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H.M.T House Building Cooperative Society v. M. Venkataswamappa And Others
Factual and Procedural Background
The judgment deals with a batch of Special Leave Petitions filed by several House Building Cooperative Societies (and in one set, the State of Karnataka) challenging High Court orders that had quashed land-acquisition notifications issued under Sections 4(1) and 6(1) of the Land Acquisition Act, 1894. The High Court had found that the acquisitions were engineered by private agents or developers, that the societies lacked bona fide membership, and that mandatory prior approval of the State Government under Section 3(f)(vi) had not been obtained. Earlier, in HMT House Building Coop. Society v. Syed Khader, (1995) 2 SCC 677, the Supreme Court had upheld identical High Court reasoning and dismissed a connected set of appeals. The present judgment applies the HMT ruling to these additional petitions, resulting in their dismissal and the reiteration of directions to restore possession of lands to the original landowners upon refund of compensation.
Legal Issues Presented
- Whether land-acquisition notifications issued for the benefit of private House Building Cooperative Societies, without a valid order of prior approval under Section 3(f)(vi) of the Land Acquisition Act, are sustainable in law.
- Whether agreements between the societies and private developers or agents—who “managed all concerned at all levels” to secure acquisition—vitiate the legitimacy of the acquisition process.
- Whether an order dated 9-8-1984 could constitute valid prior approval when Section 3(f)(vi) (and the amended definition of “company” in Section 3(e)) came into force only on 24-9-1984.
- Whether the Supreme Court should interfere with the High Court’s findings that the societies were not bona fide and that thousands of “bogus members” had been admitted.
Arguments of the Parties
Petitioning Societies
- Attempted to distinguish their factual situations from the HMT case, asserting that their acquisitions had different factual matrices.
- In SLPs (C) Nos. 12535-37 of 1991, counsel relied on a Government order dated 9-8-1984 claimed to be prior approval under Section 3(f)(vi).
State of Karnataka (in SLPs (C) Nos. 5824-5920 of 1995)
- Sought to justify the impugned notifications and acquisitions on unspecified grounds; detailed submissions were not recorded.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| HMT House Building Coop. Society v. Syed Khader, (1995) 2 SCC 677 | Acquisition for private societies without bona fide purpose and without prior statutory approval is void; directions for restoration of land to owners. | The Court held that the reasoning in HMT fully governed the present petitions; consequently, all SLPs were dismissed on the same grounds and identical remedial directions were issued. |
Court's Reasoning and Analysis
Justice N. P. Singh, speaking for the Court, adopted the detailed reasoning in the earlier HMT judgment and found no distinguishing features in the present matters:
- Lack of Prior Approval: None of the societies could produce a valid order of the State Government granting prior approval under Section 3(f)(vi). An order dated 9-8-1984 relied upon by one society could not qualify, as the statutory provision itself came into force only on 24-9-1984.
- Role of Middlemen/Developers: The societies had executed agreements with private agents who promised to secure acquisitions and to “manage all concerned at all levels,” undermining the public-purpose character of the proceedings.
- Absence of Bona Fides: The High Court’s factual findings—such as advertisements inviting non-members (including overseas applicants) and the admission of 4,050 bogus members—were accepted as conclusive evidence that the societies were not genuine cooperative ventures.
- Application of HMT Principle: Given the identity of facts and legal deficiencies, the Court concluded that the High Court orders quashing the notifications were unassailable.
- Ancillary Directions: Consistent with HMT, the Court reiterated that (a) possession must revert to the original landowners, and (b) those landowners must refund any compensation already received.
Holding and Implications
HOLDING: All Special Leave Petitions are DISMISSED; the application for condonation of delay filed by the State of Karnataka is also dismissed. No costs were awarded.
Implications: The dismissal affirms the High Court’s orders and reinforces the precedent that acquisitions initiated at the behest of private agents, without strict statutory compliance and bona fide cooperative purpose, are invalid. The immediate consequence is the restoration of land to original owners and refund of compensation; the judgment does not set new legal doctrine but consolidates the principles laid down in the HMT case.
N.P Singh, J.— The connected Appeals Nos. 3011-19 of HMT House Building Coop. Society v. Syed Khader (1995) 2 SCC 677 have already been disposed of by a reasoned judgment. The reasons given for dismissing the said appeals are equally applicable in the facts and circumstances of the present case. Accordingly, these special leave petitions filed on behalf of the same House Building Cooperative Society are dismissed. No costs.
2. In Appeals Nos. 3011-19 of 1995 arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioner, the respondents and the State Government including all authorities/persons concerned shall implement the aforesaid directions at an early date.
Special Leave Petitions (C) Nos. 12104-07, 12600-03, 13150-80, 18297-300 of 1991
3. Lands on basis of the notifications issued under Sections 4(1) and 6(1) of the Land Acquisition Act, had been acquired for the petitioner-House Building Society, treating the said acquisition to be for a public purpose. No order of the State Government as required by Section 3(f)(vi) granting prior approval for acquisition of the lands in question for the housing scheme of the petitioner-Society has been produced. The petitioner-Society had also entered into an agreement with the contractor more or less on the same terms and conditions as was in the case of HMT House Building Cooperative Society, assuring that the lands in question shall be acquired on basis of the notification issued by the State Government under Sections 4(1) and 6(1) of the Act. The High Court in its impugned judgment has given details of the allegations made against the petitioner-Society regarding collection of huge amounts from different applicants for site who were not even members of the Society and how the Society had entered into an agreement with agents, who with their influence have got the lands acquired. The High Court has also referred to an advertisement issued by the petitioner-Society inviting persons who want to have mansions in the city of Bangalore. It also gave the name and address of a representative at Dubai. On basis of the aforesaid materials, the High Court has come to the conclusion that the society itself was not a bona fide House Building Society. The High Court has also recorded a finding that the notifications under Sections 4(1) and 6(1) of the Act had been issued at the instance of the agents appointed by the petitioner-Society, to whom huge amounts had been paid for influencing the Government to issue the aforesaid notifications. Mr Ramaswamy, appearing for the petitioner-Society purported to distinguish this case on facts from the case of HMT House Building Cooperative Society. But according to us, the facts of the present case are similar to the case of HMT House Building Cooperative Society and there is no scope to interfere with the order of the High Court, quashing the notifications under Sections 4(1) and 6(1). Accordingly, the special leave petitions filed on behalf of the petitioner-Society are dismissed. No costs.
4. In the appeals arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioner, the respondents and the State Government including all authorities/persons concerned shall implement the aforesaid directions at an early date.
Special Leave Petitions (C) Nos. 13114 and 13339 of 1991
5. These special leave petitions have been filed on behalf of the petitioner Amarjyothi House Building Cooperative Society Ltd. for setting aside the judgment of the High Court, quashing the notifications under Sections 4(1) and 6(1) of the Land Acquisition Act, acquiring lands for the petitioner-Society. From the judgment of the High Court, it appears that this society also had entered into an agreement with a developer who had assured to get the lands in question acquired in accordance with the provisions of the Act. Petitioner-Society paid huge amount to the said developer for the said object. In this case also there is no order of the State Government, granting prior approval for acquisition of the lands in question, as required by Section 3(f)(vi) of the Act. The High Court has also referred to the Report of Mr G.V.K Rao about the bogus members. According to the finding, the Society had admitted 4050 bogus members. As such, there is no scope for taking a view contrary to the one which we have taken while disposing of the Appeals Nos. 3011-19 of 1995 [arising out of SLPs (C) Nos. 11482-90 of 1991] filed on behalf of the HMT House Building Cooperative Society. These special leave petitions are accordingly dismissed. No costs.
6. In Appeals Nos. 3011-19 of 1995 arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioner, the respondents and the State Government including all authorities/persons concerned shall implement the aforesaid directions at an early date.
Special Leave Petitions (C) Nos. 12032-37 of 1991
7. These special leave petitions have been filed for setting aside the judgment of the High Court, quashing the notifications under Sections 4(1) and 6(1) of the Land Acquisition Act, on the ground that the said notifications had been issued at the instance of the agents, appointed by the petitioner-Society. The High Court has also referred to the agreement entered into by the petitioner and the said middleman, who had undertaken to get the lands in question acquired. The agent had undertaken in the agreement to manage all concerned “at all levels”. No order granting prior approval by the State Government for the acquisition of the lands, as required by Section 3(f)(vi) of the Act has been produced. According to us, the facts of the present case are in no way different from that of the HMT House Building Cooperative Society, which has been disposed of by a reasoned judgment. That judgment fully covers the present special leave petitions also. Accordingly, the special leave petitions are dismissed. No costs.
8. In Appeals Nos. 3011-19 of 1995 arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioner, the respondents and the State Government including all authorities/persons concerned shall implement the aforesaid directions at an early date.
Special Leave Petitions (C) Nos. 12535-37 of 1991
9. These special leave petitions have been filed against the judgment of the High Court, quashing the notifications under Sections 4(1) and 6(1) of the Land Acquisition Act, on the ground that the notifications had been issued at the instance of the agent, appointed by the petitioner-Society. The learned counsel, appearing for the petitioner, could not point out as to how the facts of the present case are different from the facts of the HMT House Building Society, so far as this aspect is concerned. He has, however, pointed out that in the present case, an order had been issued by the State Government granting prior approval. In this connection, reference was made to an order dated 9-8-1984 by which it is said that the Government had granted prior approval for the acquisition of the lands in question. According to us, an order dated 9-8-1984 cannot be an order under Section 3(f)(vi) because the definition of “public purpose” which was introduced by Act 68 of 1984 came in force with effect from 24-9-1984. As such there was no occasion for the State Government to exercise power under Section 3(f)(vi) on 9-8-1984. Any such order must be in terms of Section 39 read with Section 40 of Part VII of the Act, which part is applicable when acquisition of land is made for companies. It is surprising as to how the present House Building Cooperative Society was being treated even as a company on 9-8-1984, because the new definition of company was also introduced in Section 3(e) with effect from 24-9-1984. Accordingly, there is no merit in these special leave petitions, which are dismissed. No costs.
10. In Appeals Nos. 3011-19 of 1995 arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioner, the respondents and the State Government including all authorities/persons concerned shall implement the aforesaid directions at an early date.
Special Leave Petitions (C) Nos. 5824-5920 of 1995
11. The special leave petitions have been filed on behalf of the State of Karnataka against the same judgment of the High Court, quashing the notifications under Sections 4(1) and 6(1) of the Land Acquisition Act, acquiring lands for different House Building Cooperative Societies. The State of Karnataka has purported to justify the issuance of those notifications. Whether the lands in question had been acquired in accordance with law has been examined in detail in the case of HMT House Building Cooperative Society. In view of the reasons given in the said judgment, the special leave petitions have to be dismissed. The application for condonation of delay in filing the special leave petitions is also dismissed. No cost.
12. In Appeals Nos. 3011-19 of 1995 arising out of SLPs (C) Nos. 11482-90 of 1991, after the dismissal of the appeals a direction has been given that as a result of the quashing of the land acquisition proceedings including the notifications in question, the possession of the land shall be restored to the respective landowners irrespective of the fact whether they had challenged the acquisition of their lands or not. A further direction has been given that on restoration of the possession to the landowners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands. We issue a similar direction even in this case. The petitioners and the respondents including all authorities/persons concerned shall implement the aforesaid directions at an early date.
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