TaxTMI 
TaxTMI 
2016 (5) TMI 1493
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....or 27-28, Rohtak, Haryana by the Haryana Urban Development Authority under the Haryana Urban Development Authority Act, 1977 ('the 1977 Act'). However, the final notification dated 8th April, 2003 under Section 6 of the Land Acquisition Act, 1894 ('the 1894 Act'), according to the impugned order of the High Court, was in respect of 441.11 acres. Award dated 6th April, 2005 was for 422.44 acres. Appellant -Uddar Gagan Properties Limited ('the Builder') who is a Builder-cum-Developer entered into collaboration agreements with some of the farmers - owners whose land was under acquisition on 02nd March, 2005 for development of a Colony in accordance with the Haryana Development and Regulation of Urban Areas Act, 1975('the 1975 Act'). The Builder made applications on and around 21st March, 2005 to the Director, Town and Country Planning, Chandigarh, Haryana for grant of licence to develop a colony on land covering about 280 acres. The licences were granted on and around 12th June, 2006 and corresponding land was released from acquisition. The licences were addressed to the owners but remitted to the builder. This was followed by execution of sale deeds in favour of the builder through p....
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....e expiry of the statutory period of two years. As per the categoric stand taken by the Land Acquisition Collector in the written statement initially filed, he took over the possession of land and handed- over it to the Estate Officer, HUDA, Rohtak on that very day, i.e., 06th April, 2005. The official record also substantiates this plea of the respondents. On doing so, the acquired land stood vested absolutely in the State Government, free from all encumbrances by virtue of Section 16 of the 1894 Act. xxx xxx [62]. The Government Files pertaining to the grant of licence or release of land in favour of 11th respondent have been deceptively captioned as if the entire initiative to seek the release of land is at the instance of the farmer-owners of the acquired land. That very record, however, falsifies this facade. The application dated 21st March, 2005 [receipt No. 2461] is on the letter-head of respondent No. 11. It is signed by one of its Directors. Form 'LC-I', however, earlier thumb impressions of previous owners along with the attested copies of 'Power of Attorney' and 'Collaboration Agreements' executed by them in favour of respondent No. 11....
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.... to be believed. There is a natural and conventional bondage between the land and its tiller. A farmer seldom sells the land save for the compelling reasons. Agricultural being their only source of survival, the loss of land is a terrible nightmare for any farmer. The Land Acquisition Collectors never assess the compensation as per actual market value of the land and the only yardstick to be followed is the Collector's rate fixed for the purpose of registration charges. The farmer can not sell the land in open market as on issuance of Section 4 notification all sale transactions are invariably banned. These moments of fear and anxiety must have prompted respondent No. 11 to indulge in the best bargain. For the farmers the offer was like 'better you give the wool than the whole sheep'. There was no free trade for the farmers. Their choice was limited : to accept the State compensation at the Collector's rate or a better offer given by State sponsored private builder. There was inequality of bargaining power. The determination of land value was not at all in the control of farmers. They were gropping in the dark. They had no clue that the land will be released. They a....
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....d the threat of its mighty power under the ruse of eminent domain and created a psycho-fear in the mind of poor farmers that they would, if did not agree, lose the land and its value both. [73]. We may now also deal with yet another vigorously argued plea that the land was as a matter of fact released from acquisition or most of the licences were granted to respondent No. 11 under the directions of this Court. The official respondents in the written statements have repeatedly referred to CWP Nos. 14451 to 14453 of 2010 which were allowed by a learned Single Judge on 06th December, 2010 directing the State and its authorities to extend the benefit of Section 48 of the 1894 Act to the landowners and grant them licences. It is pertinent to mention that while CWP No. 14451 of 2010 was filed by M/s Uddar Gagan Properties Private Limited - respondent No. 11 along with some land-owners represented it, in the 2nd case also the said Builder-cum-Developer was one of the writ petitioner and the other farmers were also impleaded "THROUGH THEIR POWER OF ATTORNEY HOLDER - SHRI SANJAY JAIN...", namely, the authorised representative of respondent No. 11. All the three writ petiti....
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....ent files or before the Court to hide the identity of respondent No. 11 wherever possible and to give a misleading impression as if the real beneficiaries of State largess were the small time landowners. The fact of the matter is that the farmers have not got even an inch of the released land, which has been formally transferred in favour of respondent No. 11 through the Sale Deeds executed in January, 2007, again by General Power of Attorney holders of the farmers, namely, authorised representatives of respondent No. 11. The only irresistible conclusion can be that the farmers stood ousted from the scene since March/April, 2005 and it was the 11th respondent who masqueraded for them, otherwise where was the occasion for the landowners to execute Sale Deeds on 25th January, 2007 through the Power of Attorneys obtained from them in March, 2005? xxx xxx [79]. The Vendors and the Vendee both had full and informed knowledge of the fact that the transacted land had since been acquired and Award also passed. The Vendee was aware of the fact that the Vendors did not possess a clean title, yet the Sale Deeds were presented and got registered, after about two years of the passin....
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....epetition, it may be mentioned that applications for the grant of Licences were moved mostly in March/ April, 2005 though respondent No. 11 continued dropping in such applications in the year 2006 also. All the Licences were issued after passing of the Award in April, 2005 and before the execution of Sale Deeds in January, 2007. The Builder did not own an inch of land, yet every licence was addressed to it and sent with a specific enclosure that respondent No. 11 was the sole owner of the licensed and released land. The issuance of licence, in our considered view, was a fraud played on the policy behind the 1975 Act. We say so for the reasons that Section 2[d] of the Act defines 'colonizer' to mean "an individual, company or association, body of individuals, whether incorporated or not, owning land for converting it into a colony.....". Section 2[k] defines the expression 'owner' to include a person in whose favour a lease of land in an urban area for not less than 99 years has been granted. Section 3[1] mandatorily requires that "any owner desiring to convert his land into a colony" can make an application for the grant of Licence. Sub-Section [2] obligates the Dir....
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....ess of granting licences or releasing the land commenced in the year 2006 and continued till the year 2011. In fact, till the last date of hearing, the official respondents, for the reasons best known to them, did not deem it necessary to bring it on record as to how much land [out of 422.44 acres] has since been released in favour of respondent No. 11. It, however, appears from the submissions made at the bar that a major chunk of land has now gone into the hands of respondent No. 11 in due course of time except a few patches where the State/ HUDA intends to develop 'public utilities' to facilitate the said respondent. Secondly, no development whatsoever has been carried out till date and it was informed that the land is still lying in its original form without any construction having been made. (emphasis added) " 6. It is clear from the findings recorded by the High Court that the transfer of title of land, covered by the notification for acquisition, in favour of a builder, who sought release of land for setting up of a colony, was clearly to defeat the law and the notified purpose of acquisition. It was observed that on this undisputed factual position, the plea o....
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....assed in purported exercise of powers under Section 48[1] of the 1894 Act are hereby quashed; [iv] As a result of the declaration and directions issued at [ii] and [iii] above, the Sale Deeds executed in favour of respondent No. 11 on different dates in January, 2007 in respect of the acquired land are declared to be null and void and non-existent in the eyes of law; [v] Those landowners who have neither received compensation nor entered into any Collaboration or Agreements to Sell with respondent No. 11, shall be restored with the possession of their respective land forthwith. [vi] Those landowners who have received compensation but have not entered into any Collaboration or Agreements to Sell with respondent No. 11, shall also be returned their respective land subject to their deposit of the entire amount of compensation along with simple interest at the rate of 9% as prescribed under Section 28 of the Land Acquisition Act, 1894. The possession shall be restored in their favour within one week of refund of the compensation amount; [vii] Those landowners who have entered into Collaboration or Agreements to Sell with respondent No. 11, shall be g....
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.... wherein applicants claim to have purchased the plots on and after 6th February, 2012, during pendency of the litigation to support the appellant- builder. Applications have also been filed by some land owners who were not party before the High Court to support the impugned judgment. Even though persons who claimed to have purchased the plots during pendency of litigation may have no right whatsoever to oppose the writ petitions, we have heard counsel representing them only with a view to consider the diverse view points presented before the Court. 10. We have heard Shri Shyam Divan, learned senior counsel for the builder, S/Shri Harish N. Salve and Dr. Rajeev Dhawan, learned senior counsel, apart from other counsel, also appearing for the builder or the purchasers and Shri K.K. Venugopal, learned senior counsel for the land owners and other counsel for the land owners. We have also heard learned counsel for the State. The record has also been produced by the State. 11. The contentions on behalf of the appellants are that there is nothing wrong with the policy of the State to permit colonization by a private builder and the said policy is not under challenge. The policy is pe....
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....vely. It was also submitted that after acquisition, the HUDA could dispose of the acquired land even without carrying out any development thereon. Acquisition could not be challenged after the award. Bona fide purchasers were entitled to restitution. Shri Salve submitted that as against the problem of farmers on account of the forcible acquisition, equally serious problem of urban middle-classes for living space needs to be considered. Once acquisition is quashed, the validity of sale by farmers to the builders should be left to be gone into in private law remedy where equity could be balanced. If the acquisition is valid and the order of release under Section 48 is quashed, the land has to revert to the State. In this fact situation, the impugned order could not be justified. In absence of cross-examination and weighing of equities, the land could not be returned to the land owners who have already received the compensation or the sale consideration. The alleged fraud and undue influence or coercion may render a contract voidable but not void and the civil court has to balance equities for setting aside such a sale. Learned counsel for the State submitted that the object of the po....
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....ng an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounts to transfer of resources of poor for the benefit of the rich. It amounts to permitting profiteering at the cost of livelihood and existence of a farmer. This is against the philosophy of the Constitution and in violation of guaranteed fundamental rights of equality and right to property and to life. What cannot be done directly cannot be done indirectly also. 15. This apart, if State is to be party to directly or indirectly select beneficiary of State largess - which in present fact situation the State certainly is - objectivity and transparency are essential elements of exercise of public power which are required to be followed. It is patent that the State has enabled the builder to enter the field after initiation of acquisition to seek colonization on the land covered by acquisition. In absence of State's action, it was not possible for the builder to enter into the transactions in question which was followed by withdrawal from acquisition. But for assurance from ....
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.... basis of the claim for any relief. 18. While it is true that a belated petition cannot be entertained under Article 226 of the Constitution, it is well settled that this is only a rule of practice based on sound and proper exercise of discretion and not a jurisdictional bar. Exercise of discretion to quash an illegal action based on fraud or abuse of law even belatedly may not be liable to be interfered with under Article 136 of the Constitution. When the land sought to be acquired for a public purpose is allowed to be transferred to private persons, any administrative action or private transaction could be held to be vitiated by fraud[Royal Orchid Hotels v. G. Jayarama Reddy (2011) 10 SCC 608, para 22]. There is no legal sanction for such action, as already explained. 19. It is well settled that use of power for a purpose different from the one for which power is conferred is colourable exercise of power. Statutory and public power is trust and the authority on whom such power is conferred is accountable for its exercise. Fraud on power voids the action of the authority[State of Punjab v. Gurdial Singh (1980) 2 SCC 417]-[Greater Noida Industrial Development Authority v. Dev....
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....Gyan Chand v. Gopala & Ors.]; (1995) 5 SCC 335 [Mahavir & Anr. v. Rural Institute, Amravati & Anr.]; (1996) 3 SCC 124 [The U.P. Jal Nigam, Lucknow Thr. its Chairman & Anr. v. M/s. Kalra Properties Pvt. Ltd., Lucknow & Ors.]; (2008) 9 SCC 177 [Meera Sahni v. Lieutenant Governor of Delhi] and (2014) 15 SCC 394, pr. 14-15; (2012) 12 SCC 133 pr.18]. 22. In view of the above, we do not find any ground to interfere with the finding recorded by the High Court that there was an abuse of power in releasing the land in favour of the builder. Once it is found that action of the State and the builder resulting in transfer of land from land owners to the builder was without any authority of law and by colourable exercise of power, none of the contentions raised by the builder could accepted[(2007) 9 SCC 304]. We may consider the issue of moulding relief separately but the builder cannot be allowed to retain the land acquired illegally. Undoing of such illegal actions would clearly be in the interests of justice. The wrong has to be remedied. 23. We find that the operative part of the order passed by the High Court needs modification. The entirety of the acquisition need not be quashed. Wh....
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....ents which are now relied upon had taken place on the date of filing of the writ petition. It has been specifically held in para 89 of the impugned judgment that no development had taken place till the judgment of the High Court. Any subsequent transactions or development are of no consequence for rights of parties.[ibid, pr 11] Any subsequent transactions entered into by the builder cannot be taken into account and are hit by the principle of lis pendens. In any case it was for the builder to inform the third parties to whom the plots have been sold, that the land was under litigation. If the third parties have purchased the land knowing fully about the litigation, they have clearly taken risk and their remedy will be only against the builder. If pendency of litigation was suppressed, the third parties can take their remedies against the builder. Without prejudice to their said private remedies, the court may try to balance equities to the extent possible. We are also of the view that if the authorities have proceeded to entertain applications for licence to give undue benefit to the builder by way of helping him to take over land under the cloud of acquisition, it may call for ac....
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....rd party rights by the builder also stand quashed. v) The sale consideration paid by the builder to the land owners will be treated as compensation under the award. The land owners will not be required to refund any amount. The land owners who have not received compensation will be at liberty to receive the same. The land owners will also be at liberty to prefer reference under Section 18 of the 1894 Act within a period of three months, if such reference has not been earlier preferred. vi) The builder will be entitled to refund/ reimbursement of any payments made to the State, to the land owners or the amount spent on development of the land, from HUDA on being satisfied about the extent of actual expenditure not exceeding HUDA norms on the subject. Claim of the builder will be taken up after settling claim of third parties from whom the builder has collected money. No interest will be payable on the said amount. vii) The third parties from whom money has been collected by the builder will be entitled to either the refund of the amount, out of and to the extent of the amount payable to the builder under the above direction, available with the State, on th....