1 Of 29 on 8 May, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Anant S. Dave
C/CA/11958/2013 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (FOR CONDONATION OF DELAY) NO. 11958 of 2013
In
MISC.CIVIL APPLICATION NO. 54 of 2014
In
CIVIL APPLICATION NO. 3036 of 2010
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
MISC.CIVIL APPLICATION NO. 54 of 2014
In
CIVIL APPLICATION NO. 3036 of 2010
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE ANANT S. DAVE
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
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STATE OF GUJARAT & 2....Applicant(s)
Versus
Page 1 of 29
C/CA/11958/2013 JUDGMENT
LIQUIDATOR - PETROFILS COOPERATIVE LTD & 16....Respondent(s)
================================================================
Appearance:
MR TUSHAR MEHTA- ADDITIONAL ADVOCATE GENERAL WITH MR PK
JANI-GP WITH MR PARTH BHATT-AGP for the Applicant(s) No. 1 - 3
MR BH BHAGAT, ADVOCATE for the Respondent(s) No. 9 - 10
MR BHARAT JANI, ADVOCATE for the Respondent(s) No. 2 , 4 , 6 - 7 , 10 - 11
, 14
SHRI MIHIR THAKORE, SR COUNSEL WITH MR PR NANAVATY WITH MR
BS KHATANA, ADVOCATE for the Respondent(s) No. 17
MR KI SHAH, ADVOCATE for the Respondent(s) No. 12 - 13
MR MS RAO, ADVOCATE for the Respondent(s) No. 1
MR PRANAV G DESAI, ADVOCATE for the Respondent(s) No. 8
MS NALINI S LODHA, ADVOCATE for the Respondent(s) No. 11
MR SHALIN MEHTA, SR COUNSEL WITH MS VIDHI J BHATT, ADVOCATE
for the Respondent(s) No. 15 - 16
RULE SERVED BY DS for the Respondent(s) No. 2 - 13
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE ANANT S. DAVE
Date : 08/05/2014
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Civil Application No.11958/2013 is filed seeking condonation of delay in filing Misc. Civil Application No.54/2014. Misc. Civil Application No. 54/2014 is filed for recalling of final order dated 22.6.2011 passed in Special Civil Application No.4353/2008 by which the said writ petition was disposed of, as also an order dated 6.4.2010 passed in Civil Application No.3036/2010 in Special Civil Application No.4353/2008 in which certain directions were issued.
Page 2 of 29C/CA/11958/2013 JUDGMENT
2. These proceedings are filed by the State Government seeking recall of the said orders which were passed by the Division Benches of this Court in writ petition filed by the liquidator of one Petrofils Cooperative limited, a cooperative society under liquidation, (hereinafter referred to as "the said society"). The order passed in Civil Application No.3036/2010 pertained to confirmation of sale of certain properties by the liquidator to the private respondents who were successful bidders in a public auction held for such purpose.
3. Brief history to this litigation is as under :
3.1. For the purpose of manufacturing certain petrochemicals, the said society was formed in which Government of India was a majority stakeholder to the extent of 86%. The said society is a cooperative society registered under the Multi State Cooperative Societies Act, 1984. For the purpose of developing a township for the employees and staff of Petrofils, land was needed.
Gujarat Industrial Development Corporation ("GIDC" for short) constituted under the Gujarat Industrial Development Act, 1962 ("GID Act" for short), therefore, applied to the State Government for acquisition of land necessary for such public purpose. The State Government therefore, under a notification dated 9.6.1978 decided to acquire the requisite land for such public purpose namely, that for construction of a township by Petrofils in GIDC Vadodara. The Government contributed a sum of Rs.1000/ from the Page 3 of 29 C/CA/11958/2013 JUDGMENT public revenue towards the compensation for such land acquisition. For such lands which are now purchased by respondents no.15 and 16, notification under section 4 of the Land Acquisition Act, 1894 was issued on 23.8.1979, notification under section 6 was issued on 21.8.1981 and the land was acquired by consent award passed on 13.10.1981. Similarly for land purchased by respondent no.17, notification under section 4 of the Land Acquisition Act, 1894 was issued on 2.9.1974, notification under section 6 was issued on 11.6.1976 and the land was acquired by consent award passed on 13.7.1976.
3.2. It is undisputed that Petrofils township was also constructed on the land so acquired. However, sometime in the year 19941995, Petrofils started facing severe financial crisis due to which two of its plants had to be shut down. Over a period of time all operations of the society came to a halt. When all hopes for revival of the unit were abandoned, the Government of India decided to initiate steps for winding up the society. On 11.4.2001, the Central Registrar of Cooperative Societies appointed a liquidator to finalise the liquidation within stipulated time. One of the creditors of the society approached the Ahmedabad Bench of Debts Recovery Tribunal (DRT for short) filing Original Application No.410 of 2001 for recovery of dues. Different other creditors followed the suit and several Original Applications were filed against the society before the DRT, Ahmedabad for recovery of dues.
Page 4 of 29C/CA/11958/2013 JUDGMENT 3.3. On 23.4.2007, DRT Ahmedabad, allowed the Original Applications of the creditors and directed the liquidator to pay to IDBI the decreed amount with interest. The liquidator thereupon challenged the said judgement of the DRT, Ahmedabad dated 23.4.2007 before the Debts Recovery Appellate Tribunal ("DRAT" for short). Such appeals were admitted. Interim stay against further proceedings was granted.
3.4. IDBI bank issued notice under section 13(2) of the Securitisation and the Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Securitisation Act") on 16.8.2007 seeking to recover a sum of Rs.755.42 crores (rounded off) with interest from the society failing which the bank would take measures under the Securitisation Act. The liquidator responded to such notice under a communication dated 17.9.2007 raising objections. On 28.9.2007 IDBI bank conveyed to the liquidator that objections cannot be accepted and called upon him to handover the possession of secured assets. Before expiry of statutory period of 60 days of notice under section 13(2) of the Securitisation Act, liquidator filed Special Civil Application No.26713/2007 before this Court challenging the said notice issued by the IDBI bank. The Court disposed of such petition on 16.10.2007 in view of the fact that parties engaged in litigation were public sector undertakings and without permission from the high power committee, the litigation could not have been instituted.
Page 5 of 29C/CA/11958/2013 JUDGMENT 3.5. After getting permission from such committee, the liquidators filed Special Civil Application No.4353/2008. In such petition, he had challenged notice dated 16.8.2007 issued by IDBI under section 13(2) of the Securitisation Act. By way of amendment two prayers were added. First was for a declaration that in view of the provisions contained in Multi State Cooperative Societies Act, 1984, Securitisation Act would not apply in the present case. The second prayer was for the constitution of a sale committee with a view to prevent further erosion of value of assets of the society. In such petition on 11.3.2008, while issuing notice, learned Single Judge ordered to maintain statusquo qua the possession of property of the society. On 3.12.2008, the Court indicated its desire to constitute a sale committee and therefore, permitted the debtors and borrowers to be impleaded as parties to such petition, 3.6. On 12.12.2008, while admitting this writ petition, the learned Single Judge constituted a sale committee provided for the following modalities :
"9. There was suggestions and counter suggestions from both the sides and ultimately, it appears that the learned counsels are on agreement for constitution of the Committee.
i. The modalities to be undertaken for such Committee as stated hereinafter:
A.The Committee shall comprise of the liquidator of the petitioner Society being Convener and Chairman. B.One member of each financial institutions who are having status of secured creditor.
C.One member of each Bank who is having status of secured Page 6 of 29 C/CA/11958/2013 JUDGMENT creditors.
D.One member representing majority unsecured creditors. E.One member nominated by NCDC re representing Contributors.
F. One member nominated by the Department of Chemicals & Petrochemicals, Government of India.
ii. In normal circumstances, it will be for the Convener of the Committee to call the meeting of the Committee. However, it would be open for more than one or two members to request the convener to convene the meeting and upon such request, the convener shall convene the meeting within 15 days from the receipt of such request. The decision of the Committee shall be taken generally by majority. However, in case of any major policy decision, when there is no unanimous agreement, it would be open to any member of the Committee either directly or through the convener to approach this Court in the present proceeding for intervention, if any, for exercise of the judicial power.
iii.The Committee shall through the convener undertake the exercise of preparing the valuation report of the assets. The valuation shall be by atleast one independent Government valuer. Such process for valuation report shall be completed by 31.01.2009. IDBI, which is the lead secured creditor , respondent No.1 herein, shall also be at the liberty to get the valuation report prepared of the assets of the property by the Government approved valuer, but such process for preparation of the valuation report shall be completed by 31.01.2009. The petitioner shall permit access to the assets so as to enable the valuer to prepare the report at the instance of IDBI which is the lead secured creditor.
iv.Whichever highest valuation report is available on the record of the property concerned, shall be the basis for fixation of the upset price for the respective assets, may be in one lot or different lot as may be finalised by the Committee. The process for issuing advertisement, open bid, inter se bidding amongst the bidder and confirmation Page 7 of 29 C/CA/11958/2013 JUDGMENT of sale, shall be finalised by Asset Sale Committee, but subject to the approval granted by this Court. v. It shall be specifically informed to the interested offerers who may deposit earnest money that they may be required to undertake inter se bidding even at the time when there is approval to be granted by this Court.
vi.The amount of deposit as EMD shall be in the separate Bank account with any nationalised Bank to be opened by the Liquidator of the petitioner and such amount shall be appropriated or adjusted only under the specific orders of this Court.
vii.After the approval granted by this Court, the price realised shall be deposited with this Court and thereafter, the investment shall be ordered as may be finalised by this Court.
viii.The aforesaid process of issuing advertisement and inter se bidding and confirmation before the Sale Committee shall be completed within a period of 2 months, i.e. on or before 31.03.2009.
ix.The expenses for advertisement and other process as integral part of the sale process, until it is approved by this Court, shall be borne by the petitioner Society through its liquidator. At the time when the proposal for approval is submitted before this Court, the amount of EMD in the aforesaid separate Bank account shall also be made available to this Court for directions to be deposited as may be finalised by this Court.
x. The aforesaid would be the function of the Committee. However, in the event there is any major dispute or there is any grievance on the part of any member of the Committee pertaining to major policy decision, it would be open to any member of the Committee to move this Court for appropriate clarification and/or directions.
10. In view of the above, the directions for constitution and functioning of the Committee is ordered accordingly."
3.7. The committee constituted under such order carried Page 8 of 29 C/CA/11958/2013 JUDGMENT out the task of obtaining valuation reports for the purpose of fixing upset price for different lots of properties and inviting offers for such sale. At different stages, learned Single Judges of this Court were apprised about periodical developments. The petition was later on placed before a Division Bench presumably in view of subject matter of securitisation being transferred to Division Bench. On 16.4.2010, Division Bench of this Court passed its order on Civil Application No.3036/2010 and connected proceedings which reads as under :
"The auction having already taken place pursuant to the Court's order and in absence of any objection made by any of the parties, we allow the Liquidator to confirm the sale. The amount may be deposited with the Court in terms of the earlier order. Civil Application Nos. 3036 to 3052 of 2009 stand disposed of."
3.8. On 22.6.2011, the writ petition was disposed of by the Division Bench, relevant portions of which read as under :
"Subsequently, when the matter was taken up by the Division Bench on 23rd June, 2010, this Court while observed that there is nothing on record to satisfy that any action is taken under Section 13(4) of the said Act and merely a notice under Section 13(2) of the said Act has been challenged, learned counsel on behalf of the parties submitted that in view of intervention and the interim orders passed by this Court, the parties are trying to settle the dispute and number of immovable Page 9 of 29 C/CA/11958/2013 JUDGMENT properties of Petrofils have been auction sold by the Liquidator. On their request, the case was adjourned to ensure settlement.
Today when the matter was taken up, it is stated that the matter is still pending for settlement, but this Court is not inclined to grant time, as in the present case only a notice under Section 13(2) of the SARFAESI Act is under challenge and this Court is not inclined to interfere with such notice, under Article 226 of the Constitution of India. There is also a remedy of appeal under Section 17 of the SARFAESI Act if any measure is taken by the secured creditor under Section 13(4) of the SARFAESI Act.
Learned counsel for the petitioner and the respondents would submit that number of properties have already been auction sold by the Liquidator and the amount has been deposited with this Court, and therefore the Liquidator be directed to withdraw the amount and to disburse the amount amongst the creditors on proportionate basis. In this regard, we may only observe that this Court is not inclined to decide the main issue as measures have already been taken under the SARFAESI Act and there is efficacious remedy before Debt Recovery Tribunal. We allow the Liquidator to withdraw the amount, if any, deposited with the Court pursuant to the interim orders passed by this Court in the present case, and direct the Liquidator to keep the amount in a separate interest bearing no lien account till the matter is settled by the Liquidator, if he is empowered under the law, or by any competent authority or a Court of competent jurisdiction/Debt Recovery Tribunal.
The Registrar General of this Court is directed to release the amount in favour of Liquidator, if any amount is deposited pursuant to the order passed by this Court in Page 10 of 29 C/CA/11958/2013 JUDGMENT the present case, after proper verification of the Liquidator by learned counsel for the petitioner. It is expected that the matter will be resolved on an early date. The writ petition stands disposed of."
3.9. The said decision of this Court was challenged by the liquidator before the Supreme Court which came to be disposed of bay an order dated 29.3.2012 in following terms :
"Taken on board.
Shri H.P. Raval, learned Additional Solicitor General appearing for the petitioner, on instructions, would submit that he is not interested in prosecuting the Special Leave Petition against respondent nos.2 and 14 for the present and accordingly, requests us to delete respondent nos.2 and 14 from the array of parties, at his risk. Request sought for is granted. Petitioners are permitted to delete respondent nos.2 and 14, at his risk. Learned Additional Solicitor General for the petitioner submits that respondent nos.1, 3 to 13 and 15 have entered into a joint agreement for amicable settlement dated 7.3.2012. In view of that, he requests this Court to permit the petitioner to withdraw the Special Leave Petition. Permission sought for is granted and the Special Leave Petition is disposed of as withdrawn.
Liberty granted to the petitioner, if need arises, to make appropriate application for modification/recalling of the orders passed by this Court.
I.A. No.1 is disposed of accordingly."
3.10. We are informed that subsequently the parties also withdrew the proceedings from DRAT pursuant to Page 11 of 29 C/CA/11958/2013 JUDGMENT the proceedings recorded before the Supreme Court and amounts realised through sale of properties of Petrofils were also distributted prorata amongst the creditors.
4. At that stage, the State Government has filed the present proceedings. Briefly stated case of the State is that land was acquired for public purpose by the Government. The State Government had contributed to the cost of acquisition. Such land so acquired can be used only for public purpose for which the acquisition was made. If such public purpose was either not possible to accomplish or stood exhausted, the lands could be divested only for another public purpose that too with the previous sanction of the State Government. In the present case, without any reference to the State Government, the land was sold to private individuals that too for development of private housing colony which cannot be stated to be a public purpose. It is for this purpose that application for recalling the said two orders came to be filed. First order was passed on Civil Application confirming the sale made by the sale committee. The second was the order under which the writ petition came to be disposed of. We would refer to these aspects a while later.
5. We may notice that there was considerable delay in filing application for recall of the orders. The State has therefore, preferred Civil Application seeking condonation of delay of 1258 days in preferring the application. In our order dated 20.12.2013 while issuing rule in the Civil Application for condonation of delay, we had put the respondents to notice that if after hearing the respondents, Page 12 of 29 C/CA/11958/2013 JUDGMENT the delay is condoned, on the next date of hearing itself, we may take the review application for hearing for which no separate notice would be necessary. Since several issues in the delay condonation application as well as application for recall overlap, we have heard learned advocates for the parties on these proceedings simultaneously and propose to dispose of both the proceedings by this common order.
6. To explain considerable delay, in the Civil Application, the State has putforth the grounds of no notice to the State as well as fraud by the stakeholders in the sale of the properties. It is pointed out that the State Government was not made a party in the said proceedings. A consent order was sought from the Court geopardising the interest of others who were not parties to the the said proceedings. The lands could not have been transferred without the approval of the State Government. Such facts were not brought to the notice of the Court. The State Government came to know about the orders passed in the said proceedings only on 16.5.2013 when application came to be filed by the farmers original land owners for restoration of the land.
7. On the other hand, the respondents opposing this delay application have tried to point out that the farmers had approached the State Government earlier also. The properties were sold after public notice. These proceedings were thus widely publicised and the same would amount to constructive notice to the Government.
8. In the application for recall similar stand is taken by the Page 13 of 29 C/CA/11958/2013 JUDGMENT State. It is pointed out that the land was acquired at the instance of Petrofils through GIDC for the public purpose. The State Government had contributed to the cost of acquisition. Under section 17A of the Land Acquisition Act, 1894 as applicable to the State of Gujarat, such land cannot be divested for any other purpose without the sanction of the Government.
9. The opponents on the other hand jointly oppose this stand of the State Government. Their contention is that the lands were sold by the sale committee constituted by the High Court. The sale was confirmed after due verification. Proper sale price was fetched. Sale consideration has already been recovered and distributed amongst the creditors. Equities thus have changed. At this belated stage, in any case , no interference should be made.
10. On the basis of such materials on record, learned Additional Advocate General Shri Tushar Metha raised the following contentions :
1) The land was acquired by the State Government for the public purpose under section 17A of the Land Acquisition Act, 1894. Such land cannot be divested for any other purpose. In the present case, the land was sold for development of private housing colony which is by no stretch of imagination a public purpose.
2) The State Government was not joined as a party in the writ petition though it was a necessary party. In absence of the State Government by consent between the Page 14 of 29 C/CA/11958/2013 JUDGMENT parties the land was sold at a very low price. To highlight this aspect, he relied on the following factors :
a) According to him, the valuation report was not obtained from the Government valuer though directed by the Court.
b) There was consent between all the parties.
c) Through successive sale attempts only three purchasers actively participated who eventually offered the highest price for different lands and whose offers were accepted. Soon after completion of the sale, some of the purchasers joined hands clearly demonstrating carteling
d) The upset price fixed and ultimate sale price fetched were way below the Government valuation estimating the value of the lands prevailing during the auction period. The valuation reports obtained for fixing the upset price ignored many factors and relevant material. In this context, he drew our attention to communication dated 8.10.2003 from the Town Development Officer, Vadodara to the Collector Vadodara pointing out that the value of the land in question as on 7.1.2010 was assessed at Rs.12,458/.
Along with such communication, he had attached detailed valuation report to come to such conclusions. In such report several sale considerations of neighbouring lands were taken into account. Adjustments were made on the basis whether the sale instances were of agricultural lands, non agricultural land and whether town planning scheme have already been framed etc. On the basis of such Page 15 of 29 C/CA/11958/2013 JUDGMENT detailed exercise valuation of the land was assessed. He pointed out summary of the valuation which reads as under :
Sr. Name Name of Details of Purpose Average Details as per Price Price No. of the the village land price as Jantri determined determined office per as per Town as per extract of Planner/ consensus in sales Date meeting (per sq. mtr) 1 Survey Non Rs.3833/ (1) For As per Rs.12,458/ no.235, 236, agricultural per sq. Industrial assessment 237, 238 etc. purpose km. purpose of situation of Moje Rs.4000/ per as on Udera, sq mtr 7.1.2010 by Taluka (2) For Open the Town District land Rs.4600/ Planner, Vadodara. per sq. mtr. Vadodara Total land of Rs.12,458/ 36 survey per sq. mtr numbers. dated 8.10.2013 2 Moje Survey Non Rs.3833/ (1) For As per Rs.12,458/ LAQ Udera no.193/2/A agricultural per sq. Industrial assessment Taluka etc of Moje purpose km. purpose of situation District Udera, Rs.4000/ per as on Vadodara Taluka sq mtr 7.1.2010 by District (2) For Open the Town Vadodara. land Rs.4600/ Planner, Total land of per sq. mtr. Vadodara 44 survey Rs.12,458/ numbers. per sq. mtr dated 8.10.2013 3 Survey Non Rs.3963/ (1) For As per Rs.12,880/ no.193/2/A agricultural per sq. Industrial assessment etc of Moje purpose mtr purpose of situation Udera, Rs.4000/ per as on Taluka sq mtr 6.4.2010 by District (2) For Open the Town Vadodara. land Rs.4600/ Planner, Total land of per sq. mtr. Vadodara 44 survey Rs.12,880/ numbers. per sq. mtr dated 8.10.2013 He highlighted that against such valuation of Rs.12458/ and 12880/ per sq. mtrs for three parcels of land, upset price for the lands was fixed at Rs.2674/ per sq. mtr. The ultimate sale consideration fetched by the lands was barely Page 16 of 29 C/CA/11958/2013 JUDGMENT above the said upset price. He drew our attention to comparative chart suggesting the sale price of lands during auction, the value of the land as per the Government valuation noted above and the difference in total sale consideration as under :
Sr. No. Name of Area of Rate as Total value Purchase Difference Purchaser lnad (In per DLPC of land value of (56) sq. mt) (3x4) auction 1 2 3 4 5 6 7 1 Aspire Confra 2,18,261 12880/ 281.12 84.20 196.92 Pvt. Ltd per sq mtr crore crore crore 2 Prestige 7000 " 9.02 crore 3.92 crore 5.10 crore Infrastructure Pvt. ltd 3 Avani 2,87,719 " 370.58 38.98 331.60 Infrastructure crore crore crore Total 5,12,980 660.72 127.10 533.62 crore crore crore On the basis of such materials, he contended that valuable lands were sold off at an extremely low price. In the process there was complete fraud committed by the parties and the land which was otherwise acquired for the public purpose was diverted to entirely unrelated purpose.
In the process, the Government exchequer has suffered. Inadequate price of the land also means lower recoveries by creditors who comprise of Banks and financial institutions
3) It was contended that the said proceedings and the orders passed by this Court were never brought to the notice of the Government right till 16.5.2013 till the farmersoriginal land owners approached the Government Page 17 of 29 C/CA/11958/2013 JUDGMENT requesting for restoration of possession of land to them. He clarified that though earlier also such representation was made by the land losers, same was not placed before the Collector and only the later representation was noticed by the Collector upon which he immediately took up the steps for instituting the proceedings which was done after obtaining necessary sanctions from the authorities. He therefore, submitted that delay caused in filing the application for recall is dealt in the application. In any case, the fraud would vitiate the entire proceedings and irrespective of such delay, the Court would redress the situation resulting into considerable financial loss to the public exchequer.
11. On the other hand, learned counsel Shri M.S. Rao for the liquidator stoutly opposed the prayers of the State. He submitted that the State has selectively picked these sale proceedings for challenge. The liquidator had acted under the supervision of the High Court. The entire proceedings were undertaken by the sale committee constituted by the High Court. GIDC has not been joined as a party. There is thus nonjoinder of necessary party. He also contended that some of the respondents who had no concern with the proceedings have been joined which has led to misjoinder of parties. Counsel further submitted that the valuation reports were obtained from the Government approved valuer which was as per the order of this Court. Long after the sales were completed in most transparent manner, the State Government has filed these proceedings when the amounts have been realised and also distributed amongst the creditors. He would draw our attention to the Page 18 of 29 C/CA/11958/2013 JUDGMENT order passed by the Supreme Court to contend that pursuant to such order later on all the proceedings from DRAT were also withdrawn. In short, according to him it is not now possible to go back to the stage where sales were confirmed by the High Court.
12. Learned counsel Shri Shalin Mehta for some of the successful auction purchasers also equally strongly opposed the proceedings. He submitted that through public notices all the proceedings were within the public knowledge. Gross delay caused in filing the application for recall of orders is not explained He submitted that section 17A of the Land Acquisition Act, 1894 would at best control the use of land acquired for the public purpose and not its transfer. If the purchasers are putting the land to any use which is otherwise not authorised in law, appropriate action can be taken but on such ground sale cannot be set aside. He further submitted that the purchasers have invested considerable amounts in acquiring the rights over the lands. At this stage, setting aside the sale confirmation would cause considerable hardship. He pointed out that land was granted to Petrofils by GIDC on lease for a period of 100 years. What the purchasers have acquired is the right to use such land as leaseholder for the remainder of the period. Thus this is not an outright sale of the land but the purchasers acquired only a leasehold right which is not prohibited. According to him this was one of the reasons why the valuation of these lands cannot be compared with neighbouring lands which would be free hold lands. He relied on several decisions of Supreme Court, particularly Page 19 of 29 C/CA/11958/2013 JUDGMENT on decision in case of Valji Khimji and company v. Official Liquidator of Hindustan Nitro Product (Gujarat) limited and others reported in (2008) 9 Supreme Court Cases 299, where the Supreme Court disapproved setting aside auction sale which was done after due publicity at the instance of a person who did not bid on the ground that there is a higher offer now available.
13. Learned counsel Shri Mihir Thakore and Shri Premal Nanavaty for the purchasers of land at Ranoli also opposed the delay condonation application on similar grounds. They additionally contended that land is acquired by the clients for the purpose of industry which has alight purpose. They undertake that such purpose would not be changed. Application of section 17A of the Land Acquisition Act, 1894 is therefore, ruled out.
14. We have noticed the pleadings on record. The question of delay as well as of recalling the orders passed by this Court substantially overlap. We therefore, address both these issues simultaneously. Though there is considerable delay in filing the application, it is an admitted position that the State Government was not a party to the proceedings before the High Court. The proceedings were instituted by the liquidator and opposed by the creditors of the society under liquidation. At different stages, the Court passed interim orders, initially setting up the sale committee. It was under such proceedings that the Court passed first of its two orders which the State desires recall of. Under such order, in view of the consent between the parties, the Court Page 20 of 29 C/CA/11958/2013 JUDGMENT confirmed the auction sale. By subsequent order, the Court held that the writ petition should not be entertained and left the parties to resort to the proceedings pending before the DRAT while still providing for release of the sale proceeds in favour of the liquidator. The delay of the State therefore, has to be viewed from this angle. When the State Government was not made a party, it would not be possible to track the progress in the litigation, particularly, by a machinery which otherwise does not have any personal involvement or stake. It would be impossible for the State Government to follow and chase ever litigation before the High Court and other Courts in order to ascertain whether any State interest is being jeopardised. Particularly, in matters of this nature, only when the facts are brought to the notice of the responsible officers of the State that machinery would move. It is only then a view can be taken whether the State interests are required to be protected by proper representation. On the face of it, it was a litigation between a society under liquidation and its creditors. The State Government would ordinarily have no interest in such litigation. Even public notices of auction to be conducted may not be sufficient to bring the relevant aspects of the matter to the notice of the State machinery. Every day large number of notices of sale, NOC or title clearance are issued. It would be impossible to expect the State machinery to follow all of th em and to take steps to defend State interest whether involvement of State interest apparent or not. In this context the State Government has pointed out that on 16.5.2013, farmers who were the original land owners had applied to the Collector for restoration of the land to them. It was thereupon that the Page 21 of 29 C/CA/11958/2013 JUDGMENT wheels started moving within the State machinery. After appropriate clearance from the higher authorities, the proceedings were instituted. It is undoubtedly true that previously also the farmers had approached the State making similar request. However, it is declared on oath that such representation was never placed before the Collector concerned and it was only when the representation of farmers dated 16.5.2013 was placed before the Collector that he took up steps for ascertaining whether any proceedings are required to be instituted.
15. In addition to such facts emerging from the record, we can also not shut our eyes completely to certain data presented by the State. These observations are made only for the purpose of dealing with these proceedings and may not be seen as our conclusive view on the rival stands. We may recall that the stand of the State is that there was a huge difference in price between the rate at which the lands were sold and the Government Jantri rate prevailing during the said period or thereabouts. We have noticed the yawning gap between the two valuations. We have also noticed that the sale was confirmed by the Court in a brief order primarily on consent which would not reflect any independent scrutiny by the Court about the various factors which now the State wants to present before the High Court. In this context, some of the other factors of the participating parties in the successive auction attempts also cannot be completely ignored. We may clarify that this should not be seen as our acceptance of the State's rather frontal accusations of fraud. This is only one of the indicators to accept the request of the State to condone the Page 22 of 29 C/CA/11958/2013 JUDGMENT delay and to enable the State to place full facts and argue its point before the Court.
16. Under the circumstances, application for condonation of delay is granted. Delay is condoned.
17. This very factor shall also have to be kept in mind while considering the State request for recall of the orders. The order which hurts the Government is one dated 6.4.2010 under which the sale of the lands in question was confirmed. The subsequent order dated 22.6.2011 is primarily one of disposing of the writ petition without recalling which it would not be possible for us to recall the order dated 6.4.2010 or for the State to request an audience before the sale is confirmed.
18. It is an undisputed position that land was acquired for public purpose by the State and the part of the cost of acquisition came from the State revenue. It is well settled that under the Land Acquisition Act, 1894, there are only two kinds of acquisitions. One for the public purpose and another for the company. In the present case, the case falls in the former category. The State legislature vide Gujarat Act 20 of 1965 introduced section 17A to the Land Acquisition Act, 1894 which reads as under :
"17A Use of land for any public purpose permitted. When any lands vests in the State Government or in a corporation owned by the State Government under the provisions of this Act, it shall be lawful, with the previous sanction of the State Government to use such land also for any public purpose other than that for which its Page 23 of 29 C/CA/11958/2013 JUDGMENT possession was taken."
19. As per this provision, therefore, when any land has vested in the State Government or in a Corporation owned by the State Government under the provisions of the Land Acquisition Act, it would be lawful with the previous sanction of the State Government to use such land for any public purpose other than that for which its possession was taken. This provision thus permits the Corporation owned by the State Government to put the land acquired for public purpose other than for which the same was acquired. This switch of the public purpose requires previous sanction of the State Government. The term used is "previous sanction" and not approval. Under the circumstances, it would prima facie emerge that GIDC for whom the land was acquired, could not have permitted diversion of the said land for any purpose other than for which the same was acquired without the previous sanction of the State Government. It would also prima facie emerge that in any case land so acquired could not be put to any use other than public purpose with or without the sanction of the Government.
20. In case of Ahmedabad Victoriya Iron Works v. State of Gujarat & ors. reported in 1996(2) GLH 946, Division Bench of this Court in the context of section 17A of the Land Acquisition Act, 1894 held and observed as under :
"5. If the land is acquired for a public purpose, then in absence of previous sanction as per Sec. 17 A of the Act as applicable to the State of Gujarat, it is not permissible to use the same land for other public purpose. Section Page 24 of 29 C/CA/11958/2013 JUDGMENT 17A has been inserted vide Gujarat Act 20 of 1965 which reads as under : "17A. Use of land for any public purpose permitted. When any land vests in the State Goivernment or in a corporation owned or controlled by the State Government under the provisions of this Act, it shall be lawful with the previous sanction of the State Government, to use such land also for any public purpose other than that for which its possession was taken."
Thus, reading the Section 17A it is very clear that without previous sanction of the State Government, the land could not have been used for any other public purpose than for which its possession was acquired. There is no dispute before us that the piece of land was acquired for widening the road which is a public purpose.
The Estate Management Committee, Standing Committee or the General Board of Respondent Corporation has not considered the fact that occupants were requesting for regularising their occupancy on the land which in fact did not belong to Corporation and that was acquired for widening the road. By regularising, the Corporation has not acted in accordance with law."
In case of State of Kerala and others v. M. Bhaskaran Pillai and another reported in AIR 1997 Supreme Court 2703, the Supreme Court observed that when the land which was acquired for public purpose remains unutilised for achieving such public purpose, the same should be put to public auction instead of disposal by way of sale to erstwhile owners.
Page 25 of 29C/CA/11958/2013 JUDGMENT In case of Voltas Limited v. The Tehsildar Thane and others reported in AIR 2003 Bombay 351, in the context of land acquired for a company, the Division Bench of the High Court observed that when such land was transferred in breach of the conditions of Sanad, the Government can recover unearned income by the company.
In case of Royal Orchid Hotels Limited and another v. G. Jayarama Reddy and others reported in (2011) 10 Supreme Court Cases 608, the Supreme Court stressed upon the concept of eminent domain on the public land enjoyed by the Government.
21. We may notice that if the land is acquired for the company under section 44A of the Land Acquisition Act, 1894, there would be certain restrictions on transfer of such land. The provision provides that no company for which any land is acquired, shall be entitled to transfer the said land or any part thereof by sale, mortgage, gift, lease, or otherwise except with the previous sanction of the appropriate Government. Likewise under section 17A of the Land Acquisition Act, 1894, restrictions are imposed on change of use of the public purpose even by a Government owned Corporation for whom the land may have been acquired for a particular public purpose.
22. Under the circumstances, in our opinion the Government would have right of audience to point out that under section 17A, the land cannot be put to any use except for the public purpose for which the same was acquired without the previous sanction of the Government Page 26 of 29 C/CA/11958/2013 JUDGMENT and in any case, such land cannot be diverted for a use other than public purpose. In our opinion section 17A does not strike at the use of the land but is diversion for a purpose other than the public purpose for which the same was acquired.
23. Learned counsel Shri Shalin Mehta contended that land had vested in GIDC by virtue of section 30(2) of the Gujarat Industrial Development Act, 1962 and therefore section 17A of Land Acquisition Act, 1894 would not apply. Section 30 reads as under :
"30(1) Whenever any land is acquired by the Corporation for any purpose in furtherance of the objects of the Act, but the Corporation is unable to acquire it by agreement, the State Government may, upon an application of the Corporation in that behalf, order proceedings to be taken under the relevant land acquisition law for acquiring the same on behalf of the Corporation as if such lands were needed for a public purpose within the meaning of the relevant land acquisition law.
(2) The amount of compensation awarded and all other charges incurred in the acquisition of any such land shall be forthwith paid by the Corporation and thereupon the land shall vest in the Corporation."
24. Under subsection(1) of section 30 thus when the Corporation is unable to acquire the land by agreement, it may approach the State Government for acquisition of the land under the Land Acquisition Act as if the sale was needed for a public purpose. Subsection(1) of section 30 thus provides for a deeming fiction namely, that the land needed by the Corporation would be one for public Page 27 of 29 C/CA/11958/2013 JUDGMENT purpose, for the purpose of the acquisition law under which the same is being acquired by the State. Sub section(2) of section 30 provides that the amount of compensation and other charges would be paid forthwith by the Corporation upon which the land would vest in the Corporation. In our opinion, section 30(2) is not a vesting section but it provides for the Corporation to bear the cost of acquisition of land and other charges. It clarifies that only after such charges are paid that the land would vest in the Corporation. Vesting of the land in our opinion takes place under the Land Acquisition Act, 1894 and in particular, section 11(2) thereof upon passing an award upon which the land would vest.
25. Before closing we clarify that once the said orders are recalled, the writ petition would be revived and would be put back at the stage before passing order dated 6.4.2010 i.e. of confirmation of sales in question. Such proceedings would be placed before the appropriate Court taking up the subject matter of the litigation. Our observations in this order are therefore, meant for the purpose of deciding the application for condonation of delay and recall of the orders. We are conscious that the purchasers have contributed sizeable amounts towards sale consideration. At this stage, therefore, when we are only recalling the orders without any further comments, it is not necessary for us to modulate how such amounts would be governed if ultimately and if at all the auctions are to be quashed. Such a stage has not yet arrived. Same would be the subject matter of consideration before the Court taking up further hearing of the matter.
Page 28 of 29C/CA/11958/2013 JUDGMENT
26. Under the circumstances, the following order is passed :
1) Orders dated 22.6.2011 passed in Special Civil Application No.4353/2008 and dated 6.4.2010 passed in Civil Application No.3036/2010 are recalled.
2) Writ petition being Special Civil Application No.4353/2008 is revived and shall be placed before appropriate Court for hearing.
2) Till such time the Court grants first hearing, all parties shall maintain statusquo with respect to the lands in question.
27. Civil Application and Misc. Civil application stands disposed of accordingly. Rule made absolute in Civil Application.
(AKIL KURESHI, J.) (ANANT S.DAVE, J.) raghu Page 29 of 29