Vasantha Bai vs The Government of Tamil Nadu

A.R. Lakshmanan, J.—The Petitioner in W.P. No. 12888 of 1990 is the Appellant herein. The Appellant filed that Writ Petition to quash the Notification issued u/s 4(1) of the Land Acquisition Act and the declaration made u/s 6 of the said Act in so far as they relate to the lands of the Appellant in Survey Nos. 84/1BL and 85/1B of Madavilagam Village, Sriperumbudur Taluk, Chengai Anna District. The acquisition of the lands in question along with other lands was made for the purpose of laying Treated Water Transmission Linre under the Madras Metropolitan Water Supply and Sewerage Board Scheme. Though the acquisition has been challenged on more than one ground in the affidavit, the Appellant confined her challenge only to the ground raised in paragraphs 9, 10 and 12 of the affidavit, in that, according to the Appellant, the acquisition for the purpose in question would constitute an acquisition for the benefit of the Madras Metropolitan Water Supply and Sewerage Board (hereinafter referred to as the Board), created under the special enactment called Madras Metropolitan Water Supply and Sewerage Board Act, 1978 (hereinafter referred to as the Act, and that therefore, the acquisition could be only by following the procedure stipulated under Part VII of the Land Acquisition Act. On behalf of the Government it was contended that the Board in terms of the definition contained in Section 3(aa) of the Land Acquisition Act would constitute a ''Local Authority" and that therefore, the claim of the Appellant was liable to be rejected.

D. Raju, J. dismissed the Writ Petition holding that the acquisition of the Appellant''s lands following the procedure laid down under Part II of the Land Acquisition Act was, therefore, in accordance with law and that the decision reported in Union of India (UOI) and Others Vs. Shri R.C. Jain and Others, also squarely answered the plea raised by the Appellant. The learned Judge also held that the Board in question, constituted by an enactment of the State Legislature, would squarely answer the definition of ''Local Authority''. The above question was also canvassed before a Division Bench of this Court consisting of K. Venkataswami, J. as he then was, and K. Swamidurai, J. The Division Bench disposed of the Writ Appeal on examining only one ground, viz. whether the provisions of Section 11A of the Land Acquisition Act had been complied with or not. The Division Bench thought it unnecessary to go into the other aspects of the case viz., whether the Board is a local authority within the meaning of the Land Acquisition Act. The Division Bench held that the provisions u/s 11A of the Land Acquisition Act were violated, therefore, the entire land acquisition proceedings stood lapsed. In the result, the Bench allowed the Writ Appeal.

The Government of Tamil Nadu filed Civil Appeal No. 4608 of 1995 before the Supreme Court of India. The Supreme Court allowed the appeal holding that the stay of dispossession would tantamount to stay of further proceedings being taken u/s 11, and Explanation to Section 11-A of the Land Acquisition Act covers such an order, as such the entire period of stay has to be excluded in computing the period of two years prescribed by Section 11-A of the Land Acquisition Act. Since the point, whether the Board is a local authority or not had not been decided by the Division Bench, the Supreme Court remitted the matter to this Court for its decision on the aforesaid point in accordance with law. Therefore, one of the questions we are now required to decide is as to whether the Board is a "Local Authority"?

Mr. K. Doraiswami, learned Senior Counsel appearing for the Appellant, reiterated the grounds raised in the grounds of appeal. According to him, the Board is not a Local Authority and therefore, Part VII of the Land Acquisition Act ought to have been followed, and that the decision of the Supreme Court reported in Union of India (UOI) and Others Vs. Shri R.C. Jain and Others, is not applicable to the facts of the present case. Mr. K. Doraiswami, therefore, contended that the entire proceedings have to be rendered illegal.

Mr. R. Muthukumaraswami, learned Government Pleader, contended that the acquisition in the present case has been initiated in 1988 after the amendment to the Land Acquisition Act by the Central Act 68 of 1984 and by the said amendment, the word ''public purpose'' has been defined to include the provision of land for any local authority or a Corporation owned or controlled by the State. He also invited our attention to Section 3(i)(v) and 3(aa) of the Land Acquisition Act. He further drew our attention to Section 3(31) of the General Clauses Act, 1897 and Sections 5, 9, 31, 84(2) and 85 of the Madras Metropolitan Water Supply and Sewerage Board Act, 1978. He also contended that the Board would also constitute a State within the meaning of Article 12 of the Constitution of India and therefore an acquisition for the Board will be an acquisition for the State, therefore it can be undoubtedly done under Part II of the Land Acquisition Act. He cited the decisions reported in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, ; Rajasthan State Electricity Board, Jaipur Vs. Mohan Lal and Others, and Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, , which are to the effect that every public authority exercising statutory power would constitute an authority and consequently, a State within the meaning of Article 12 of the Constitution of India. We will now deal with the arguments addressed by the Learned Counsel appearing on either side.

As already stated, the question that arises for consideration is as to whether the acquisition in question would attract Part II of the. Land Acquisition Act or should have been resorted to by following the procedure under Part VII of the Land Acquisition Act. It cannot be disputed, and as a matter of fact, it has not been disputed that if the acquisition of land is made for a ''public purpose'', the same can be done by following the procedure contemplated in Part II. Equally, it is well settled that if the acquisition is for a company and the compensation is to be paid out of the funds of the company, the acquisition would have to be made following the procedure contemplated by Part VII. A reference to the decision reported in Smt. Somavanti and Others Vs. The State of Punjab and Others, is an authority for the above proposition. In the said judgment the Supreme Court has observed that if the acquisition is for a company and the compensation is to be paid out of the funds of the company, the acquisition would have to be made following the procedure contemplated by Part VII.

As referred to earlier, the acquisition is for the Board. The Board has been constituted under an Act of the Tamil Nadu Legislature in the year 1978. The said Act received the assent of the President of India on 08.06.1978 and was published in the Tamil Nadu Government Gazette Extraordinary on 14.06.1978. The preamble to the Act runs thus:

An Act to provide for the constitution of the Madras Metropolitan Water Supply and Sewerage Board, for exclusively attending to the growing needs of and for planned development and appropriate regulation of water supply and sewerage services in the Madras Metropolitan Area with particular reference to the protection of public health and for all masters connected therewith or incidental thereto.

Prior to this Act, the functions of this Board were carried out by the Madras City Municipal Corporation and other local authorities, which are now included within the Madras Metropolitan Area. The functions of the Corporation and other local areas in the periphery relating to water supply and sewerage in the Madras Metropolitan Area have been divested from the Corporation and other local authorities and are invested in the new Body-constituted under the Act.

Section 5 of the Act deals with the functions of the Board. Section 9 of the Act deals with compulsory acquisition of land, etc. Section 9 reads as follows:

Any land or any interest there in required by the Board for the purposes of this Act shall be deemed to be needed for a public purpose within t he meaning of the Land Acquisition Act, 1894 (Central Act 1 of 1894).

Section 31 of the Act deals with the Board''s fund. It reads as follows:

31.(1) - The Board shall have its own fund and all receipts of the Board shall be credited thereto and all payments by the Board shall be made therefrom.

(2) All moneys belonging to that fund may be deposited or invested.

(i) in any scheduled bank within the meaning of the Reserve Bank of India Act, 1934 (Central Act II of 1934); or

(ii) in any corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (Central Act 5 of 1970); or

(iii) in tire State Bank of India as defined in the State Bank of India Act, 1955 (Central Act 23 of 1955) or its subsidiary banks as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (Central Act XXXVIII of 1959);or

(iv) in such securities as may be approved by the Government.

(3) The Government may, from time to time, make grants, subventions, or advances or loans to the Board for the purposes of this Act on such terms and conditions as the Government may determine.

(4) The Board may accept grants, subventions, donations and gifts from the Central or State Government or a local authority, or any individual or body, whether incorporated or not, for all or any of the purposes of this Act.

(5) The Board may constitute a sinking fund, depreciation reserve fund and other funds in such manner and in such form as may be prescribed. Such funds shall be invested in such manner as may be determined by the Board with the approval of the Government.

Section 84 of the Act deals with the effect of other laws. The said S. lays down that the Local Authority''s jurisdiction and functions have been taken over by the Board in the Madras Metropolitan Area. Section 84(2) runs thus:

Without prejudice to the generality of the foregoing provision, any existing authority being the Madras Municipal Corporation or a Municipal Council, Township Committee, Panchayat Union Council or Panchayat constituted or established under the Madras City Municipal Corporation Act, 1919 (Tamil Nadu Act IV of 1919), the Tamil Nadu District Municipalities Act, 1920 (Tamil Nadu Act V of 1920) or the Tamil Nadu Panchayat Act, 1958 (Tamil Nadu Act XXXV of 1958) shall cease to have jurisdiction in respect of water supply or sewerage services in or for the Madras Metropolitan Area with effect from the notified date and shall not....

Section 85 of the Act deals with amendments to other enactments. In this context, Parts I. II and III of the Schedule can also be noticed with reference to Section 85 of the Act. Having regard to the Preamble to the Act and also to the various provisions of the Act, it would be obvious that the Board is a ''local authority''. In fact and in law it has been constituted under the Act to exercise the powers of the local authorities by repealing the relevant provisions in the other Statutes as mentioned in Section 84(2) of the Act referred to above and vesting, those powers with the Board.

The expression ''Local Authority'' has not been defined in the Land Acquisition Act, However, a useful reference may be made to Section 3(31) of the General Clauses Act, 1897, which defines the expression ''local authority'' as follows:

District ''Local authority'' shall mean a Municipal Committee, District Board body of port commissioners or other Authority legally entitled to, or entrusted by the Government with the control or management of a municipal or local fund.

The Tamil Nadu General Clauses Act, 1891 also defines the expression "Local Authority" in similar terms. The definition given in the General Clauses Act, 1897, governs all Central Acts and Regulations made after the commencement of the Act. No doubt, this Act was enacted later in point of time than the Land Acquisition Act, but, this Act was enacted to consolidate and extend the General Clauses Act, 1868 and 1887 and the definition of the expression ''Local Authority'' is the same as that contained in the earlier Acts of 1868 and 1887. Thus, the definition given in Section 3(31) will, therefore hold good for construing the expression ''Local Authority'' occurring in the Land Acquisition Act. A proper and careful scrutiny of the language of Section 3(31) suggests that an authority, in order to be a Local Authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioners, possessing many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board, or Body of Port Commissioners, but possessing one essential feature, viz. that it is legally entitled to or entrusted by the Government with the control and management of a municipal or local fund. We have already seen Section 31 of the Act, which deals with the Board''s fund.

In this case, the Board has a separate legal existence as Corporate Body. It is an independent legal entity. The Board functions in a definite area. The Board also enjoys certain degree of autonomy with freedom to decide for themselves questions of policy affecting the area administered by them. The Board is entrusted by the statute with such governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services water and sewerage, town planning and development of roads, markets, transportation, social welfare services, etc., etc. Broadly, we may say that the Board is entrusted with the performance of civic duties and functions which would otherwise be Governmental or Local Authorities, duties and functions. The Board has the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges or fees. One essential feature is, the Board has the control and management of the fund which is vested in it u/s 31 of the Act.

The Calcutta Metropolitan Development Authority has been held to be a ''Local Authority'' since it is a statutory body created under the Calcutta Metropolitan Development Authority Act, 1972, and is entitled to control and manage its funds and effect development in area under its control, a power analogous to that vested in Municipalities. In the decision reported in R. Sarangapani and Another Vs. The Port Trust of Madras, , where the vires of a resolution of Port Trust Board was challenged, it has been held that the word ''State'' in Article 12 of the Constitution includes, apart from the Government and Parliament of India and the Government under the Legislature of each of the States, all local and other authorities within the territory of India or under the control of the Government of India, and the Port Trust will fall within the meaning of the term ''State'' by virtue of Section 3(31) of the General Clauses Act.

The Scope of the definition u/s 3(31) of the General Clauses Act came up for consideration before the Supreme Court in the decision reported in Union of India (UOI) and Others Vs. Shri R.C. Jain and Others, The question for consideration in that appeal was, whether the Delhi Development Authority constituted under the Delhi Development Act, 1957, was a local authority whose employees were taken out of the purview of the Payment of Bonus Act, 1965, by Section 32(iv) of that Act, which provided that nothing in the Act shall apply to employees employed by an establishment engaged in any industry carried on by or under the authority of any Department of the Central Government or State Government or a Local Authority. The High Court allowed the Writ Petition and the Union of India and the Delhi Development Authority preferred the appeal before the Supreme Court after obtaining Special Leave. While construing Section 3(31) of the General Clauses Act, the Supreme Court has observed as follows:

A proper and careful scrutiny of the language of Section 3(31) suggests that an authority, in order to be a Local Authority, must be of like nature and character as a Municipal Committee, District Board or Body of Post Commissioners, possessing, therefore, many, if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board or Body of Port Commissioners, but possessing one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority? First, the authorities must have separate legal existence as Corporate Bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next, they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to Municipal Bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services, etc. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their activities and the fulfilment of their projects by levying taxes, rates, charges or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority.

In this context, it is very useful to refer to the judgment of the Supreme Court reported in Municipal Corporation of Delhi Vs. Birla Cotton, Spinning and Weaving Mills, Delhi and Another, wherein Hidayatullah, J., as he then was, speaking for the Bench described some of the attributes of local bodies in the following manner:

Local Bodies are subordinate branches of Government activity. They are democratic institutions managed by the representatives of the people. They function for public purposes and take away a part of the Government affairs in local areas. They are political sub-divisions and agencies which exercise a part of State functions. As they are intended to carry on local self-Government, the power of taxation is a necessary adjunct to their other powers. They function under the supervision of the Government.

We have seen the definition of the expression "Local Authority" as contained in Section 3(31) of the General Clauses Act and the scope of the said definition has been considered by the Supreme Court in R.C. Jain''s case. The functions of the Board in question, in our opinion, would squarely fall within the definition of Section 3(31) of the General Clauses Act and satisfy the principles laid down by the Supreme Court in the aforesaid judgment. Consequently, we are of the view, that the acquisition made for the Board is an acquisition, for the ''Local Authority'' and therefore it is for a ''public purpose''. In the circumstances, we hold that the acquisition under Part II of the Land Acquisition Act is perfectly valid.

This apart, the word ''public purpose'' has been defined to include the provision of land for any local authority or a Corporation owned or controlled by the State. Section 3(f)(v) of the Land Acquisition Act deals with the provision of land for residential purposes to the poor or landless or to persons residing in areas affected by natural calamities, or to persons displaced or affected by reason of the implementation of any scheme undertaken by Government, any local authority at a Corporation owned or controlled by the State.

Section 3(aa) of the Land Acquisition Act defines the expression ''Local Authority'' as follows:

The expression ''local authority'' includes a town planning authority (by whatever name called) set up under any law for the time being in force.

It is an inclusive definition as such it not exhaustive. It only means that apart from other authorities which undoubtedly fall within the expression "Local Authority" Town Planning Authority is also included within the definition of the ''Local Authority'' to avoid or eliminate any doubt in this regard. The expression'' Corporation owned or controlled by the State'' has been defined in Section 3(cc) of the Land Acquisition Act to mean'' any body corporate established by or under a Central, Provincial or State Act, and includes a Government company, etc."

It cannot be disputed that the Board in question is a Body Corporate established by the Act. Therefore, the acquisition in question for the Board would amount to acquisition to a Corporation owned or controlled by the State, which would therefore be for a public purpose, within the meaning of the Land Acquisition Act. Consequently, the acquisition made, applying Part II of the Land Acquisition Act, is, in our view perfectly valid. Therefore, we hold that there is no need to follow the procedure prescribed by Part VII of the Land Acquisition Act as contended by the Learned Counsel for the Appellant since, as already seen, the acquisition is only for a ''public purpose'' to wit, for the local authority'' and as such, it can be made under Part II of the Land Acquisition Act.

It is contended by the Learned Counsel for the Appellant that the acquisition of the land in question is not for the benefit of the Board. The said contention has no force. The Board is not a commercial concern. The functions relating to drinking water supply and sewerage of the Madras Metropolitan Area are exclusively assigned to the Board under the provisions of the Act. In short, the above functions were excluded from the purview of the Madras Corporation and/entrusted to the Board for effective implementation.

Further, the Board would also constitute a State within the meaning of Article 12 of the Constitution and therefore the acquisition for the State can be undoubtedly made under Part II of the Land Acquisition Act. The world ''State'' has been defined in Article 12 of the Constitution to include ''the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India''. This Article gives an extended meaning to the words ''the State'' wherever they occur in Part III of the Constitution. Unless the context otherwise requires, ''the State'' will include not only the Executive and legislative organs of the Union and the States but also local bodies such as municipal authorities as well as other authorities, which include the ''instrumentalities or agencies'' of the State, or bodies or institutions which discharge public functions of a governmental character. The expression ''Local Authorities'' includes a Panchayat, a Port Trust or other Bodies coming within the definition of ''local authority'' in Section 3(31) of the General Clauses Act, 1897.

As already seen, the Board would satisfy the definition of ''local authority'' within the meaning of Section 3(31) of the General Clauses Act. Even otherwise, the Board would fall within the meaning of the word ''other authorities'' comprehended by Article 12 of the Constitution and therefore a State. The expression ''other authorities'' occurring in Article 12 of the Constitution came up for consideration before the Supreme Court in a number of cases. First we refer to the decision reported in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, . In that case the Supreme Court held that an instrumentality of a State would amount to an authority. The Board in our case in an instrumentality of the State constituted to carry out the functions of Water Supply and Sewerage and therefore, in our view, would fall within the definition of ''State''.

In the decision reported in Rajasthan State Electricity Board, Jaipur Vs. Mohan Lal and Others, , the Supreme Court held that every public authority exercising statutory power would constitute an authority and consequently a State within the meaning of Article 12 of the Constitution, as could be seen from paragraphs 3 to 6 of the judgment.

In the decision reported in Sukhdev Singh, Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II. Officers, Shyam Lal, Industrial Finance Corporation, , there were two questions for consideration in the appeals before the Supreme Court. The first question was, whether an order for removal from service contrary to regulations framed under the Oil and Natural Gas Commission Act, 1959, the Industrial Finance Corporation Act, 1948, and the Life Insurance Corporation Act, 1956, would enable the employees to a declaration against the statutory corporation of continuance in service or would only give rise to a claim for damages. The second question was, whether an employee of a statutory corporation, would be entitled to claim protection of Article 14 and 16 of the Constitution against the Corporation. In short, the question was, whether these statutory corporations were authorities within the meaning of Article 12 of the Constitution. The Supreme Court held that the Rules and Regulations framed by the Oil and Natural Gas Commission, Life Insurance Corporation and Industrial Finance Corporation had the force of law and that the employees of these statutory Bodies would have a statutory status and they would be entitled to a declaration of being in employment when their-dismissal or removal was in contravention of statutory provisions. These statutory Bodies were authorities within the meaning of Article 12 of the Constitution.

In the present case, the Board has been created by a statute with statutory powers and function. Therefore, it is obvious that the Board would fall within the expression ''other authorities'' within the meaning of Article 12 of the Constitution and therefore, would amount to a State for the purpose of Part III of the Constitution. As such the acquisition can be resorted to under Part II of the Land Acquisition Act. In the circumstances, even otherwise as already pointed out above, the acquisition in question, having been made following the procedure under Part II of the Land Acquisition Act, is perfectly in order and valid.

As a matter of fact, this question could be answered straightaway if a reference is made to Section 9 of the Act. Section 9 of the Act provides that any land or any interest required by the Board for the purpose of the Act shall be deemed to be needed for a public purpose within the meaning of the Land Acquisition Act. It would, therefore, be clear that by virtue of the provisions contained in Section 9 of the Act, any land required for the purpose of the Board can be acquired as one for public purpose and consequently it can be made by resorting to the procedure under Part II of the Act.

In view of the facts stated above, the principles laid down in the decisions of the Supreme Court referred to above and the statutory provisions referred to above it is obvious that the acquisition in question is the one for a ''public purpose'' and therefore, the procedure under Part II of the Land Acquisition Act has been rightly invoked. There are no merits in the contentions of the Appellant as such the appeal deserves to be rejected.

For the foregoing reasons, the Writ Appeal is dismissed. However, there will be no order as to costs.