Paragraph numbers below are the court’s original numbering, recovered from the source text.
30. As held in State of Punjab v. Gurdial Singh (Supra) when a custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, such exercise is nothing but colourable exercise of power and that the power of the State to acquire lands of private persons compulsorily cannot be overstretched to legitimize a patently illegal and fraudulent exercise undertaken to favour certain private persons. This principle has been followed consistently. While dealing with fact situation arising in the context of exercise of power under the provisions of the Act and its interplay with the power under the provisions of the Haryana Act and the concerned policies, the 20 (2003) 8 SCC 648 21 (2005) 3 SCC 738 observations of this Court in the decision in Uddar Gagan (supra) are crucial. They cull out principles that entertaining an application for releasing of land in favour of a builder who came into picture after acquisition had been initiated amounts to transfer of resources of poor for the benefit of the rich and that no legitimacy can be conferred to an abuse of power to advance such purpose. Further, mala fides could be inferred from undisputed facts even without naming a particular officer. But the salutary principle discernable from Uddar Gagan (supra) lies in the relief granted by this Court in paragraph 33. This Court agreed with the High Court that there was fraud on power but did not sustain the relief of return of lands to the landholders. The real victim of abuse of power or fraud on power was “public interest”; for furtherance of which the acquisition was sustained and appropriate directions were passed. This Court therefore severed that part which was found to be bad but sustained acquisition to sub-serve “public interest”.
31. If we consider the established or crystallized facets of the matter as stated above, in the light of the principles emerging from the decisions rendered by this Court, in our considered view the decisions dated 24.08.2007 and 29.01.2010 were taken to confer advantages and benefits upon the builders/private entities rather than to carry out or effectuate public purpose. The record indicates that various entities including certain “middlemen” cornered unnatural gains and walked away with huge profits taking the entire process of acquisition for a ride. Substantial sums have exchanged hands in the form of settlement money. All the steps and stages show that the builders/private entities were well aware that the acquisition would not go through but the landholders were confronted with the smoke screen of acquisition and were cornered and persuaded in entering into transactions with the builders/private entities. The transactions so entered into between the landholders and the concerned builders/private entities could not be said to be voluntary and free from any influence. The unnatural and unreasonable bargain was forced upon the landholders by creating façade of impending acquisition. Public Interest was not the underlying concern or objective behind those decisions dated 24.08.2007 and 29.01.2010 but the motive was to confer undue advantage on the builders/private entities. It is clear that considerations other than those which were required to be bestowed, guided the exercise of power in arriving at decisions dated 24.08.2007 and 29.01.2010. The inescapable conclusion, therefore, is that there was RAMESHWAR v. STATE OF HARYANA [UDAY UMESH LALIT, J.] an unholy nexus between the governmental machinery and the builders/ private entities in devising a modality to deprive the innocent and gullible landholders of their holdings and jeopardize public interest which the acquisition was intended to achieve. Mr. Dhruv Mehta, learned Senior Advocate is right in his submission that the entire mechanism was deliberately employed so that gullible landholders could be deprived of their holdings by a set of builders/private entities and after having seen that the desired result was achieved, the acquisition was dropped and later completely withdrawn. The decisions on the part of the State arrived at on 24.08.2007 and 29.01.2010 were clearly a result of fraud on power and cannot be said to be bona fide exercise of power. In our view, the initiation of class action and filing of Writ Petition in the present matter was perfectly justified and we reject all the submissions made by the learned Counsel appearing for various builders/private entities.
32. We thus hold that:- a] The transactions entered into between the landholders and the concerned builders/private entities in the present case were not voluntary and were brought about by fraudulent influence. Certain ‘middlemen’ and builders enriched themselves at the expense of the landholders and public interest which was to be achieved by acquisition. b] The decisions dated 24.08.2007 and 29.01.2010 as well as entertaining of applications for grant of licence from those who had bought the lands after the acquisition was initiated, were not bona fide exercise of power by the State machinery. The exercise of power under the Act was guided by considerations extraneous to the provisions of the Act and as a matter of fact, was designed to enrich the builders/private entities. These decisions were nothing but fraud on power.
33. Having so found that the exercise of power in arriving at decisions dated 24.08.2007 and 29.01.2010 as well as entertaining of applications for licence from those who had bought the lands after the acquisition was initiated, to be fraud on power; we now have to consider what relief be granted in the present matter. The relief to be granted must depend upon who the real victim is and to what extent solace can be granted to such real victim. If the landholders are considered to be the real victim, Mr. Dhruv Mehta, learned Senior Advocate is absolutely right in his submissions. If the result of forcing land holders to enter into unnatural and unreasonable bargain was achieved by wrongful utilization of the power conferred under the Act, in its writ jurisdiction a superior court would be justified in granting the relief of invalidating such transaction as a consequential relief, while holding the State action to be bad and invalid. The law laid down by this Court is quite clear and the objection that instead of a class action in the realm of public law, each individual land holder must make good his submissions on individual facts and seek relief of annulment of transaction entered into by him has to be rejected. To the extent the unnatural and unreasonable bargain was forced upon the landholders, there would be justification in granting such relief. But in the circumstances, the public interest which the acquisition was intended to achieve will never be sub-served. It is nobody’s case that public interest was adequately achieved and therefore the acquisition was required to be dropped. The fact that other acquisitions have been completed and have attained the required objective is a pointer in the direction that there was nothing wrong with the initiation but somewhere along while the process was on, it was completely hijacked by vested interests. We cannot, therefore, grant mere declaration invalidating the transaction and grant relief of restoring status ante. The real and substantial relief would be in restoring the situation where the process of acquisition is made free from such supervening vested interests and is enabled to achieve the objective that the acquisition was intended to sub-serve.
34. At this stage an aspect needs elaboration and clarification. In Uddar Gagan (supra) the proceedings for acquisition under the Act had culminated in passing of an award. After the declaration of award, the lands were withdrawn from acquisition under the provisions of Section 48 of the Act. In terms of the directions issued by this Court in paragraph 33 in Uddar Gagan (supra) the withdrawal under Section 48 of the Act was set aside and the acquisition and award were sustained by this Court. In essence therefore, the lands in question continued to be under acquisition and appropriate directions were thereafter passed by this Court adjusting the competing claims of the concerned parties. In the present case, unlike Uddar Gagan (supra) the acquisition was dropped just two days before the day the award was to be pronounced. It is true that the entire process right upto publishing the date for pronouncement of award was validly undertaken, every possible submission was placed on record and all contentions were taken by the persons or parties interested. It was not as if any person or any party was denied any RAMESHWAR v. STATE OF HARYANA [UDAY UMESH LALIT, J.] chance of raising objections or making submissions. The acquisition was dropped for reasons, which in our considered view were not germane at all and the entire exercise of dropping the acquisition was fraud on power. If that fraud on power is to be invalidated, the real and substantial restoration would be to ensure that the acquisition proceeds in the logical direction and the public purpose is sub-served. In a way, the directions required in the present matter may go beyond what Uddar Gagan (supra) did.
35. In certain cases this Court, considering typical fact situation has passed directions to complete the process of acquisition, for instance: (a) In Bhimandas Ambwani (Dead) through Lrs. V. Delhi Power Company Limited22 it was found, “there had been no proceedings regarding acquisition of the land in dispute”. However, as the authorities had taken over possession of the land and developed the same, this Court observed : “In such a fact situation, the only option left out to the respondents is to make the award treating Section 4 notification as, on this date i.e. 12.02.2013 and we direct the Land Acquisition Collector to make the award after hearing the parties within a period of four months from today.” (b) In K.B. Ramachandra Raje Urs(Dead) by L.Rs. V. State of Karnataka and Others23, having held that the acquisition and allotment of 55 acres of land to respondent No.28- Society to be contrary to law, it was noted that a full-fledged campus had come up in an area admeasuring 40 acres of land out of said 55 acres. It was therefore observed: “Insofar as the remaining 40 acres of land allotted to Respondent 28 is concerned, we direct that compensation, in respect thereof, to the person/persons entitled to receive such compensation under the Land Acquisition Act, will follow the outcome of Writ Appeal No.1654 of 2008. The compensation under the Act will be paid by taking the date of the order of the learned Single Judge of the High Court i.e. 22-2-2001.” Thus, in cases where there was no valid acquisition but the land was taken possession of and developed, restoration of land to the landholders was not found to be the appropriate, adequate and complete 22 (2013) 14 SCC 195 23 (2016) 3 SCC 422 relief and this Court directed that process of acquisition be initiated taking or treating certain date to be the relevant date for initiation of the acquisition. If the power can go to the extent of directing acquisition in such manner, in a case where an acquisition having been properly and validly initiated if the supervening circumstances show that there was complete fraud on power in dropping the acquisition, can the power of the superior court not extend to/not be extended for passing appropriate directions to complete the acquisition and sub-serve the public interest. But for such fraud on power, the matter in the present case was ripe for pronouncement of award when the acquisition was dropped just two days before the date of pronouncement. All the steps leading to the publication of date for pronouncement of award having been validly and correctly undertaken, can a direction not be passed that there was a deemed award and completed acquisition.
36. Wherever there has been fraud on power, the duty of the Court is not only to set aside such exercise of power but to see that there is no unjust enrichment directly or indirectly as a result thereof and there is full and substantial restoration. Going by the principles laid down by this Court in Indian Council for Enviro-Legal Action (Supra) unjust retention of benefit would be completely against the fundamental principles of justice, equity and good conscience. It was observed therein that so long as the deprivation of a party has not been fully compensated for, injustice to that extent continues. Having found that there was a clear case of fraud on power as a result of which unnatural and unreasonable gains have been derived by certain builders/private entities, we consider it our duty to grant full restitution. The restoration in real and substantial terms has to ensure that the public purpose, the acquisition was intended to achieve, stands sub-served. In our considered view, this is an appropriate case where this Court has to declare that there was a completed acquisition and the award deemed to have been passed on the date when it was supposed to be pronounced i.e. on 26.08.2007. The suggested relief by the learned Amicus Curiae is also on similar lines.
37. There are certain other elements which need attention at this stage. The Act now stands replaced by “The Right of Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013”. In terms of Section 24(1)(b) of said 2013 Act, where an award had been made under Section 11 of the Act, the proceedings under the provisions of the Act would continue as if the Act had not RAMESHWAR v. STATE OF HARYANA [UDAY UMESH LALIT, J.] been repealed. Thus, even if a direction is passed that an award be deemed to have been made on 26.08.2007, the provisions of the Act would still continue to operate in respect of such acquisition in question. There is however, one point which may pose some difficulty. Out of 688 acres of land which was covered by Declaration under Section 6 of the Act in the present matter, majority of the lands were taken over by builders/private entities and as such presently the concerned landholders are not in possession of their holdings. However, in case of certain other lands where no transactions were entered into, as a result of dropping of the acquisition, those land holders are presently in occupation without there being any cloud of acquisition. If we restore status ante where the entirety of 688 acres of land continues to be under acquisition, the interest of such landholders is bound to be put to some prejudice. Those landholders are not parties to this litigation, nor their interest in any manner, is represented in the proceedings. They would now be visited with the prospect of losing their holdings. Those who sold away their holdings to the builders/private entities after the acquisition was initiated, naturally would not be prejudiced at all nor can the builders/ private entities who purchased the land after the land was initiated can put up a plea of prejudice. However those who had never sold the holdings and continued to face the prospect of acquisition will certainly be put to prejudice. It is possible that some such landholders may have sold away their holdings or may have applied and secured licences for construction. In cases, where third party interests have thus intervened, there would be some more concern.
38. The relief to be granted in the matter has therefore to take care of all the aforesaid aspects. On one hand, the real and substantial relief to be granted in the matter would be not just restoring the status ante and invalidating of the transactions but the relief ought to be that the process of acquisition is taken to its logical end and the objective that said acquisition was to achieve must be sub-served. On the other hand, even while passing appropriate directions in the nature that there was a deemed Award, the interest of those landholders who had not parted with their holdings and had faced the acquisition and had not participated in the proceedings ought to be secured. Further, the interest of purchasers of individual apartments is also required to be protected. It is axiomatic that wherever a superior Court finds that the exercise of power by the executive was mala fide or that there was fraud of power, the full and substantial relief must be granted. The principles of restitution and concept of unjust enrichment as explained in cases referred to hereinabove show that no person who directly or indirectly was a party to the fraud of power be allowed to reap or retain any unjust enrichment. Though, it is through the acts on part of the landholders that the builders/private entities were brought on the scene, we don’t hold them to be pari delicto alongwith builders/private respondents. But at the same time they cannot be given benefit of annulment of transactions and restoration of their holdings. The greater victim in the matter was the public interest. The land holders in any case had received considerations which were greater than what was awarded in Awards dated 09.03.2006 and 24.02.2007, which were the most proximate awards in terms of time. However, even when we propose to take the matter to its logical end and say that there was a deemed award, those who had not sold away their holdings and had not in any manner either directly or indirectly, tried to jeopardize the process of acquisition, cannot at this length of time be subjected to any prejudice. We will therefore have to exclude that body of landholders who had not transferred their holdings unlike the writ petitioners and similarly situated landholders, so also the purchasers of individual apartments from the width of our directions. Though fraud vitiates every resultant action and on that principle every beneficiary/purchaser in subsequent transaction must restore such benefit, an exception has to be made in favour of individual purchasers of flats or apartments who are being left undisturbed while moulding the relief. Any payments made by them can be adjusted towards the amounts payable to the colonizer and their possession can be regularized by HUDA/HSIDC on suitable conditions by making allotment to them. This aspect will stand covered by directions issued hereafter.
39. Having bestowed our attention to various competing elements and issues we deem it appropriate to direct: (a) The decisions dated 24.08.2007 and 29.01.2010 referred to hereinabove are set aside as being brought about by mala fide exercise of power. In our considered view, those decisions were clear case of fraud on power and as such are annulled. (b) The decision dated 24.08.2007 was taken when the matters were already posted for pronouncement of the award on 26.08.2007. Since all the antecedent stages and steps prior thereto were properly and validly undertaken, and since the decision dated 24.08.2007 has been held by us to be an exercise of fraud on power, it is directed that an Award is deemed to have been passed on 26.08.2007 in respect of lands RAMESHWAR v. STATE OF HARYANA [UDAY UMESH LALIT, J.] (i) which were covered by declaration under Section 6 in the present case and (ii) which were transferred by the landholders during the period 27.08.2004 till 29.01.2010. The lands which were not transferred by the landholders during the period from 27.08.2004 till 29.01.2010 are not governed by these directions. (c) Subject to the directions issued hereafter, the lands covered under aforementioned direction (b) shall vest in the HUDA/HSIDC, as may be directed by the State of Haryana, free from all encumbrances. HUDA/HSIDC may forthwith take possession thereof. Consequently all licences granted in respect of lands covered by the deemed Award dated 26.08.2007 will stand transferred to HUDA/HSIDC. (d) Since the dropping of acquisition on 24.08.2007 and subsequent decision dated 29.01.2010 have been set aside, the period between 24.08.2007 and upto the date of this judgment shall not be counted for the purposes of Section 24(2) of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. (e) All transactions entered into during the period from 24.08.2007 till 29.01.2010, pursuant to which the original landholders transferred their holdings in favour of builders/private entities or third parties shall be subject to and the interest of the respective parties shall be governed by the directions issued hereafter. (f) Consistent with directions issued in Para 33 of Uddar Gagan (Supra), the builders/private entities will not be entitled to recover the consideration paid by them to the landholders. The sale consideration paid by the builders/private entities to the landholders shall be treated towards compensation under the award and the landholders will not be required to refund any amount to such builders/private entities. The landholders will be at liberty to prefer Reference under Section 18 of the Act within a period of three months from today. For the purposes of maintaining such Reference the reasoning that weighed while passing Awards dated 09.03.2006 and 24.02.2007 shall be the basis. If the Reference Court were to enhance the compensation, the amounts received by the landholders by way of consideration from the builders/ private entities shall be appropriated towards such sum awarded by the Reference Court. If the landholders are still entitled to something more than what they had received from the builders/private entities, the differential sum shall be made over to them by the State of Haryana towards acquisition of their interest in the lands in question. If however, what the landholders had received towards consideration from the builders/private entities is found to be in excess of what is awarded by the Reference Court, the remainder shall not be recovered from them. (g) Consistent with the directions issued by this Court in Paragraphs 33.6 and 33.7 in Uddar Gagan (supra), the builders/private entities will be entitled to refund/reimbursement of any payment made to the landholders or the amounts that had been spent on development of the land, such payments shall be made by HUDA or HSIDC on being satisfied about the extent of actual expenditure not exceeding HUDA or HSIDC norms on the subject as the case may be. Refund will however be in respect of amount at which the landholders sold the land and not of subsequent sales. As regards subsequent transactions, the subsequent purchasers will have remedies against their respective vendors. Claims of builders/private entities entitled to refund will be taken up after settling claims of third parties from whom the builders/private entities had collected monies. No interest will be payable on such amounts. (h) The third parties from whom money had been collected by the builder/private entities will either be entitled to refund of the amount from and out of and to the extent of the amount payable to the builder/ private entities in terms of above direction, available with the State, on their claims being verified or will be allotted the plots or apartments at the agreed price or prevalent price, whichever is higher. Every such claim shall be verified by HUDA or HSIDC. In cases where, constructions have been erected and the entire project is complete or is nearing completion, upon acceptance of the claim, the plots or apartments shall be made over to the respective claimants on the same terms and conditions. Except for such verified and accepted claims, the remaining area or apartments will be completely at the disposal of HUDA or HSIDC, as the case may be, which shall be free and competent to dispose of the same in accordance with the prevalent policy and procedure. In order to facilitate such exercise all third parties who had purchased or had been allotted the plots or apartments shall prefer claims within one month from today, which claim shall be verified within two months from today. (i) As found by us in the preceding paragraphs, substantial sums were made over to “middle men”. In the pending investigation, the CBI may do well to unravel the truth. In any case, such hefty sums which were made over to “middle men” cannot be said to be rightfully earned by and belonging to them. In fact, this actually represents the return for RAMESHWAR v. STATE OF HARYANA [UDAY UMESH LALIT, J.] being able to garner the lands in question and getting requisite licences under the provisions of the Haryana Act and a benefit derived out of fraud on power. In our view this money rightfully belongs to the State and none other. We direct the authorities of the State as well as the Central Government to reach the depths of such transactions and recover every single pie and make it over to the State Government. A complete investigation in the transactions including unearthing unnatural gains received by “middle men” shall be undertaken by the CBI. (j) If CBI has filed charge sheet before the concerned Court, the same may be dealt with as per law. (k) The State shall give benefit of “Rehabilitation and Resettlement of Land Acquisition Oustees” policy of the State/HUDA/HSIDC to the landholders. Area so required shall be reserved out of the acquired land itself. (l) The State may revisit its policy of change of land use and giving colonization licence in respect of land which is subject matter of acquisition. (m) We are given to understand that a Commission of Enquiry was appointed by the State of Haryana to enquire into certain facts concerning acquisitions in respect of lands in Gurgaon Manesar Urban Complex and that the matter is presently subject matter of challenge in a pending writ petition in the High Court of Punjab and Haryana on account of which further steps are held up. Without expressing any opinion on the merits or demerits of such challenge, we request the High Court to deal with and dispose of the matter as early as possible and preferably within two months from the date of receipt of a copy of this order so that public interest may not suffer by delay in such decision.
40. Before we close, we must record our sincere appreciation for the efforts put in and for the invaluable assistance rendered by the learned Amicus Curiae. His analytical approach and suggestions have helped us immensely in resolving the issues.
41. The appeals stand allowed in the aforesaid terms. There shall be no order as to costs. Kalpana K. Tripathy Appeal allowed.