Undue Favouritism To One Company Is Violative Of Article 14- SC Upholds Quashing Of Land Acquisition Proceedings For Vedanta University

A Supreme Court Bench of Justice MR Shah and Justice Krishna Murari has upheld a judgment passed by the Orissa High Court, which quashed the land acquisition proceedings initiated by the Orissa Government to acquire about 6000 acres of the land for the Vedanta University.

Senior Advocate C Aryama Sundaram appeared for the appellants. Senior Advocate Rakesh Dwivedi appeared for the State of Orissa. Counsel Prashant Bhushan appeared for the respondent - landowners.

In this case, an appeal was filed by the Anil Agarwal Foundation challenging the High Court's judgment which quashed the proceedings for violating the provisions of the Land Acquisition Act, 1894. 

The Apex Court was in complete agreement with the view taken by the High Court.

Noting that the company was a private company, the Court observed that the applicable provision would be Section 44B of the Land Acquisition Act, which bars the acquisition proceedings for a private company unless it is a government company. Therefore, it was held that the lands in question could not have been sought to be acquired by the company. 

With regard to the environmental concerns, the Court observed that the State Government had not applied its mind to the environmental aspects and passing of two rivers from the acquired lands in question. In that regard, it was said that "It is not in dispute that from 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".

It was also observed that there is a Wildlife Sanctuary across the road, and in that context, it was said that "the large-scale construction for the establishment of the proposed university as observed by the High Court will also adversely affect the Wildlife Sanctuary, entire Eco system and the ecological environment in the locality. It is a duty of the State to protect the Wildlife Sanctuary and it may affect the entire Eco system and the ecological environment in the locality".

Further, the Court observed that the State government did not apply its mind on the requirement of lands by the company. In that context, it was said 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."

In the same context, it was held that "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 favourism and violative of Article 14 of the Constitution of India".

In light of the same, the Court held that "the High Court has not committed any error and in fact the High Court was justified in setting aside the entire acquisition proceedings, which has been vitiated by non-compliance of the statutory provisions under the Act, 1894 and the Rules, 1963 and vitiated by mala fides and favourism and is a clear case of the non-application of mind on relevant aspects". 

Accordingly, the Court dismissed the appeals and imposed a cost of Rs. 5 lakhs on the Appellant (Beneficiary Company) to be deposited with the Registry of the Apex Court and subsequently transferred to Orissa State Legal Services Authority.

Cause Title: Anil Agarwal Foundation Etc. Etc. v. State of Orissa and Ors.

Click here to read/download the Judgment