Land Acquisition | Once the Government Funds an Acquisition, Public Purpose Cannot Be Disputed: Bombay High Court

The Bombay High Court has ruled that land acquisition proceedings for a cooperative sugar factory in Maharashtra are valid and do not suffer from procedural or constitutional infirmities, rejecting allegations of excessive delay, lack of public purpose, and violation of fundamental rights.

In a judgment delivered on January 28, 2025, a Division Bench comprising Justice M.S. Sonak and Justice Jitendra Jain dismissed a writ petition filed by landowners challenging the acquisition proceedings initiated under the Land Acquisition Act, 1894. The Court held that statutory timelines had not been violated, since delays caused by judicial stays must be excluded from limitation calculations under Section 6(1) and Section 11-A of the 1894 Act.

The Court further clarified that a cooperative sugar factory qualifies as serving a "public purpose" if the acquisition is even partially funded by the State, irrespective of whether the government’s shareholding in the cooperative society is above or below 51%.

"Since the acquisition was declared to be at the partial cost of the Government, the conclusivity of the Section 6 declaration stands. The percentage of the State’s shareholding in the cooperative society is, therefore, irrelevant in determining whether the acquisition is for a public purpose."

Challenge to Constitutional Validity of 44th Amendment and Land Acquisition (Amendment) Act, 1984, Not Considered

The Petitioners had sought to challenge the constitutional validity of the Constitution (44th Amendment) Act, 1978, and the Land Acquisition (Amendment) Act, 1984, arguing that they violated the fundamental right to property under Article 300A of the Constitution.

The Court refused to entertain these arguments, noting that the Petitioners had failed to substantiate their claims with legal arguments or supporting precedents.

"The challenge to the constitutional validity of the amendments was not pressed during arguments, and hence, we refrain from recording any findings on these issues."

Delay in Land Acquisition Proceedings Not Fatal – Stay Period Excluded from Limitation Calculations
The Petitioners argued that the Section 6 declaration, issued on July 22, 2014, was beyond the statutory one-year period from the last publication of the Section 4 notification on May 31, 2013, and that the acquisition had therefore lapsed.

Rejecting this contention, the Court invoked Explanation 1 to Section 6(1) of the 1894 Act, which excludes the period during which legal proceedings were stayed by court orders.

"The interim relief granted by this Court in October 2013, restraining possession of the land, continued until March 2017. As per statutory provisions and Supreme Court precedents, the period of stay must be excluded in computing the limitation period. Hence, the Section 6 declaration is valid."

The Court emphasized that judicial intervention cannot be used to invalidate an acquisition when the delay is caused by legal proceedings initiated by the Petitioners themselves.

"The Petitioners cannot, on the one hand, obtain a stay order preventing the government from proceeding with the acquisition and, on the other, turn around and argue that the proceedings are vitiated by delay."

Acquisition Proceedings Did Not Lapse Under Section 11-A of the 1894 Act or Section 25 of the 2013 Act

The Petitioners further argued that the award, passed on July 16, 2016, was beyond the statutory period, causing the acquisition to lapse under both Section 11-A of the 1894 Act and Section 25 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

The Court relied on the Supreme Court’s ruling in Indore Development Authority v. Manoharlal, which held that any period during which judicial intervention prevented the government from proceeding must be excluded from statutory timelines.

"The delay in passing the award was due to judicial intervention, and under settled legal principles, such periods cannot be counted against the State. The acquisition proceedings, therefore, have not lapsed."

"Public Purpose" Cannot Be Challenged Once Government Funds the Acquisition

The Petitioners challenged the legality of the acquisition, arguing that the third Respondent, a cooperative sugar factory, did not qualify as a "corporation owned or controlled by the State" under Section 3(cc) of the Land Acquisition Act, 1894, since government shareholding was below 51%.

The Court dismissed this argument, ruling that the primary criterion for public purpose is not the State’s equity participation, but rather whether the acquisition is partly funded by the government.

"Once the acquisition is partially funded by the government, the conclusivity of the Section 6 declaration applies. The question of whether the cooperative society is 'controlled' by the State through shareholding is immaterial."

The Court cited Pratibha Nema v. State of Madhya Pradesh and Pandit Jhandu Lal v. State of Punjab, both of which held that even nominal financial contributions by the government to an acquisition establish its public purpose.

"It is well established that if the government contributes to the acquisition, even a minimal amount, it satisfies the requirement of public purpose. The distinction between a public purpose acquisition and a private acquisition under Part VII of the Act has been significantly blurred by judicial interpretation."

The Petitioners relied on a Government Resolution (GR) dated June 14, 2001, which required Section 6 declarations to be made within six months of a Section 4 notification. The High Court rejected this argument, ruling that government resolutions cannot amend statutory provisions.

"Government resolutions cannot be interpreted as amending statutory timelines. The acquisition remains valid as long as statutory compliance is maintained."

Judicial Review of Land Acquisition – Limited Scope Once Section 6 Declaration is Issued
The Court reiterated that once a Section 6 declaration is issued, it serves as conclusive evidence that the land is required for a public purpose, significantly limiting the scope of judicial review.

"The conclusivity of a Section 6 declaration cannot be lightly displaced, particularly when the acquisition is partly funded by the State. The Petitioners have failed to prove fraud in the acquisition process."

Interim Protection Extended for Eight Weeks to Enable Supreme Court Appeal
While dismissing the petition, the Court recognized that the Petitioners have been in possession of the land since 2013 under interim relief orders. In light of this, it extended the protection against dispossession for eight weeks, allowing the Petitioners to approach the Supreme Court for further remedies.

"The interim order restraining the Respondents from taking possession has been in effect since 2013. Therefore, we extend it by eight weeks should the Petitioners wish to challenge this decision before the Hon’ble Supreme Court."

The Bombay High Court’s ruling reaffirms that judicial intervention does not automatically invalidate acquisition proceedings and that even minimal government funding is sufficient to establish public purpose under land acquisition laws.
 

Date of Decision: 28 January 2025