# [1971] 1 S.C.R. 719

- **Citation:** [1971] 1 S.C.R. 719
- **Court:** Supreme Court of India
- **Decided:** 1970-08-05
- **Case number:** Writ Petitions Nos. 182 of 1969
- **Bench:** M. HloAYATULLAH
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1971-1-s-c-r-719-5119
- **Pages:** 12

## Headnote

J. M. S!rELAT,
G. K. MITTER,
C. A. VAIDIAL!NGAM AND A. N. RAY, JJ.]
Maharashtra Industrial Development Act, 1961-Maharashtra Development Corporation formed under the Act whether a trading corporatioRLegisiative competence-Legislation falls under Entry 24 of the State List
and not under Entry 43 of Union List-Act is valid-No discriminatio11
in procedure for acquisition under above Act and Land Reqtdsirion Ac1,
1894-Proviso to s. 33 of Maharashtra Act does not restrict judicial power
of Collector in determining compensation.
. In a petition under Art.
32 of the Constitution of India the petitioners challenged the validity of the Maharashtra Industrial De>elopmont
Act, 1961.
In support of the petition it was contended: (i) that the
Maharashtra legislature was incompetent to enact the Act because the Act
was for the incorporation, regulation .and winding up of the Maharashtra
Development Corporation which was a trading corporation; accordingly
the impugned legislation fell within Entry 43 of List I (Union List) or
the Seventh Schedule of the Constitution; (ii) that there was a special
proeedure designed by the land Acquisition Act for acquisition of la~d for
tile companies whereas in the present case under the pro,isions of the
impugned Act the State was acquiring land for companies without adopting the procedure of the Land Ar,quisition Act and thus there was procedural discrimination; (iii) that the proviso to s. 33 of the impugned
Act providing that no compensation exceeding such amount as the State
Government may by general order specify to be paid for acquisition •hall
be determined by the Collector without the previous ap!?roval of .the State
Government or its nominee, was restrictive of the judicial power of the
Collector.
HELD : (i) It is the true intent of the Act i.e. jts pith and s~bstance
which will determine the validity of the Act. Industries come "1thm Entry
24 of the State List subject to the provision of Entry 7 and Entry 52 of
the Union list of the Constitution.
Entry 7 of the Union List relates
to industries declared by Parliament by law to be necessary for the purpose
of defence or for the prosecution of war. E~try ~2 of the Umon List _relates
industries the control of which by the Un•on ts declared .by Parhament
hy law to be expedient in the public interest. The estabhshment, growth
and development of industries in the State of Maharashtra does not fall
within Entry 7 and Entry 52 of the Union List. . Establishmen.t gro~h
and development of industries in the State 1s. w1thm t_he State List of mdustries The pith and substance of the Act ts esta~hshment growth a!'d
clevelop'.ment of industries, and acquisition of land 1n t!'at behalf cames
out the purposes of the Act by setting up the Corporation as .one ot :J::
limbs or agencies of the Gove~n_ment. The powers and fu~ctt?~s o
'Xlrporation show in no certam terms that these are all m aid of tiie
~rincioal and predominant purpose of establishrnthentCoand ~?'vthh of ~'b.
dustries. When the Government is sa~fied that
e
i;por~_ion
a~ • 11
stantially achived the purposes for whtch the Cof!'Oration " estab,1she ,
720
SUPREME COURT REPORTS
(1971] 1 S.C.R.
the Corporation will be dissolved because the raison d'etre is gone. It
A
must, therefore, be held that the Act is a valid piece of legislation [725
F-726 DJ
.
'The contention that the Corporati~n was a trading one, cir that it was
a Government company within the meaning of s. 617 of the Companies
Act, 1956 could not be accepted. [Reason dissussed]
The true character
of the Corporation in the present case is to act as an architectural agent
of the development and growth of industrial towns by establishing and
developing industrial estates and industrial areas. [727 B-728 F]
(ii) 'The contention that there was procedural discrimination as between
the present Act and the Land Acquisition Act could not be accepted.
'The Maharashtra Industrial Development Act is a· special one ha\ing
the specific and special purpose of gr

## Text

719·
A
SHRI KAMTANU
CO-OPERATIVE
HOUSING SOCffiTY
LTD. & ANR.
\',
STATE OF MAHARASHTRA & ORS.
11
August 5, 1970
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[M. HloAYATULLAH, C.J.,
J. M. S!rELAT,
G. K. MITTER,
C. A. VAIDIAL!NGAM AND A. N. RAY, JJ.]
Maharashtra Industrial Development Act, 1961-Maharashtra Development Corporation formed under the Act whether a trading corporatioRLegisiative competence-Legislation falls under Entry 24 of the State List
and not under Entry 43 of Union List-Act is valid-No discriminatio11
in procedure for acquisition under above Act and Land Reqtdsirion Ac1,
1894-Proviso to s. 33 of Maharashtra Act does not restrict judicial power
of Collector in determining compensation.
. In a petition under Art.
32 of the Constitution of India the petitioners challenged the validity of the Maharashtra Industrial De>elopmont
Act, 1961.
In support of the petition it was contended: (i) that the
Maharashtra legislature was incompetent to enact the Act because the Act
was for the incorporation, regulation .and winding up of the Maharashtra
Development Corporation which was a trading corporation; accordingly
the impugned legislation fell within Entry 43 of List I (Union List) or
the Seventh Schedule of the Constitution; (ii) that there was a special
proeedure designed by the land Acquisition Act for acquisition of la~d for
tile companies whereas in the present case under the pro,isions of the
impugned Act the State was acquiring land for companies without adopting the procedure of the Land Ar,quisition Act and thus there was procedural discrimination; (iii) that the proviso to s. 33 of the impugned
Act providing that no compensation exceeding such amount as the State
Government may by general order specify to be paid for acquisition •hall
be determined by the Collector without the previous ap!?roval of .the State
Government or its nominee, was restrictive of the judicial power of the
Collector.
HELD : (i) It is the true intent of the Act i.e. jts pith and s~bstance
which will determine the validity of the Act. Industries come "1thm Entry
24 of the State List subject to the provision of Entry 7 and Entry 52 of
the Union list of the Constitution.
Entry 7 of the Union List relates
to industries declared by Parliament by law to be necessary for the purpose
of defence or for the prosecution of war. E~try ~2 of the Umon List _relates
industries the control of which by the Un•on ts declared .by Parhament
hy law to be expedient in the public interest. The estabhshment, growth
and development of industries in the State of Maharashtra does not fall
within Entry 7 and Entry 52 of the Union List. . Establishmen.t gro~h
and development of industries in the State 1s. w1thm t_he State List of mdustries The pith and substance of the Act ts esta~hshment growth a!'d
clevelop'.ment of industries, and acquisition of land 1n t!'at behalf cames
out the purposes of the Act by setting up the Corporation as .one ot :J::
limbs or agencies of the Gove~n_ment. The powers and fu~ctt?~s o
'Xlrporation show in no certam terms that these are all m aid of tiie
~rincioal and predominant purpose of establishrnthentCoand ~?'vthh of ~'b.
dustries. When the Government is sa~fied that
e
i;por~_ion
a~ • 11
stantially achived the purposes for whtch the Cof!'Oration " estab,1she ,
720
SUPREME COURT REPORTS
(1971] 1 S.C.R.
the Corporation will be dissolved because the raison d'etre is gone. It
A
must, therefore, be held that the Act is a valid piece of legislation [725
F-726 DJ
.
'The contention that the Corporati~n was a trading one, cir that it was
a Government company within the meaning of s. 617 of the Companies
Act, 1956 could not be accepted. [Reason dissussed]
The true character
of the Corporation in the present case is to act as an architectural agent
of the development and growth of industrial towns by establishing and
developing industrial estates and industrial areas. [727 B-728 F]
(ii) 'The contention that there was procedural discrimination as between
the present Act and the Land Acquisition Act could not be accepted.
'The Maharashtra Industrial Development Act is a· special one ha\ing
the specific and special purpose of growth, development and organisation
of industrie8. That Act has its own procedure. Under the Land Acquisition Act acquisition is at the instance of and for the benefit of a company
whereas under the present Act acquisition is solely by the State for public
purposes.
The two acts are dissimilar in
situation and circumstances.
(728 H-729 E]
(iii) The proviso to s. 33 no doubt provides that where the amount
of compensation determined by the Collector is higher than what the
State Government may by general order specify the approval of the State
Government is necessary. But sub-s. (5) of s. 33 states that in determining
the compensation the Collector shall be guided by the provisions contained
in sections 23 and 24 and other relevant provisions of the Land Acquitition
Act. There is no ceiling fixed by the Government. Further there is an
·appeal to the Court from the decision of the Collector. The decision of
the Court will finally determine the amount of compensation.
There is
thus no restriction on the powers of the Collector in the matter of determination of compensation, although the approval of Government may be
necessary in the Government interest. (729 F-730 CJ
ORIGINAL JURISDICTION : Writ Petitions Nos. 182 of 1969 and
42 to 45 of 1968.
Petition under Art. 32 of the Constitution of India for enforcement of the fundamental rights.
D. M. Paru/ekar and A. G. Ratnaparkhi, for the petitioners (in
W.P. No. 182 of 1969).
S.S. Shukla, for the petitioners (in W.P. No. 42 to 45 of 1968.
S. T. Desai, G. L. Sanghi, B. D. ShllTma for S. P. NayllT, for
respondents Nos. 1to3 (in W.P. No. 182 of 1969) and the respondents (in W.P. Nos. 42 to 45 of 1968).
The Judgment of the Court was delivered byRay, J.
These petitioners
raise two principal questions.
First, whether the State of Maharashtra (hereinafter referred to
as the State) is competent to enact the Maharashtra Industrial
Development Act, 1961 (hereinafter refererd to as the Act) :
liecondly, whether there is procedural discrimination between
the Maharashtra Industrial Development Act, 1961 and the Land
Acquisition ~ct, 1894.
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RAMTANU HOUSING SOCIETY v. MAHARASHTRA (Rav, J.)
721
The contentions of the petitioners are that the Act io for the
incorporation, regulation and winding np of the
Maharashtra
D<velopment Corporation (hereinafter referred to as the Corporation) and that 1he Corporation is a trading one and therefore
the impugned legislation falls within Entry 43 of List I of the
Seventh Schedule of the Constitution. On behalf of the State it
is said on the other hand that the Act is for the growth and
development of industries in the State of Maha:ashtra and for
acquisition of land in that behalf and the Corporation is established for carrying out the purposes of the Act, and, therefore,
the legislation is valid.
The true character, scope and intent of the Act is to be ascertained with reference to the purposes and the provisions of the
Act. The Act is one to make a special provision for securing
the orderly establishment in industrial areas and industrial estates
of industries in the State of Maharashtra, and to assist generally
in the organisation thereof, and· for that purpose to establish
an Industrial Development Corporation, and for purposes connected with the matters aforesaid.
•
The Corporation is established for the purpose of securing
and assisting the rapid and orderly establishment and organisation of industries in industrial areas and industrial estates in the
State of Maharashtra.
The Corporatfon consists of 8 members,
two of whom are nominated by the State Government of whom
one shall be the Financial Adviser to the Corporation, one member nominated by the State Electricity Board, one member nominated by the Housing Board and three members nominated by
the State Government, from amongst persons appearing to. Government to be qualified as having had experience 'of, and having
shown capacity in, industry or trade or finance or who are in the
opinion of the Government capable of representing the interest
of persons engaged or employed therein, and the Chief Executive Officer of the Corporation, who shall be the Secretary of the
Corporation.
·
The functions of the Corporation shall be generally to promote
and assist in the rapid and orderly establishment, growth and development of industries in the State of Maharashtra and to establish
and manage industrial ~tates at places selected by the State Government, develop industrial are&s seleeted by the State Government
for the purpose and make them available for undenakings to estal>-
H
lish themselves, assist financially by loans industries to move their
factories into such estates or areas, and to un<iertake schemes or
works, either jointly with other corporate bodies or institutions, or
L169Sup.Cl(P)71-2
722
SUPREME COURT REPORTS
(1971] I S.C.R.
with Government or local authorities, or on agency basis, in furiherance of the purposes for which the Corporation is established
and all matters connected therewith.
An industrial area under the Act means any area declared to be
an industrial area by the State Government by notification in the
Official Gazette whlch is to be developed and. where industries are
to be accommodated. An industrial estate under the Act means
any site selected by the State Government, where the Corporation
builds factories and other buildings and makes them available for
any site selected by the State Government, where the Corporation
means the carrying out of building, engineering, quarrying or other
operations in, on, over or under !and, or the making of any material cha'lge in any building or land, and includes re-development.
'mt does not include mining operations. Amenity under the Act
includes road, supply of water or electricity, street lighting, drainage, sewerage, conservancy and such other conveniences as
the
State Government may by notification in the Official Gazette specify
to be an amenity for the purposes of the Act.
We have referred to these expressions, industrial area. industrial estate, devlopment and amenity in order to appreciate the
general powers of the Corporation to_discharge the functions of the
Corporation in regard to the establishment, growth and development of industries in the State. These powers are to acquire and
hold property, moveable and intmoveable for the performance of
any of its activties. and to lease, sell, exchange or otherwise transfer any property held by the Corporation on such conditions as
may be deemed proper by the Corporation and also to purchase
by agreement or to take on lease or under any form of tenancy
any land, to erect such buildings and to execute such other works
as may be necessary for the purpose of carrying out its duties and
functions. to nrovide or cause to be provided amenities and common facilites in industrial estates and industrial areas and construct
and maintain or cau'e to be maintained works and buildings therefor, to make available buildings on hire or sale to industrialists
@r persons intending to start industrial undertakings, to construct
buildings for the housing of the employees of such industries. to
allot factory sheds or such buildings or parts of buildin!!s. including residential tenements to suitable persons in
the industrial
estates established or developed bv the Cornoration. and to do
such other things and perform such acts as it mav think necessarv
or expedient for the proper conduct of its functions. and the carf\=-
ing into effect the purposes of this Act.
-
Broadly stated the function, and powers of the Corporation
are to. develop industrial areas and industrial estates bv providing
amenities of road, supply of water or electricity.
stre~t lighting.
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RAMTANU HOUSING SOCIETY v. MAHARASHTRA (Ray, /.) 723
drainage, sewerage, conservancy and other converuences, secondly to construct works and buildings, factory sheds and thirdly, to
make available buildings on hire or sale to industrialists or peisons
intending to start industrial undertakings and to allot factory sheds,
buildings, residential tenements to suitable persons in industrial
estates established or developed by the Corporation and to lease,
sell, exchange or otherwise transfer any property held by the
Corporation on such conditions as may be deemed proper by th•
Corporation.
The development of industrial areas and industrial estates i
intended to serve two objects. In the first place, there is to be an
orderly establishment and growth of industries in the Bombay
Poona sector.
The second object is to secure dispersal of industries from the congested areas of the Bombay Poona sector to the
under-developed parts of the State.
The industrial areas are
broadly classified into two categories, namely, first, those meant
for engineering and other industries which are not obnoxious,
and, secondly, those meant for chemical industries.
The esta'.-
blishment and growth of industries in the State is inextricably
bound up with availability of land.
Available land in limited.
Such limited supply leads to speculation in land. Power is therefore required for compulsory acquisition of land to achieve the
purposes of the Act.
At the same time, land owners are not to
be deprived of the legitimate benefit of reasonable increase in land
values in a developing economy.
Development of chemical industries requires long stretches of
pipelines to be laid for moving gas and other liquid chemical
products. The growth of industries in the State by establishment
of industrial areas and industrial estates also means laying pipelines for carrying gas, water, electricity and constructing sewerage
and drains. These amenities are essential. The absence of
amenities is envisaged and answered in the Act by empowering
the Corporation to provide these essential amenities, facilities and
conveniences.
The principal functions of the Coqior~tion ~ re~ard to the
establishment, growth and development of mdustnes m the State
are first to establish and manage industrial estates at selected
places and secondly to develo:i industrial areas selected by the the
State Government. When industrial areas are selected the necessity of acquisition of land in those areas is apparent. The A;ct
therefore, contemplates that the State Gover.lfl!ent may acqWI\;
land by publishing a notice specifying t~e p~rt1~ular purpose .for
which such land is required. Before the pubbcatlon of the notice,·
the owner of the land is given an opportunity to show cause as to
724
SUPREME COURT REPORTS
[1971.J I S.C.R.
why the land should not be acquired.
The State after considering the cause shown by the owner the State Government may pass
such orders as it deems fit.
When a notice is published lo;· acquisition of land, the land, shall, on and from the date of such publication, vest absolutely in the State Government free from all encumbrances.
Where the land has been acquired for the Corporation or any local authority, the State Government shall. after it
has taken possession of the land, transfer the land to the Corporation or that local authority, for the purposes for which the land
has been acquired subject to such terms and conditions which the
State Government may deem fit to
impose.
We
have already
noticed that for the purpose of the Act, namely, the establishment
and development of industries in the State the Corporation will
establish industrial estates and develop industrial am1s.
Apart from establishing industrial estates and developing industrial areas the Corporation may dispose of any land ncquired
~y the State Government and tra_nsferred to the Corporation without undertaking or carrying out any development thereof or trans-
.fer sucJ;i land after undertaking or carrying out any devilopment as
it thinks fit.
These powers of the Corporation with respect to the
disposal of land are to be exercised so far as
practicable. that
where the Corporation proposes to dispose of by sale any such
land without any development having been undertaken or carried
out thereon, the Corporation slial! offer the land in the first instance
to the persons from whom it was acquired if they desire to. purchase it subject to such requirements as to its development and
use as the Corporation may think fit
to impose.
Against, the
persons who are residing or carrying on business or other activities on any such land shall, if they desire to obtain aceommodation
on land belonging to the Corporation and are willing to comply
with any requirements of the Corporation as to its development
and use, have an opportunity to obtain thereon accommodation
suitable to tl)eir reasonable requirements on terms settled with due·
regard to the price at which any such land has been
acquired
from them.
The other provisions in the Act· are that the State Government
may upon such conditions as may be agreed between the State
Government and the Corporation, place at the disposal of the
Corporation any land vested in the State Government. After any
such land has been developed by, or under the control and supervision of, the Corporation, it shall be dealt with by the Corporation in accordance with the regulations made, and directions given
by the State Government in this behalf.
Further, if any land
placed at the disposal of the C<Yrporation is r~quired at ariy time
therafter by the State Government, the Corporation shall replace
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RAMTANU HOUSING SOCIETY V. MAHARASHTRA (Ray, J.) 725
it at the disposal of the State Government upon such lenm and
conditions as may be mutually agreed upon.
There arc two other important provisions in the Act. Jn the
first place, the State Government may issue to the Corporation
such general or special direc•ions as to policy as it
may think
necessary or expedient for the purpose of carrying out the purposes of the Act. and the Corporation shall be bound to follow and
act upon such directions. These directions will be in the field of
establishment and mangement of industrial estates and development of industrial areas and carrying out the other powers of the
Corporation in regard to the provision of amenities and common
facilities and assisting industrialists or industrial undertakings in
obtaining buildings or factory sheds or residential tenements or
land for development of industries. The second important provision is that when the State Government is satisfied that the purposes
for which the Corporation is established under the Act have been
substantially achieved so as to render the continued existence of
the Corporation in the opinion of the State Government unnecessary that Government may by notification in the Official Gazette
declare that the Corporation shall be dissolved with effect from
such date as may be specified in the notification and the Corporation shall be deemed to be dissolved accordingly. Upon such dissolution, all properties, funds and dues which are vested in or
realisable by the Corporation shall vest in or be realised by the
State Government and all liabilities enforceable against the Corporation shall be enforceable against the State Government.
It is in the background of the purposes of the Act and pow~rs
and functions of the Corporation that the real and true character
of the legislation will be determined. That is the doctrine of finding out the pith and substance of an Act.
In deciding the pith and
suhqance of the legislation, the true test is not to find out whether
the Act has encroached upon or invaded any forbidden field but
what the pith and substance of the Act is. It is true intent of the
Act which will determine the validity of the Act. Industries come
within E,'ltry 24 of the State List subject to the provision c;f Entry 7
and Entry 52 of the Union List of the Constitution. Entry 7 of the
Union List relates to industries declared by Parliament by Jaw to be
necessary for the purpose of defence or for the prosecution of war.
Entry 52 of the Union List relates to industries, the control of
which by the Union is declared by Parliament by law to be expedient in the p•;blic interest. The establisnment, growth and development of industries in the State of Maharashtra do_es
not fall
within Entry 7 and Entry 52 ot the Union List. Establishment,
growth and development of industries in the State is within the
726
SCPREME COURT REPORTS
[1971] l S.C.R.
State List of industries. Furthermore, to effectua,e the purposes
of the development of industries in the State it is necessary to inake
land available. Such land can be made available by acquisition or
requisition. The Act in the present case deals with ·acquisition of
land by the State and on such acquisit,ion, the State may transfer
the land to the Corporation which again may develop it itself and
establish industrial estates or may develop· industrial areas. Acquisition or requisition of land falls unc!_er Entry 42 of the Concurrent
List. In order to achiev growth of industries it is necessary not
only to acquire land but also to implement the purposes of the Act.
The Corporation is therefore established for carrying out the pur·
poses of the Act. The pith and substance of the Act is establish-
. ment, growth and orga.nisation of industries, acquisition of land
in that behalf and carrying out the pnrposes of the Act by setting
up the Corporation as one of the lfn1bs·or agencies of the Government. · The powers and functions of the Corporation show in no
uncertain terms thanhese are all in aid of the principal and' predominant purpose of establishment, growth and estaliiishment of
industries. The Corporation is established for that purpose. When
the Government is satisfied that the Corporation has substantially
achieved the purpose for which the Corporation is established, the
Corporation will be dissolved because the raison d'etre is gone.
We, therefore, hold that the Act is a valid piece of legislation.
The petitioners contended that the Corporation was a trading
one. The reasons given were that the Corporation could sell pro·
perty, namely, transfer land; that the Corporation had borrowing
powers; and that the Corporation was entitled to moneys by way of
rents and profits. Reliance was placed on the report of the Cor·
poration and in particular on the income and expenditure of the
Corporation to show that it was making profits. These features of
transfer of land, or borrowing of moneys or receipt of rents and
profits will by themselves neither be the indicia nor the decisive
attributes of the trading character of the Corporation. Ordinarily,
a Corporation is established by shareholders with their capital. The
shareholders have their Directors for the regulation and management of the Corporation. Such a Corporation set up by the shareholders carries on business and is intended for making profits.
When profits are earned by such a Corporation they are distributed
to shareholders by way of dividends or kept in reserve funds.
In
the present case, these attributes of a trading Corporation are
absent. The Corporation is established by the AQt for carrying out
the purposes of the Act. The purposes of the Act are development
of industries in the State. The Corporation consists of nominees
of the State Government, State Electricity Board and the Housing
Board.
The functions and powers of the Corporation indicate
that the Corporation is acting as 'a wing of the State Government
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RAJ\ITANU HOUSING SOCIETY I'. MAHARASHTRA (Ra,v, J.) 727
in establishing industrial estates and developiflg industrial areas,
a'quiring property for thme "purposes, constructing buildings,
allorting buildmgs, factory sheds to industrialists or industrial
undertakings.
1t is obvious that the Corporation will receive
moneys for disposal c.! land, buildings and other properties and also
that the Corporation would receive rents and profits in appropriate
ca,es.
Receipts of these moneys arise not out of any business or
1rade but out of the sole purpose of estiiblishmeot, growth and
de,eJopment of indu'1ries.
The Corporation has to provide <.menities and facilities in industrial estates and industrial areas. Amenities of road, electricity,
sewerage and other facilities in industrial estates and industrial
are;1s are within the programme of work of the Corporation. The
fund of the Corporation consists of moneys received from the Srate
Government, all fees, costs and charges received by the Corporation. all moneys received by the Corporation from the disposal of
lands. buildings and other properties and all moneys received by
the Corporation bv way c.f rents and profits or in any other manner.
The Corporation shal! have the authority to spend such sums out
of tht general funds of the Corporation or from reserve and other
funds.
The Corporation is to make provision for reserve and
other specially denomi.nated funds as the State Government may
direct.
The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings", or
sheds is made or is likely to be made in furtherance of the object
of the Act. A budget is prepared showing the estimated receipts
and expenditure. The accounts o.f the Corpora!ion are audited by
an auditor appointed by the State Government. These provisions
in regard to the firnrnce of the Corporation indicate the real role
of the Corporation. l'i~ .. the agency of the Government in. carrying
out the purpose and object of the Act which is the development of
industries. If in the ultimate a•nalysis there is excess of income
over expenditure that will not establish the trading character of the
Corporation.
There are various departments of the Government
which may haYe excess of income over expenditure.
The Corporation is not a Government compaly within the
meaning of section 617 of the Companies Act, 1956 no1 can the
Companies Act. 1956 be said to apply to the Corporation because
under the provisions contained in section 616 of the Companies
Act that Act will apply to a company governed by any special Act
except in so far as the provisions of the Companies Act are inconsistent with the provisions of such special Act. The provisions of
the Act in the present case in regard to incorpo~ation. functions,
powers and dissolution of the Corporatiorl show that the purpose5
728
SUPREME COURT REPORTS
[1971] 1 S.C.R
and objects of the Act and the functions and powers of the Corro:
A.
ration are like the warf and weft of the fabric of development of
industries by the State.
·
There are two provisions of the Act which are not to he found
in any trading Corporation. In the first place, the sums payable
by any person to the Corporation are recoverable by 1t under this
B
Act as an arrear of land revenue on the application of the Corporation. Secondly, on dissolution of the Corporation the assets vest
in and the liabilities become enforceable against the State Govern·
ment.
The underlying concept of a trading Corporation is buying and
selling. There is no aspect of buying or selling by the Corporation
in the present case. The Corporation carries out the purposes of
the Act, namely, development of industries in the State. The construction of buildings, the establishment of industries by letting
buildings on hire or sale. the acquisition and transfer of land in
relation to esfablishmem of industrial estates or development cf
industrial areas and of setting up of industries cannot be said to be
dealing in land or buildings for the obvious reason that the State i'
carrying out the objects of the Act with the Corporation as an
agent in setting up industries in the State. The Act ainl.s at build·
ing an industrial town and the Corporation carries out the objects
of the Act, The hard core of trading Corporation is its commercial
character. Commerce connotes transactions of purchase and sale
of commodities, dealing in goods. The forms of business transactions may be varied but the real character is buying and selling.
The (rue character of the Corporation in the present case is to act
as an architectural agent of the development and growth of industrial towns by establishing and devloping industrial estates and
industrial areas.
We are of opinion that the Corporation is not
a trading on'e.
Counsel on. behalf of the petitioners contended that there was
procedural discrimination between the Land Acquisition Act and
· the Act in the present case. It was said that there was a special
procedure designed by the Land Acquisition Act for acquisition of
land for the companies whereas in the present case the State was
acquiring land for companies without adopting the procedure of
theLand Acquisition Act. It is to be remembered that the Act in
the present case is a special one having the specific and special purpose of growth, develooment and organisation of industries in the·
State of Maharashtra. The Act has its own procedure and there is
no provision in the Act ror acquisition of land for a company as
in the case of Land Acquisition Act. In the present case, acquisition under the Act is for the purpose of development of industrial
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H
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RAMTANU HOUSING SOCIETY v. MAHARASHTRA (Ra,v, J.)
72~
estates or industrial areas by the Corporation or any other purpose
in furtherance of the objects of the Act. The policy underlying
the Act is not acquisition of land for any company but for the one
and only purpose of development, organisation and growth of
industrial e~tates and industrial areas. The Act is designed to have
a planned industrial city as opposed to haphazard growth of industrial areas in all parts of the State. The Act is intended to prevent
growth oi industries in the developed parts of the State. Industries
are therdore to be set up in the developing or new parts of the
State where new industrial towns will be brought into existence.
The object of the Act is to carve out planned areas for industries.
On one side there will be engineering industries and on the other
there will be chemical industries. There will be localisation of
industries with the result that the residents and dwellers of towns
and cities "'ill not suffer either from the polluted air or obnoxious
chemicals of industries or the dense growth of industries and industrial population, within and near about the residential areas. The
Land Acquisition Act is a general Act and that is why there is specific provision for acquisition of land by the State for public purpose
and acquisition of land by the State for companies. The present
Ac on the other hand is designed the sole purpose ct de,·elopment of industrial areas and industrial estates and growth and
development of industries within the State. Industrial undertakings
or persons who are engaged in industries all become entitled to the
facilities on such industrial growth. Under the Land Acquisition
Act acquisition is at the instance of and for the benefit of a company whereas under the present Act acquisition is solely by the
State for public purposes. The two acts are dissimilar in situations
and circumstances.
The petitioners contended that the provisions as to compensation were a restriction on the judicial power oi the Collector. Section 33 of the Act deals with compensation. Tfie amount of compensation under the Act can be determihcd by agreement between
the State Government and the person to be compensated. Where
on the other hand no such agreement can be reached, the State
Government shall refer the case to the Collector. That is subsection (3) of section 33 of the Act. The proviso to that subsection is that no compensation exceeding such amount as the State
Government may by general orders specify to b paid for such
acquisition shall be determined by the Collector without the previous approval of the State Government or such officer as the
State Government may appoi~t. in that behalf. This proviso was
construed on behalf of the petitioners to be a fetter on the j1.1dicial
powers of the Collector to to determine compensation. Subsection ( 5\ of section 33 of the Act states that in detennining the
amount of compensation, the. Collector shall be guided by the pro-
730
SUPREME COURT REPORTS
(197 Jj 1 S.C.R.
visions contained in sections 23 and 24 and other relevant provisions of the Land Acquisition Act These provisions indicate that if
the Collector will determine an amount higher than what the State
Government may by general orders specify, the approval of the
State Government will be necessary. There is no ceiling fixed by
the Go1·ernment.
Finally, there is an appeal to the Court from
the decision of the Collector. The decision of the Court will finally
determine the amount of compensation.
We are of opinion that
there L' no restriction on the powers of the Collector in the matter
of determination of compensation, although the approval of Government may be necessary in the Government interest.
All the contentions advanced by the petitioners fail. The petitions :ire dismissed with costs.
·
G.C.
Petitions dismissed.
A
B
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