# M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA AND ORS

- **Citation:** [2022] 14 S.C.R. 591
- **Court:** Supreme Court of India
- **Decided:** 2022-10-11
- **Case number:** Civil Appeal No.4678 of 2021
- **Bench:** Hemant Gupta, Vikram Nath
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-m-s-p-l-limited-v-the-state-of-karnataka-and-ors-35745
- **Pages:** 47

## Headnote

Land Acquisition :
Karnataka Industrial Areas Development Act, 1966:
ss. 3(1), 1(3) and 28(1) - Land acquisition by the Karnataka
Industrial Area Development Board for two companies, the appellant
company and its fully owned subsidiary for setting up an iron ore
plant - Issuance of Notification u/ss. 1(3), 3(1) and 28(1) of the
1966 Act for land acquisition - Objections invited from land owners
u/s. 28(3) of 1966 Act - Objections duly considered - Thereafter,
notifications u/s. 28(4) of 1966 Act was issued for a total area
required by the appellant company - Similar notifications were issued
for the land required for the subsidiary company - Compensation
also determined - Writ Petitions filed seeking quashing of the
notifications issued u/s. 28(4) of the 1966 Act for the appellant
company and its fully owned subsidiary - More than 90 per cent of
the land owners covering 90 per cent of the area acquired accepted
the compensation - Only 10 per cent or less of the land owners had
filed the said writ petitions - Challenge was also made to the grant
u/ss. 1(3) and 3(1) of the 1966 Act - Single Judge dismissed all the
petitions filed by land owners - However, the Division Bench
quashed the acquisition proceedings for the entire areas which was
not even challenged - Also quashed the notifications issued u/ss.
1(3), 3(1) and 28(1) of the 1966 Act - On appeal, held - Division
Bench erred in quashing the acquisition proceeding - Karnataka
Industries (Facilitation) Act, 2002.
Acquisition of land, in absence of environmental clearance -
Permissibility of - Plea that two companies did not have any
Environmental Clearance, in the absence of which the land could
not have been acquired for setting up the plant - Held : No objection
can be raised that there is no environmental clearance certificate
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from the Ministry of Environment and Forest as the same has already
been issued on 23.09.2016.
Land acquisition, if vitiated for non-application of mind and
undue haste by competent authorities - Held : No grounds were
raised nor any foundation laid in the petitions alleging mala fide -
Object of the 2002 Act was primarily to provide a Single Window
Clearance by the High Level Committees constituted under the 2002
Act - Reports and recommendations of the different Committees as
also the State Government have been gone through - Found that
all aspects of the matter have been considered and a conscious
decision has been taken on the overall conspectus of the project
and the proposals submitted.
s. 3(1), 1(3), 28(1) - Procedure prescribed to acquire land
under - Duly followed or not - Held: Entire process as provided
under the Act has been strictly followed - Division Bench in the
impugned judgment apparently was swayed by its own personal
views based on assumptions and having no material backing which
led to the quashing of the notifications.
ss. 28, 41 - Allotment of plots in special cases - Land
Acquisition for single company, if can be said to be for public
purpose and could be made under 1966 Act - Held : Under the
Regulation 13, the Board is empowered to allot any plot or area to
any individual or company for establishment of an industry in
consultation with the State Government - This provision also
contemplates acquiring land for the purpose of allotment to a single
company to set up an industry - In the instant case, the allotment by
the Board is duly approved by the State Government.
Land acquisition for a non-applicant company under the Act,
without its application being routed through State High Level
Clearance Committee - Permissibility of - Held : Non-applicant
company is fully owned subsidiary of the applicant company - Only
change sought by the applicant was the integrated steel plant be
set up by non-applicant which was its own subsidiary - These are
commercial matters and the State after examining the proposal for
change in its wisdom accepted the same - There was no change i

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 [2022] 14 S.C.R. 591
M/S. M.S.P.L. LIMITED
v.
THE STATE OF KARNATAKA AND ORS.
(Civil Appeal No(s). 4678 of 2021)
OCTOBER 11, 2022
[HEMANT GUPTA AND VIKRAM NATH, JJ.]
Land Acquisition :
Karnataka Industrial Areas Development Act, 1966:
ss. 3(1), 1(3) and 28(1) - Land acquisition by the Karnataka
Industrial Area Development Board for two companies, the appellant
company and its fully owned subsidiary for setting up an iron ore
plant - Issuance of Notification u/ss. 1(3), 3(1) and 28(1) of the
1966 Act for land acquisition - Objections invited from land owners
u/s. 28(3) of 1966 Act - Objections duly considered - Thereafter,
notifications u/s. 28(4) of 1966 Act was issued for a total area
required by the appellant company - Similar notifications were issued
for the land required for the subsidiary company - Compensation
also determined - Writ Petitions filed seeking quashing of the
notifications issued u/s. 28(4) of the 1966 Act for the appellant
company and its fully owned subsidiary - More than 90 per cent of
the land owners covering 90 per cent of the area acquired accepted
the compensation - Only 10 per cent or less of the land owners had
filed the said writ petitions - Challenge was also made to the grant
u/ss. 1(3) and 3(1) of the 1966 Act - Single Judge dismissed all the
petitions filed by land owners - However, the Division Bench
quashed the acquisition proceedings for the entire areas which was
not even challenged - Also quashed the notifications issued u/ss.
1(3), 3(1) and 28(1) of the 1966 Act - On appeal, held - Division
Bench erred in quashing the acquisition proceeding - Karnataka
Industries (Facilitation) Act, 2002.
Acquisition of land, in absence of environmental clearance -
Permissibility of - Plea that two companies did not have any
Environmental Clearance, in the absence of which the land could
not have been acquired for setting up the plant - Held : No objection
can be raised that there is no environmental clearance certificate
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from the Ministry of Environment and Forest as the same has already
been issued on 23.09.2016.
Land acquisition, if vitiated for non-application of mind and
undue haste by competent authorities - Held : No grounds were
raised nor any foundation laid in the petitions alleging mala fide -
Object of the 2002 Act was primarily to provide a Single Window
Clearance by the High Level Committees constituted under the 2002
Act - Reports and recommendations of the different Committees as
also the State Government have been gone through - Found that
all aspects of the matter have been considered and a conscious
decision has been taken on the overall conspectus of the project
and the proposals submitted.
s. 3(1), 1(3), 28(1) - Procedure prescribed to acquire land
under - Duly followed or not - Held: Entire process as provided
under the Act has been strictly followed - Division Bench in the
impugned judgment apparently was swayed by its own personal
views based on assumptions and having no material backing which
led to the quashing of the notifications.
ss. 28, 41 - Allotment of plots in special cases - Land
Acquisition for single company, if can be said to be for public
purpose and could be made under 1966 Act - Held : Under the
Regulation 13, the Board is empowered to allot any plot or area to
any individual or company for establishment of an industry in
consultation with the State Government - This provision also
contemplates acquiring land for the purpose of allotment to a single
company to set up an industry - In the instant case, the allotment by
the Board is duly approved by the State Government.
Land acquisition for a non-applicant company under the Act,
without its application being routed through State High Level
Clearance Committee - Permissibility of - Held : Non-applicant
company is fully owned subsidiary of the applicant company - Only
change sought by the applicant was the integrated steel plant be
set up by non-applicant which was its own subsidiary - These are
commercial matters and the State after examining the proposal for
change in its wisdom accepted the same - There was no change in
the project, as such, regarding the finance, employment and other
infrastructures - Thus, the said objection not maintainable.
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Reliance on Shri Ramtanu Coop. Housing Society Ltd. vs. State
of Maharashtra's case for the proposition that the acquisition under
the 1966 Act was in pari materia to the Maharashtra Industrial
Development Act, 1962 and, thus, the acquisition has to be for public
purpose only and not for a private company - Correctness of -
Held : Validity of the 1962 Act was being considered in the case of
Shri Ramtanu - However, in the present litigation, there is no
challenge to the validity of the 1966 Act or the 2002 Act - Purpose
in 1962 Act was for establishment of industrial areas whereas in
the other statute i.e 1966 Act, it was for promotion of the
establishment and orderly development of industries - Thus, the
reliance by the Division Bench in the impugned judgment on the
case of Shri Ramtanu is misplaced - Maharashtra Industrial
Development Act, 1962.
Value judgments of policy views - Significance of -
Conclusions arrived at in the impugned judgment, if vitiated on
account of inclusion of value judgments of policy views by the High
Court - Held : Division Bench introduced several value judgments
and policy views in order to interpret the provisions of the 1966 Act
and the 2002 Act - Such value judgments and policy views are
beyond the domain of the Court - Courts should refrain itself from
expressing value judgments and policy views in order to interpret
statutes - Statutes are to be read in their plain language and not
otherwise - Interpretation of Statutes.
Petition for quashing the land acquisition by a fraction of
landowners holding a fraction of acquired land which is only 10 %
or less of the total acquired land - Maintainability of - Held :
Quashing the entire acquisition at the instance of one land owner
having 4.34 acres of land out of total acquisition for applicant
company of 110 acres, would be against the public policy and public
interest - Further, in the case of non-applicant company acquisition
of 914 acres is challenged by a fraction of less than 10% land
owners - Hence, Division Bench erred in quashing the acquisition
proceedings.
Karnataka Industrial Areas Development Act, 1966 -
Karnataka Industries (Facilitation) Act, 2002 - Object/scope -
Discussed.
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS.
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Disposing of the matters, the Court
HELD : A. Environmental Clearance.
1. On record environmental clearance has been given on
23.09.2016 by the Ministry of Environment and Forests,
Government of India, copy of which has been filed along with I.A.
in the appeal of MSPL. Prior to it, the Ministry itself vide
Notification dated 14.09.2006 provided that no Environment
Clearance from MOEF was required for securing land. KSPCB
had given its clearance and no objection much earlier for setting
up the plant vide communication dated 02.08.2008. Further, the
Ecology and Environmental Department of Government of
Karnataka had given clearance on 01.10.2010. Further, the
Ministry of MOEF had issued an order dated 08.09.2014
providing that the plant may be continued to operate. Thereafter,
the KSPCB issued an order dated 16.10.2014 requiring MSPL
to apply for Terms of Reference by 07.12.2014 and to obtain
environment clearance from MOEF within one year. The MSPL
accordingly applied as per the Terms of Reference and was
granted the environment clearance by MOEF vide communication
dated 23.09.2016. In view of the said facts, as of date, no objection
can be raised that there is no environmental clearance certificate
from the Ministry of Environment and Forest as the same has
already been issued on 23.09.2016. [Para 25][624-H; 625-A-D]
B. Non--application of mind and undue haste.
2.1 The SHLCC after considering all aspects of the matter
had resolved to approve the project and had made
recommendations accordingly. Thereafter, the KIADB accepted
the recommendations of the SHLCC and the same also had due
approval of the Government at the highest level. The division
made by MSPL (the initial applicant) for setting up the two
industries by two different entities also had due approval of the
KIADB and the Government. [Para 26][625-D-E]
2.2 The original writ petitioners (land owners) had
challenged the notifications under Section 1(3), 3(1) and 28(1) of
the 1966 Act on the ground of non-application of mind and undue
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haste. No grounds were raised nor any foundation laid in the
petitions alleging mala fide. The object of the 2002 Act was
primarily to provide a Single Window Clearance by the High Level
Committees constituted under the 2002 Act. The Court has gone
through the reports and recommendations of the different
Committees as also the State Government and found that all
aspects of the matter have been considered and a conscious
decision has been taken on the overall conspectus of the project
and the proposals submitted. [Para 27][625-F-H]
2.3 The meeting of the SHLCC dated 06.06.2005 was
chaired by the Chief Minister, State of Karnataka, the concerned
Ministers and Secretaries were also present in the meeting. The
complete project was discussed under different heads including
the background of the promoters, background of the company,
means of finance, infrastructure facilities, environment and
pollution control clearances, local employment, water
consumption, electricity consumption and incentives &
concessions. The Government Order, thereafter, was issued on
22.12.2005 detailing the different facets of the proposal and
granting due approval for establishment of the palletization plant
as also the integrated steel plant with a total investment of
2292.26 crores and generating employment to one thousand
persons. Thereafter, under the provisions of 1966 Act, the Land
Audit Committee in its meeting of 28th January, 2006, which was
chaired by the Principal Secretary, Department of Commerce &
Industries and Secretaries of other relevant Departments with
special invitees also took a conscious decision with respect to
the project submitted by MSPL for both the plants at subject
Item No.2.5 and recommended for acquisition of 1034 acres of
land and to intimate the same to the KIADB. It was thereafter
that the Nodal Agency of the State level i.e. Karnataka Udyog
Mitra in its meeting dated 15.02.2006 after considering the
proceedings of the SHLCC dated 6th June, 2005 and that of the
Land Audit Committee dated 28.01.2006 accepted the
recommendation for acquisition of 1034 acres of land.[Paras 2830][626-A-E]
2.4 In view thereof, the finding in the impugned judgment
regarding non-application of mind and the submission to the said
effect cannot be sustained. [Para 32][628-A]
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS.
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2.5 Insofar as the notifications under Section 1(3), 3(1) and
28(1) of 1966 Act being issued on the same date, it may be noted
that there is no embargo on the same. [Para 33][628-B]
C. Procedure Prescribed under the 1966 Act duly followed:
3.1 The due procedure had been followed. It is also to be
noticed that the objections were invited under the procedure
prescribed in Section 28 of the 1966 Act and the same were duly
considered and disposed of, as such, it cannot be alleged that the
objections have not been considered vitiating the acquisitions.
The Land Audit Committee approved the grant of 1034 acres of
land in its meeting dated 28.01.2006, which was duly accepted
and approved by the State Nodal Agency, Karnataka Udyog Mitra
in its meeting dated 15.02.2006 and duly communicated vide letter
of even date to the KIADB to start the process for acquisition. It
was thereafter that the notifications were issued under Section
3(1), 1(3) and 28(1) of the 1966 Act, on 09.11.2006. Simultaneous
publication of the said notifications has already been upheld to
be not suffering from any illegality or irregularity. [Para 35][628G-H; 629-A-B]
3.2 Pursuant to the notification under Section 28(1) of the
1966 Act, further steps were taken and after inviting objections
and disposing of the same, final declaration was made,
compensation was determined and thereafter possession taken.
From the material on record, it is apparent that the land was
acquired in the name of the State, thereafter transferred to the
KIADB, which proceeded to allot the same to MSPL and AISL
respectively and, accordingly, lease deeds were executed. The
entire process as provided under the Act has been strictly
followed. The Division Bench in the impugned judgment
apparently was swayed by its own personal views based on
assumptions and having no material backing which led to the
quashing of the notifications. [Para 36][629-B-D]
D. Acquisition for a Single Company
4. The words for the purpose of development by the Board,
and or for any other purpose in furtherance of the objects of this
Act make it amply clear that the intention to acquire land in the
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opinion of the State Government could be not only for the purpose
of development by the Board but for any other purpose in
furtherance of the objects of this Act. This gives power to acquire
land beyond development by KIADB. Further, the regulations
framed by the Board under Section 41 particularly deal with this
aspect in Regulation 13. Under the above regulations, the Board
is empowered to allot any plot or area to any individual or company
for establishment of an industry in consultation with the State
Government. This provision also contemplates acquiring land for
the purpose of allotment to a single company to set up an industry.
In the instant case, the allotment by the Board is duly approved
by the State Government. Therefore, the view expressed by the
Division Bench that no acquisition could be made for a single
company cannot be sustained. [Paras 37, 38, 40][629-F-G; 630B-C; 632-F-G]
E. Acquisition for a non--applicant (AISL).
5. It is not disputed that AISL (non-applicant) is fully owned
subsidiary of MSPL (applicant). In effect, AISL is a new Company
promoted by the same promoters. The State Government
examined the request of MSPL and also AISL for modification of
its Government Order dated 22.12.2005. It examined the
bifurcation under various heads. State Government issued
Government Order dated 22.03.2006 splitting the infrastructures
required with further stipulation that all other terms and conditions
mentioned in the Government Order dated 22.12.2005 would
apply as it is to both the Companies. The only change sought by
MSPL was the integrated steel plant be set up by AISL which
was its own subsidiary. These are commercial matters and the
State after examining the proposal for change in its wisdom
accepted the same. There was no change in the project, as such,
regarding the finance, employment and other infrastructures. The
objection raised to the aforesaid effect does not merit
consideration. [Para 41][632-G-H; 633-A-B]
F. Relevance of Shri Ramtanu judgment:
6. The impugned judgment has placed reliance upon the
judgment in the case of Shri Ramtanu for the proposition that the
acquisition under the 1966 Act was in pari materia to the
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS.
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Maharashtra Industrial Development Act, 1962 and, therefore,
the acquisition has to be for public purpose only and not for a
private company. It may be recorded that validity of the 1962 Act
was being considered in the case of Shri Ramtanu. In the present
litigation, there is no challenge to the validity of the 1966 Act or
the 2002 Act. Further, the object and purpose of the 1962 Act
was for securing the orderly establishment in industrial areas
and industrial State of industries in the State of Maharashtra
whereas the 1966 Act, the object and preamble was to promote
the establishment and orderly development of industries (in
industrial areas). Thus, it is to be noticed that the purpose in
1962 Act was for establishment of industrial areas whereas in the
other statute i.e 1966 Act, it was for promotion of the
establishment and orderly development of industries. Thus, the
reliance by the Division Bench in the impugned judgment on the
case of Shri Ramtanu is misplaced. [Para 42, 43][633-C-E; 634G-H]
G. Value Judgments of policy views
7. The Division Bench in the impugned judgment seems to
have been swayed by its own philosophy in due deference to the
principles of statutory interpretation. The statute is to be read in
its plain language. Setting up of industries is part of development.
There has to be a sustainable growth and existence of all facets
and, that is why, laws have been framed, cheques and balance
have been imposed so that development takes place side by side
with the protection and preservation of nature and environment.
A perusal of the above makes it amply clear that the Division
Bench introduced several value judgments and policy views in
order to interpret the provisions of the 1966 Act and the 2002
Act. It is only as a measure of caution that the said aspect is
being taken note of. Such value judgments and policy views are
beyond the domain of the Courts. The Courts should refrain itself
from expressing value judgments and policy views in order to
interpret statutes. Statutes are to be read in their plain language
and not otherwise. [Para 44, 45][635-A-B; 636-B-C]
H. Challenge to acquisition by a minority (10%) of land
owners.
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8. It is admitted position that the challenge to the acquisition
of more than a thousand acres was made by a small fraction of
land owners having land less than 10% of the total acquisition.
Compensation for rest of the 90% land acquired had been
accepted by their respective land owners. The Division Bench
has quashed the entire acquisition of more than a thousand acres
at the instance of such a small fraction. Out of approx 110 acres
of land acquires for MSPL, only one land owner possessing only
4.34 acres of land, had filed the writ appeal before the Division
Bench. Quashing the entire acquisition at the instance of one
land owner having 4.34 acres of land out of total acquisition for
MSPL of 110 acres, would be against the public policy and public
interest. The MSPL alone provides employment to 292 persons
with a substantial investment of Rs.200 crores. The employment
to approximately 300 persons by MSPL is also alleged to be
double of the number of employees as projected in the proposal.
Further, in the case of AISL acquisition of 914 acres is challenged
by a fraction of less than 10% land owners. The estimated project
of AISL is approx Rs.2092 crores and would employment to at
least one thousand persons. In view thereof, the Division Bench
committed an error in quashing the acquisition proceedings. The
judgment of the Division Bench is set aside and the writ petitions
stand dismissed as ordered by the Single Judge. [Para 46- 48][636G; 637-A-E]
Shri Ramtanu Co-op.Housing Society Ltd. v. State of
Maharashtra (1970) 3 SCC 323 : [1971] 1 SCR 719;
Chairman & MD, BPL Ltd. v. S.P. Gururaja (2003) 8
SCC 567 : [2003] 4 Suppl. SCR 587; Deputy General
Manager (HRM) and another v. Mudappa and others
(2007) (9) SCC 768 : [2007] 2 SCR 363; Narayanappa
v. State of Karnataka (2006) 7 SCC 578 : [2006] 4
Suppl. SCR 716; Amarjit Singh v. State of Punjab
(2010) 10 SCC 43 : [2010] 12 SCR 163; Om Prakash
v. State of U.P. (1998) 6 SCC 1 : [1998] 3 SCR 64 -
referred to.
Case Law Reference
[1971] 1 SCR 719
referred to
Para 24
[2003] 4 Suppl. SCR 587
referred to
Para 31
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS.
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[2007] 2 SCR 363
referred to
Para 33
[2006] 4 Suppl. SCR 716
referred to
Para 39
[2010] 12 SCR 163
referred to
Para 46
[1998] 3 SCR 64
referred to
Para 46
CIVIL APPELLATE JURISDICTION : Civil Appeal No.4678
of 2021.
From the Judgment and Orders dated 22.03.2012 of the High
Court of Karnataka at Circuit Bench at Dharwad in Writ Appeal No.6224
of 2009 (LA-KIADB)
With
Civil Appeal Nos.7167 Of 2022, 4699-4719, 4679-4698, 4745-4747
of 2021.
Ranjit Kumar, Gurukrishna Kumar, Shekhar S. Naphade, Udaya
Holla, Krishnan Venugopal, Ms. Kiran Suri, Sr. Advs., A.V.S. Raju, D.
Srinivas, Krishan Pal Mavi, S.K. Kulkarni, M. Gireesh Kumar, Ankur S.
Kulkarni, Ms. Uditha Chakravarthy, G.V. Chandrashekar, N.K. Verma,
Ms. Anjana Chandrashekar, P. V. Dinesh, Ashwini Kumar Singh, Bineesh
K., Rahul Raj Mishra, Somanatha Padhan, Mrs. Shubhangi Tuli, V. N.
Raghupathy, Balaji Srinivasan, Nishanth Patil, M.V. Mukunda, Guntur
Prabhakar, Dr. P. V. Saravanaraja, Anantha Narayana M.G., Ms.
Aishwarya Dash, Ms. Farah Hashm, Dr. Prashant Pratap, Kumar
Mitakshar, Ajit S. Bhasme, Sanjay Kumar Visen, Suresh Kumar Bhan,
Ms. Asmita Dwivedi, Ms. Swati Yadav, Mahesh Agarwal, M.S. Ananth,
Rohan Talwar, Shaswat Singh, E. C. Agrawala, Nishanth Patil, Ms.
Aishwarya Kumar, Advs. for the appearing parties.
The Judgment of the Court was delivered by
VIKRAM NATH, J.
1. Leave granted in SLP(C) No. 23351/2012.
2. The State of Karnataka (Civil Appeal No. 4745-4747 of 2021),
the Karnataka Industrial Area Development Board (Civil Appeal No.
4699-4719 of 2021), M/S MSPL Limited (Civil Appeal No. 4678 of 2021)
and AARESS Iron & Steel Limited (Civil Appeal No. 4679-4698 of
2021) have jointly assailed the correctness of the judgement and order
dated 22.03.2012 passed by the Division Bench of the Karnataka High
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Court, Circuit Bench at Dharwad in a group of writ appeals filed by the
land owners. By the said judgment, the Division Bench allowed the writ
appeals, set aside the order of the learned Single Judge dated 17.03.2009
and the writ petitions were allowed. The notifications under Sections
3(1), 1(3) and 28(1) of the Karnataka Industrial Areas Development
Act, 19661 were quashed.
3. Civil Appeal @ SLP (C) No. 23351 of 2012 is filed by a land
owner Syed Ahmed challenging the judgment dated 14.12.2011 passed
by the Division Bench of the Karnataka High Court, Circuit Bench at
Dharwad in Writ Appeal No. 6098 of 2009 whereby the writ appeal was
dismissed and the judgement of the learned Single Judge dated 23.06.2008
dismissing the writ petition {bearing number W.P.No. 18617 of 2007
(LA-KIDAB)} was affirmed. As the argument of the appellant is based
upon the Division Bench Judgement of the Karnataka High Court dated
22.03.2012 which is impugned in the group of Civil Appeals referred to
above, this matter has been taken up analogous with the above said
appeals.
Background
4. Two State Acts legislated in the State of Karnataka are relevant
for determination of issues in the present case. Karnataka Industrial
Areas Development Act, 1966 and the Karnataka Industries (Facilitation)
Act, 20022.
(i) The 1966 Act came up with the following preamble/object:
"An Act to make special provisions for securing the establishment
of industrial areas in the 1 [State of Karnataka]1 and generally to
promote the establishment and orderly development of industries
therein, and for that purpose to establish an Industrial Areas
Development Board and for purposes connected with the matters
aforesaid. WHEREAS it is expedient to make special provisions
for securing the establishment of industrial areas in the 1 [State of
Karnataka]1 and generally to promote the establishment and the
orderly development of industries in such industrial areas, and for
that purpose to establish an Industrial Areas Development Board
and for purposes connected with the matters aforesaid;"
(ii) The 2002 Act was enacted with the following preamble/object:
1 In short "the 1966 Act"
2 In short "the 2002 Act"
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS. [VIKRAM NATH, J.]
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"An Act to provide for the promotion of industrial development
and facilitation of new investments to simplify the regulatory
frame work by reducing procedural requirements and
rationalising documents and to provide for an investor friendly
environment in the State of Karnataka. Whereas, it is expedient
to provide for speedy implementation of industrial and other
projects in the State by providing single point guidance and
assistance to promoters, reducing the procedural requirements,
rationalising documents and to ensure smooth operation;"
5. The acquisition is for two companies viz. M/s MSPL Ltd.3 and
M/s AARESS Iron and Steel Ltd.4, for setting up an iron ore palletisation
plant and an integrated steel plant respectively.
6. Before setting out the facts it is relevant to note that challenge
to the notifications under Section 1(3) and 3(1) of 1966 Act is made only
in W.P. No.6304 of 2008. This petition relates to the land acquired for
MSPL. The land owner in this petition S. Narayana Reddy owned only
4.35 acres whereas the total land acquired for MSPL was approx: 110
acres. Thus, S.Narayana Reddy owned a fraction of land being less
than 4% of the total acquisition for MSPL. Rest of the 10 petitions
challenged the notification under Section 28 of 1966 Act. The writ
petitioners therein in all the 10 petitions held less than 10% of the total
land acquired for AISL. For sake of convenience facts from the appeal
of MSPL have been recorded. It covers the relevant facts of the AISL
appeal also.
Chronology of events:
i.
MSPL moved an application on 23.03.2005 before the State
High Level Clearance Committee5 under the 2002 Act for
approval of project to set up palletisation plant and an
integrated steel plant in Koppal Taluk of Koppal District in
the State of Karnataka.
ii.
The SHLCC in its meeting dated 06.06.2005 approved the
proposal of the project of MSPL to establish 1.20 million
TPA iron ore pellet plant and 1 million TPA speciality steel
plant (an integrated steel plant with an initial capacity of 1
3 In short "MSPL"
4 In short "AISL"
35 In short "SHLCC"
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million TPA) with a total cost of Rs. 2296.26 Crores for
both the plants.
iii.
The SHLCC also approved infrastructural facilities for the
aforesaid project which included acquisition of 1034 acres
of land by Karnataka Industrial Area Development Board63
setup under the 1966 Act.
iv.
Government of Karnataka on the aforementioned
recommendations issued a Government Order dated
22.12.2005 permitting MSPL to setup the project and also
approved the infrastructural facilities, including 1034 acres
of land to be acquired by the KIADB.
v.
MSPL on 04.01.2006 transferred all applications made to
the Government of Karnataka for setting up of palletisation
and iron and steel plant to AISL.
vi.
Consequent to the above, AISL on 09.01.2006 applied for
all applications submitted by MSPL to be transferred in its
name.
vii.
On 16.01.2006, a further restructuring was made by MSPL
and it was communicated to the Department of Industries
that the palletisation project was to be done by MSPL
whereas the iron and steel project was to be done by AISL.
viii.
On 28.01.2006, the Land Audit Committee granted approval
of 1034 acres of land for acquisition.
ix.
On 15.02.2006, Karnataka Udyog Mitra conveyed the
decision dated 28.01.2006 to KIADB to give 1034 acres of
land for the project.
x.
The Government of Karnataka issued another Government
Order dated 22.03.2006 modifying already approved project
for pellet plant in favour of the MSPL and integrated steel
plant in the name of AISL.
xi.
The State Government issued notifications under Section
1(3), 3(1) and 28(1) of the 1966 Act somewhere between
09.11.2006 till 07.05.2007.
xii.
The Karnataka State Pollution Control Board74on 19.10.2006
forwarded its inspection report for the palletisation plant of
MSPL.
 6 In short "KIADB"
47 In short KSPCB
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS. [VIKRAM NATH, J.]
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xiii.
The Special Land Acquisition Officer, KIADB on 20.11.2006
issued notice to the land owners under Section 28(2) of
1966 Act inviting their objections.
xiv.
On 12.04.2007, the Special Land Acquisition Office, KIADB
issued an order under Section 28 (3) of 1966 Act after
dealing with each of the objections.
xv.
Thereafter, notifications under Section 28(4) of 1966 Act
was issued on 17.05.2007, 13.03.2008 and 17.04.2007 for
a total area of 110 acres 24 guntas required by MSPL.
(Similar notifications were issued for the land required for
AISL)
xvi.
The compensation under Section 29 (2) of 1966 Act was
determined at a sum of Rs. 3,64,98,000/- for MSPL.
xvii.
The Special Land Acquisition Officer, KIADB issued its
orders determining compensation of land in two categories:
Rs. 3 lac per acre for dry land and Rs. 3.50 lacs per acre
for irrigated lands. The land owners were requested to
collect their compensation.
xviii. Writ Petition No. 10501 of 2007 and 10 other petitions were
filed praying for quashing of the notifications issued under
Section 28(4) of the 1966 Act for MSPL and AISL. It would
be relevant to mention that more than 90 per cent of the
land owners covering 90 per cent of the area acquired
accepted the compensation. It was only 10 per cent or less
of the land owners who had filed the above 11 petitions. In
Writ Petition No. 6304 of 2008 challenge was also made to
the grant under Sections 1(3) and 3(1) of the 1966 Act.
The area of petitioners therein sought to be acquired is only
4 acres and 34 guntas. Further the Writ Petition No. 6304
of 2008 was with respect to the land for the pelletisation
plant being set up by MSPL The other 10 petitions were for
the land acquired for AISL.
xix.
On 31.01.2008, the Government of Karnataka issued an
order for transfer of land with respect to 110 acres and 24
guntas.
xx.
The transfer of possession took place on 10.03.2008 and
both the companies MSPL and AISL were handed over
possession.
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xxi.
MSPL entered into an agreement with KIADB on
11.03.2008.
xxii.
KSPCB gave its consent to MSPL to establish pellet plant
on 02.08.2008 and 01.12.2008.
xxiii. Further the Ecology and Environment Department of
Government of Karnataka gave environmental clearance
on 01.10.2010.
xxiv. On 17.03.2009, the learned Single Judge dismissed all the
11 petitions.
xxv.
Judgment of the Single Judge was challenged by way writ
appeals before the Division Bench.
xxvi. The Division Bench vide judgment dated 22.03.2012 allowed
the appeals and quashed the acquisition proceedings for
the entire areas which was not even challenged.
xxvii. Special Leave Petitions filed in this Court with a request
for interim order in favour of MSPL. This Court granted
interim protection on 27.07.2012 by staying operation of
the impugned judgment of the Division Bench.
xxviii. The Ministry of Environment and Forest issued an order
dated 08.09.2014 providing that the plant may be continued
to operate.
xxix. The KSPCB issued an order dated 16.10.2014 asking MSPL
to apply for Terms of Reference (TOR) by 07.12.2014 and
also to obtain environment clearance within one year.
xxx.
The Ministry of Environment and Forest vide letter dated
23.09.2016 communicated environmental clearance to
MSPL.
7. The above chronology of events is part of the written note of
the appellant MSPL. No objection has been taken by the respondents to
the said chronology.
Proceedings before the High Court:
8. Before the learned Single Judge, the learned counsels for land
owners had raised two points as recorded in paragraph 3 thereof; the
same is reproduced below:
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS. [VIKRAM NATH, J.]
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"Sri Mahabaleshwar Goud, learned counsel appearing on
behalf of some of the petitioners canvassed mainly two points:
(a) The State Government has not issued Notification under
Section 1(3) of the KIADB Act and consequently, Chapter 7
of the KIADB Act has not come into force in so far as it relates
to the present acquisition is concerned and therefore, the
acquisition notifications issued under Section 28(1) and 28(4)
of the KIADB Act are bad in the eye of law, and (b) the
acquisition is in respect of only one company and therefore,
the same is not for public purpose. According to him, it is the
case of colourable exercise of power and the action of the
respondents is fraudulent and therefore, the acquisition
proceedings vitiate."
9. Insofar as the first point was concerned regarding the absence
of notification under Section 1(3) of the 1966 Act, the learned counsel
appearing for KIADB produced the notification of the Government dated
09.01.2006 notifying that chapter VII of the 1966 Act would come into
force in the relevant area. Insofar as the second point is concerned that
the acquisition was only for one company and as such it could not be for
public purpose, the exercise being colourable exercise of power and the
action of respondents is fraudulent was dealt with by the learned Single
Judge in detail and relying upon the judgments of the Karnataka High
Court under the 1966 Act held that the second argument would also fail.
The learned Single Judge has also recorded in the last paragraph that
only 1/10 i.e. 10% of the land owners submitted their grievances by
filing the writ petitions. It further gave reasons for not accepting their
challenge in larger public interest relying upon a judgment of this Court.
The last paragraph of the judgment of learned Single Judge is reproduced
hereinbelow:
"As aforementioned, the owners of only 1/10th of the lands
which are sought to be acquired are agitating their grievances
by filing these writ petitions. If the Notifications under Section
28(1) and Section 28(4) of the KIADB Act are set aside, qua
these pockets of lands, then the entire development activity in
the industrial area will come to a grinding halt and that would
not be in the interest of anyone. It is not advisable nor feasible
to interfere with the acquisition of such a large tract of lands
when the occupants of 9/10th of the acquired lands have not
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thought it fit to challenge the acquisition proceedings. The
aforesaid view of mine is supported by the judgement of the
Apex Court in the case of OM PRAKASH AND ANOTHER -
vs- STATE OF U.P. AND OTEHRS ((1998) 6 SCC PAGE-1).
The individual's right of the land owner must yield place to
the larger public purposes. In view of the same, this Court
declines to interfere I the acquisition proceedings."
10. The Division Bench allowed the appeals, and after setting
aside the judgement of the learned Single Judge proceeded to quash the
acquisition proceedings. In paragraph 127, the Division Bench recorded
its conclusions which are reproduced hereunder:
"127. In the result, we sum up our conclusions as under:
i) In the Indian context, Judicial review of administrative
action is much more precise, pervasive and accurate than as
contemplated either under the English legal system or as
developed in the American legal system. In the wake of our
country having a written Constitution and laws made by
competent legislatures, judicial review of administrative action
is not merely confined to the question of decision making
process on the parameters of the same being affected or
vitiated due to unreasonableness, arbitrariness or
irrationality, which concepts are not capable of a precise
definition though many erudite authors have made good
contributions and administrative law is very much part of
jurisprudence but is on more substantial and precise
parameters such as on the touchstone of the statutory
provisions and the constitutional provisions and therefore any
decision and the process of making such a decision, if is not
in conformity with the relevant statutory provisions and the
constitutional provisions, the decision is affected and cannot
be sustained.
ii) Acquisition of private lands even for a public purpose,
while should always be in conformity with the laws governing
acquisition proceedings and existence of public purpose
which subserve a public interest is a sine quo none of such
acquisition proceedings, in a situation where acquisition is
of private agricultural lands belonging to agriculturists and
has the effect of affecting their very livelihood and depriving
M/S. M.S.P.L. LIMITED v. THE STATE OF KARNATAKA
AND ORS. [VIKRAM NATH, J.]
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them of their avocation, then the acquisition proceedings will
have to be tested even on the touchstone of the constitutional
provisions such as Articles 14, 21 and 300A of the Constitution
of India and though there is no corresponding safeguard as
is provided under Article 22 of the Constitution of India visavis violations of Article 21, nevertheless, Courts will have to
apply the test of strict compliance with procedural
requirements and any deviation even from procedural
requirement will vitiate acquisition proceedings.
iii) Acquisition of lands under the provisions of the Karnataka
Industrial Areas Development Act, 1966 can only be for the
purpose of developing the subject lands as an industrial area
and by the Board and cannot be for the benefit of a private
industry or company or companies, particularly as the
notifications issued under the provisions of 1, 3 and 28 of
the Act, proclaiming that the subject lands are notified for
acquisition for the purpose of the board and when once it is
so, handing over of such lands to a private industrialist
amounts to an instance of improper exercise of power and
for a purpose other than the published and stated purpose,
but more importantly, distribution of such acquired land,
whether after development or before development, being in
the nature of distribution of largesse of the State, amounts to
depriving equal opportunity to all aspirants, who propose to
set up industries in industrial areas and when the State hands
over acquired lands to a private individual, it is therefore
violative of the equality clause in the Constitution of India.
In this regard, statement of law as enunciated in the single
bench decision of this Court in the case of Heggappanavara
[supra], later followed by another learned Single Judge in
the case of N. Somashekar [supra], on the basis of the
judgment of the Supreme Court in the case of RAMTANU
[supra], does not state the correct legal position as indicated
in para 21 of the judgment of the constitutional bench of the
Supreme Court, reading as under:
21. 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
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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 the Land
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, development and organisation of
industries in the State of Maharashtra. The Act has its own
procedure and there is no provision in the Act for
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 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 estates 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.