Rameshwar & Others v. State of Haryana & Others

(xi) Around 22.09.2009, approvals of building plans of group housing societies and schemes of private builders came to be granted.

(xii) Having come to know that the lands under acquisition were now being utilized for private gain by various builders/colonizers, the farmers started agitation against the process adopted by the Governmental machinery.

(xiii) On 29.01.2010 a decision was taken by the State Government in Industries and Commerce Department to close the acquisition proceedings in view of the recommendations of the Inter Departmental Committee dated 26.03.2008 which in turn had been accepted by the HSIIDC.

(xiv) The farmers’ agitation against the decision of the State

Government favouring the builders was widely reported in newspapers on 01.03.2011. The agitation continued beyond August and September, 2011. On 20.09.2011 a request was made by sending communications to various functionaries for registration of FIR in respect of fraud played by the officials of the Land Acquisition Department as well as the Director, Town Planning in active connivance with the builders.

(xv) On 19.12.2011 the aforesaid Writ Petition No.23769 of 2011 was filed in the High Court of Punjab and Haryana at Chandigarh by 117 landholders. It was submitted that the entire action of initiating the acquisition and thereby compelling writ petitioners/landholders to divest their valuable and fertile land at throwaway prices under the threat of acquisition to certain private builders and then dropping the acquisition just two days before the date fixed for declaration of award was deliberate and was fraught with malice.

(xvi) In the written statement filed by Respondent No.3 – ABW

Infrastructure Limited, it was submitted that the answering respondent had obtained requisite licences for its residential as also commercial/group housing project namely ABW Niketan and had raised loans to the tune of Rs.170,00,00,000/-.

(xvii) In their written statements, Respondent Nos.[4] and 5 namely

Metropolis Realtors Pvt. Ltd. and Flair Realtors Pvt. Ltd. submitted that both these Companies were incorporated on 03.02.2006; that the prices of lands in and around Gurgaon were increasing as Gurgaon city was developing fast and another factor causing rise in prices was that Master Plan for the area – i.e. Gurgaon Development Plan was notified on 05.02.2007.

(xviii) The written statement submitted by Respondent No.6 –

Metropolis Infrastructure Pvt. Ltd. stated that said Company was incorporated on 19.04.2006. Rest of the submissions were on lines similar to that of Respondent Nos.[4] and 5.

(xix) On 06.12.2012 written statement was filed by State of Haryana justifying its action of withdrawal of acquisition. It was submitted that the writ petitioners had approached the Court more than 4½ years after the decision of the State Government of dropping the acquisition proceedings. It was denied that there was any nexus between the builders and the State officials or that the exercise of acquisition was in any manner mala fide or fraudulent.

(xx) In their replications filed on 15.01.2013, it was submitted by the writ petitioners that most of the lands were purchased by the builders or their substitute companies after the issuance of the Notification under Section 4 of the Act and yet, the sale deeds executed between the parties made no mention of factum of such notification. Further, the escalation of prices in last 20 days namely after the issuance of the notices under Section 9 showed that the builders were not only aware but were also sure that the acquisition would be dropped by the State Government. The hike in price was essentially to lure the landholders as after dropping of the acquisition there would be no threat to the landholders.

(xxi) On 24.02.2014 the High Court directed the State of Haryana to give details about various acquisitions initiated around the time in question for the same public purpose namely, setting up of Chaudhary Devi Lal Industrial Township.

(xxii) Accordingly, on or about 21.03.2014 an additional affidavit was filed on behalf of State of Haryana giving relevant details in a tabular chart. These details appear to be in addition to the lands covered under Awards 7, 8, 9, 10 and 12 of 09.03.2006. The relevant tabular chart was as under:- Details of Sections 4 and 6 notifications along with the Revenue Estates as mentioned in the written statement dated 06.12.2012

┌─────────────────────────────────────────────────────────────────────────────────────────────────────────┐
│ Sl. Events           912     acres,   24 acres,    163 acres,    3718 acres,     3510 acres,            │
│ No.                  IMT,             IMT,         IMT,          IMT,            IMT,                   │
│                      Manesar          Manesar      Manesar       Manesar         Manesar                │
├─────────────────────────────────────────────────────────────────────────────────────────────────────────┤
│  1         2               3               4             5             6               7                │
│  1.   Date of        27.08.2004       27.12.2005   25.11.2005    08.12.2006      25.04.2008             │
│       Sec. 4                                                                                            │
│       Notification                                                                                      │
│  2.   Land Area      912A-0 K-7M      24A-4K-5M    163A-3K-15M   3718A-6K-9M     3510A-5K-1M            │
│       Notified                                                                                          │
│       U/S 4                                                                                             │
│  3.   Villages       Lakhnaula,       Manesar      Manesar,      Fazilwas,       Fazilwas,              │
│                      Naurangpur,                   Khoh,         Kukrola,        Kukrola,               │
│                      Manesar                       Kasan         Kharkhri,       Kharkhri, Bas          │
│                                                                  Bas Lambi,      Lambi,                 │
│                                                                  Mokalwas,       Mokalwas,              │
│                                                                  Seharavan       Seharavan              │
│                                                                  Fakharpur.      Fakharpur.             │
│  4.   Purpose        Setting up of    Setting up   Setting up of Setting up of   Setting up of          │
│                      Chaudhary        of           the           Chaudhary       Chaudhary              │
│                      Devi Lal         Chaudhary    Industrial    Devi Lal        Devi Lal               │
│                      Industrial       Devi Lal     Model         Industrial      Industrial             │
│                      Model            Industrial   Township,     Model           Model                  │
│                      Township,        Model        Manesar, to Township to       Township to            │
│                      Manesar, to     Township,      be planned        be planned as    be planned as    │
│                      be planned as   Manesar, to    and               an integrated    an integrated    │
│                      an integrated   be planned     developed         complex for      complex for      │
│                      complex for     as an          as an             Industrial,      Industrial,      │
│                      residential,    integrated     integrated        Commercial       Commercial       │
│                      recreational    complex        complex for       and other        and other        │
│                      and other       for            industrial,       public           public           │
│                      public          residential,   residential,      utilities by     utilities by     │
│                      utilities.      recreational   recreational      the HSIIDC.      the HSIIDC.      │
│                                      and other      and other                                           │
│                                      public         public                                              │
│                                      utilities.     utilities, etc.                                     │
│  5.   Date of        25.08.2005      15.07.2006     24.11.2006        18.01.2008       09.03.2009       │
│       Sec. 6                                                                           22.04.2009       │
│       Notification                                                                                      │
│  6.   Land Area      688A-3K-12M     24A-4K-5M      162A-3K-14M       3510A-5K-1 M     90A-5K-14M       │
│       Notified                                                                         3325A-3K-16M     │
│       u/S 6                                                                                             │
│  7.   Date of        Award not       26.06.2008     24.02.2007        Section 6        24.08.2009       │
│       Award          announced as                                     Notification     Award in         │
│                      the                                              was              respect of       │
│                      acquisition                                      inadvertently    1128 acres       │
│                      proceedings                                      issued after     was              │
│                      were allowed                                     expiry of the    announced on     │
│                      to lapse vide                                    period of one    21.04.2011.      │
│                      government                                       year from the                     │
│                      order dated                                      date of last     Award of the     │
│                      24.08.2007                                       publication of   remaining        │
│                                                                       Section 4        land was not     │
│                                                                       notification     announced in     │
│                                                                       and became       view of the      │
│                                                                       a legal          decision of      │
│                                                                       nullity. Fresh   the Cabinet      │
│                                                                       Section 4        Sub-             │
│                                                                       notification     Committee        │
│                                                                       for 3510         on               │
│                                                                       acres was        infrastructure   │
│                                                                       issued on        and explained    │
│                                                                       25.04.2008.      in paragraph     │
│                                                                                        6 of the reply   │
│                                                                                        on merits of     │
│                                                                                        the written      │
│                                                                                        statement dt.    │
│                                                                                        06.12.2012.      │
│        (xxiii)Thus, in addition to lands covered by said Awards dated                                   │
└─────────────────────────────────────────────────────────────────────────────────────────────────────────┘

80. … Secondly, it is not a case of challenging the sale deeds for the breach of any bilateral terms and conditions or on the conventional grounds where a question of fact has to be proved. The incidental relief to declare the sale deeds as null and void is an offshoot of the broader issues raised by the petitioners including those hovering around the systematic colourable exercise of power by the State apparatus. A constitutional court while performing its solemn duty as a trustee of the fundamental rights of the citizens shall thus be well within its right to lift the veil and unmask the private object behind an acquisition carried out in disregard to the mandate of Articles 14 and 300-A of the Constitution.”

26. This Court affirmed the view taken by the High Court as regards quashing of release orders but upheld the acquisition and awards. It further directed that the lands in question vested in State free from all encumbrances. In the context of the present case, the following observations of this Court in Uddar Gagan (supra) in paragraphs 18, 19, 22 and 23 are quite crucial:- “18. …. entertaining an application for releasing of land in favour of the builder who comes into picture after acquisition notification and release of land to such builder tantamounts to acquisition for a private purpose. It amounts to transfer of resources of poor for the benefit of the rich. It amounts to permitting profiteering at the cost of livelihood and existence of a farmer. This is against the philosophy of the Constitution and in violation of guaranteed fundamental rights of equality and right to property and to life. What cannot be done directly cannot be done indirectly also.

19. ….. It is patent that the State has enabled the builder to enter the field after initiation of acquisition to seek colonisation on the land covered by acquisition. In the absence of the State’s action, it was not possible for the builder to enter into the transactions in question which was followed by withdrawal from acquisition.

22. ….. When the land sought to be acquired for a public purpose is allowed to be transferred to private persons, any administrative action or private transaction could be held to be vitiated by fraud.

23. …. Fraud on power voids the action of the authority. Mala fides can be inferred from undisputed facts even without naming a particular officer and even without positive evidence.”

27. For the present purposes, contents of paragraphs 29 and 30 of the decision in Uddar Gagan (supra) and the directions issued in paragraph 33 are extracted:- “29. Once release of land under acquisition is found to be mala fide or arbitrary exercise of power, acquisition of released land stands revived. The operative direction of the High Court to quash the acquisition to the extent it has neither been challenged nor concerns the land transferred to a private builder by abusing the power of acquisition or on account of any extraneous considerations does not appear to be justified. Similarly the direction of permitting the builder to retain the land of those landowners who are not able to refund the sale consideration received by them may permit the builder to illegally retain the land. Moreover, it may not be practicable in the present fact situation to restore the land to the landowners but they can be duly compensated while restoring the land to the State to use it for notified public purpose. Person whose land is taken for houses for others cannot be rendered homeless and unemployed. This will be sheer exploitation. In view of the conduct of the builder, agreeing with the view of the High Court, we do not propose to allow any interest to the builder while permitting refund/reimbursement to it. From the impugned judgment there is nothing to show that the developments which are now relied upon had taken place on the date of filing of the writ petition. It has been specifically held in para 89 of the impugned judgment that no development had taken place till the judgment of the High Court. Any subsequent transactions or development are of no consequence for rights of parties. Any subsequent transactions entered into by the builder cannot be taken into account and are hit by the principle of lis pendens. In any case it was for the builder to inform the third parties to whom the plots have been sold, that the land was under litigation. If the third parties have purchased the land knowing fully about the litigation, they have clearly taken risk and their remedy will be only against the builder. If pendency of litigation was suppressed, the third parties can take their remedies against the builder. Without prejudice to their said private remedies, the court may try to balance equities to the extent possible. We are also of the view that if the authorities have proceeded to entertain applications for licence to give undue benefit to the builder by way of helping him to take over land under the cloud of acquisition, it may call for action against those who have misused their power and to find out the considerations for such misuse.

30. Land is scarce natural resource. Owner of land has guarantee against being deprived of his rights except under a valid law for compelling needs of the society and not otherwise. The commercial use of land can certainly be rewarding to an individual. Initiation of acquisition for public purpose may deprive the owner of valuable land but it cannot permit another person who may be able to get permission to develop colony to take over the said land. If the law allows the State to take land for housing needs, the State itself has to keep the title or dispose of land consistent with Article 14 after completion of acquisition. If after initiation of acquisition, process is not to be completed, land must revert back to owner on the date of Section 4 notification and not to anyone else directly or indirectly. This is not what has happened. ………..

33. Keeping the above in mind, we are of the view that ends of justice will be served by moulding the relief as follows:

33.1. Notifications dated 11-4-2002, 8-4-2003 and awards dated 6-4-2005 are upheld. The land covered thereby vests in HUDA free from all encumbrances. HUDA may forthwith take possession thereof.

33.2. All release orders in favour of the builder in respect of land covered by the award in exercise of powers under Section 48 are quashed.

33.3. Consequently, all licences granted in respect of the land covered by acquisition will stand transferred to HUDA.

33.4. Sale deeds/other agreements in favour of the builder in respect of the said land are quashed. The builder will not be entitled to recover the consideration paid to the owners but will be entitled to reimbursement as indicated hereinafter. Creation of any third-party rights by the builder also stands quashed.

33.5. The sale consideration paid by the builder to the landowners will be treated as compensation under the award. The landowners will not be required to refund any amount. The landowners who have not received compensation will be at liberty to receive the same. The landowners will also be at liberty to prefer reference under Section 18 of the 1894 Act within a period of three months, if such reference has not been earlier preferred.

33.6. The builder will be entitled to refund/reimbursement of any payments made to the State, to the landowners or the amount spent on development of the land, from HUDA on being satisfied about the extent of actual expenditure not exceeding HUDA norms on the subject. Claim of the builder will be taken up after settling claim of third parties from whom the builder has collected money. No interest will be payable on the said amount.

33.7. The third parties from whom money has been collected by the builder will be entitled to either the refund of the amount, out of and to the extent of the amount payable to the builder under the above direction, available with the State, on their claims being verified or will be allotted the plots at the price paid or price prevalent, whatever is higher. No interest will be payable on the said amount.

33.8. The State shall give benefit of “Rehabilitation and Resettlement of Land Acquisition Oustees” policy of the State/HUDA to the landowners. Area so required shall be reserved out of the acquired land itself.

33.9. The State Government may enquire into the legality and bona fides of the action of the persons responsible for illegally entertaining the applications of the builder and releasing the land to it, when it had no title to the land on the date of the notification under Section 4 of the 1894 Act and proceed against them in accordance with law.

33.10. This judgment be complied with within one year.

33.11. Quarterly progress report of the action taken in pursuance of this judgment be filed by the State in this Court and final report of compliance may be filed within one month after expiry of one year from today for such further direction as may become necessary.”

28. Apart from the decisions of this Court in Uddar Gagan (supra) following decisions of this Court are noteworthy: a] In Collector (DM) v. Raja Ram Jaiswal[8], it was observed by this Court:- “26. Where power is conferred to achieve a purpose it has been repeatedly reiterated that the power must be exercised reasonably and in good faith to effectuate the purpose. And in this context 'in good faith' means 'for legitimate reasons'! Where power is exercised for extraneous or irrelevant considerations or reasons, it is unquestionably a colourable exercise of power or fraud on power and the exercise of power is vitiated. If the power to acquire land is to be exercised, it must be exercised bona fide for the statutory purpose and for none other. If it is exercised for an extraneous, irrelevant or non-germane consideration, the acquiring authority can be charged with legal mala fides. In such a situation there is no question of any personal ill-will or motive. In Municipal Council of Sydney v. Campbell[9] it was observed that irrelevant considerations on which power to acquire land is exercised, would vitiate compulsory purchase orders or scheme depending on them…….” b] In Royal Orchid Hotels Limited and Another v. G. Jayarama Reddy and Others10, this Court was called upon to consider question

1925 AC 338 at p. 375 whether land acquired by the State Government for specified purpose namely Golf-cum-Hotel Resort could be transferred to a private individual. The observations in paragraph 38 are relevant for the present purposes:-

c] In Greater Noida Industrial Development Authority v. Devendra Kumar and Others11, validity of acquisition of about 156 hectares of land and subsequent transfer of acquired land to the builders and whether such transfer was colourable exercise of power came up for consideration of this Court. In paragraph 43 this Court quoted the observations of Krishna Iyer J in State of Punjab v. Gurdial Singh12 and later made following observations in paragraph 49:-

“43. In this context, it will be useful to notice the observations made in State of Punjab v. Gurdial Singh. In that case, while pronouncing upon the correctness of the order passed by the Punjab and Haryana High Court which had quashed the acquisition of the respondents’ land on the ground of mala fide exercise of power, this Court observed: (SCC p. 475, para 9) “9. … Legal malice is gibberish unless juristic clarity keeps it separate from the popular concept of personal vice. Pithily put, bad faith which invalidates the exercise of power— sometimes called colourable exercise or fraud on power and oftentimes overlaps motives, passions and satisfactions—is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal. If the use of the power is for the fulfilment of a legitimate object the actuation or catalysation by malice is not legicidal. The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment. When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark even in law when he stated: ‘I repeat … that all power is a trust—that we are accountable for its exercise—that, from the people, and for the people, all springs, and all must exist.’ Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act.” ………

49. Before concluding, we consider it necessary to reiterate that the acquisition of land is a serious matter and before initiating the proceedings under the 1894 Act and other similar legislations, the Government concerned must seriously ponder over the consequences of depriving the tenure-holder of his property. It must be remembered that the land is just like mother of the people living in the rural areas of the country. It is the only source of sustenance and livelihood for the landowner and his family. If the land is acquired, not only the present but the future generations of the landowner are deprived of their livelihood and the only social security. They are made landless and are forced to live in slums in the urban areas because there is no mechanism for ensuring alternative source of livelihood to them. Mindless acquisition of fertile and cultivable land may also lead to serious food crisis in the country.”

29. The decisions referred in the preceding paragraphs were delivered in the context of exercise of power under the provisions of the Act. In addition, there are few other decisions which were rendered in other fields but considered the issues regarding “fraud on power”; notable amongst them being: S. Pratap Singh v. The State of Punjab13, Express Newspapers Pvt. Ltd. and others v. Union of India and others14 and observations by R.M. Sahai J in Shrisht Dhawan (Smt) v. Shaw Bros.15 The issue concerning unjust enrichment was dealt with by this Court very succinctly in Indian Council for Enviro-Legal Action v. Union of India16 as under:

152. “Unjust enrichment” has been defined by the court as the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

153. Unjust enrichment is “the unjust retention of a benefit to the loss of another, or the retention of money or property of another against the fundamental principles of justice or equity and good conscience”. A defendant may be liable “even when the defendant retaining the benefit is not a wrongdoer” and “even though he may have received [it] honestly in the first instance”. (Schock v. Nash17, A 2d, 232-33.)

154. Unjust enrichment occurs when the defendant wrongfully secures a benefit or passively receives a benefit which would be unconscionable to retain. In the leading case of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd.18, Lord Wright stated the principle thus: (AC p. 61) “… Any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep. Such remedies in English law are generically different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution.” 732 A 2d 2017 (Delaware 1999) 1943 AC 32

155. Lord Denning also stated in Nelson v. Larholt19 as under: (KB p. 343) “… It is no longer appropriate, however, to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect. Nor is it necessary to canvass the niceties of the old forms of action. Remedies now depend on the substance of the right, not on whether they can be fitted into a particular framework. The right here is not peculiar to equity or contract or tort, but falls naturally within the important category of cases where the court orders restitution, if the justice of the case so requires.”

156. The above principle has been accepted in India. This Court in several cases has applied the doctrine of unjust enrichment. …..…

159. Unjust enrichment is basic to the subject of restitution, and is indeed approached as a fundamental principle thereof. They are usually linked together, and restitution is frequently based upon the theory of unjust enrichment. However, although unjust enrichment is often referred to or regarded as a ground for restitution, it is perhaps more accurate to regard it as a prerequisite, for usually there can be no restitution without unjust enrichment. It is defined as the unjust retention of a benefit to the loss of another or the retention of money or property of another against the fundamental principles of justice or equity and good conscience. A person is enriched if he has received a benefit, and he is unjustly enriched if retention of the benefit would be unjust. Unjust enrichment of a person occurs when he has and retains money or benefits which in justice and equity belong to another.

160. While the term “restitution” was considered by the Supreme Court in South Eastern Coalfields Ltd. v. State of M.P.20 and other cases excerpted later, the term “unjust enrichment” came to be considered in Sahakari Khand Udyog Mandal Ltd. v. CCE & Customs21. This Court said: (Sahakari Khand case, SCC p. 748, para 31) “31. … ‘unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. (1948) 1 KB 339

‘Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.”

161. The terms “unjust enrichment” and “restitution” are like the two shades of green—one leaning towards yellow and the other towards blue. With restitution, so long as the deprivation of the other has not been fully compensated for, injustice to that extent remains. Which label is appropriate under which circumstances would depend on the facts of the particular case before the court. The courts have wide powers to grant restitution, and more so where it relates to misuse or non-compliance with court orders.”

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 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 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 subserved. 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 subserve.

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 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 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 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 (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 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. …....….………………J. (Adarsh Kumar Goel) ……………………….J. (Uday Umesh Lalit) New Delhi March 12, 2018