'Vitiated By Favouritism' : Supreme Court Upholds Quashing Of Odisha Govt's Land Acquisition For Vedanta University Of Anil Agarwal Foundation

The Supreme Court on Wednesday upheld the 2010 judgment of the Orissa High Court which quashed the land acquisition proceedings initiated by the Odisha Government to acquire about 6000 acres of the land for the proposed Vedanta University.  The University was proposed to be headed by mining baron and chairman of Vedanta Resource Ltd Anil Agarwal.

A bench comprising Justices MR Shah and Krishna Murari dismissed the appeal filed by Anil Agarwal Foundation challenging the High Court's judgment which quashed the proceedings for violating the provisions of the Land Acquisition Act 1894. While agreeing with the view of the High Court, the Supreme Court noted that the dispute in this case was related to nearly 6000 acres of land belonging to about 6000 families, and thus, involving displacement of approximately 30,000 people, and the entire process was aimed for the benefit of one company. The Court also specifically noted that the lands were agricultural lands.

The Court noted that the entire acquisition proceedings came to be initiated at the instance of the Vedanta Foundation(later Anil Agarwal Foundation) in April 2006.  The land in Puri district was identified by the company and not by the Government of Orissa. In this context, it was noted that the company was a private company at the relevant time. Therefore, the acquisition proceedings were hit by Section 44B of the Land Acquisition Act 1894, which specifically bars the acquisition proceedings for a private company unless it is a government company. Though the company claimed that it was later converted into a public company, the Court noted that when at the relevant time it was a private company, the lands in question could not have been sought to be acquired by it.

Also, the proceedings were found to have violated the provisions of Sections 39, 40 and 41 of the Act, 1894 read with Rules 3(2) and (4) of the Land Acquisition Rules, 1963.

Non-application of mind to environmental aspects; two rivers also acquired for the company

"The most important aspect, which is required to be considered is the non-application of mind by the State Government on environmental aspects and passing of two rivers from the acquired lands in question", the Court observed. Through the lands in question, two rivers namely ‘Nuanai’ and ‘Nala’ are flowing, which as such were acquired by the State Government.

"How the maintenance of the rivers etc. can be handed over to the beneficiary company?. If the lands in question are continued to be acquired by the beneficiary company, the control of the rivers would be with the said private company, which would violate the Doctrine of Public Trust. Even requiring the beneficiary company to maintain the flow of above two rivers may also affect the residents of the locality at large", the Court observed.

Also, there is a wildlife sanctuary near the proposed site. The large-scale construction for the establishment of the proposed university will also adversely affect the Wildlife Sanctuary, entire Eco system and the ecological environment in the locality. 

Why entire proceedings for the benefit of one company?

The Court also wondered why the large scale acquisition was carried out for the benefit of one particular company.

"It is required to be noted that the lands were proposed to be acquired at the instance of one foundation / company and the State Government was dealing with the lands belonging to the agricultural landowners. It is required to be noted that the Government is holding a public trust and has to deal with the lands belonging to private landowners, more particularly, agricultural landowners in accordance with law. The State Government could not have considered the proposal from only one beneficiary/trust. There may be other public trusts / companies, who might be interested in establishing such university. Even no proper inquiry seems to have been initiated by the Government / Collector while considering the proposal by the beneficiary company"

Undue benefits to the proposed University

The Court was also surprised to note that the State Government granted several relaxations to the University such as :

(i) total autonomy with regard to administration, admission, fee structure, curriculum and faculty selection;

(ii) complete immunity from any reservation laws of the State Government;

(iii) all assistance in getting regulatory approvals from UGC, AICTE etc.;

(iv) Government agreed to provide 4-lane road from Bhubaneshwar city to the proposed site; in the agreement, the Government also agreed to make the land use/ zoning plan in the 5 km radius from the university boundary only after Consultation with Vedanta;

(v) promise to exempt all state levies/ taxes/ duties namely, viz. VAT, Works Contract Tax, Stamp Duty and Entry tax on R&D equipment, educational aids, lab equipment and tools, and construction materials;

(vi) promise to assist the Foundation in obtaining NOC from State Pollution Control Board and all clearances from the Central Government;

(viii) promise to assist the Foundation in arranging rapid EIA and EMP for the project;

(ix) promise to provide extraordinary huge amounts of electricity and water. 

"It is not appreciable why the Government offered such an undue favour in favour of one trust/ company. Thus, the entire acquisition proceedings and the benefits, which were proposed by the State Government were vitiated by favouritism and violative of Article 14 of the Constitution of India", the Court observed in this regard.

The objection raised to the maintainability of PILs challenging the acquisition proceedings was also rejected by the Court by holding that there was sufficient public interest in the matter.

Dismissing the appeals, the Court directed Anil Agarwal Foundation to deposit cost of Rs 5 lakhs with the Registrar of the Supreme Court within a period of six weeks from today and on such deposit, the same be transferred to the Orissa State Legal Services Authority.

Senior Advocate CA Sundaram appeared for the Foundation; Advocate Prashant Bhushan appeared for the land owners.

Case : Anil Agarwal Foundation vs State of Orissa

Citation : 2023 LiveLaw (SC) 300

Land Acquisition - Supreme Court upholds quashing of the proceedings initiated by the Orissa Government to acquire nearly 8000 acres of land for Vedanta University proposed to be established by Anil Agarwal Foundation- Violations of the provisions of the LA Act 1894- Also notes that procedure was vitiated by favouritism- Not appreciable why the Government offered such an undue favour in favour of one trust/ company- No application of mind regarding environmental aspects- Two rivers also sought to be acquired

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