Land Acquisition Act 1894 (Engro Limited Case)

“Public purpose”- Land Acquisition Act 1894 (Engro Limited Case) whether a company can acquire land under s.40 if its acts can be regarded as falling under the ambit of “public purpose”.

Brief Facts

Engro Limited is a company which wants to acquire 537K- 13M adjacent to their company situated in Chak No. 97/9-L, Tehsil and district Sahiwal. The land was to be acquired for the expansion of the existing dairy based- food plants of the company.

We will adumbrate upon 3 issues mainly:

• Bare reading of s. 40 and brief interpretation of the section.
• What is “public purpose?
• How do courts interpret public purpose and whether our case can fall under the realm of “public purpose”?

Section 40

Previous enquiry

(1) Such consent shall not be given unless the[ appropriate Government] be satisfied.[ either on the report of the Collector under section 5A, sub- section (2), or] by an enquiry held as hereinafter provided,- [ (a) that the purpose of the acquisition is to obtain land for the erection of dwelling houses for workmen employed by the Company or for the provision of amenities directly connected therewith, or [ (aa) that such acquisition is needed for the construction of some building or work for a Company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose, or]

(b) that such acquisition is needed for the construction of some work, and that such work is likely to prove useful to the public].

(2) Such enquiry shall be held by such officer and at such time and place as the[ appropriate Government] shall appoint.

(3) Such officer may summon and enforce the attendance of witnesses and compel the production of documents by the same means and, as far as possible, in the same manner as is provided by the[ Code of Civil Procedure, 1908 (5 of 1908 )] in the case of a Civil Court.

The first issue to be resolved is whether acquiring the land for dairy based- food plants is a purpose for the enhancement of the business of the company for their own profiteering purposes or whether this expansion will bring benefits to the public in general as well. If so, then the expansion is lawful and the company should by all means be able to acquire the above stated land. Sub-section (1)(b) clearly points out that in such circumstances where acquisition is likely to prove useful to the public, a consent may be granted and the Court would not be competent to question the validity of the proceedings under S.40.

This takes us to the second issue of our discussion; what is a public purpose?

P L D 1983 Lahore 355

Before Irshad Hassan Khan, J

Raja MUHAMMAD AMIR AND 14 OTHERS-Petitioners versus PROVINCE OF THE PUNJAB AND 2 OTHERS—Respondents:

Summary- Part VII, S. 40(aa) [as amended by Land Acquisition (West Pakistan) Amendment Ordinance.(I of 1965), S. 31-Sufficient material placed on record showing that land was acquired for public purpose Even if provisions of Part VII resorted to acquire land-Case, held, covered by S. 40-Word 'work'-Used in widest terms-Scope being enlarged, every acquisition for Company can now be made for construction of some building or work for a Company which is engaged or is taking steps for engaging itself in an industry or work which is for 'public purpose'.

[Para 10]- In Jaishi Ram Goel and others v. The State of Punjab and others (A I R 1962 Punj. 177), it was held that the presumption as to the correctness of public purpose is rebuttable and, is subject to examination by the Court. In this case also a distinction was drawn for acquisition for Company simpliciter and for Company for public purpose. Furthermore, it was held that establishment of industry for sanitary wares would be for a 'public purpose' and the community would benefit by the set up of such a factory. In V. Harihara Prasad v. K. Jagannadham and another (A I R 1955 Andh. Pra. 184), it was held that where the members of the community are to be benefited by the construction of the temples, the acquisition for the purpose of construction of the temples must be held to be a public purpose. It was further held in this case that where the acquisition was made for the purpose of a Company it was not necessary that the compensation should be met wholly or partly out of public revenues. In Muhammad Akbar and 7 others v. The Commissioner, Rawalpindi Division and 2 others (P L D 1975 Lah 747) the term 'public purpose' was defined as under:

 "The classical definition of a 'public purpose,' is 'an object or aim, in which the general interest of the community as opposed to particular interest of individuals is directly and vitally concerned.' This definition knocks out from the bottom the case of the Land Acquisition Authorities because the object of acquiring the disputed lands is not such in which the general interest of the community is directly and vitally concerned."

[Para 10]- In Muhammad Ashraf Khan v. Revenue E. A. C. and 7 others (1980 C L C 1504), it was held that in terms of section 4 of the Act, the term "public purpose' broad speaking means any purpose aiming at promotion of general welfare and whether such a purpose amounts to public purpose is a matter within the exclusive domain of the Government. Keeping in view the definition. of term 'public purpose' as defined by the Superior Courts of this country and l decisions from Indian jurisdiction, I am inclined to hold that the, acquisitio In of land for Dandot Cement Project. wherein many works, specified in the notification and the agreement, shall be carried out including excavation of clay needed for the manufacture of cement are for 'public purpose'. The Court can take judicial notice of the acute shortage of cement in the country and the acquisition of land by the Government in an effort to increase the E production of cement to narrow down the gap between the demand and supply is in national interest. .The material placed on the record by the respondent Corporation also lends support to this conclusion. Furthermore, the land has, not been acquired for the excavation of clay simpliciter. In any event, the raw material for the purpose of manufacture of cement if imported would be too costly and if by excavation of clay the cement is made available t the community at competitive rate, the people at large will be benefited by such a process. In these circumstances, the declaration made by the Government under section 6 of the Act would raise a presumption that the acquisition was being made for a `public purpose'. The mere fact that the Dandot Cement Factory had been allegedly acquiring its clay for the last so many years without acquisition does not mean that the acquisition of the land for this purpose was outside the purview of `public purpose.

Para 12- I am also inclined to hold that the word `work' used in clause (aa) of section 40 has been used in the widest term. The scope has been enlarged and not controlled by the addition of clause (aa) which was introduced into the principal Act by section 3 of the Land Acquisition (Amendment) Ordinance (I of 1965). Such an amendment was also made India in the Land Acquisition Act, in 1962. As a result of this amendment, every .acquisition for a Company can now be made for the construction off some building or work for a Company which is engaged or is taking steps for engaging itself in any industry or work which is for a public purpose. In the instant case, the land was acquired for the construction and setting of a cement factory, therefore, in keeping with the spirit of times under which legislation was enacted, any work necessary for the running of the cement factory right from the stage of excavating clay to the ultimate sale and disposal of manufactured goods and all matters connected therewith would fall within the ambit of word "work" as used in clause (aa). It is, therefore, difficult to hold .that quarrying was not necessary for the running of cement factory and is. Neither covered by clause (aa) nor is for a public purpose.

PLD 2009 SC 217:

“In the instant case, prima facie laying of Housing Scheme for the utility/use of public-at-large, as compared to some individuals, is a public purpose within the meaning of section 4 of the said Act..” [22]

“It has been consistently held that the acquisition of land for establishing a housing society is a public purpose” [22]

"It has been previously held that “has held that the land acquired for establishing residential Colony for the WAPDA employees falls in the category of public purpose.” [22]

Acquisition of land for a housing scheme for a limited and specified segment of the society is a public purpose though where the benefit would ensure to the entire community the same would be a higher public purpose.

Establishment of a housing colony for the benefit of a specified segment of citizens does not offend against the fundamental rights enshrined in the Constitution and is also a public purpose and in the public interest in terms of the Act as well as the Rules.[23]

Whenever a Company makes a request for acquisition of the land for a particular purpose, the Provincial Government is to be satisfied that the same fell within the ambit of purposes mentioned in section 40. In the presence of these express provisions, it could not be argued that the acquisition of the land for a "Company" could not be made for a purpose other than a public purpose. Clauses (b) and (c) of this section appear to be more relevant for resolving the controversy in this case. [28]

The respondent-company made request for acquisition of land which was needed for the purpose of development of a housing scheme to provide developed plots to the general public for construction of the houses. [29]

Since there is no restriction or limitation on sale of the plot to any class, of persons rather it is open to all, therefore, the purpose of acquisition can safely be construed to be useful to public at large. [30]

P L D 1983 Lahore 552

Befare Irshad Hasan Khan , J

DR. MUHAMMAD NASIM JAVED-Petitioner versus  LAHORE CANTONMENT HOUSING SOCIETY LTD, THROUGH THE SECRETARY FORTRESS STADIUM LAHORE CANTT. AND 2  OTHERS-Respondent

Summary- Ss. 38 to 44--Acquisition of land by Government at Society's expenses for construction of residential accommodation for defence and Civilian Personnel, held, may serve `public purpose' but depends upon circumstances of each case whether or not such acquisition is for `public Purpose'.

In this case there is an emphasis on the general interest of the community as opposed to particular interest of the community. The purpose can be anything under the sun as long as it offers the community in general some benefit from its activities. In our case, the public will enjoy benefits of employment from the expansion of the company. Moreover, Public purpose does not cease to be so simply because incidental benefit will ensure to private individual. The following extracts accentuate both these points:

Para 9- It is an admitted fact that the Commissioner declared that he was satisfied that the land was required to be taken by the Government for the respondent Society for a public purposes, namely, for the construction of residential accommodation for Defence and Civilian Personnel. The petitioners, however, contended that such a purpose is not a work contemplated by section 40 of the Act, therefore, the acquisition proceedings are void ab initio. The term "public purpose" has been interpreted by the superior Courts of India and Pakistan in a large number of cases, which means a purpose furthering general interest of community as opposed to particular interest of individuals and to be construed according to the spirit of times in which particular legislation is enacted. Refer Raja Muhammad Amir and others v. Province of Punjab and others () P L D 1983 Lah. 355). Refer also Babu Barkya Thakur v. State of Bombay (A I R 1960 S C 1203), wherein it was held :

"It will thus be noticed that the expression `public purpose’ has been used in its generic sense of including any purpose in which even a fraction of the community may be interested or by which it may be benefited."

Para 10- The question as to whether acquisition would be for a public purpose if Government were to acquire land for housing scheme of any kited has been examined in a number of cases from Indian jurisdiction. In Hamabai Framjee Petit v. Secretary of State for India (A I R 1914 P C 20), a question arose whether the acquisition of land for erecting buildings for the use of Government servants was a public purpose. It was held ;

"The phrase 'public purpose' must include a purpose that is an object or aim in which the general interest of the community as opposed to the particular interests of the individuals is directly and vitally concerned. The resumption of lands for erecting building for the use of Government officials is for public purpose as it will redound to public benefit by helping the Government to maintain the efficiency of its servants."

In Jhandu Lai Budh Ram and others v. Tie State of Punjab and another (A I R 1959 Pb. 479); it was held:

"It is perfectly legitimate policy on the part of the Government, in view of the extraordinary shortage of house accommodation at Delhi; to encourage the development of Co-operative House Building Societies on a non-profit basis, and it amounted to a public purpose if the Government helped such societies by acquiring land for them."

The- same view was taken in Tej Ram Jag Ram v. Union of India', Ministry of Works, Housing acrd Supply, New Delhi and others (A I R 1959 Pb. 478), wherein it was held :

"The meaning of the term `public purpose' is undoubtedly hard to define but in the case of acquisition of land it is not confined to the direct use of land by Government itself or even that the land acquired is to he made available to the public at large.

Thus the acquisition would be fur a public purpose if Government were to acquire land for a housing scheme of any kind in which the houses were to be sold or let to persons of any class if an acute housing shortage existed and this shortage could not be, and was not being adequately met by private enterprise.

That as an acute housing shortage existed in the Delhi area, an acquisition of land for the persons forming themselves into co-operative house building societies for the purpose of building homes for themselves on a strict co-operative and. non-profit-making basis must be regarded as a legitimate public purpose."

Para 11- R. L. Arora v. The State of Uttar Pradesh and others (A.I R 1962 S C 764), to contend that what the provisions of sections 40 and 41 of the Act require is that the work should be directly useful to the public and the agreement shall contain a term how the public shall have the right to use the work directly themselves and that the work contemplated is a work like a hospital, a public reading room or library or an educational institution open to the public or such other work as the public may directly use and it is only for such works, which are useful to the public in this way and can be directly used by it, that land can be acquired for a Company under the Act. Sarkar, J., expressed contrary view and observed as under :

"it would be unduly restricting the meaning of the word `useful' to say that a work is useful to the public only when it can directly be used  by the public. The words are not 'work which the public can use', in which case it might with some justification have been said that the work must be such as the public could use. Reading section 40(1)(b) itself, it cannot be accepted that the work there contemplated is only a building or other construction put up for a philanthropic purpose or is such as itself can be used by the public. The work contemplated is a work from the construction of which the public can in any way derive benefit, whether by the direct use of the work or by the enjoyment of the fruits of the activities, carried on there, or, may be, otherwise."

Para 15- In Muhammad Akbar's case, it was found that land of private persons had been acquired only for the benefit of an individual and not in lieu of his acquired land but for his agreeing to shift the Shrine- It was further held: that acquisition I for such a purpose was not a "public purpose" in the eye of law though it 'may be laudable otherwise. I say so with respect that the rule laid down in Muhammad Akbar's case that the land could not be acquired for an individual is not absolute. There may be exceptional circumstances and times where such an acquisition would serve public purpose. In the instant case, the land is not acquired for the benefit of an individual simpliciter, but is needed for a Co-operative Housing Society and such a need has been held to be a public purpose in a number of cases some of which have been quoted above. The record of the acquisition proceedings shows that the respondent Society proposed the acquisition oh the disputed land to ease the acute housing shortage in Lahore Cantt. and to provide shelter to defence and civilian personnels. A large number of applications are pending with the Society for over six years for tire allocation of plots.

Para 15- Public purpose does not cease to be so simply because incidental benefit will ensure to private individual. (Refer Nichols on Eminent Domain, Vol. 2, section 7.222). There can be no doubt that the acquisition of the disputed land for providing housing facilities and civil amenities, ancillary buildings, godowns, roads etc., as envisaged by paragraph 2 of the Agreement will serve public purpose, within the ambit of clauses (aa) and (b) of section 40 of the Act. The word "work" used in the aforesaid clauses has a wide meaning. (Refer Raja Muhammad .4inir's case). The Society is undoubtedly engaged and is taking steps for engaging itself in a work which is for public purpose and therefore, no exception can be taken to the acquisition for a purpose covered by the aforesaid provisions. It is, therefore, difficult to sustain the plea of the learned counsel for the petitioners that the acquisition is ultra vires of section 40 of the Act, There is no material on the record to lead to the conclusion that the opinion of the Government that public purpose would be served by this acquisition is incorrect.

1993 SCMR 1673

There is no doubt that the acquisition of the land for a Housing Scheme formulated by the Board of Revenue Employees Housing Society Limited is a public purpose. By public purpose is meant an object or aim in which the general interest of the community as compared with the interest of an individual is involved. [6]

The High Court was not justified in ignoring the objects for utilization of the land by the Telegraph and Telephone Department stated in their said communication, which decidedly is a public purpose of higher order as compared with the one for which the land is acquired for use by the Board of Revenue Employees Housing Society Ltd., namely, construction of housing colony. The reason being that so far as the latter is concerned only a section of the society would be benefited by the acquisition of the land but its utilization by Telegraph and Telephone Department involves the interest of the public at large. It seems to us that the Assistant Commissioner was conscious of this aspect of the case, who in his report categorically made suggestion that the land be procured through negotiation, otherwise the execution of the housing scheme would be rendered impracticable, to which unfortunately the Commissioner did not advert and chose to issue Notification under section 6 of the Act. [7]

2002 S C M R 1652

Whether the provisions of the Land Acquisition Act se far as they relate to acquisition of land on the request of a Company for a purpose other than "public purpose" are inconsistent with fundamental right relating, to protection of property right as enshrined in Article 24 of the Constitution, for if the argument as raised by the learned counsel for the petitioners is sustained, the said provisions of the Act would have to be declared void as provided in Article 8 of the Constitution. Sub‑Article (2) of Article 24 of the Constitution no doubt provides that no property shall be compulsorily acquired or taken possession of save for a public purpose and it does not, cover acquisition for any purpose as mentioned in section 40 other than public purposes but sub­-clause (e) of sub‑Article (3) of this Article provides that nothing in the said Article shall affect the validity of any law providing for the acquisition of any class of property for the purpose of providing housing and public facilities and services such as roads, water supply sewerage, gas and electric power to all or any specified class of citizens, therefore, the provisions of the Land Acquisition Act so far as they relate to acquisition of land for the purpose of Company even for purposes other than "public purpose" as contemplated by sub‑Article (2) is valid in law and cannot be held to be void on account of inconsistency with the provisions of the said Article. [19]

PLD 1984 Lahore 295

In this case, the acquisition of land for the purpose of quarrying clay deposits to feed the cement factory fell under clause (aa) of section 40 of the Act. [10]

It is clear that in these days of extreme shortage of cement, setting up of a cement factory for produc­tion of cement is a national need and is obviously for public purpose. The said company needs the work of establishing a quarry to excavate clay deposits to feed the cement plant for the ‑ preparation of cement as the said clay is an indispensible ingredient of the cement to be produced by the plant installed at the Dandot Cement Project. We are also clear in our mind that the word `work' in the expression building or work as used in clause (aa) of subsection (1) of section 40 of the Act is not confined to a work of industrial nature and has a much wider meaning and it embraces within its ambit setting up of a quarry for excavation of clay to provide the same to the said cement factory. The acquisition of land for the purpose of quarrying clay deposits, therefore, clearly falls within clause (aa) of sub­section (1) of section 40 of the Act. [11]

The acquisition of said land for the purpose of the said company was, therefore, made after full satisfaction of conditions laid down in Part VII of the Act and accordingly the said acquisition was perfectly in order and was unexceptionable. [11]

Mohammad Ishaq v Government of Punjab – 2002 SCMR 1652

Summary- Acquisition of land for company—public purpose as defined and  contemplated by law with the same strictness as the said expression was made applicable in other cases. Acquisition of land for the purpose of development of a housing Scheme to provide developed plots to the needy persons for construction of houses.

Para 16 – In the presence of these express provisions (s40), it could not be argued that the acquisition of the land for a company could not made for a purpose other than a public purpose. Clauses B and C of this section appear to be more relevant for resolving the controversy in this case.

Para 17 – The expression useful to the public does not have the same meaning as could be assigned to the expression public purpose. The expression “useful” to the public purpose in our considered view would mean “beneficial” for the public. 

Para 19 – 24 (2) of the constitution no doubt provides that no property shall be compulsorily acquired or taken possession of safe for a public purpose and it does not cover acquisition for any purpose as mentioned in s40 other than public purposes but sub-clause (3) of this article provides that nothing in the said article shall affect the validity of any law providing for the acquisition of any class of property for the purpose of providing housing and public facilities and services such as roads water supply sewerage gas and electric power to all or any specified class of citizens, therefore, the provisions of the land acquisition act, so far as they relate to the acquisition of land for the purpose of Company, even for purposes other than “public purpose” as contemplated by Sub-article (2) is valid in law and cannot be held to be void on account of inconsistency with the provisions of the said article.

Petition dismissed.

Federation of Pakistan v Province of Punjab – 1993 SCMR 1673

Summary- The dispute between the parties is confined to acquisition of land situated in the estate of village Dhana falling within the urban area of Lahore. The land along with other area was earlier purchased by the Pakistan Telephone and Telegraph Department from the Settlement Department.

Para 9 – Under section 6, on consideration of a report submitted to the commissioner under S5 A or S40 in compliance with other provisions of the act (which includes s39 and s40), if he is satisfied that the land is needed for public purpose or for a company he may make a declaration to that effect. It is noteworthy that an inquiry and s40 is factual in nature in which hearing is given to the objectors. It is a channel to place information for the commissioner for the satisfaction to enable him to have a correct perception of the situation before making a declaration that the land is needed for a public purpose and consequently its acquisition is warrantable, but the satisfaction of the commissioner should be deliberate and arrived at after due care and proper application of the mind to the facts appearing on the record.

Conclusion

The object of s. 40 is that the Government is custodian of public interest and sole judge whether land was required for construction of public interest and whether such work was likely to prove useful to public. Only other person concerned in the matter is a Company which made application for such land. If Government is satisfied that the work was to be constructed for purpose useful to the public then the Court must not question the validity of the proceedings. In our case Engro Limited is serving a public purpose of higher order in a sense that top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Company’s dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. Their activities are not just contributing to the economy of the country and bringing a good name to the food industry of Pakistan globally but Engro Foods is among the biggest and fastest growing conglomerates in Pakistan with a vision to cater to local needs with products conforming to global standards. So it is also benefiting the public at large by supplying the best possible dairy products. So there is a much broader public benefit of health at stake as described in s40 (1)(b) compared to the public purpose claimed by the petitioner which is so small that it only caters to a handful of residents of that area.