Gujarat High Court
The Liquidator Petrofils Co. Operative ... vs Industrial Development Bank Ofindia ... on 7 May, 2015
Equivalent citations: AIR 2015 (NOC) 1248 (GUJ.), 2015 AIR CC 2341 (GUJ)
Author: V.M.Sahai
Bench: Vijay Manohar Sahai, R.P.Dholaria
C/SCA/4353/2008 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
With
CIVIL APPLICATION NO. 3036 of 2010
In
SPECIAL CIVIL APPLICATION NO. 4353 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE ACTING CHIEF JUSTICE
MR. VIJAY MANOHAR SAHAI Sd/-
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA Sd/-
=========================================
1. Whether Reporters of Local Papers may be YES
allowed to see the judgment ?
2. To be referred to the Reporter or not ? YES
3. Whether their Lordships wish to see the fair NO
copy of the judgment ?
4. Whether this case involves a substantial NO
question of law as to the interpretation of the
constitution of India, 1950 or any order made
thereunder ?
===========================================================
THE LIQUIDATOR PETROFILS CO. OPERATIVE LTD (IN
LIQUIDATION)....Petitioner
Versus
INDUSTRIAL DEVELOPMENT BANK OFINDIA LTD (IDBI LTD) &
21....Respondents
=========================================
Appearance :
MR MS RAO, ADVOCATE for the Petitioner.
MR BHARAT JANI, ADVOCATE for the Respondent Nos.1,10.
NOTICE SERVED BY DS for the Respondent No.2.
MR PRANAV G DESAI, ADVOCATE for the Respondent Nos.3-7.
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C/SCA/4353/2008 CAV JUDGMENT
MR BH BHAGAT, ADVOCATE for the Respondent Nos.8-9.
MR KI SHAH, ADVOCATE for the Respondent Nos.11-12.
MR CZ SANKHLA, ADVOCATE for the Respondent No.13.
MR KKASHYAP K PUJARA, ADVOCATE for the Respondent No.14.
MR SHRAMIK BHATT FOR SINGHI & CO, ADVOCATE for Respondent No.15.
MR SHALIN MEHTA, SENIOR COUNSEL ASSISTED BY MR HRIDAY BUCH,
ADVOCATE for the Respondent Nos.16-17.
MR MIHIR THAKORE & MR DHAVAL C DAVE, SENIOR COUNSEL ASSISTED
BY MR BS KHATANA, ADVOCATE for the Respondent No.18.
MR PK JANI, ADDITIONAL ADVOCATE GENERAL ASSISTED BY MR PARTH
BHATT, AGP for the Respondent Nos.19 to 21.
MR RUTVIJ M BHATT, ADVOCATE for the Respondent No.22.
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CORAM: HONOURABLE THE ACTING CHIEF JUSTICE
MR. VIJAY MANOHAR SAHAI
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 07/05/2015
CAV JUDGMENT
(PER : HONOURABLE THE ACTING CHIEF JUSTICE MR. VIJAY MANOHAR SAHAI)
1. The petitioner is a Liquidator of the Society appointed under Section 90 (1) of the Multi-State Cooperative Societies Act, 2002. The petitioner is not an Official Liquidator nor is a Liquidator envisaged under the Companies Act, 1956.
2. M/s. Petrofils Co-operative Limited was a National Cooperative Society (the Society for short) in which the Government of India had 84% share capital. The Society was included in Schedule II to the Multi State Co-operative Societies Act, 1984. For the purpose of manufacturing polyester filament yarn, the said Society was formed, in which Government of India was a majority stakeholder to the extent of 84%. The Society was a co-operative society registered under the Multi-State Cooperative Societies Act, 1984. For the purpose of developing the industry Page 2 of 73 C/SCA/4353/2008 CAV JUDGMENT Petrofils and 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), applied to the State Government for acquisition of land for the Society, necessary for such public purpose. The State Government under a notification dated 9.6.1978 decided to acquire the required land for public purpose, namely, for establishment of Petrofils industry and construction of a township for employees of Petrofils at Vadodara. The Government contributed a sum of Rs.1000/- from the public revenue towards the compensation for such land acquisition. For lands which are now purchased by respondents no.16 to 18, a notification under section 4 of the Land Acquisition Act, 1894 (for short 'the LA Act') 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 other respondents, notification under section 4 of the LA Act 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. The entire cost of acquisition expenses and the entire amount of compensation to the land owners was paid by GIDC and the possession of entire acquired land was directly taken by GIDC from the farmers/land owners.
3. It is undisputed that Petrofils industry and township Page 3 of 73 C/SCA/4353/2008 CAV JUDGMENT was also constructed on the land so acquired. However, sometime in the year 1994-95, 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) by 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.
4. 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 judgment 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.
5. The IDBI bank issued notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Page 4 of 73 C/SCA/4353/2008 CAV JUDGMENT Enforcement of Security Interest Act, 2002 (for short '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 of 2007 before this Court challenging the said notice issued by the IDBI bank. The Court disposed of the 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.
6. After getting permission from such committee, the liquidator filed Special Civil Application No.4353 of 2008 and in the petition, he challenged the 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 Page 5 of 73 C/SCA/4353/2008 CAV JUDGMENT 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 status quo with regard to 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.
7. On 12.12.2008, while admitting this writ petition, the learned Single Judge constituted a sale committee provided for the following modalities. The relevant part of the order is extracted below :-
"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. 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 creditors.
D. One member representing majority unsecured
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C/SCA/4353/2008 CAV JUDGMENT
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 at least 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 Page 7 of 73 C/SCA/4353/2008 CAV JUDGMENT 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 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 realized shall be deposited with this Court and thereafter, the investment shall be ordered as may be finalised by this Court.Page 8 of 73 C/SCA/4353/2008 CAV JUDGMENT
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."
8. The committee constituted under order dated 12.12.2008 carried out the task of obtaining valuation reports for the purpose of fixing upset price for different lots of properties and inviting offers for sale. At different stages, learned Single Judges of Page 9 of 73 C/SCA/4353/2008 CAV JUDGMENT 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 of 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."
9. On 22.6.2011, the writ petition was disposed of by the Division Bench, relevant portions of which reads 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 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 Page 10 of 73 C/SCA/4353/2008 CAV JUDGMENT 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 the present case, Page 11 of 73 C/SCA/4353/2008 CAV JUDGMENT 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."
10. The said decision of this Court was challenged by the liquidator before the Supreme Court which came to be disposed of by 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."Page 12 of 73 C/SCA/4353/2008 CAV JUDGMENT
11. The parties subsequently also withdrew the proceedings from DRAT pursuant to the proceedings recorded before the Supreme Court and amounts realised through sale of properties of Petrofils were also distributed pro-rata amongst the creditors.
12. The State Government has filed the review/recall application along with delay condonation application on 15.10.2013 for reviewing the judgment dated 22.6.2011 on the ground that land was acquired for public purpose by the State 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 public purpose was either not possible to accomplished or stood exhausted, the lands could be used only for another public purpose that too with the previous sanction of the State Government. The State Government and the GIDC were not made parties to the writ petition and other proceedings. The land of the State Government 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 review/recalling the said two orders were filed. First order was passed on Civil Application confirming the sale by this Court made by the sale committee. The second was the order under which the writ petition came to be disposed of.
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13. The review/recall application was allowed by the Division Bench on 8.5.2014, thereafter the petitioner has impleaded the State of Gujarat, Collector Vadodara as well as Gujarat Industrial Development Corporation as party to the writ petition. The Collector Vadodara on 21.2.2015 has filed affidavit- in-reply. The State Government on 1.4.2015 has filed affidavit-in- reply and additional affidavit on 20.4.2015 to the writ petition. The GIDC on 1.4.2015 has also filed affidavit-in-reply to which the petitioner has filed rejoinder affidavit. The respondent no.16 has filed affidavit-in-reply to the affidavit-in-reply filed by Collector, Vadodara on 17.3.2015. The respondent no.17 has also filed affidavit-in-reply on behalf of respondent no.17 to the affidavit-in- reply filed by Collector, Vadodara on 17.3.2015. The respondent no.18 has filed affidavit-in-rejoinder to the affidavit-in-reply filed by Collector, Vadodara on 18.3.2015. The GIDC also filed an additional affidavit on 24.4.2015 bringing on record photocopy of the agreement between State of Gujarat and Gujarat Industrial Development Corporation for the land of Undhera, District Vadodara. Learned counsel for all the parties stated that since only the agreement is brought on record, they do not propose to file any reply to it. We further inquired from the learned Additional Advocate General as to whether he proposes to file any rejoinder affidavit to the affidavit-in-reply filed on behalf of respondent nos.16 and 17 and sur-rejoinder to the rejoinder affidavit filed on Page 14 of 73 C/SCA/4353/2008 CAV JUDGMENT behalf of respondent no.18, the Additional Advocate General very fairly stated that all the facts have come before this Court by way of various affidavits and the main question which is to be decided by this Court is as to whether the land had vested in the State Government and without the prior approval of the State Government, as provided by Section 17A Gujarat Act, the GIDC could execute lease deeds in favour of auction purchasers for use of another public purpose and in absence of State of Gujarat in whom the land had vested, the entire auction and sale confirmation proceedings were illegal and liable to be set aside. Therefore, no further sur-rejoinder to the rejoinder filed by the petitioner and respondent no.18 or rejoinder affidavit to affidavit-in-reply filed by respondent no.16 and 17 was required to be filed. All the learned counsel for the parties submitted that the Court may proceed to finally hear and decide the matter. Therefore, we have started final hearing of the matter with the consent of learned counsel for the parties as affidavits had been exchanged.
14. We have heard Mr. M. S. Rao, learned counsel for the petitioner, Mr. Bharat Jani, learned counsel appearing for respondent Nos.1, 2 and 10, Mr. Pranav Desai, learned counsel for respondent Nos.3 to 7, Mr. B. H. Bhagat, learned counsel for respondent Nos.8 and 9, Mr. K. I. Shah, learned counsel for respondent Nos.11 and 12, Mr. C. Z. Shankhla, learned counsel for respondent No.13, Mr. K. K. Pujara, learned counsel for respondent Page 15 of 73 C/SCA/4353/2008 CAV JUDGMENT No.14, Mr. Shramik Bhatt, learned counsel for M/s Singhi & Company for respondent No.15, Mr. Shalin Mehta, learned senior counsel assisted by Mr. Hriday Buch for respondent Nos.16 and 17, Mr. Mihir Thakor and Mr. Dhaval C. Dave, learned senior counsel assisted by Mr. B. S. Khatana, learned counsel for respondent No.18, Mr. P. K. Jani, learned Additional Advocate General assisted by Mr. Parth Bhatt, learned Assistant Government Pleader for respondent Nos.19 to 21 and Mr. Rutvij M. Bhatt, learned counsel for respondent No.22.
15. Learned counsel for the petitioner Mr. M.S. Rao has urged that the petitioner was appointed as Liquidator and this Court by order dated 12.12.2008 constituted an Asset Sale Committee of which the petitioner was appointed as Chairman and Convener of the Committee which was entrusted the job of getting the assets of the Society valued by Valuers. One valuation shall be made at least by one independent Government approved Valuer. The Committee obtained the valuation reports in respect of the assets of the Society including the lands which are in dispute, by Tatas Strategic Management Group, a Division of Tata Industries Limited which was appointed by IDBI Limited and submitted it before the Court. It is relevant to point out over here that there is no independent Government Valuer. The valuation report obtained by IDBI Limited and the earlier valuation report of the Liquidator was placed before this Court on 9.2.2009. Summary valuation Page 16 of 73 C/SCA/4353/2008 CAV JUDGMENT report of Petrofils Cooperative Limited which prepared earlier by a Government approved Valuer dated 1.12.2008 and subsequently revised valuation report by Tatas Strategic Management Group was placed before this Court. According to the valuation reports, the upset price for the respective assets which may be in one lot or different lot be fixed and advertisement be issued inviting open bid and inter-se bidding amongst the bidders may also be held. The Asset Sale Committee was to finalize the sale and the matter was to be placed before the Court for confirmation of sale. The bidders were asked to deposit earnest money. After inter-se bidding, confirmation before the Sale Committee shall be completed within two months on or before 31.3.2009.
16. The Committee decided to issue first advertisement on 19.3.2009 after fixing the upset price but no one applied in response to the advertisement. The matter was brought to the notice of this Court and by order dated 2.7.2009 on the agreement of counsel for the parties agreed that upset price be fixed on the basis of advise of Petrofils Cooperative Limited (original valuation report) and IDBI (revised valuation report). This order was passed by this Court in Civil Application for direction No.6528 of 2009 on 2.7.2009. Some property was sold in the auction sale which was required to be confirmed. However, the properties which remained unsold (the properties which are in dispute in this petition), the Court permitted for fixing a fresh reduced upset price by order Page 17 of 73 C/SCA/4353/2008 CAV JUDGMENT dated 3.8.2009. Both these orders were passed in Civil Application for direction No.6528 of 2009. By another advertisement on 6.8.2009, second tender notice was issued but again no tender was submitted inspite of reduction in upset price. The Committee obtained approval of this Court on 14.12.2009 in Civil Application No.12197 of 2009 for further reducing the upset price and for issuance of fresh tender which was accepted and fresh tender notice was advertised on 7.1.2010 by further reducing the upset price. The inter-se bidding took place in which the highest bidders were the respondent Nos.16, 17 and 18 and Civil Applications No.3040 of 2010 and 3041 of 2010 were filed before this Court for confirmation of sale in favour of the highest bidders. This Court by its order dated 6.4.2010 was pleased to confirm the auction sale. The sale proceeds were deposited before the Registry of this Court. After the sale of leasehold rights, all properties and assets of M/s. Petrofils Cooperative Limited stood sold out. This Court by another order dated 22.6.2011 disposed of the writ petition with a direction to the Registrar General of this Court to release the amount in favour of the Liquidator. The amount was released by the Registry to the Liquidator. Thereafter, it has been paid by the Liquidator to the Secured Creditors on pro-rata basis and the dispute came to an end.
17. After two years, the State Government filed a review/recall application before the Division Bench on the ground Page 18 of 73 C/SCA/4353/2008 CAV JUDGMENT that State Government was not impleaded as party to the writ petition though the land belongs to the State Government and prayed that auction sale made in favour of respondent Nos.16, 17 and 18 be set aside. It is relevant to note over here that the State Government had not challenged the sale of other assets of the Society to other persons. However, in any case, the auction sale in favour of the respondent Nos.16, 17 and 18 the auction purchasers had become final and was not open for challenge by the State Government. There was no illegality committed by the Liquidator and the sale of the land of the Society took place under the guidance and supervision of this Court and sale was confirmed and sale proceeds were released to the Secured Creditors by the Liquidator. Therefore, this writ petition is bound to be allowed as entire auction sale has taken place under the orders passed by this Court and the auction sale cannot be challenged by the State Government as it was not a necessary party.
17.1 Learned counsel for the petitioner has further urged that it is true that the land was acquired under the provisions of LA Act by the State Government for GIDC, but the land never vested in the State Government under Section 16 of the LA Act as the State Government never took possession of the land in dispute. The entire amount and expenses for acquisition and compensation was paid by the GIDC, award was made on the basis of consent award obtained by the GIDC and possession was taken over by the GIDC. Page 19 of 73 C/SCA/4353/2008 CAV JUDGMENT Therefore, the entire land in dispute and properties of the Society vested in the GIDC in view of Section 30 (2) of the GID Act and the land in dispute vested in the Corporation free from all encumbrances. Learned counsel further urged that the land was acquired under Section 17 read with Section 17-A inserted by Gujarat Act No.20 of 1965. Under Section 17-A, the land could legally vest in the Corporation owned by the State Government for using such land for public purpose. The land in dispute did not vest in the State Government as under Section 16, neither the State Government nor the Collector took possession. The land in dispute vested in the Corporation as the land was acquired under Section 17, 17-A (Gujarat Act) for fulfilling the requirement of the Gujarat Industrial Development Corporation as provided in Section 30 of GID Act which had been enacted for securing the orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat. Learned counsel for the petitioner further urged that the public purpose was for which the land was acquired was achieved by establishment of the Society for manufacturing certain petrochemicals and for developing a township for the employees and staff of the Society. The Society was a Joint Venture of the Government of India with weavers. The land was acquired by the GIDC on 1.3.1983 for the Society and lease agreement was executed between the Society and the GIDC. The manufacturing of chemicals and petrochemicals was started but the Society started incurring losses since 1994 - 95 and its Page 20 of 73 C/SCA/4353/2008 CAV JUDGMENT plant was shut down in November 1998. Since then, it became totally defunct. The rehabilitation scheme was not found to be viable.
17.2 He further urged that the provisions of a General Act should give way to the provisions contained in a Special Act and that being so, the Liquidator in the present case is not under any obligation to seek any prior permission of the State Government nor the GIDC before proceeding to dispose of the lease hold rights of the Society in liquidation over the lands in question by sale or otherwise. He further urged that the Liquidator of the Society is a statutory authority under The Multi State Cooperative Societies Act, 2002 which is a Special Act enacted by the Union Parliament under Entry 44 of List I under Schedule 7 of the Constitution of India. The said Act is a Special Act because for the purpose of dealing with other ordinary cooperative societies, there is a Central Legislation called "Cooperative Societies Act, 1912". The objects and reasons underlying the enactment of the Act of 2002 would go to make the said Act a special one, whereas the LA Act is on the other hand a General Act as has been observed by the Constitution Bench of the Hon'ble Supreme Court in paragraph 21 of the decision in the case of Shri Ramtanu Cooperative Housing Society Ltd. v. State of Maharashtra and others, AIR 1970 SC 1771. He further submitted that under Section 90 (1) of the Act of 2002, immediately from the date of passing of the order for Page 21 of 73 C/SCA/4353/2008 CAV JUDGMENT winding up of a Multi State Cooperative Society, the whole of the assets of such Society shall vest in the Liquidator and he shall have the power to sell assets. Therefore, the Liquidator of such a multi state cooperative society under Liquidation is not bound by any restriction or limitation prescribed by any provisions contained in the LA Act, more particularly, Section 17A of the said Act which is a General Act. The Liquidator is not bound by any provisions contained in GID Act or the regulations framed there under nor any covenants contained in the lease deed executed between the Society and GIDC.
17.3 He further urged that neither the Liquidator nor the Asset Sale Committee constituted by this Court had committed any illegality or irregularity in disposal of the lands in question to the auction purchasers. Initially, the Asset Sale Committee in terms of the stipulation contained in order dated 12.12.2008, had sought to sell inter alia the leasehold rights over the lands in question on the basis of the highest of the two valuations given by the Govt. approved Valuers - one appointed by the Liquidator and the other one appointed by the IDBI. But the response from the public was zero.
17.4 Thereafter, after obtaining due approval from this Court on 2.7.2009, when the Asset Sale Committee sought to sell the leasehold rights of the lands in question on the basis of the average Page 22 of 73 C/SCA/4353/2008 CAV JUDGMENT of the two valuations given by the aforesaid two Government approved valuers and issued public notice dated 6.8.2009, again there was no response. After obtaining due approval from this Court on 14.12.2009, when the Asset Sale Committee sought to sell the leasehold rights of the lands in question on the basis of the average of the two valuations minus 10% thereof, and issued public notice dated 7.1.2010, there was again no response whatsoever with regard to Vadodara Plant, however, there were three responses in respect of Vadodara Township and five responses in respect of Vadodara School. After carrying out inter-se biddings in respect of aforesaid Vadodara Township and Vadodara School, the Asset Sale Committee through the Liquidator had sought prior approval of this Court by filing two separate Civil Application Nos.3040 and 3041 of 2010 respectively. Prior approval was granted by the Court on 6.4.2010. In so far as Vadodara Plant is concerned, the same was sold later on by the Asset Sale Committee on 26.8.2011 i.e. after the final disposal of the present petition on 22.6.2011.
17.5 He further submitted that there is no iota of truth or substance in the stand of the State Government that the real market value of the aforesaid three leasehold lands in question at the relevant point of time, was Rs.660.72 Crores. The so-called market value of Rs.660.72 Crores has been arrived at by the District Land Pricing Committee admittedly on the basis of the Page 23 of 73 C/SCA/4353/2008 CAV JUDGMENT guidelines/instructions issued by the State Government and its authorities on 26.4.2011 and 2.5.2011. The valuations done by the two Govt. approved Valuers appointed by the Liquidator and the IDBI are on realistic basis and on the basis of jantri values. 17.6 He then urged that the very fact that the State Government and its authorities are selective in their approach to the question, the Liquidator's decision to transfer the leasehold rights of the only the lands in question goes to demonstrate that the move initiated by the State Government is actuated by extraneous considerations. He further urged that the Liquidator had moved Civil Application No.12862 of 2010 in October 2010 praying, inter alia, for accord of confirmation of sale to one M/s. Ganesh Infrastructure the Society's Ankleshwar property having 243 quarters with infrastructure facilities standing on the leasehold land of GIDC admeasuring 2,02,337 Sq. Mts. located in GIDC Area, Bharuch at the agreed price of Rs.69.25 Crores as against the upset price of Rs.62.26 Crores. The said application was allowed on 29.10.2010 and this Court accorded its confirmation of the aforesaid sale. Thereafter, the Liquidator entered into sale deed with M/s. Ganesh Infrastructure where after the said party had also reportedly divided the said parcel of land into plots and sold the same to third parties. Even though the aforesaid parcel of land is a property acquired by Society through GIDC, yet even till date, the State Government has not questioned the decision of the Asset Sale Page 24 of 73 C/SCA/4353/2008 CAV JUDGMENT Committee headed by the Liquidator to sell the said lands to M/s. Ganesh Infrastructure or the State Government was a necessary party.
18. Mr. P. K. Jani, learned Additional Advocate General assisted by Mr. Parth Bhatt, learned Assistant Government Pleader for respondent Nos.19 to 21 has urged that the challenge in the writ petition is to the notice under Section 13 of the Securitisation Act, 2002. The issue involved in the present writ petition is that the petitioner and the respondents who are Secured Creditors could not have agreed to sell the land wherein there is an interest of the State Government. He submitted that a detailed procedure is provided under Multi-State Co-operative Societies Act, 2002 for winding up of a Cooperative Society. The petitioner and the respondents who are secured creditors could not have bypassed the procedure envisaged under the said Act with consent of each other resulting into serious prejudice to the interest of the State Government.
18.1 He further submitted that the State Government had acquired the land by following the procedure under Part II of the LA Act for industrial development. As per Section 16 of the LA Act, the subject land had vested in the State free from all encumbrances. In that view of the matter, the State became the owner of the land. The ownership of the land remained with the Page 25 of 73 C/SCA/4353/2008 CAV JUDGMENT State Government at every stage and even till date. 18.2 He further submitted that the State Government had assigned the subject land to GIDC for the purpose of carrying out the industrial development as envisaged under the GID Act. That GIDC is not the owner of the land. The land is assigned to GIDC only for the limited purpose of carrying out the public purpose i.e. industrial development.
18.3 He has further submitted that GIDC has not paid full amount to the State as the State's contribution of Rs.1,000/- always remained unpaid to subserve the public purpose for all time. The land had never vested in GIDC with ownership rights of GIDC. That GIDC had limited right of use of this land for carrying out industrial purposes only.
18.4 He further submitted that the land acquired by the State Government has to be utilized for public purpose only and it cannot be used for any private purpose by the allottees of GIDC or the successor of the allottees. The Society or its successor have no right to transfer, sell or in any manner assign its rights to any third party. When the Society was unable to utilize this land for the purpose for which it was granted to it, the Society was required to return the land to GIDC. Society cannot directly sell its interest in the land to third party for commercial activities and other purposes Page 26 of 73 C/SCA/4353/2008 CAV JUDGMENT which are outside the scope of GID Act, 1962.
18.5 He further submitted that the entire process of constituting sale committee, giving public notice for auction, determining upset price of the land in dispute and confirmation of sale sufferers from patent illegality, irregularity and impropriety. The upset price of the land had not been determined by Government valuer, but it was done by a person different than Government valuer. There was no effective wide publicity for sale of land. Only few persons participated in auction. After the auction, all the participants formed common legal entities. There is huge difference between price offered by the auction purchasers and the actual price. Hence, there was cartel of selected persons to get the land at very low price.
18.6 He further submitted that this Court had no occasion to go into the legality, validity and propriety of the auction proceedings as the parties before this Court did not object to the auction proceedings. This Court did not assign any reasons for confirmation of sale. At that stage, the State and the office of Collector were not parties to the proceedings at that time. 18.7 He further submitted that there was no intimation to the State or GIDC about auction proceedings. Prior approval of GIDC was not taken for auction proceedings. That the entire Page 27 of 73 C/SCA/4353/2008 CAV JUDGMENT auction proceedings were conducted behind the back of the State and the GIDC. The auction purchasers have no right, title or any interest over the land as the rights of the Society in the land were incapable of being sold to anyone. He further submitted that the auction purchasers cannot be permitted to make use of the land for commercial activities. They do not have rights to develop the land, sub-plot it, sell it or part with the possession of entire or part of land to anyone. They cannot be allowed to carry out commercial activities of any nature. He, therefore, submitted that the petition be dismissed.
19. Mr. Mihir Thakore, learned Senior Counsel and Mr. Dhaval C. Dave, learned Senior Counsel assisted by Mr. B.S. Khatana appearing for respondent No.18 have urged that the land in dispute was acquired by the State Government for the Corporation known as GIDC and the entire amount of expenses and compensation was paid by GIDC and the land vested in the GIDC in view of Section 17A of the Gujarat Act read with Section 16 and 17 of the LA Act. The possession of the land in dispute was taken directly by the GIDC from the farmers/land owners and in view of Section 30 (1) and (2), the entire land vested in the GIDC free from all encumbrances. The land in dispute never vested in the State Government under Section 16 of the LA Act. In support of his argument, learned counsel has placed reliance on paragraphs 16 and 17 of the decision of the Apex Court in Municipal Page 28 of 73 C/SCA/4353/2008 CAV JUDGMENT Corporation of Greater Bombay v. Industrial Development Investment Co. Pvt. Ltd. and others, (1996) 11 SCC 501. 19.1 The learned counsel further urged that apart from paying Rs.1,000/-, the State Government has not paid any amount at any stage. The respondent no.18 had purchased the land in open public auction conducted under the orders of this Court and the sale has been confirmed and the amount paid by the respondent has also been paid by the Liquidator to the Secured Creditors on pro-rata basis and the respondent no.18 had acquired rights as per the lease deed to use the land for any purpose though the respondent would be using the land for industrial purpose. The permission of the State Government for change of land use as provided in Section 17A of the Gujarat Act would not apply as the owner of the land is GIDC and not the State Government. GIDC had sold the land in dispute in furtherance of the object of GID Act, therefore, the land can be used for construction of residential houses, flats, industrial purpose or any other purpose as per the terms of the lease deed. The State Government has got no right whatsoever to challenge the auction sale which has become final and binding.
19.2 The respondent no.18 Avani Infrastructure has filed a rejoinder affidavit to the affidavit-in-reply filed by Collector, Vadodara stating therein that they were the highest bidder in open Page 29 of 73 C/SCA/4353/2008 CAV JUDGMENT public auction. In paragraph 5 of the rejoinder, it has been stated that all the proceedings of the sale of the property have been done in a fair and transparent manner. This Court has confirmed the sale of a property. It is stated that the land purchased by the respondent no.18 is situated at village Ranoli for industrial purpose allotted by GIDC to the Society. The answering respondent has stepped into the shoes of the Society so far as lease is concerned. It has clearly been stated that the respondent no.18 is going to utilize the land for industrial purpose only. The description of the property given in paragraph 3 of the affidavit-in-reply filed by the Collector was inaccurate.
19.3 In paragraph 7 of the rejoinder, it has been stated that the land purchased by the respondent no.18 in open public auction which has been confirmed by this Court regarding which a notification under Section 4 was issued on 2.9.1974 and notification under Section 6 was issued on 11.6.1976 of the LA Act and the land was acquired by consent award dated 13.7.1976. The respondent no.18 had purchased the leasehold right for the remaining period of 99 years of the land situated at village Ranoli forming part of Petrochemical park developed by GIDC and the respondent would be using the land for the same purpose only for which GIDC allotted the land to erstwhile leaseholder. 19.4 In paragraph 8 of the rejoinder, it has been stated that Page 30 of 73 C/SCA/4353/2008 CAV JUDGMENT in the entire State of Gujarat, wherever the land has been acquired for the purpose of GIDC, the same vests in the GIDC and regulated under the GID Act. It has further been stated that whenever the land allotted to any allottee falls vacant, that the same is re-allotted in most cases by public auction, and by other method as per the policy of GIDC. The State Government had never objected to the transfer/re-allotment of plots made by GIDC. In the case in hand, out of 15 properties which were put to sale, only three parcels of land have been picked and chosen by the State Government for challenge and other auction sales confirmed for 12 properties had not at all been challenged by the State Government. 19.5 In paragraph 9, it has been stated that there is no outright transfer of ownership of the land to the respondent no.18, there is no change of purpose in respect of land for which it was acquired and, therefore, the stand of the State Government is ill- founded and liable to be rejected.
19.6 In paragraph 11 of the rejoinder, it has been stated that the land was acquired for GIDC by the State Government and GIDC in turn allotted it to various industries including the land in dispute which has been purchased by the respondent no.18. There is no role of the Government in transfer of land by GIDC in favour of the answering respondent for the remaining lease period. The land acquired by GIDC for the public purpose would also be carried out Page 31 of 73 C/SCA/4353/2008 CAV JUDGMENT by the petitioner and the land would be used for same public purpose.
19.7 In paragraph 15 of the rejoinder, it has been stated that land acquired for GIDC vests in GIDC and GIDC was well within its power to utilize the land in furtherance of the purpose for which it was acquired. Even, Section 17A of the Gujarat Act permits the use of land for the same public purpose for which no permission or previous sanction is required to be taken from the State Government.
19.8 In paragraph 17 of the rejoinder, it has been stated that the respondent no.18 purchased the leasehold rights in the property in dispute for the remaining period by investing huge amount of approximately Rs.79.35 Crores and more than two years have passed, but the answering respondent is not able to enjoy the fruits of the transaction. With the permission of this Court, the answering respondent has dismantled the plant and obtained necessary no objection from various authorities to complete the formalities of transferring leasehold rights and when the lease document was about to be executed, the State Government filed the review petition which delayed the implementation of the Project by the answering respondent causing huge loss.
20. Mr. Shalin Mehta, learned senior counsel assisted by Page 32 of 73 C/SCA/4353/2008 CAV JUDGMENT Mr. Hriday Bhuch for respondent Nos.16 and 17 has submitted that Section 30 (1) and (2) of GIDC Act makes GIDC the owner of the acquired land. Vesting connotes ownership and Section 30 (2) gives no indication that there is a limited vesting of land in GIDC for the purpose of management and possession. The vesting provision must be given its fullest effect in absence of any hint in the statute that GIDC cannot become the owner of the land acquired by the State for GIDC.
20.1 He further submitted that the award amount was paid by GIDC and hence, GIDC has borne the entire cost of acquisition and the State is merely an acquiring agency and hence, State does not become the owner.
20.2 He further submitted that Section 30 (1) empowers GIDC to acquire land by agreement. Section 14 of GID Act permits GIDC to acquire land and hold movable and immovable property for the purpose of its activities. It also has the power under Section 14 to lease out and sell the same on such terms as it thinks fit. 20.3 He further submitted that the lease deed executed between GIDC and the Society permits transfer of lease with the consent of GIDC. Rule 27 of 1963 Rules permit GIDC to transfer the lands acquired under the LA Act on lease for industrial purpose. So, there is no illegality at all in transferring the land on Page 33 of 73 C/SCA/4353/2008 CAV JUDGMENT lease to Society and Liquidator further transferring the lease in favour of respondent Nos.16 and 17.
20.4 He further submitted that Section 17 A of the Land Acquisition Act does not apply to the facts of the case because the acquired land had already been put to use for the public purpose acquired - for expansion of Petrochemicals Industry and for constructing residential colony / township for staff of Society. Section 17 A contemplates a situation where land is sought to be used for a purpose other than that for which possession is taken, provided the land had vested in the State.
20.5 He further submitted that in the same auction, there were several other lands belonging to the Society. No permission of State was required for auctioning the lands of the Society. He further submitted that auction was held under the aegis of Sale Committee appointed by this Court. Valuation of the land is just and fair.
20.5 While replying to the affidavit-in-reply filed by the Collector, Vadodara, the respondent no.16 - Aspire Confra Private Limited in its affidavit-in-reply in paragraph 5 has stated that it had purchased the land in dispute in terms of the special conditions of sale and liabilities wherein one of the condition 1.05 was that the successful bidder will have to execute lease agreement with GIDC Page 34 of 73 C/SCA/4353/2008 CAV JUDGMENT as per prevailing Rules and Regulations of GIDC. In paragraphs 6 and 7, it has been stated that petitioner made a bid for land situated at Undhera, Dist. Vadodara together with building and structures and submitted its tender on 15.2.2010. Total area admeasuring 2,18,261 Sq. Mts. out of total land of 2,25,261 Sq. Mtrs and Prestige Infrastructure Pvt. Ltd. submitted its tender on 15.2.2010 for school and land located in Petrofil Nagar, Vadodara admeasuring 7,000 Sq. Mts. The bid of answering respondent was accepted as he was the highest bidder and the sale was confirmed. Similarly, bid of the respondent no.17 - Prestige Infrastructure Pvt. Ltd. was also highest and the sale was confirmed. In paragraph 11, it has been stated that No Objection has been issued by GIDC, GEB, Notified Area Authority, transfer charges had been paid and all dues of the aforesaid authority were paid by the answering respondent. In paragraph 13 of the affidavit-in-reply, it has been stated that with regard to the land, a supplementary agreement was executed on 12.9.2011 between GIDC and the respondent no.16 accepting respondent no.16 to be the successor of the original licensee.
20.6 In paragraphs 14 and 15 of the affidavit-in-reply, it was stated by respondent no.16 that by letter dated 17.9.2012, the GIDC conveyed its no objection for the approval of land for development of the housing sector land for residential purpose subject to terms and conditions specified therein. Page 35 of 73 C/SCA/4353/2008 CAV JUDGMENT 20.7 In paragraph 16, it was stated that on 25.3.2013, Vadodara Urban Development Authority communicated revised development permission for residential purpose and approved the same after receiving necessary development charges. 20.8. On behalf of respondent no.17, affidavit-in-reply has been sworn by Mukundbhai Manubhai Patel on behalf of Prestige Infrastructure Pvt. Ltd. is exactly the same as that has been sworn by respondent no.16 Ashok Madhavdas Khurana. Even the annexures are exactly same and, therefore, not required to be dealt with separately.
21. Mr. Ritvij Bhatt, learned counsel appearing for respondent no.22 - GIDC placing reliance on his affidavit-in-reply filed on 1.4.2015 has urged that GIDC is the lessor of the land in dispute but earlier, it had not been made party to the writ petition. It promotes the purpose of GID Act. It also promotes industries within the area of Gujarat. Several industrial zones have been created for the purpose of industrial development and lands are acquired by GIDC as per the provisions of Section 30 and 31 of the GID Act. The land in dispute is situated at Ranoli and Undhera. In paragraph 6 of the affidavit-in-reply, it had been stated that proceedings were initiated under Section 30 and 31 of GID Act with regard to aforesaid two villages and compensation was paid by Page 36 of 73 C/SCA/4353/2008 CAV JUDGMENT GIDC for the land in dispute to the land owners under consent awards/regular reference and after the acquisition of the aforesaid land, the industrial area was developed for promoting and creating of industrial zones in Ranoli and Naldhari and to achieve this object, the lands in dispute were allotted to Petrofils Cooperative Limited. In paragraph 9 of the affidavit-in-reply, it had been stated that the plot was acquired by the State for GIDC which were situated at Petrochemical complex area, village Ranoli, Taluka Dist. Vadodara vide notification dated 11.6.1976 under Section 6 of the LA Act and consent award to the owners of the land as per Section 11(2) of the LA Act was made on 13.7.1976. The public purpose was clearly mentioned in the notification that the land was required for expansion of petrochemical estate of GIDC. 21.1 Learned counsel for GIDC placing reliance on paragraph 10 of the affidavit-in-reply further urged that as per the object of acquiring the land for public purpose, GIDC entered into lease agreement for a period of 99 years with Petrofils Cooperative Limited which is in liquidation since 21.7.1997. The entire land in dispute was allotted to Petrofils. The purpose of allotment of land was mentioned in the lease deed in condition 2 (m) that the land would be used for establishment of the project for manufacturing of polyester filament yarn and the land would not be used for any other purpose without the permission of the lessor. In condition (r) of the lease deed, it was mentioned that in the event of liquidation Page 37 of 73 C/SCA/4353/2008 CAV JUDGMENT of the lessee, the person in whom the title vests shall serve a notice on the lessor within one month from the date of vesting. 21.2 In paragraph 13 of the affidavit-in-reply, it has been stated that the land in dispute situated at Naldhari industrial area of GIDC, Taluka Valia, Dist. Bharuch was acquired by GIDC by notification dated 24.11.1986 and consent award/regular award as per Section 11 of the LA Act was made on 8.3.1989 and 12.1.1990. In the notification as well as in the award, the public purpose was clearly mentioned that the land is acquired for creation of Valia Industrial Estate. M/s. Petrofils Cooperative Limited entered into a lease agreement for the period of 99 years with GIDC on 8.11.1989 and the entire land was allotted to Petrofils Cooperative Limited. In paragraph 22, it has been stated that if the leasehold rights of the land in dispute are transferred, then the supplementary agreement will have to be entered between GIDC and the auction purchaser and the purchaser would have to bear the transfer fees. In paragraph 23 of the affidavit-in-reply, it has been stated by GIDC that land acquired at village Undhera, Dist. Vadodara for public purpose of residential township for the employees of Petrofils Cooperative Limited, the land was allotted along with the additional land. These lands have been auctioned in pursuance of the order passed by this Court and on the request made by the auction purchaser, GIDC has transferred the land admeasuring 2,25,26 Sq. Mts. situated at Undhera, Dist. Vadodara in favour of Page 38 of 73 C/SCA/4353/2008 CAV JUDGMENT M/s. Prestige Infrastructures Private Limited and M/s. Aspire Confra Private Limited, after collecting all statutory dues of GIDC and Notified Area Authority including transfer fee, revenue and other charges thereon by transfer order dated 12.9.2011 to the auction purchaser. Learned counsel for GIDC has urged that he has no objection if the auction purchasers, namely, respondent nos.16, 17 and 18 get the land transferred in their favour after paying all statutory dues of GIDC and Notified Area Authority including transfer fees and revenue and other charges thereon. After these formalities are completed, thereafter GIDC may enter into supplementary agreement with the respondent nos.16 to 18.
22. On the argument of the learned counsel for the parties, one thing is clear that the land was acquired by the State Government for GIDC for establishment of petrochemical industry, namely, Petrofils Cooperative Limited and for establishment of township for the employees of the industry. The State Government issued notification under Sections 4 and 6 of the LA Act for acquiring the lands in dispute of villages Ranoli and Undhera. The State Government contributed Rs.1,000/- towards cost of acquisition and apart from this amount, no amount was spent by the State Government either for acquisition purpose or for payment of compensation. The entire amount of expenses and payment of compensation in pursuance of the consent award was paid by the Society. Contribution of Rs.1,000/- by the State Government was Page 39 of 73 C/SCA/4353/2008 CAV JUDGMENT essential condition for acquisition of land for public purpose and to demonstrate that the cost of acquisition had been borne wholly or in part out of public fund. It could not be disputed by the learned Additional Advocate General appearing for the State Government that the land in dispute was acquired for public purpose for the Society. The Petrofils Cooperative Limited was a joint venture of Government of India and the weavers society known as Petrofils Cooperative Limited for manufacture of polyester filament yarn. The Central Government was holding 84% shares. The argument of learned Additional Advocate General cannot be accepted that merely because the State Government had invested Rs.1,000/- for acquiring the land for public purpose, would mean that the land belongs to the State Government or the acquired land has vested in the State Government. It only establishes that land acquisition was for a public purpose.
23. The Apex Court in Manubhai Jehtalal Patel v. State of Gujarat, (1980) 4 SCC 553 at page 555 in paragraph 4 is extracted as under :-
"4. It is not correct to determine the validity of acquisition keeping in view the amount of contribution but the motivation for making the contribution would help in determining the bona fides of acquisition. Further in Malimabu case, contribution of Re.1 from the State revenue was held adequate to hold that acquisition was for Page 40 of 73 C/SCA/4353/2008 CAV JUDGMENT public purpose with State fund. Therefore, the contribution of Re.1 from public exchequer cannot be dubbed as illusory so as to invalidate the acquisition."
24. Thus, the argument advanced on behalf of State that since it had invested Rs.1,000/- in acquisition of land, it would become owner of the land is misplaced. The State Government can only become owner if the land in dispute has vested in the State under Section 16 of the LA Act and possession had been taken by the State. In this case, neither the acquired land had vested in the State nor the State ever took possession of the land in dispute.
25. Counsel for the parties have argued at length about the vesting of land and possession of the land, we propose to examine as to whether the land had vested in the State Government or in GIDC free from all encumbrances. The GIDC sent its proposal to the State Government for acquiring the land for the purpose of setting up of an industry and industrial township. Section 30 of the GID Act provides as under :-
"ACQUISITION AND DISPOSAL OF LAND 30 (1) Wherever any land is required 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 Page 41 of 73 C/SCA/4353/2008 CAV JUDGMENT 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."
26. The object of framing of GID Act was to promote industrial development in the entire State of Gujarat through the Corporation known as GIDC. The GIDC sent its proposal to the State Government for acquiring the land making it clear that the amount of compensation awarded and all other charges incurred in execution of such land shall be paid by the Corporation and thereupon the land shall vest in the Corporation. The State Government acquired the land by issuing notification under Section 4 and 6 of the LA Act and GIDC entered into consent award with the farmers/land owners and paid the entire compensation to them and they directly handed over possession to the GIDC and consent award was passed by the Collector under Section 11 (2) of the LA Act. The land in dispute never vested in the State nor the Collector or the State Government had taken possession from the farmers/land owners.
Page 42 of 73 C/SCA/4353/2008 CAV JUDGMENT
27. The land was acquired by the State Government under Section 30 and 31 of the GID Act and in furtherance of the object of the GID Act, the State Government entered into agreement with GIDC as provided in Section 32 of the GID Act. Section 32 of the GID Act is reproduced as under :-
"(32) (1) For the furtherance of the objects of this Act, the State Government may, upon such conditions as may be agreed upon between it and the Corporation, place at the disposal of the corporation any lands vested in the State Government.
(2) After any such land has been developed by,
or under the control and supervision of the
Corporation, it shall be dealt with by the
Corporation in accordance with the regulations made, and directions given by the State Government in this behalf.
(3) If any land placed at the disposal of the Corporation under sub-section (1) is required at any time thereafter by the State Government, the Corporation shall replace it at the disposal of the State Government upon such terms and conditions as the State Government may after consultation with the Corporation determine."
28. It was clear to GIDC that the land was vested in GIDC free from all encumbrances as entire cost of expenses for acquisition and payment of compensation under consent award Page 43 of 73 C/SCA/4353/2008 CAV JUDGMENT passed under Section 11 (2) was paid by the GIDC and the farmers/land holders directly gave possession to the GIDC. At no point of time, possession was taken by the Collector on behalf of the State Government nor there is any material on record to demonstrate that the State Government never took possession or invested any amount except Rs.1,000/-. Though Section 32 of GID Act was not applicable as the land in dispute had never vested in the State, however, under a bonafide mistake, the GIDC entered into an agreement with regard to Ranoli and Undhera village with the State Government. A copy of the agreement with regard to Undhera village filed by GIDC along with the additional affidavit-in- reply is reproduced as under :-
": AGREEMENT :
AN AGREEMENT made this 1st day of August One Thousand nine hundred and seventy nine BETWEEN THE GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, a Corporation established by the Government of Gujarat under the Gujarat Industrial Development Act, 1962, (hereinafter referred to as "the Corporation" which expression shall unless the context does not so admit include its successor or successors), of the one part AND The GOVERNOR OF GUJARAT (hereinafter referred to as "the Government" which expression shall unless excluded by or repugnant to the context be deemed to include his successors or successors in office and assigns) of the other part. WHEREAS the Corporation has applied to the Page 44 of 73 C/SCA/4353/2008 CAV JUDGMENT Government of Gujarat (hereinafter referred to as "the Government") that the Corporation is in need of all that land situate in the village Undera in the Taluka Vadodara in the District Vadodara admeasuring about 17-15-86 H-A-Sq. Mtr. Sectors bounded on North by village boundaries of ______________ on South by _____________________ on East by the village boundary of ________________________ and western boundary of) as shown in the map and schedule more particularly described in the schedule hereunder written hereinafter called "the said land" together with the trees, houses and all other things whatsoever standing on the same or attached thereto or permanently fastened to anything attached to the same for the Industrial Township.
AND WHEREAS the Government having caused an inquiry to be made in conformity with the provisions of the Land Acquisition Act, 1894 (hereinafter called "the said Act") and being satisfied as a result of such inquiry that the acquisition of the said land is needed for the aforesaid public purpose had decided to acquire the said land under the provisions of the said Act and contribute sum of rupees one thousand towards the cost of such acquisition and called upon the Corporation to enter into an agreement hereinafter contained with the Government.
Now these presents witness that the Corporation doth here by bind itself to pay to the Government the cost of the acquisition of the said land excluding Page 45 of 73 C/SCA/4353/2008 CAV JUDGMENT rupees one thousand that will be paid by the Government and such charges as may be incurred by the Government or by any of the officer of the Government in respect of the said acquisition at such time or times as the Collector of (hereinafter referred to as "the Collector") shall require on the amount of the said cost being certified by the Collector and doth agree that in the event of its making default in any such payment, it shall be lawful for the Government to recover the same as arrears of land revenue and the Government doth hereby agree with the Corporation that as soon as all the costs and charges of the said acquisition shall be paid by or recovered from it as aforesaid, the said land together with the trees, housing and other things standing thereon or attached thereto or permanently fastened to anything attached thereto shall be transferred to the Corporation so as to vest in the Corporation and be henceforth held by it for the purpose of the Gujarat Industrial Development Act, 1962 free from all claims or charges whatsoever on the part of Government.
"If at any time or times the whole or any part of the said land is required by Government or for the purpose of making any new public road or for any purpose connected with Public Health, safety, utility or necessary (as to which matter the Corporation shall accept as final, the devision of the Government), the Corporation on being there into required by the Government in writing shall transfer to the Government the whole or part of the said land as the Government shall specify to be Page 46 of 73 C/SCA/4353/2008 CAV JUDGMENT necessary for any of the aforesaid purpose, and in consideration of such transfer the Government shall pay to the Corporation a sum equal to the amount of the compensation awarded under the said Act and paid by the Corporation in respect of the lands so transferred, including the percentage awarded under Section 23 (2) of the said Act, together with such amount as shall be estimated by the Executive Engineer whose decision in the matter shall be final at the costs of the development of the land so transferred, which shall include the value at the date of transfer of any structures standing thereon, and when part of a building is on the land so transferred and part is on an adjoining land, reasonable compensation for the injurious affection of the part of the building on the adjoining land."
The Schedule above referred to is enclosed and marked Annexure 'A'.
In witness whereof the common seal of the Gujarat Industrial Development Corporation has been affixed and the officer On Special Duty (Land Acquisition) Industries Commissioner's office, Ahmedabad both on behalf of the Governor of Gujarat set his hand and affixed the seal hereto the day and your first above written.
The common seal of the Gujarat Industrial
Development Corporation was affixed hereto
pursuant to a resolution of the Corporation dated Sd/-
Asstt. Chief Executive (Land) Page 47 of 73 C/SCA/4353/2008 CAV JUDGMENT In the presence of :-
(1) Sd/-
(2) Sd/-(3)
SIGNED, SEALED AND DELIVERED by Officer On Special Duty, Industries Commissioner's Office, Ahmedabad.
Officer on Special Duty (LA), Industries Commissioner's Office, Ahmedabad.
In the presence of
(1)
(2)
SCHEDULE
District S. No. Area of the Purpose for which
Taluka land under the land is to be
Village acquisition acquired.
H.A. Sq.
Mt.
Baroda 232 0 - 59 - 69 For construction
Baroda of township for
Undera 233 0 - 31 - 36 Petrofils by
G.I.D.C.
234 0 - 29 - 34
235 1 - 23 - 43
236 0 - 62 - 73
237 0 - 58 - 68
238 0 - 51 - 60
239 0 - 46 - 54
240 0 - 25 - 29
241 0 - 24 - 28
242 0 - 54 - 63
243 0 - 52 - 61
Page 48 of 73
C/SCA/4353/2008 CAV JUDGMENT
244 0 - 48 - 56
245 1 - 79 - 07
246 0 - 64 - 75
+
0 - 02 - 02
Well's
Kharaba
247
0 - 61 - 71
249
0 - 64 - 75
+
0 - 04 - 05
Road's
250 Kharabo.
251 0 - 40 - 47
253 0 - 90 - 04
254 0 - 08 - 09
255 0 - 26 - 30
256 0 - 18 - 21
257 0 - 51 - 60
258 0 - 21 - 25
259 0 - 25 - 29
260 0 - 19 - 22
261 0 - 39 - 46
262 0 - 40 - 47
263 0 - 18 - 21
264 0 - 18 - 21
265 0 - 40 - 47
266/1 0 - 32 - 37
266/2 0 - 51 - 65
Page 49 of 73
C/SCA/4353/2008 CAV JUDGMENT
267 0 - 18 - 16
275+ 0 - 15 - 18
276 +
1
276+
0 - 96 - 12
2
+ 277
+278 +
279
Total 17 - 15 - 86
Sd/-
Asstt. Chief Executive (Land)"
29. Almost similar agreement was executed with regard to land situated at village Ranoli. From the agreement extracted above between the State Government and GIDC, it was established that the land had vested in the GIDC free from all encumbrances meaning thereby that the GIDC had become the absolute owner and in possession of the acquired land. The Apex Court in Municipal Corporation of Greater Bombay v. Industrial Development Investment Corporation Private Limited and others, (1996) 11 SCC 501 in paragraphs 16 and 17 held as under :-
"16. After the award under Section 11 of the Act was made by the Collector he is empowered under Section 16 to take possession of the land, if the Page 50 of 73 C/SCA/4353/2008 CAV JUDGMENT possession was not already taken, exercising power under Section 17(4). Thereupon, the land shall vest absolutely in the Government free from all encumbrances. It is well settled law that taking possession of the land is by means of a memorandum (panchnama) prepared by the Land Acquisition Officer and signed by Panch witnesses called for the purpose. Subsequently, the Collector hands over the same to the beneficiary by means of another memorandum or panchnama, as the case may be. But in this case Section 91 of the BMC Act statutorily comes into play which would indicate that the Land Acquisition Officer which making award should intimate to the Commissioner, Municipal Corporation of the amount of compensation determined and all other expenses. The Corporation shall pay over the same to the Land Acquisition Officer.
17. By operation of sub-section (2) thereof, the amount of compensation awarded and all other charges indicated in the acquisition of the property shall be paid by the Commissioner; "thereupon the said property shall vest in the Corporation". In other words, on payment of compensation by the Corporation to the Land Acquisition Officer, statutorily the Corporation gets transfer of possession from the State and the acquired property vests in the Corporation free from all encumbrances. Thereby the Corporation becomes the absolute owner of the land free from all encumbrances including tenancy rights, if any, alleged to be held by the respondents."Page 51 of 73 C/SCA/4353/2008 CAV JUDGMENT
30. As demonstrated earlier, it is established from the record that entire expenses of acquisition and payment of compensation under the consent award had been paid by the GIDC and the GIDC having taken possession directly from the farmers/land owners, the GIDC became the absolute owner of the land in dispute free from all encumbrances under Section 30 of the GID Act.
31. We may now consider the argument made on behalf of the State Government by the learned Additional Advocate General that since the land has been acquired by the State, it has vested in the State free from all encumbrances. It is necessary to reproduce Section 16 of the LA Act which reads as under :-
"16. Power to take possession.
When the Collector has made an award under section 11, he may take possession of the land, which shall thereupon [vest absolutely in the [Government]], free from all encumbrances."
32. The Apex Court had the occasion to consider the scope of Section 16 of the LA Act and vesting of acquired land in the State Government after passing of the award in Prahlad Singh and others v. Union of India and others, (2011) 5 SCC 386. It held in paragraphs 13 to 19 as under :-
Page 52 of 73 C/SCA/4353/2008 CAV JUDGMENT
"13. We have given our serious thought to the entire matter and carefully examined the records. Section 16 lays down that once the Collector has made an award under Section 11, he can take possession of the acquired land. Simultaneously, the section declares that upon taking possession by the Collector, the acquired land shall vest absolutely in the Government free from all encumbrances. In terms of the plain language of this section, vesting of the acquired land in the Government takes place as soon as possession is taken by the Collector after passing an award under Section 11. To put it differently, the vesting of land under Section 16 of the Act presupposes actual taking of possession and till that is done, legal presumption of vesting enshrined in Section 16 cannot be raised in favour of the acquiring authority. Since the Act does not prescribe the mode and manner of taking possession of the acquired land by the Collector, it will be useful to notice some of the judgments in which this issue has been considered.
14. In Balwant Narayan Bhagde v. M. D. Bhagwat, (1976) 1 SCC 700, Bhagwati J., (as he then was), speaking for himself and Gupta J. disagreed with Untwalia J., who delivered separate judgment and observed:
".........We think it is enough to state that when the Government proceeds to take possession of the land acquired by it under the Land Acquisition Act, Page 53 of 73 C/SCA/4353/2008 CAV JUDGMENT 1894, it must take actual possession of the land, since all interests in the land are sought to be acquired by it. There can be no question of taking "symbolical" possession in the sense understood by judicial decisions under the Code of Civil Procedure. Nor would possession merely on paper be enough. What the Act contemplates as a necessary condition of vesting of the land in the Government is the taking of actual possession of the land. How such possession may be taken would depend on the nature of the land. Such possession would have to be taken as the nature of the land admits of. There can be no hard and fast rule laying down what act would be sufficient to constitute taking of possession of land. We should not, therefore, be taken as laying down an absolute and inviolable rule that merely going on the spot and making a declaration by beat of drum or otherwise would be sufficient to constitute taking of possession of land in every case. But here, in our opinion, since the land was lying fallow and there was no crop on it at the material time, the act of the Tehsildar in going on the spot and inspecting the land for the purpose of determining what part was waste and arable and should, therefore, be taken possession of and determining its extent, was sufficient to constitute taking of possession. It appears that the appellant was not present when this was done by the Tehsildar, but the presence of the owner or the occupant of the land is not necessary to effectuate the taking of possession. It is also not strictly necessary as a matter of legal requirement that notice should be given to the Page 54 of 73 C/SCA/4353/2008 CAV JUDGMENT owner or the occupant of the land that possession would be taken at a particular time, though it may be desirable where possible, to give such notice before possession is taken by the authorities, as that would eliminate the possibility of any fraudulent or collusive transaction of taking of mere paper possession, without the occupant or the owner ever coming to know of it." (emphasis supplied)
15. In Balmokand Khatri Educational and Industrial Trust v. State of Punjab (1996) 4 SCC 212, the Court negatived the argument that even after finalization of the acquisition proceedings possession of the land continued with the appellant and observed :-
"4. It is seen that the entire gamut of the acquisition proceedings stood completed by 17-4- 1976 by which date possession of the land had been taken. No doubt, Shri Parekh has contended that the appellant still retained their possession. It is now well-settled legal position that it is difficult to take physical possession of the land under compulsory acquisition. The normal mode of taking possession is drafting the panchnama in the presence of panchas and taking possession and giving delivery to the beneficiaries is the accepted mode of taking possession of the land. Subsequent thereto, the retention of possession would tantamount only to illegal or unlawful possession".
16. In P.K. Kalburqi v. State of Karnataka (2005) 12 SCC 489, the Court referred to the Page 55 of 73 C/SCA/4353/2008 CAV JUDGMENT observations made by Bhagwati, J. in Balwant Narayan Bhagde v. M.D. Bhagwat (supra) that no hard and fast rule can be laid down as to what act would be sufficient to constitute taking of possession of the acquired land and observed that when there is no crop or structure on the land only symbolic possession could be taken.
17. In NTPC v. Mahesh Dutta (2009) 8 SCC 339, the Court noted that appellant NTPC paid 80 per cent of the total compensation in terms of Section 17(3A) and observed that it is difficult to comprehend that after depositing that much of amount it had obtained possession only on a small fraction of land.
18. In Sita Ram Bhandar Society v. Govt. of NCT, Delhi(2009) 10 SCC 501 and Omprakash Verma v. State of Andhra Pradesh (2010) 13 SCC 158, it was held that when possession is to be taken of a large tract of land then it is permissible to take possession by a properly executed panchnama. Similar view was expressed in the recent judgment in Brij Pal Bhargava v. State of UP 2011(2) SCALE
692.
19. The same issue was recently considered in C.A. No. 3604 of 2011 - Banda Development Authority, Banda v. Moti Lal Agarwal decided on 26.4.2011. After making reference to the judgments in Balwant Narayan Bhagde v. M.D. Bhagwat (supra), Balmokand Khatri Educational and Industrial Trust v. State of Punjab (supra), P.K. Page 56 of 73 C/SCA/4353/2008 CAV JUDGMENT Kalburqi v. State of Karnataka (supra), NTPC v. Mahesh Dutta (supra), Sita Ram Bhandar Society v. Govt. of NCT, Delhi (supra), Omprakash Verma v. State of Andhra Pradesh (supra) and Nahar Singh v. State of U.P. (1996) 1 SCC 434, this Court laid down the following principles :
"(i) No hard and fast rule can be laid down as to what act would constitute taking of possession of the acquired land.
(ii) If the acquired land is vacant, the act of the concerned State authority to go to the spot and prepare a panchnama will ordinarily be treated as sufficient to constitute taking of possession.
(iii) If crop is standing on the acquired land or building/structure exists, mere going on the spot by the concerned authority will, by itself, be not sufficient for taking possession. Ordinarily, in such cases, the concerned authority will have to give notice to the occupier of the building/structure or the person who has cultivated the land and take possession in the presence of independent witnesses and get their signatures on the panchnama. Of course, refusal of the owner of the land or building/structure may not lead to an inference that the possession of the acquired land has not been taken.
(iv) If the acquisition is of a large tract of land, it may not be possible for the acquiring/designated authority to take physical possession of each and every parcel of the land and it will be sufficient that symbolic possession is taken by preparing appropriate document in the presence of Page 57 of 73 C/SCA/4353/2008 CAV JUDGMENT independent witnesses and getting their signatures on such document.
(v) If beneficiary of the acquisition is an agency/instrumentality of the State and 80% of the total compensation is deposited in terms of Section 17(3A) and substantial portion of the acquired land has been utilised in furtherance of the particular public purpose, then the Court may reasonably presume that possession of the acquired land has been taken."
33. The State Government neither in the review petition nor in its affidavits-in-reply filed in this writ petition has produced any evidence or material to demonstrate that possession was taken by the State Government by preparing a Panchnama in the presence of independent witnesses and their signatures were obtained on the Panchnama. As a matter of fact, no evidence with regard to taking over symbolic or actual possession by the State Government or by the Collector, Vadodara has been filed or is on the record. Therefore, the acquired land cannot be deemed to have been vested in the State Government. In another decision, the Apex Court in State of Uttar Pradesh v. Hari Ram, (2013) 4 SCC 280 in paragraph 25 to 32 has held as under :-
"25. The word "vest" or "vesting" has different meaning. Legal Glossary, published by Official Language (Legislative) Commission 1970 Edition at Page 302 :Page 58 of 73 C/SCA/4353/2008 CAV JUDGMENT
"Vest: 1. To give a person a legally fixed, immediate right or personal or future enjoyment of (an estate), to grant, endow, clothe with a particular authority, right of property, 2. To become legally vested; (T.P. Act.) "Vesting order: An order under statutory authority whereby property is transferred to and vested, without conveyance in some person or persons;
26. Black's Law Dictionary (Sixth Edition) 1990 at page 1563: "Vested: Fixed; accrued; settled; absolute; complete; Having the character or given the rights of absolute ownership; not contingent, not subject to be defeated by a condition precedent. Rights are "vested" when right to enjoyment present or prospective has become property of some particular persons or persons as present interest; mere expectancy or future or contingent interest in property founded on anticipated continuance of existing laws does not continue "vested right" Vaughan v. Nadel; 228 Kan. 469, 618 p. 2d 778, 783. See also Accrue Vest and specific typed of vested interest infra."
27. Webster's Third New International Dictionary, of the English Language unabridged, Volume III S to Z at page 2547 defines the word "vest" as follow:
"vest" vest ...... To place or give into the possession or discretion of some person or authority (the Page 59 of 73 C/SCA/4353/2008 CAV JUDGMENT regulation of the waterways .... to give to a person a legally fixed immediate right of present or future enjoyment of (as an estate) (a deed that vests a title estate in the grantee and a remainder in his children),
(b) to grant endow, or clothe with a particular authority right or property ..... to put ( a person) in possession of land by the feudal ceremony of investiture ..... to become legally vested (normally) title to real property vests in the holder of a property executed deed.)"
28. "Vest"/"vested", therefore, may or may not include "transfer of possession" the meaning of which depends on the context in which it has been placed and the interpretation of various other related provisions.
29. What is deemed "vesting absolutely" is that "what is deemed to have acquired". In our view, there must be express words of utmost clarity to persuade a court to hold that the legislature intended to divest possession also, since the owners or holders of the vacant land is pitted against a statutory hypothesis. Possession, there is an adage "nine points of law" In Beedall v. Maitland (1881) 17 Ch. D. p.183 Sir Edward Fry, while speaking of a Statute which makes a forcible entry an indictable offence, stated as follows :
"...This statute creates one of the great differences Page 60 of 73 C/SCA/4353/2008 CAV JUDGMENT which exist in our law between the being in possession and the being out of possession of land, and which gave rise to the old saying that possession is nine points of the law. The effect of the statute is this, that when a man is in possession, he may use force to keep out a trespasser; but if a trespasser has gained possession, the rightful owner cannot use force to put him out, but must appeal to the law for assistance."
30. Vacant land, it may be noted, is not actually acquired but deemed to have been acquired, in that deeming things to be what they are not. Acquisition, therefore, does not take possession unless there is an indication to the contrary. It is trite law that in construing a deeming provision, it is necessary to bear in mind the legislative purpose. The purpose of the Act is to impose ceiling on vacant land, for the acquisition of land in excess of the ceiling limit thereby to regulate construction on such lands, to prevent concentration of urban lands in hands of few persons, so as to bring about equitable distribution. For achieving that object, various procedures have to be followed for acquisition and vesting. When we look at those words in the above setting and the provisions to follow such as sub-sections (5) and (6) of Section 10, the words 'acquired' and 'vested' have different meaning and content. Under Section 10(3), what is vested is de jure possession not de facto, for more reasons than one because we are testing the expression on a statutory hypothesis and such an hypothesis can be carried only to the extent Page 61 of 73 C/SCA/4353/2008 CAV JUDGMENT necessary to achieve the legislative intent. Voluntary Surrender
31. The 'vesting' in sub-section (3) of Section 10, in our view, means vesting of title absolutely and not possession though nothing stands in the way of a person voluntarily surrendering or delivering possession. The court in Maharaj Singh v. State of UP and Others (1977) 1 SCC 155, while interpreting Section 117(1) of U.P. Zamindari Abolition and Land Reform Act, 1950 held that 'vesting' is a word of slippery import and has many meaning and the context controls the text and the purpose and scheme project the particular semantic shade or nuance of meaning. The court in Rajendra Kumar v. Kalyan (dead) by Lrs. (2000) 8 SCC 99 held as follows:
"We do find some contentious substance in the contextual facts, since vesting shall have to be a "vesting" certain. "To vest, generally means to give a property in." (Per Brett, L.J. Coverdale v. Charlton. Stroud's Judicial Dictionary, 5th edn. Vol. VI.) Vesting in favour of the unborn person and in the contextual facts on the basis of a subsequent adoption after about 50 years without any authorization cannot however but be termed to be a contingent event. To "vest", cannot be termed to be an executor devise. Be it noted however, that "vested" does not necessarily and always mean "vest in possession" but includes "vest in interest"Page 62 of 73 C/SCA/4353/2008 CAV JUDGMENT
as well."
32. We are of the view that so far as the present case is concerned, the word "vesting" takes in every interest in the property including de jure possession and, not de facto but it is always open to a person to voluntarily surrender and deliver possession, under Section 10(3) of the Act."
34. From the decision in Hari Ram (supra), it is clear that the land in dispute vested in GIDC under Section 30 (2) of the GID Act free from all encumbrances and the GIDC was in de jura and de facto possession of the land in dispute. The Apex Court in another decision in the case of V. Chandrasekaran and another v. Administrative Officer and others, (2012) 12 SCC 133 has held in paragraphs 25 to 32 as under :-
"Land once vested in the Government -
whether can be divested :
25. It is a settled legal proposition, that once the land is vested in the State, free from all encumbrances, it cannot be divested and proceedings under the Act would not lapse, even if an award is not made within the statutorily stipulated period. (Vide: Avadh Behari Yadav v. State of Bihar &. Ors., (1995) 6 SCC 31; U.P. Jal Nigam v. Kalra Properties (P) Ltd. (Supra);
Allahabad Development Authority v. Nasiruzzaman Page 63 of 73 C/SCA/4353/2008 CAV JUDGMENT & Ors., (1996) 6 SCC 424, M. Ramalinga Thevar v. State of Tamil Nadu & Ors., (2000) 4 SCC 322; and Government of Andhra Pradesh v. Syed Akbar & Ors., AIR 2005 SC 492).
26. The said land, once acquired, cannot be restored to the tenure holders/persons-interested, even if it is not used for the purpose for which it was so acquired, or for any other purpose either. The proceedings cannot be withdrawn/abandoned under the provisions of Section 48 of the Act, or under Section 21 of the General Clauses Act, once the possession of the land has been taken and the land vests in the State, free from all encumbrances. (Vide : State of Madhya Pradesh v. V.P. Sharma, AIR 1966 SC 1593; Lt. Governor of Himachal Pradesh & Anr. v. Shri Avinash Sharma, AIR 1970 SC 1576; Satendra Prasad Jain v. State of U.P. & Ors., AIR 1993 SC 2517; Rajasthan Housing Board & Ors. v. Shri Kishan & Ors., (1993) 2 SCC 84 and Dedicated Freight Corridor Corporation of India v. Subodh Singh & Ors., (2011) 11 SCC 100).
27. The meaning of the word 'vesting', has been considered by this Court time and again. In Fruit and Vegetable Merchants Union v. The Delhi Improvement Trust, AIR 1957 SC 344, this Court held that the meaning of word 'vesting' varies as per the context of the Statute, under which the property vests. So far as the vesting under Sections 16 and 17 of the Act is concerned, the Court held as under :-
Page 64 of 73 C/SCA/4353/2008 CAV JUDGMENT
"In the cases contemplated by Sections 16 and 17, the property acquired becomes the property of Government without any condition or ; limitations either as to title or possession. The legislature has made it clear that vesting of the property is not for any limited purpose or limited duration."
28. In Gulam Mustafa & Ors. v. State of Maharashtra & Ors., AIR 1977 SC 448, in a similar situation, this Court held as under :-
"Once the original acquisition is valid and title has vested in the Municipality, how it uses the excess land is no concern of the original owner and cannot be the basis for invalidating the acquisition. There is no principle of law by which a valid compulsory acquisition stands voided because long later the requiring Authority diverts it to a public purpose other than the one stated in the ....declaration."
29. Similarly, in State of Kerala & Anr. v. M. Bhaskaran Pillai & Anr., (1997) 5 SCC 432, this Court held as under:
"It is settled law that if the land is acquired for a public purpose, after the public purpose was achieved, the rest of the land could be used for any other public purpose. In case there is no other public purpose for which the land is needed, then instead of disposal by way of sale to the erstwhile owner, the land should be put to public auction and the amount fetched in the public auction can be better utilised for the public purpose envisaged in the Directive Principles of the Constitution.Page 65 of 73 C/SCA/4353/2008 CAV JUDGMENT
(See also: C. Padma & Ors. v. Deputy Secretary to the Government of Tamil Nadu & Ors., (1997) 2 SCC 627; Bhagat Singh v. State of U.P. & Ors., AIR 1999 SC 436; Niladri Narayan Chandradhurja v. State of West Bengal, AIR 2002 SC 2532; Northern Indian Glass Industries v. Jaswant Singh & Ors., (2003) 1 SCC 335; and Leelawanti & Ors. v. State of Haryana & Ors., (2012) 1 SCC 66).
30. In Government of Andhra Pradesh & Anr. v.
Syed Akbar (Supra), this Court considered this very issue and held that, once the land has vested in the State, it can neither be divested, by virtue of Section 48 of the Act, nor can it be reconveyed to the persons- interested/tenure holders, and that therefore, the question of restitution of possession to the tenure holder, does not arise. (See also:
Pratap v. State of Rajasthan, AIR 1996 SC 1296;
Chandragaudaj Ramgonda Patil v. State of Maharashtra, (1996) 6 SCC 405; State of Kerala & Ors. v. M. Bhaskaran Pillai & Anr., AIR 1997 SC 2703; Printers (Mysore) . Ltd. v. M.A. Rasheed & Ors. (2004) 4 SCC 460; Bangalore Development Authority v. R. Hanumaiah, (2005) 12 SCC 508; and Delhi Airtech Services (P) Ltd. & Anr. v. State of U.P. & Anr. (2011) 9 SCC 354).
31. In view of the above, the law can be crystallized to mean, that once the land is acquired and it vests in the State, free from all encumbrances, it is not the concern of the land owner, whether the land is being used for the Page 66 of 73 C/SCA/4353/2008 CAV JUDGMENT purpose for which it was acquired or for any other purpose. He becomes persona non-grata once the land vests in the State. He has a right to only receive compensation for the same, unless the acquisition proceeding is itself challenged. The State neither has the requisite power to reconvey the land to the person- interested, nor can such person claim any right of restitution on any ground, whatsoever, unless there is some statutory amendment to this effect.
32. The general rule of law is undoubted, that no one can transfer a better title than he himself possesses; Nemo dat quod non habet.
However, this Rule has certain exceptions and one of them is, that the transfer must be in good faith for value, and there must be no misrepresentation or fraud, which would render the transactions as void and also that the property is purchased after taking reasonable care to ascertain that the transferee has the requisite power to transfer the said land, and finally that, the parties have acted in good faith, as is required under Section 41 of the Transfer of Property Act, 1882. (Vide: Asa Ram & Anr. v. Mst. Ram Kali & Anr., AIR 1958 SC 183;
State Bank of India v. Rajendra Kumar Singh & Ors., AIR 1969 SC 401, Controller of Estate Duty, Lucknow v. Aloke Mitra, AIR 1981 SC 102;
Hanumant Kumar Talesara v. Mohal Lal, AIR 1988 SC 299; and State of Punjab v. Surjit Kaur (Dead) through LRs., JT (2001) 10 SC 42)."
Page 67 of 73 C/SCA/4353/2008 CAV JUDGMENT
35. In another decision, the Apex Court in Gulam Mustafa and others v. State of Maharashtra and others, AIR 1977 SC 448 had held that once the original acquisition is held to be valid and title vests in GIDC, how GIDC uses the land is of no concern of the Court as it has become the absolute owner of the acquired property free from all encumbrances. Therefore, no one can claim any right, title and interest in respect of the acquired land which has vested in GIDC. Once the land had vested in GIDC, it has a right to change its user on its own according to the object of GID Act. Though, in the case in hand, even the public purpose for which the land in dispute was acquired had not been changed. The respondent Nos.16 and 17 have purchased the balance of 99 years lease rights of the Society in Court auction as the land purchased by respondent Nos.16 and 17 was acquired for establishment of Industrial Township for the employees of the Society. The respondent Nos.16 and 17 have been granted permission by the GIDC to construct residential houses etc. on the leasehold land. Similarly, the land which was originally acquired for establishment of industry by the Society, leasehold rights for the balance of 99 years lease period had been purchased in Court auction by the respondent No.18 for establishing an industry. From the aforesaid facts, it is clear that the original public purpose for which the land had been acquired had not been changed either by GIDC or by the respondent Nos.16 to 18. Neither the State Government nor the original owner of the land in dispute have any concern as to how Page 68 of 73 C/SCA/4353/2008 CAV JUDGMENT the land was being used. The Apex Court had held in V. Chandrasekaran (supra) that the land acquired for public purpose could be used for any other public purpose. In the instant case, even the public purpose for which the land had been acquired had not been changed at all.
36. The learned Additional Advocate General has vehemently urged that in view of Section 17A of the Gujarat Act No.20 of 1965, read with Section 17 of the LA Act since the land in dispute had vested in the State Government under Section 16 of the LA Act, previous sanction of the State Government was required. We deem it necessary to extract Section 17A of the Gujarat Act which reads as under :-
"Section 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 possession was taken."
37. In the earlier part of the judgment, we have already held that the land in dispute acquired by the State Government for GIDC never vested in the State Government under Section 16 of the LA Act nor possession was taken by the State Government of the acquired land nor any amount towards cost of expenses for Page 69 of 73 C/SCA/4353/2008 CAV JUDGMENT acquisition or compensation by consent award under Section 11 (2) of the LA Act was paid by the State Government. Further, the possession of the acquired land was taken by the GIDC directly from the farmers/land owners. Therefore, the entire acquired land vested in GIDC free from all encumbrances under Section 30 (2) of the GID Act. It is also relevant to point out over here that there was no necessity for the GIDC to enter into agreement with the State Government under Section 32 of the GID Act as GIDC was the absolute owner of the land in dispute but at that time, since the law was not clear to GIDC, they under a bonafide mistake entered into agreement with the State Government. The agreement cannot confer any right or title on the State Government. The land has been purchased by the respondent Nos.16 to 18 in a Court auction. The sale has been confirmed. The public purpose has not changed. Permission for construction of houses etc. had already been granted to respondent Nos.16 and 17 and no objection has been issued by GIDC and plan of respondent Nos.16 and 17 has been passed by Vadodara Urban Development Authority for construction of houses etc. The papers of respondent No.18 are also in process to permit the respondent No.18 to establish an industry over the land purchased by respondent No.18 in Court auction. The entire amount which was received in auction proceedings has been released by this Court to the Liquidator who has also paid the amount to the Secured Creditors on pro-rata basis. The review application filed by the State Government was nothing but an Page 70 of 73 C/SCA/4353/2008 CAV JUDGMENT abuse of the process of the Court. Though 15 properties belonging to the Society were sold in Court auction, the State Government only challenged three properties purchased by respondent Nos.16 to 18. It is relevant to state that in the Court auction, the auction sale has been confirmed in favour of the highest bidder and there was no material irregularity in the conduct of auction sale and neither this Court committed any illegality in accepting the highest offer in view of law laid down by the Apex Court in Kayjay Industries Private Limited v. Asnew Drums Private Limited, AIR 1974 SC 1331.
38. The State Government had no right to file a review petition before this Court on the ground that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction sale as it was well aware of the auction sale and as a matter of fact, has issued No Objection to the respondent Nos.16 to 18 as it was well aware of the entire proceedings. However, by way of abundant caution, GIDC was also impleaded as party to the writ petition. However, more than two years have passed and due to the review petition filed by the State Government, the respondent Page 71 of 73 C/SCA/4353/2008 CAV JUDGMENT Nos.16 to 18 could not enjoy the fruits of the leasehold rights in the land purchased by them, nor could they construct the industry or residential township, the interest of justice demands that the concerned authority shall complete the formalities expeditiously as the GIDC has leased out the land for public purpose to fulfill the object of GID Act.
39. By judgment dated 22.6.2011, this Court had allowed the Liquidator to withdraw the amount deposited with the Court pursuant to the interim orders passed by this Court. The Registrar General of this Court had been directed to release the amount in favour of Liquidator, and the amount deposited pursuant to the order passed by this Court in the present case, after proper verification had been withdrawn by the Liquidator and paid to the Secured Creditors on pro-rata basis and no one has come up to contest this writ petition except the State Government which has no legal right or title over the land in dispute, in our considered opinion, the dispute having been set at rest, this petition is liable to be disposed of so that the respondent Nos.16 to 18 may use the property for the purpose for which they have purchased it in Court auction.
40. This writ petition is finally disposed of with a direction to the GIDC and other concerned authorities to expeditiously complete the formalities so that the object of Gujarat Industrial Page 72 of 73 C/SCA/4353/2008 CAV JUDGMENT Development Act, 1962 is achieved. The State Government and the Collector, Vadodara are directed not to create any hindrance in implementation of the Project by the auction purchasers. There shall be no order as to costs. Civil Application also stands disposed of.
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(V.M.SAHAI, ACJ.) Sd/-
(R.P.DHOLARIA, J.) Mr. P.K. Jani, learned Additional Advocate General assisted by Mr. Parth Bhatt, learned Assistant Government Pleader appearing for respondent Nos.19 to 21 has prayed that this judgment be stayed for a period of six weeks. We do not find any reason to stay our judgment. The oral prayer for grant of stay is rejected.
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(V.M.SAHAI, ACJ.) Sd/-
(R.P.DHOLARIA, J.) Savariya Page 73 of 73