Govt cannot change purpose of acquired land: Supreme Court

Land acquired by the government or its instrumentalities for a specific public purpose cannot be changed and transferred to private individuals or corporate bodies, the Supreme Court has held.

A bench of Justice GS Singhvi and Justice Sudhansu Jyoti Mukhopadhaya said though the government enjoys power of "eminent domain" to compulsorily acquire any land for public purpose, yet,it cannot legitimise any fraudulent act of the authorities.

"The courts have repeatedly held that in exercise of its power of eminent domain, the State can compulsorily acquire land of the private persons but this proposition cannot be over-stretched to legitimise a patently illegal and fraudulent exercise undertaken for depriving the landowners of their constitutional right to property with a view to favour private persons," Justice Singhvi writing the judgment said.

The apex court passed the judgment while dismissing the appeal of certain corporate houses challenging the Karnataka High Court's decision to quash the acquisition proceedings of over 37 acres of land in south Bangalore.

The Karnataka State Tourism Development Corporation had acquired the private land through the State Government for the ostensible purpose of a Golf-cum-Hotel Resort. However, instead of constructing the resort, it chose to transfer the land to a private real estate developer for a group housing project; and also other corporate houses.

Aggrieved by the decision, the private land owners approached the high court which quashed the acquisition proceedings and directed that the land be restored to the original owners. The land owners were also asked to return the compensation received by them at the time of acquisition.

The corporate houses appealed in the apex court.

Upholding the high court order, the apex court said the corporation had made a false projection to the state government that land was needed for execution of tourism related projects.

The bench said the minutes of the corporation's meeting showed that it did not have the required funds for the project and instead wanted to transfer the land to a private builder, Dayananda Pai.

"The Managing Director of the Corporation candidly admitted that the Corporation did not have the requisite finances to pay for the acquisition of land and that Dayananda Pai, who had already entered into agreements with some of the landowners for purchase of land, was prepared to provide funds subject to certain conditions including transfer of 12 acres 34 guntas land to him for house building project.

"After 8 months, the Corporation passed resolution for transfer of over 12 acres land to Dayananda Pai. The Corporation also transferred two other parcels of land in favour of Bangalore International Centre and M/s. Universal Resorts Limited.

"These transactions reveal the true design of the officers of the corporation, who first succeeded in persuading the state gGovernment to acquire huge chunk of land for a public purpose and then transferred major portion of the acquired land to private individual and corporate entities by citing poor financial health of the corporation as the cause for doing so," the bench said.

Therefore, it said, the corporation did not have the jurisdiction to transfer the land acquired for a public purpose to the companies and thereby allow them to bypass the provisions of Land Acquisition Act.

"The diversification of the purpose for which land was acquired under Section 4(1) read with Section 6 clearly amounted to a fraud on the power of eminent domain," the bench said.