Fraud on eminent domain: diversion of acquired land to private parties can justify restoration despite explained delay.

Delay and laches under Article 226 are a discretionary bar, not an absolute one; the writ challenge was maintainable because the petitioner acted after discovering the diversion of the acquired land and the delay was satisfactorily explained. Acquisition for a declared public purpose, followed by transfer or lease of substantial portions to private parties for private benefit, was treated as a fraudulent exercise of the power of eminent domain. The court accepted that such diversion vitiated the acquisition to that extent and entitled the respondent to restoration of the land, subject to consequential compliance.

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Issues: (i) Whether the writ petition challenging the acquisition and subsequent transfer of the acquired land could be rejected on the ground of delay and laches; (ii) Whether acquisition of land for a stated public purpose, followed by transfer or lease of substantial portions to private persons and entities, amounted to fraud on the power of eminent domain and justified restoration of the land.

Issue (i): Whether the writ petition challenging the acquisition and subsequent transfer of the acquired land could be rejected on the ground of delay and laches.

Analysis: The rule against stale claims under Article 226 is a rule of practice and discretion, not an inflexible rule of law. The decisive consideration is whether the petitioner slept over his rights and whether third-party rights have crystallized during the intervening period. Here, the challenge was not merely to the original acquisition notification but to the later diversion of the acquired land to private use. The petitioner had pursued compensation and approached the Court after discovering the alleged diversion. The High Court had also found the delay satisfactorily explained in the circumstances.

Conclusion: The objection of delay and laches was not a bar to relief, and the writ petition was maintainable.

Issue (ii): Whether acquisition of land for a stated public purpose, followed by transfer or lease of substantial portions to private persons and entities, amounted to fraud on the power of eminent domain and justified restoration of the land.

Analysis: Land was acquired on the representation that it was needed for a tourism-related public project, but the record showed that, even before completion of the acquisition process, arrangements were made to part with substantial portions of the land to private parties. The Corporation itself acknowledged financial inability and facilitated transfers and leases to private individuals and corporate entities. Such a diversion from the declared public purpose to a private purpose was held to be a fraudulent exercise of the power of eminent domain. The acquisition could not be sustained as a valid public acquisition while the land was used to benefit private persons in a manner inconsistent with the statutory scheme.

Conclusion: The diversion of the acquired land to private parties constituted fraud on power, and the respondent was entitled to return of his land.

Final Conclusion: The acquisition-related action was upheld as unsustainable to the extent it had been diverted from the declared public purpose, and the respondent was granted restoration of the land with consequential compliance obligations.

Ratio Decidendi: Where land acquired for a declared public purpose is subsequently diverted to private parties for a private purpose, the exercise amounts to fraud on the power of eminent domain and the Court may grant restoration of the land notwithstanding a plea of delay, if the delay is satisfactorily explained and no inequitable third-party rights have intervened.

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