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2006 (4) TMI 515
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....ijay Kumar, K.T. Anantharaman, R. Vasudevan, N. Suresh, Richa Kapoor, Rahul Narayan, Meenakshi Arora, Vikas Sharma, Anil Katiyar, P. Parmeswaran, V.K. Verma, Prashant Kumar, Triveni Poteker, Kuldeep Singh, Basava Prabhu S. Patil, V.N. Raghupathy, B.S. Prasad, Rutwik Panda, Bimola Devi, Chander Shekhar Ashri, Sapna Malik, G.V. Chandrashekar, Anjana Chandrashekhar, S.K. Kulkarni, M. Gireesh Kumar, Radha Shyam Jena, Anjali K. Verma, Neeraj Gupta, Meera Mathur, Lalit Kumar, Nobin Singh, Senthil Jagadeesan, Advs JUDGMENT: SRIKRISHNA, J. 1. Leave granted in Special Leave Petition (C) Nos. 1562-63/06. 2. Since this matter consists of two sets of distinct but related appeals, for the sake of convenience, they may be considered under the two heads of:(i) the Main Matters and (ii) the Land Acquisition Matters. The Main Matters (Civil Appeal Nos. 3492-3494/2005, 3497/2005, 3842-3844/2005) The Background 3. These appeals are directed against a common judgment of the High Court of Karnataka (dated 3.5.2005) by which three Public Interest Litigations being Writ Petition Nos. 45334/04 (All India Manufacturers Organisation v. State of Karnataka and Ors.), 45386/04 (J.C. Madhuswamy and Or....
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....also suggested that the State Government bear 20% of the project cost, along with the cost of land acquisition, if such a project was to be implemented. The State Government did not have sufficient means and had to look for other alternative ways for implementing this project. The State Government then decided to take up the project on a Build-Own-Operate-Transfer (hereinafter "BOOT") basis with any consortium. The consortium was to carry out the development of the project from its own resources and recoup its investment by collection of tolls along the Express Highway. 6. On 20.2.1995, a Memorandum of Understanding (hereinafter "MOU") was entered into between the State Government and the Consortium of Vanasse Hangen Brustlin Inc. USA (hereinafter "VHB"), Kalyani Group of Companies (hereinafter "Kalyani") and SAB Engineering and Construction Inc. USA (hereinafter "SAB"). The Governor of the State of Massachusetts, U.S.A., Mr. William Weld, and Mr. H.D. Deve Gowda, the then Chief Minister of the State of Karnataka were present and appended their signatures thereto. It was agreed that the State Government would extend support for the development of the Bangalore-Mysore Expressway, p....
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....as to recoup its expenditure and obtain profits through tolls the first system of its kind in Karnataka. Consequently, it was felt that the modification of the existing laws might become necessary. The necessary legal changes were to be examined by the concerned administrative departments, who would take " necessary action and also extend co-operation for implementation of the Project." 9. The three members of the Consortium VHB, Kalyani and SAB entered into a "Consent and Acknowledgement Agreement" (hereinafter "the CAA") dated 9.9.1996, specially assigning their respective rights under the Government Order (dated 20.11.1995) and the MOU with regard to the Project, in favour of Nandi Infrastructure Corridor Enterprises Ltd. (hereinafter "Nandi"). Nandi had been registered on 16.1.1996 as a company under the Companies Act, 1956, to serve as a corporate vehicle for the development and implementation of the Project. On 21.12.1996, the CAA was forwarded to the State Government for necessary action. The State Government was advised by its Law Department (through Opinion No. 182 OPN II/97 dated 3/4.3.1997) that since the Government was finalising a separate agreement with Nandi, there ....
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....nd timely implementation of the Project, the FWA was challenged in a Public Interest Writ Petition No. 29221/97 in November 1997 (reported as H.T. Somashekar Reddy v. Government of Karnataka and Anr. ) by one H.T. Somashekar Reddy, a retired Chief Engineer. The State Government and Nandi were the two respondents thereto. The FWA was challenged on all conceivable grounds and the writ petition was vigorously opposed by the State Government and also by Nandi. Both the State Government and Nandi contended that the FWA was valid and that it had been entered into in larger public interest. It was also successfully pleaded on the part of the State Government that it had agreed to provide the "minimum extent of land" for the Project, which was 20,193 acres of land and that no excess land was being acquired. 14. The Division Bench of the Karnataka High Court hearing the said writ petition formulated for its consideration, the following questions: "(a) Whether the Government has acted arbitrarily in entering into the agreement with Respondent No. 2? (b) Whether agreement is illegal as being opposed to public policy? (c) Whether the agreement contravenes any Constitutional provisions o....
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.... water being put to no productive use by BWSSB. (vii) Development of tourism to augment the State's revenues." 18. Thus, through an exhaustive consideration of all the background material and documents presented to it, the High Court dismissed the writ petition by holding against the petitioner on all the contentions urged. The judgment in Somashekar Reddy (supra) was challenged before this Court (in SLP (Civil) CC 1423/99) but was dismissed in limine on 26.3.1999. The judgment in Somashekar Reddy (supra) thus reached finality. The Present Litigation 19. Although the writ petition in Somashekar Reddy (supra) was dismissed by the High Court by its judgment dated 21.9.1998, it is of relevance to notice that between November 1997, when this writ petition was filed, and when the petition was dismissed, the work of implementing the Project was going on in view of the stand of the State Government and Nandi. Accordingly, a number of notifications were issued for acquisition of the land required under the FWA. Many landowners challenged the acquisition of their lands before the High Court. Although the issue of the landowners will be dealt with in the second part of our judgment....
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....d by Section 340 of the Code of Criminal Procedure, 1973, for certain offences which came to its notice as a result of the affidavits filed by them. K.K. Misra and M. Shivalingaswamy have filed separate appeals with regard to the direction of their prosecution with which we are not concerned at present. The Contentions of the Appellants 23. The main arguments in the present Civil Appeal Nos. 3492-3494 of 2005 were addressed on behalf of the State of Karnataka by Mr. Anil B. Divan, learned Senior Counsel, whose main contentions are as under: 1. That the dispute between the State of Karnataka and Nandi is not barred by the principle of res judicata, constructive res judicata or estoppel arising from the judgment and proceedings in Somashekar Reddy (supra). 2. That the principle of res judicata cannot be inflexibly applied to Public Interest Litigations, especially when a re-examination of decided issues might be in public interest. 3. To the bar of res judicata, it would be a successful answer that fraud and misrepresentation had vitiated the entire transaction. Hence, there would be no question of res judicata since the fraud was discovered subsequent to the judgment in Som....
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....ement with the views expressed therein on this issue but we wish to highlight the following aspects to illustrate how the argument of mala fides is actually the boot on the other foot. 26. The High Court has come to the categorical conclusion that the flip- flop on the part of the State Government occurred only because of politicians, that the mala fides, if any, appears to be on the part of the State Government for political reasons. The High Court has pointed out that the FWA did not materialise out of the blue. The FWA was negotiated over several months; it came to be drafted by considering several points that the Cabinet Sub-Committee had raised. As we have already highlighted, it was only thereafter, when detailed deliberations had taken place at the highest levels of the State Government that the MOU was signed and the Project Report accepted. A Government Order (dated 20.11.1995) was issued requiring the Public Works Department to enter into a Memorandum of Understanding with the Consortium of three companies, VHB, SAB and Kalyani. On 9.9.1996, through the CAA, the three members of the Consortium agreed to " unconditionally and irrevocably transfer and assign, jointly and s....
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....h 22). 28. The High Court has also totally disbelieved the affidavits of the Chief Secretary, K.K. Misra, and the Under Secretary, M. Shivalingaswamy on this issue. We have refrained from commenting on the merits of their affidavits since their appeals against prosecution for perjury are pending separately. We may, however, point out that both the affidavits of the two senior bureaucrats are on the issue that certain facts which had been suppressed from the Government had come to light after the judgment in Somashekar Reddy (supra) and that these indicated fraud and misrepresentation on the part of Nandi. Indeed, this was the central argument put forward for impugning the FWA. 29. The FWA was executed on 3.4.1997 and implemented by the parties for at least seven years. Several obligations under the FWA were carried out by the State Government and its instrumentalities and also by Nandi, which had invested a large amount of money in the Project. These included monies for payment of compensation to landowners whose lands were being acquired for the Project. Soon after the FWA was entered into, some interested parties had raised the issue in "public interest" that the FWA was a frau....
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....ent. Res Judicata 32. Res judicata is a doctrine based on the larger public interest and is founded on two grounds: one being the maxim nemo debet bis vexari pro una et eadem causa ("No one ought to be twice vexed for one and the same cause" ) and second, public policy that there ought to be an end to the same litigation . It is well settled that Section 11 of the Civil Procedure Code, 1908 (hereinafter "the CPC") is not the foundation of the principle of res judicata, but merely statutory recognition thereof and hence, the Section is not to be considered exhaustive of the general principle of law. The main purpose of the doctrine is that once a matter has been determined in a former proceeding, it should not be open to parties to re- agitate the matter again and again. Section 11 of the CPC recognises this principle and forbids a court from trying any suit or issue, which is res judicata, recognising both 'cause of action estoppel' and 'issue estoppel'. There are two issues that we need to consider, one, whether the doctrine of res judicata, as a matter of principle, can be applied to Public Interest Litigations and second, whether the issues and findings in Som....
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....e other: Explanation III.-The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other. Further, Explanation IV to Section 11, states: Explanation IV. Any matter which might and ought to have been made ground defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit. The spirit behind Explanation IV is brought out in the pithy words of Wigram, V.C. in Henderson v. Henderson as follows: "The plea of res judicata applies, except in special case (sic), not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation and which the parties, exercising reasonable diligence, might have brought forward at the time." In Greenhalgh v. Mallard (hereinafter "Greenhalgh"), Somervell L.J. observed thus: "I think that on the authorities to which I will refer it would be accurate to say that res judicata for this purpose is not confined to the issues which the Court is actually asked to decide....
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....numerated by items 1 to 16 (specifically the issue of excess land) and (b) for quashing the various agreements, and acts done in pursuance of the Project and consequently, to denotify the land of all farmers situated away from the peripheral road and link road. We are therefore, satisfied that the prayers made in Somashekar Reddy (supra) and in Mr. Madhuswamy's writ petitions are substantially the same. 36. Second, the cause of action in both Somashekar Reddy (supra) and the present cases is the FWA, which includes the provisions for acquiring 20,193 acres of land for the Project (comprising 13,237 acres of private land and 6,956 acres of Government land). Indeed, it was stated in Somashekar Reddy's Writ Petition that the land requirement in Schedule I of the FWA was "highly exaggerated" and would illegally create "huge profits" for Nandi. Somashekar Reddy thus prayed that the FWA be quashed this prayer was, however, specifically rejected. The very same FWA that was upheld earlier has now been impugned in the present case. 37. Third, in both Somashekar Reddy and Mr. Madhuswamy's petitions, the averment was that excess land than required for the implementat....
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....f land for the project partly out of the land owned by the Government and by acquiring the balance. Permission has been given to develop the five township instead of 7, proposed by respondent No. 2 to make the Project viable. [Emphasis supplied] The submission that the contract was entered in a clandestine manner also cannot be accepted Respondents in their statement of objections have admitted that this point was raised on the floor of the House and the respondent made detailed presentation on this subject in the House Every minute detail was explained including the scientific method adopted by the respondent for identification of the land for the Project. 38. All of these unequivocally show that the issue of excess land (and connected issues) was specifically raised by the petitioner in Somashekar Reddy (supra) and was also forcefully denied by the State. In fact, the decision in Somashekar Reddy (supra), went further with the High Court according its imprimatur to the land requirements under the FWA amounting to 20,193 acres, which in no small measure, resulted from the State's successful defence that it had provided the "bare minimum of land" for the Project calculated....
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....does not operate as res judicata for the questions raised in the present petitions. Excess Land and the Expert Committee 42. There was considerable time taken by the learned counsel for the appellants in trying to persuade us that excess land had actually been delivered to Nandi under the FWA. A subsidiary argument was that even though the actual area of land delivered might not have been in excess, since land in prime areas had improperly been acquired for Nandi's benefit, the issue needed to be re-examined. In our view, this argument too is not open to be agitated at this point. As we have already pointed out, the writ petition in Somashekar Reddy (supra) was the culmination of all such allegations which had been successfully refuted even on the floor of the Legislature. Finally, having failed on the floor of the Legislature, a Public Interest Litigation was filed on the ground that there was something wrong with the FWA and that it was virtually a sell-out to Nandi. The Division Bench of the High Court considered every argument very carefully and recorded findings on all the issues against Mr. J.C. Madhuswamy and others. In our view, permitting the argument on excess land....
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....ting to note that Sri K.C. Reddy who is the Chairman of the Expert Committee was also a Member of the HLC which had approved the Project and was associated with it till the signing of the FWA which provides for 20,193 acres of land to be made available. Sri K.C. Reddy did not record his dissent in those proceedings and at no stage did he ever point out that the land that was sought to be provided for the Project was in excess of what was required but now as the Chairman of the Expert Committee he has, without identifying the excess lands which he has left for the Board to identify, opined that excess land has been acquired for the Project. We cannot appreciate such a conduct. We too cannot appreciate the conduct on the part of K.C. Reddy or the State Government. The inference drawn by the High Court is that the plea of fraud and misrepresentation sought to be raised was not only an afterthought but also false to the knowledge of the State Government. The High Court, therefore, observed (vide Paragraph 27): "It is unfortunate that the petitioners and the State Government have chosen to raise this bogie (sic bogey) to defeat the public project subserving public interest." 45.....
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....erent from that of the State of Karnataka. Thus, we are unable to countenance the arguments of Mr. Venugopal on behalf of the KIAD Board. 47. Considering the facts as a whole, the High Court came to the conclusion that since the Project had been implemented and Nandi had invested a large amount of money and work had been carried out for more than seven years, the State Government could not be permitted to change its stand and to contend that the land allotted for the Project was in excess of what was required. Having perused the impugned judgment of the High Court, we are satisfied that there is no need for us to interfere therewith. Thus, there is no merit in this contention, which must consequently fail. The Relief Granted by the High Court 48. One final argument was made by Mr. Divan as regards the relief granted by the High Court. To appreciate the argument, it is necessary to look at the relief granted in terms of Paragraph 42.2, which is as follows: Writ petitions nos. 45334 and 48981 of 2004 are allowed directing the State of Karnataka and all its Instrumentalities including the Board to forthwith execute the Project as conceived originally and upheld by this court in ....
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.... unreasonable conduct, to the respondent. In such a situation, the court is not powerless from holding the appellant to its promise and it can be enforced by a writ of mandamus directing it to perform its statutory duty. A petition under Article 226 of the Constitution would certainly lie to direct performance of a statutory duty by 'other authority' as envisaged by Article 12. 50. Kumari Shrilekha Vidyarthi and Ors. v. State of U.P. and Ors. is another authority for the proposition that the State Government has to act reasonably and without arbitrariness even with regard to the exercise of its contractual rights. In M/s Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay the situation was one in which a lease between the Bombay Port Trust and certain parties was terminated in exercise of contractual rights and the lease rent was abnormally increased. It was held that there was always an obligation on the part of public authorities in their acts of omission and commission to be reasonable. In Biman Krishna Bose v. United India Insurance Co. Ltd. and Anr. the question was whether an insurance company could arbitrarily and unreasonably refuse the renewal o....
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....53. The High Court also found, justifiably in our view, that the writ petitioners had been sponsored by the State Government to put forward its changed stand in the garb of a Public Interest Litigation. In the opinion of the High Court (vide Paragraph 29): "The court cannot allow its process to be abused by politicians and others to delay the implementation of a public project which is in larger public interest nor can the court allow anyone to gain a political objective. These legislators who have not been successful in achieving their objective on the floor of the Assembly have now chosen this forum to achieve their political objective which cannot be allowed." 54. Although this should have really put an end to the writ petitions filed by Mr. Madhuswamy and others, the High Court had to consider the petitions filed by Mr. Dakshinamurthy and the All India Manufacturer's Organisation, who were also before the court by way of Public Interest Litigation and sought a Mandamus of the continuation of the Project. A grievance was made before the High Court that these were persons put up by Nandi and that they were virtually projecting the viewpoint of Nandi. The High Court having ....
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....sposed of these petitions. The learned Judge took the view that acquisition of 60% of the land by the State Government, insofar as it related to the formation of roads and infrastructure development was valid, while the acquisition of the remaining 40% meant for the development of townships and convention centres was invalid and to that extent the acquisition was quashed. The landowners, the State Government, the KIAD Board and also Nandi were aggrieved by the judgment of the learned Single Judge and filed separate writ appeals challenging the judgment. The stand of the State Government in its writ appeal was that the learned Single Judge was wrong in quashing 40% of the acquisition of land. This was also the stand of the KIAD Board. Nandi also challenged the said part of the order. Thus, it would appear that the State Government, KIAD Board and Nandi were ad idem in their writ appeals that the learned Single Judge had erred in interfering and quashing 40% of the land as not being in public interest. 58. Sometime in August 2004, when the writ appeals came up for hearing before the Division Bench of the High Court, the State Government and the KIAD Board withdrew their appeals, bec....
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....een considered." Even before us, when these appeals were argued, no attempt was made by any of the learned counsel to satisfy us that the appellants had not actually been served notice of the acquisition. Neither was the finding of the learned Single Judge or the Division Bench impugned on this point. We are, therefore, unable to accept the contention that notices were not served on the appellants as required under Section 28(1) of the KIAD Act. Vagueness of Notice of Acquisition 62. The next contention is that the notice of acquisition was vague and consequently prejudiced any effective objection being made by the landowners whose lands were sought to be acquired. The vagueness of the notification, it is contended, has vitiated the notice itself, according to the learned counsel for some of the landowners. 63. The notification in the instant case states that the lands were being acquired for the purposes of "industrial development" i.e. establishing and developing industrial areas by the KIAD Board. In our opinion, the purpose indicated in the notifications is sufficiently precise and is not affected by the vice of vagueness as alleged. Our attention was drawn to the judgment o....
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.... the Bangalore- Mysore Infrastructure Corridor Project, which conceived of the development of roads between Bangalore and Mysore, for which there were several interchanges in and around the periphery of the city of Bangalore, together with numerous developmental infrastructure activities along with the highway at several points. As an integrated project, it may require the acquisition and transfer of lands even away from the main alignment of the road. 67. The various changes brought about to the KIAD Act, also reflect the intention of the State's Legislature to provide for land acquisition for the Project. The expressions "Industrial area" and "Industrial Infrastructural facilities" as defined under the KIAD Act, definitely include within their ambit establishment of facilities that contribute to the development of industries. We cannot forget that, as originally enacted, the KIAD Act had a different, narrower definition of "Industrial area" in Section 2(6). In 1997, the definition was broadened to also include "industrial infrastructural facilities and amenities". Further, Section 2(7-a) was added to define "Industrial Infrastructural facilities" in a manner broad enough to ....