MP Nagar Tatha Gram Nivesh Adhiniyam - Scheme Will Not Lapse Merely Because It Was Not Completed Within 3 Years Despite Substantial Steps : Supreme Court

The Supreme Court of India recently set aside the judgments of the Madhya Pradesh High Court which held the acquisition proceedings initiated by the Indore Development Authority and the State of Madhya Pradesh for a residential scheme as lapsed.

A Bench of Justices MR Shah and BV Nagarathna was hearing appeals moved by the Indore Development Authority challenging the High Court orders setting aside Scheme No. 97 under Section 50 of the Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 and the subsequent land acquisition proceedings undertaken by the State of Madhya Pradesh under the Land Acquisition Act, 1894.

The Indore Development Authority passed a Resolution under Section 50(1) of the Adhiniyam on 13.03.1981 declaring its intention to frame Scheme No. 97 – a residential scheme providing for other connected land uses. In an order dated December 24, 1983, the State Government empowered all the Collectors and Divisional Commissioners to act as ex-officio Deputy Secretaries of the Department of Revenue, Government of Madhya Pradesh and ex-officio Secretary of the said Government respectively, for disposal of the cases under provisions of the 1894 Act.

After completing various formalities, the IDA published Scheme No. 97. The scheme was challenged before the Single Judge as well as the Division Bench of the High Court – both times, it was set aside.

The Single Judge allowed the writ petitions declaring Scheme No. 97 as illegal and invalid and quashed and set aside the entire acquisition proceedings under the 1894 Act on three grounds:

1. That there was no delegation of power by the State Government with regard to Section 5-A of the Act, 1894 to Collector;
2. That IDA failed to take substantial steps to implement the scheme within a period of three years from the date of final publication as envisaged under section 54 of the Adhiniyam; and
3. That huge and big chunk of land, out of the total land sought to be acquired by the Authority, has been released.

The Additional Solicitor General submitted that in view of the timeline which was set out, the Single Judge had completely erred in declaring the scheme as having lapsed on the ground of non-implementation of the scheme under section 54 of the Adhiniyam. The words “commence implementation” occurring in Section 54 do not mean completion of implementation of the scheme. The reasonable interpretation would be that some steps should be taken by the Authority for implementation of the scheme.

Advocate Punit Jain, appearing on behalf of the respective contesting respondents submitted neither the learned Single Judge nor the Division Bench of the High Court has committed any error in quashing and setting aside the scheme(s) and the related acquisition proceedings.

What the Court said

After going through the facts, the Bench had a look at Section 56 of the Adhiniyam. The provision states that within three years the Development Authority was required to proceed to acquire by agreement the land required for the implementation of the scheme and only thereafter and on its failure so to acquire, the State Government may, at the request of the Development Authority, proceed to acquire such land.

The Development Authority stated that in the present case since negotiations failed and the Development Authority failed to acquire the land by agreement, it had requested the State Government to acquire the land, which request was made within a period of three years from the date of finalization of the scheme. Therefore, the Development Authority submitted that the scheme had not have lapsed under section 54 of the Adhiniyam. These steps were in furtherance of, or commencing implementation of the scheme.

However, as per the High Court, actual implementation of the scheme is a must and that there were no substantial steps to implement the scheme within three years. That to make the request four days before the completion of three years would not be sufficient and therefore the scheme has lapsed under section 54 of the Adhiniyam, the High Court noted.

In this connection, the Supreme Court endorsed the judgment of the Madhya Pradesh High Court in the case of Sanjai Gandhi Grah Nirman Sahkari Sanstha Maryadit v. State of M.P AIR 1991 MP 72.  While interpreting the words “implementation of the scheme” and the word “implementation” occurring in section 54 of the Adhiniyam, it held that the word “implementation” occurring in section 54 of the Adhiniyam cannot be construed to mean that even after substantial steps have been taken by the authority towards the implementation of the scheme, the scheme shall lapse after the expiry of three years because of its non-completion within that period.

“The words used are “proceed to acquire” and not “actual acquisition”. The intention of the legislature thus seems to be very clear and unambiguous. Therefore, when the Statute provides certain things to be done within the stipulated time mentioned in the Act, the Authority is to be given such time, more particularly while dealing with the scheme which has been framed for the entire area and for the public purpose. In the present case, Scheme No. 97 has been framed and the lands have been acquired for residential, park and industrial purposes. Any other meaning may frustrate the purpose of framing of the scheme for residential, part and industrial purposes”, the Supreme Court observed.

When within three years various steps were taken for implementation of the scheme including the steps to acquire the land by negotiations and even thereafter, on failure to acquire the land by negotiations approaching the State Government to acquire the land under the Land Acquisition Act, the Supreme Court said that the High Court has erred in declaring that the scheme has lapsed under section 54 of the Adhiniyam, the court added.

“The High Court has adopted too narrow a meaning while interpreting and/or considering section 54 of the Adhiniyam”, the Supreme Court opined.

Regarding the aspect of no proper delegation of power to the Collector with regard to Section 5A of the Act, the court stated this,

“Merely because Section 5A has not been mentioned in the said order, the entire acquisition proceedings including notifications under Sections 4 & 6 of the Act, 1894 and more particularly the declaration which was issued after considering the report/objections under section 5A cannot be declared illegal.”

Relying on Top Court decisions, the Bench observed that when the Collector has exercised the power of the appropriate government and a declaration under section 6 of the Act has been issued after considering the report on the objections under Section 5A of the Act, the High Court had seriously erred in quashing and setting aside the entire acquisition proceedings on the aforesaid ground.

While considering the third ground, the Court had noted that out of the total land acquired, 68.11% of the land has been developed and 31.89% has not been developed due to interim orders passed by the Courts.

According to the Development Authority, 111.156 hectares of the land covered under the scheme was released in favour of Housing Cooperative Societies because the object of the housing societies and the scheme was the same. Further, it said that the Authority/State Government had released the land only of those societies who had either developed or started development of colonies or had acquired the title to the land or had obtained exemption under section 20 of the Urban Land (Ceiling & Regulation) Act, 1976 before publication of the final scheme under section 50(7) of the Adhiniyam.

According to the Development Authority, 104.524 hectares of land covered under the scheme which was released from the scheme, the land use of the said land was either agricultural or regional park. Release of the land having area of 46.116 hectares of land was in response to objections under section 5A of the Act because of certain reasons like existing houses, religious places, different land use etc.

“Thus, from the above, it cannot be said that the release of the land was arbitrary and/or with an object of undue favour to those persons whose lands have been released. As rightly submitted that even otherwise such lands were to be acquired for residential, park and industrial purposes, release of the land which according to the authority 40 was for valid reasons or valid grounds has not prejudiced or affected the integrity of the scheme. The end result of the release of some land is that the total area of the scheme is lesser to that extent but the integrity of the scheme remains the same”, the Bench observed.

Case Title: Indore Development Authority Versus Burhani Grih Nirman Sahakari Sanstha Maryadit Sneh Nagar And Others | Civil Appeal No. 5071 Of 2022

Citation : 2023 LiveLaw (SC) 183

Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 - Section 54-  the words used in Section 54 of the Adhiniyam are “fails to commence implementation”. That does not mean that there must be implementation of the scheme within the time stipulated under section 54 of the Adhiniyam. There is a clear distinction between the words “implementation” of the scheme and “to commence implementation”- word “implementation” occurring in section 54 of the Adhiniyam cannot be construed to mean that even after substantial steps have been taken by the authority towards the implementation of the scheme, the scheme shall lapse after the expiry of three years because of its non-completion within that period -Approves MP HC judgment in Sanjai Gandhi Grah Nirman Sahkari Sanstha Maryadit v. State of M.P.AIR 1991 MP 72-  Para 8, 9.

Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam 1973 - Section 54- when within three years various steps were taken for implementation of the scheme including the steps to acquire the land by negotiations and even thereafter on failure to acquire the land by negotiations approaching the State Government to acquire the land under the Land Acquisition Act, the High Court has erred in declaring that the scheme has lapsed under section 54 of the Adhiniyam. The High Court has adopted too narrow a meaning while interpreting and/or considering section 54 of the Adhiniyam - Para 11

Land Acquisition Act 1894- Section 5A - Merely because Section 5A has not been mentioned in the said order, the entire acquisition proceedings including notifications under Sections 4 & 6 of the Act, 1894 and more particularly the declaration which was issued after considering the report/objections under section 5A cannot be declared illegal.when the Collector has exercised the power of the appropriate government and a declaration under section 6 of the Act has been issued after considering the report on the objections under Section 5A of the Act, the High Court has seriously erred in quashing and setting aside the entire acquisition proceedings on the aforesaid ground - Para 12, 12.3

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