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THE LIQUIDATOR PETROFILS CO. OPERATIVE LTD (IN LIQUIDATION) Versus INDUSTRIAL DEVELOPMENT BANK OFINDIA LTD (IDBI LTD) & 21

2015 (5) TMI 692 - GUJARAT HIGH COURT

Winding up of society - Sale of property through auction - A Co-operative society registered under the Multi-State Cooperative Societies Act, 1984 - Gujarat Industrial Development Corporation (GIDC) constituted under the Gujarat Industrial Development Act, 1962 (GID Act), applied to the State Government for acquisition of land for the Society, necessary for such public purpose - Land acquired for public purpose - State objection regarding possession of the land in dispute by filing review/ recal .....

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d notification under Sections 4 and 6 of the LA Act for acquiring the lands in dispute of villages Ranoli and Undhera. The State Government contributed ₹ 1,000/- towards cost of acquisition and apart from this amount, no amount was spent by the State Government either for acquisition purpose or for payment of compensation. The entire amount of expenses and payment of compensation in pursuance of the consent award was paid by the Society. Contribution of ₹ 1,000/- by the State Governm .....

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ture of polyester filament yarn. The Central Government was holding 84% shares. The argument of learned Additional Advocate General cannot be accepted that merely because the State Government had invested ₹ 1,000/- for acquiring the land for public purpose, would mean that the land belongs to the State Government or the acquired land has vested in the State Government. It only establishes that land acquisition was for a public purpose.

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s entire cost of expenses for acquisition and payment of compensation under consent award passed under Section 11 (2) was paid by the GIDC and the farmers/land holders directly gave possession to the GIDC. At no point of time, possession was taken by the Collector on behalf of the State Government nor there is any material on record to demonstrate that the State Government never took possession or invested any amount except ₹ 1,000/-. Though Section 32 of GID Act was not applicable as the .....

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ession of the acquired land.

The State Government neither in the review petition nor in its affidavits-in-reply filed in this writ petition has produced any evidence or material to demonstrate that possession was taken by the State Government by preparing a Panchnama in the presence of independent witnesses and their signatures were obtained on the Panchnama. As a matter of fact, no evidence with regard to taking over symbolic or actual possession by the State Government or by the Col .....

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und that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction sale as it was well aware of the auction sale and as a matter of fact, has is .....

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t the concerned authority shall complete the formalities expeditiously as the GIDC has leased out the land for public purpose to fulfill the object of GID Act.

By judgment dated 22.6.2011, this Court had allowed the Liquidator to withdraw the amount deposited with the Court pursuant to the interim orders passed by this Court. The Registrar General of this Court had been directed to release the amount in favour of Liquidator, and the amount deposited pursuant to the order passed by thi .....

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Court auction. - This writ petition is finally disposed of with a direction to the GIDC and other concerned authorities to expeditiously complete the formalities so that the object of Gujarat Industrial Development Act, 1962 is achieved. The State Government and the Collector, Vadodara are directed not to create any hindrance in implementation of the Project by the auction purchasers. - SPECIAL CIVIL APPLICATION NO. 4353 of 2008 With CIVIL APPLICATION NO. 3036 of 2010 - Dated:- 7-5-2015 - MR. VI .....

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VOCATE GENERAL ASSISTED BY MR PARTH BHATT, AGP, MR RUTVIJ M BHATT, ADVOCATE JUDGMENT (PER : HONOURABLE THE ACTING CHIEF JUSTICE MR. VIJAY MANOHAR SAHAI) 1. The petitioner is a Liquidator of the Society appointed under Section 90 (1) of the Multi-State Cooperative Societies Act, 2002. The petitioner is not an Official Liquidator nor is a Liquidator envisaged under the Companies Act, 1956. 2. M/s. Petrofils Co-operative Limited was a National Cooperative Society (the Society for short) in which th .....

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f of Petrofils, land was needed. Gujarat Industrial Development Corporation (GIDC for short) constituted under the Gujarat Industrial Development Act, 1962 (GID Act for short), applied to the State Government for acquisition of land for the Society, necessary for such public purpose. The State Government under a notification dated 9.6.1978 decided to acquire the required land for public purpose, namely, for establishment of Petrofils industry and construction of a township for employees of Petro .....

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on under section 4 of the LA Act was issued on 2.9.1974, notification under section 6 was issued on 11.6.1976 and the land was acquired by consent award passed on 13.7.1976. The entire cost of acquisition expenses and the entire amount of compensation to the land owners was paid by GIDC and the possession of entire acquired land was directly taken by GIDC from the farmers/land owners. 3. It is undisputed that Petrofils industry and township was also constructed on the land so acquired. However, .....

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ety approached the Ahmedabad Bench of Debts Recovery Tribunal (DRT for short) by filing Original Application No.410 of 2001 for recovery of dues. Different other creditors followed the suit and several Original Applications were filed against the Society before the DRT, Ahmedabad for recovery of dues. 4. On 23.4.2007, DRT Ahmedabad, allowed the Original Applications of the creditors and directed the liquidator to pay to IDBI the decreed amount with interest. The liquidator thereupon challenged t .....

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ety failing which the bank would take measures under the Securitisation Act. The liquidator responded to such notice under a communication dated 17.9.2007 raising objections. On 28.9.2007 IDBI bank conveyed to the liquidator that objections cannot be accepted and called upon him to handover the possession of secured assets. Before expiry of statutory period of 60 days of notice under section 13(2) of the Securitisation Act, liquidator filed Special Civil Application No.26713 of 2007 before this .....

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3(2) of the Securitisation Act. By way of amendment two prayers were added. First was for a declaration that in view of the provisions contained in Multi State Cooperative Societies Act, 1984, Securitisation Act would not apply in the present case. The second prayer was for the constitution of a sale committee with a view to prevent further erosion of value of assets of the Society. In such petition on 11.3.2008, while issuing notice, learned Single Judge ordered to maintain status quo with rega .....

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tely, it appears that the learned counsels are on agreement for constitution of the Committee. The modalities to be undertaken for such Committee as stated hereinafter :- A. The Committee shall comprise of the liquidator of the petitioner Society being Convener and Chairman. B. One member of each financial institutions who are having status of secured creditor. C. One member of each Bank who is having status of secured creditors. D. One member representing majority unsecured creditors. E. One me .....

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Committee shall be taken generally by majority. However, in case of any major policy decision, when there is no unanimous agreement, it would be open to any member of the Committee either directly or through the convener to approach this Court in the present proceeding for intervention, if any, for exercise of the judicial power. iii. The Committee shall through the convener undertake the exercise of preparing the valuation report of the assets. The valuation shall be by at least one independent .....

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ich is the lead secured creditor. iv. Whichever highest valuation report is available on the record of the property concerned, shall be the basis for fixation of the upset price for the respective assets, may be in one lot or different lot as may be finalised by the Committee. The process for issuing advertisement, open bid, inter se bidding amongst the bidder and confirmation of sale, shall be finalised by Asset Sale Committee, but subject to the approval granted by this Court. v. It shall be s .....

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ce realized shall be deposited with this Court and thereafter, the investment shall be ordered as may be finalised by this Court. viii. The aforesaid process of issuing advertisement and inter se bidding and confirmation before the Sale Committee shall be completed within a period of 2 months, i.e. on or before 31.03.2009. ix. The expenses for advertisement and other process as integral part of the sale process, until it is approved by this Court, shall be borne by the petitioner Society through .....

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of the Committee to move this Court for appropriate clarification and/or directions. 10. In view of the above, the directions for constitution and functioning of the Committee is ordered accordingly. 8. The committee constituted under order dated 12.12.2008 carried out the task of obtaining valuation reports for the purpose of fixing upset price for different lots of properties and inviting offers for sale. At different stages, learned Single Judges of this Court were apprised about periodical .....

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ay be deposited with the Court in terms of the earlier order. Civil Application Nos. 3036 to 3052 of 2009 stand disposed of. 9. On 22.6.2011, the writ petition was disposed of by the Division Bench, relevant portions of which reads as under :- Subsequently, when the matter was taken up by the Division Bench on 23rd June, 2010, this Court while observed that there is nothing on record to satisfy that any action is taken under Section 13 (4) of the said Act and merely a notice under Section 13 (2) .....

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ime, as in the present case only a notice under Section 13(2) of the SARFAESI Act is under challenge and this Court is not inclined to interfere with such notice, under Article 226 of the Constitution of India. There is also a remedy of appeal under Section 17 of the SARFAESI Act if any measure is taken by the secured creditor under Section 13(4) of the SARFAESI Act. Learned counsel for the petitioner and the respondents would submit that number of properties have already been auction sold by th .....

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suant to the interim orders passed by this Court in the present case, and direct the Liquidator to keep the amount in a separate interest bearing no lien account till the matter is settled by the Liquidator, if he is empowered under the law, or by any competent authority or a Court of competent jurisdiction/Debt Recovery Tribunal. The Registrar General of this Court is directed to release the amount in favour of Liquidator, if any amount is deposited pursuant to the order passed by this Court in .....

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d submit that he is not interested in prosecuting the Special Leave Petition against respondent nos.2 and 14 for the present and accordingly, requests us to delete respondent nos.2 and 14 from the array of parties, at his risk. Request sought for is granted. Petitioners are permitted to delete respondent nos.2 and 14, at his risk. Learned Additional Solicitor General for the petitioner submits that respondent nos.1, 3 to 13 and 15 have entered into a joint agreement for amicable settlement dated .....

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efore the Supreme Court and amounts realised through sale of properties of Petrofils were also distributed pro-rata amongst the creditors. 12. The State Government has filed the review/recall application along with delay condonation application on 15.10.2013 for reviewing the judgment dated 22.6.2011 on the ground that land was acquired for public purpose by the State Government. The State Government had contributed to the cost of acquisition. Such land so acquired can be used only for public pu .....

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It is for this purpose that application for review/recalling the said two orders were filed. First order was passed on Civil Application confirming the sale by this Court made by the sale committee. The second was the order under which the writ petition came to be disposed of. 13. The review/recall application was allowed by the Division Bench on 8.5.2014, thereafter the petitioner has impleaded the State of Gujarat, Collector Vadodara as well as Gujarat Industrial Development Corporation as par .....

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ehalf of respondent no.17 to the affidavit-inreply filed by Collector, Vadodara on 17.3.2015. The respondent no.18 has filed affidavit-in-rejoinder to the affidavit-in-reply filed by Collector, Vadodara on 18.3.2015. The GIDC also filed an additional affidavit on 24.4.2015 bringing on record photocopy of the agreement between State of Gujarat and Gujarat Industrial Development Corporation for the land of Undhera, District Vadodara. Learned counsel for all the parties stated that since only the a .....

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which is to be decided by this Court is as to whether the land had vested in the State Government and without the prior approval of the State Government, as provided by Section 17A Gujarat Act, the GIDC could execute lease deeds in favour of auction purchasers for use of another public purpose and in absence of State of Gujarat in whom the land had vested, the entire auction and sale confirmation proceedings were illegal and liable to be set aside. Therefore, no further sur-rejoinder to the rejo .....

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arned counsel appearing for respondent Nos.1, 2 and 10, Mr. Pranav Desai, learned counsel for respondent Nos.3 to 7, Mr. B. H. Bhagat, learned counsel for respondent Nos.8 and 9, Mr. K. I. Shah, learned counsel for respondent Nos.11 and 12, Mr. C. Z. Shankhla, learned counsel for respondent No.13, Mr. K. K. Pujara, learned counsel for respondent No.14, Mr. Shramik Bhatt, learned counsel for M/s Singhi & Company for respondent No.15, Mr. Shalin Mehta, learned senior counsel assisted by Mr. Hr .....

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Court by order dated 12.12.2008 constituted an Asset Sale Committee of which the petitioner was appointed as Chairman and Convener of the Committee which was entrusted the job of getting the assets of the Society valued by Valuers. One valuation shall be made at least by one independent Government approved Valuer. The Committee obtained the valuation reports in respect of the assets of the Society including the lands which are in dispute, by Tatas Strategic Management Group, a Division of Tata .....

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egic Management Group was placed before this Court. According to the valuation reports, the upset price for the respective assets which may be in one lot or different lot be fixed and advertisement be issued inviting open bid and inter-se bidding amongst the bidders may also be held. The Asset Sale Committee was to finalize the sale and the matter was to be placed before the Court for confirmation of sale. The bidders were asked to deposit earnest money. After inter-se bidding, confirmation befo .....

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report). This order was passed by this Court in Civil Application for direction No.6528 of 2009 on 2.7.2009. Some property was sold in the auction sale which was required to be confirmed. However, the properties which remained unsold (the properties which are in dispute in this petition), the Court permitted for fixing a fresh reduced upset price by order dated 3.8.2009. Both these orders were passed in Civil Application for direction No.6528 of 2009. By another advertisement on 6.8.2009, secon .....

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40 of 2010 and 3041 of 2010 were filed before this Court for confirmation of sale in favour of the highest bidders. This Court by its order dated 6.4.2010 was pleased to confirm the auction sale. The sale proceeds were deposited before the Registry of this Court. After the sale of leasehold rights, all properties and assets of M/s. Petrofils Cooperative Limited stood sold out. This Court by another order dated 22.6.2011 disposed of the writ petition with a direction to the Registrar General of t .....

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sale made in favour of respondent Nos.16, 17 and 18 be set aside. It is relevant to note over here that the State Government had not challenged the sale of other assets of the Society to other persons. However, in any case, the auction sale in favour of the respondent Nos.16, 17 and 18 the auction purchasers had become final and was not open for challenge by the State Government. There was no illegality committed by the Liquidator and the sale of the land of the Society took place under the guid .....

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e State Government for GIDC, but the land never vested in the State Government under Section 16 of the LA Act as the State Government never took possession of the land in dispute. The entire amount and expenses for acquisition and compensation was paid by the GIDC, award was made on the basis of consent award obtained by the GIDC and possession was taken over by the GIDC. Therefore, the entire land in dispute and properties of the Society vested in the GIDC in view of Section 30 (2) of the GID A .....

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land in dispute vested in the Corporation as the land was acquired under Section 17, 17-A (Gujarat Act) for fulfilling the requirement of the Gujarat Industrial Development Corporation as provided in Section 30 of GID Act which had been enacted for securing the orderly establishment and organization of industries in industrial areas and industrial estates in the State of Gujarat. Learned counsel for the petitioner further urged that the public purpose was for which the land was acquired was achi .....

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in November 1998. Since then, it became totally defunct. The rehabilitation scheme was not found to be viable. 17.2 He further urged that the provisions of a General Act should give way to the provisions contained in a Special Act and that being so, the Liquidator in the present case is not under any obligation to seek any prior permission of the State Government nor the GIDC before proceeding to dispose of the lease hold rights of the Society in liquidation over the lands in question by sale o .....

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of the Act of 2002 would go to make the said Act a special one, whereas the LA Act is on the other hand a General Act as has been observed by the Constitution Bench of the Hon ble Supreme Court in paragraph 21 of the decision in the case of Shri Ramtanu Cooperative Housing Society Ltd. v. State of Maharashtra and others, AIR 1970 SC 1771. He further submitted that under Section 90 (1) of the Act of 2002, immediately from the date of passing of the order for winding up of a Multi State Cooperativ .....

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nts contained in the lease deed executed between the Society and GIDC. 17.3 He further urged that neither the Liquidator nor the Asset Sale Committee constituted by this Court had committed any illegality or irregularity in disposal of the lands in question to the auction purchasers. Initially, the Asset Sale Committee in terms of the stipulation contained in order dated 12.12.2008, had sought to sell inter alia the leasehold rights over the lands in question on the basis of the highest of the t .....

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esponse. After obtaining due approval from this Court on 14.12.2009, when the Asset Sale Committee sought to sell the leasehold rights of the lands in question on the basis of the average of the two valuations minus 10% thereof, and issued public notice dated 7.1.2010, there was again no response whatsoever with regard to Vadodara Plant, however, there were three responses in respect of Vadodara Township and five responses in respect of Vadodara School. After carrying out inter-se biddings in re .....

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iota of truth or substance in the stand of the State Government that the real market value of the aforesaid three leasehold lands in question at the relevant point of time, was ₹ 660.72 Crores. The so-called market value of ₹ 660.72 Crores has been arrived at by the District Land Pricing Committee admittedly on the basis of the guidelines/instructions issued by the State Government and its authorities on 26.4.2011 and 2.5.2011. The valuations done by the two Govt. approved Valuers a .....

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o.12862 of 2010 in October 2010 praying, inter alia, for accord of confirmation of sale to one M/s. Ganesh Infrastructure the Society s Ankleshwar property having 243 quarters with infrastructure facilities standing on the leasehold land of GIDC admeasuring 2,02,337 Sq. Mts. located in GIDC Area, Bharuch at the agreed price of ₹ 69.25 Crores as against the upset price of ₹ 62.26 Crores. The said application was allowed on 29.10.2010 and this Court accorded its confirmation of the afo .....

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e Government was a necessary party. 18. Mr. P. K. Jani, learned Additional Advocate General assisted by Mr. Parth Bhatt, learned Assistant Government Pleader for respondent Nos.19 to 21 has urged that the challenge in the writ petition is to the notice under Section 13 of the Securitisation Act, 2002. The issue involved in the present writ petition is that the petitioner and the respondents who are Secured Creditors could not have agreed to sell the land wherein there is an interest of the State .....

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of the LA Act for industrial development. As per Section 16 of the LA Act, the subject land had vested in the State free from all encumbrances. In that view of the matter, the State became the owner of the land. The ownership of the land remained with the State Government at every stage and even till date. 18.2 He further submitted that the State Government had assigned the subject land to GIDC for the purpose of carrying out the industrial development as envisaged under the GID Act. That GIDC i .....

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18.4 He further submitted that the land acquired by the State Government has to be utilized for public purpose only and it cannot be used for any private purpose by the allottees of GIDC or the successor of the allottees. The Society or its successor have no right to transfer, sell or in any manner assign its rights to any third party. When the Society was unable to utilize this land for the purpose for which it was granted to it, the Society was required to return the land to GIDC. Society cann .....

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n different than Government valuer. There was no effective wide publicity for sale of land. Only few persons participated in auction. After the auction, all the participants formed common legal entities. There is huge difference between price offered by the auction purchasers and the actual price. Hence, there was cartel of selected persons to get the land at very low price. 18.6 He further submitted that this Court had no occasion to go into the legality, validity and propriety of the auction p .....

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nd the GIDC. The auction purchasers have no right, title or any interest over the land as the rights of the Society in the land were incapable of being sold to anyone. He further submitted that the auction purchasers cannot be permitted to make use of the land for commercial activities. They do not have rights to develop the land, sub-plot it, sell it or part with the possession of entire or part of land to anyone. They cannot be allowed to carry out commercial activities of any nature. He, ther .....

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ssession of the land in dispute was taken directly by the GIDC from the farmers/land owners and in view of Section 30 (1) and (2), the entire land vested in the GIDC free from all encumbrances. The land in dispute never vested in the State Government under Section 16 of the LA Act. In support of his argument, learned counsel has placed reliance on paragraphs 16 and 17 of the decision of the Apex Court in Municipal Corporation of Greater Bombay v. Industrial Development Investment Co. Pvt. Ltd. a .....

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the land for any purpose though the respondent would be using the land for industrial purpose. The permission of the State Government for change of land use as provided in Section 17A of the Gujarat Act would not apply as the owner of the land is GIDC and not the State Government. GIDC had sold the land in dispute in furtherance of the object of GID Act, therefore, the land can be used for construction of residential houses, flats, industrial purpose or any other purpose as per the terms of the .....

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has confirmed the sale of a property. It is stated that the land purchased by the respondent no.18 is situated at village Ranoli for industrial purpose allotted by GIDC to the Society. The answering respondent has stepped into the shoes of the Society so far as lease is concerned. It has clearly been stated that the respondent no.18 is going to utilize the land for industrial purpose only. The description of the property given in paragraph 3 of the affidavit-in-reply filed by the Collector was i .....

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ge Ranoli forming part of Petrochemical park developed by GIDC and the respondent would be using the land for the same purpose only for which GIDC allotted the land to erstwhile leaseholder. 19.4 In paragraph 8 of the rejoinder, it has been stated that in the entire State of Gujarat, wherever the land has been acquired for the purpose of GIDC, the same vests in the GIDC and regulated under the GID Act. It has further been stated that whenever the land allotted to any allottee falls vacant, that .....

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ed that there is no outright transfer of ownership of the land to the respondent no.18, there is no change of purpose in respect of land for which it was acquired and, therefore, the stand of the State Government is illfounded and liable to be rejected. 19.6 In paragraph 11 of the rejoinder, it has been stated that the land was acquired for GIDC by the State Government and GIDC in turn allotted it to various industries including the land in dispute which has been purchased by the respondent no.1 .....

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ection 17A of the Gujarat Act permits the use of land for the same public purpose for which no permission or previous sanction is required to be taken from the State Government. 19.8 In paragraph 17 of the rejoinder, it has been stated that the respondent no.18 purchased the leasehold rights in the property in dispute for the remaining period by investing huge amount of approximately ₹ 79.35 Crores and more than two years have passed, but the answering respondent is not able to enjoy the f .....

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ch for respondent Nos.16 and 17 has submitted that Section 30 (1) and (2) of GIDC Act makes GIDC the owner of the acquired land. Vesting connotes ownership and Section 30 (2) gives no indication that there is a limited vesting of land in GIDC for the purpose of management and possession. The vesting provision must be given its fullest effect in absence of any hint in the statute that GIDC cannot become the owner of the land acquired by the State for GIDC. 20.1 He further submitted that the award .....

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her submitted that the lease deed executed between GIDC and the Society permits transfer of lease with the consent of GIDC. Rule 27 of 1963 Rules permit GIDC to transfer the lands acquired under the LA Act on lease for industrial purpose. So, there is no illegality at all in transferring the land on lease to Society and Liquidator further transferring the lease in favour of respondent Nos.16 and 17. 20.4 He further submitted that Section 17 A of the Land Acquisition Act does not apply to the fac .....

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No permission of State was required for auctioning the lands of the Society. He further submitted that auction was held under the aegis of Sale Committee appointed by this Court. Valuation of the land is just and fair. 20.5 While replying to the affidavit-in-reply filed by the Collector, Vadodara, the respondent no.16 - Aspire Confra Private Limited in its affidavit-in-reply in paragraph 5 has stated that it had purchased the land in dispute in terms of the special conditions of sale and liabili .....

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5.2.2010 for school and land located in Petrofil Nagar, Vadodara admeasuring 7,000 Sq. Mts. The bid of answering respondent was accepted as he was the highest bidder and the sale was confirmed. Similarly, bid of the respondent no.17 - Prestige Infrastructure Pvt. Ltd. was also highest and the sale was confirmed. In paragraph 11, it has been stated that No Objection has been issued by GIDC, GEB, Notified Area Authority, transfer charges had been paid and all dues of the aforesaid authority were p .....

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sector land for residential purpose subject to terms and conditions specified therein. 20.7 In paragraph 16, it was stated that on 25.3.2013, Vadodara Urban Development Authority communicated revised development permission for residential purpose and approved the same after receiving necessary development charges. 20.8. On behalf of respondent no.17, affidavit-in-reply has been sworn by Mukundbhai Manubhai Patel on behalf of Prestige Infrastructure Pvt. Ltd. is exactly the same as that has been .....

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l industrial zones have been created for the purpose of industrial development and lands are acquired by GIDC as per the provisions of Section 30 and 31 of the GID Act. The land in dispute is situated at Ranoli and Undhera. In paragraph 6 of the affidavit-in-reply, it had been stated that proceedings were initiated under Section 30 and 31 of GID Act with regard to aforesaid two villages and compensation was paid by GIDC for the land in dispute to the land owners under consent awards/regular refe .....

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on 6 of the LA Act and consent award to the owners of the land as per Section 11(2) of the LA Act was made on 13.7.1976. The public purpose was clearly mentioned in the notification that the land was required for expansion of petrochemical estate of GIDC. 21.1 Learned counsel for GIDC placing reliance on paragraph 10 of the affidavit-in-reply further urged that as per the object of acquiring the land for public purpose, GIDC entered into lease agreement for a period of 99 years with Petrofils Co .....

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erson in whom the title vests shall serve a notice on the lessor within one month from the date of vesting. 21.2 In paragraph 13 of the affidavit-in-reply, it has been stated that the land in dispute situated at Naldhari industrial area of GIDC, Taluka Valia, Dist. Bharuch was acquired by GIDC by notification dated 24.11.1986 and consent award/regular award as per Section 11 of the LA Act was made on 8.3.1989 and 12.1.1990. In the notification as well as in the award, the public purpose was clea .....

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r the transfer fees. In paragraph 23 of the affidavit-in-reply, it has been stated by GIDC that land acquired at village Undhera, Dist. Vadodara for public purpose of residential township for the employees of Petrofils Cooperative Limited, the land was allotted along with the additional land. These lands have been auctioned in pursuance of the order passed by this Court and on the request made by the auction purchaser, GIDC has transferred the land admeasuring 2,25,26 Sq. Mts. situated at Undher .....

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ues of GIDC and Notified Area Authority including transfer fees and revenue and other charges thereon. After these formalities are completed, thereafter GIDC may enter into supplementary agreement with the respondent nos.16 to 18. 22. On the argument of the learned counsel for the parties, one thing is clear that the land was acquired by the State Government for GIDC for establishment of petrochemical industry, namely, Petrofils Cooperative Limited and for establishment of township for the emplo .....

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ribution of ₹ 1,000/- by the State Government was essential condition for acquisition of land for public purpose and to demonstrate that the cost of acquisition had been borne wholly or in part out of public fund. It could not be disputed by the learned Additional Advocate General appearing for the State Government that the land in dispute was acquired for public purpose for the Society. The Petrofils Cooperative Limited was a joint venture of Government of India and the weavers society kn .....

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e Apex Court in Manubhai Jehtalal Patel v. State of Gujarat, (1980) 4 SCC 553 at page 555 in paragraph 4 is extracted as under :- 4. It is not correct to determine the validity of acquisition keeping in view the amount of contribution but the motivation for making the contribution would help in determining the bona fides of acquisition. Further in Malimabu case, contribution of Re.1 from the State revenue was held adequate to hold that acquisition was for public purpose with State fund. Therefor .....

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the State nor the State ever took possession of the land in dispute. 25. Counsel for the parties have argued at length about the vesting of land and possession of the land, we propose to examine as to whether the land had vested in the State Government or in GIDC free from all encumbrances. The GIDC sent its proposal to the State Government for acquiring the land for the purpose of setting up of an industry and industrial township. Section 30 of the GID Act provides as under :- ACQUISITION AND .....

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2) The amount of compensation awarded and all other charges incurred in the acquisition of any such land shall be forthwith paid by the Corporation and thereupon the land shall vest in the Corporation. 26. The object of framing of GID Act was to promote industrial development in the entire State of Gujarat through the Corporation known as GIDC. The GIDC sent its proposal to the State Government for acquiring the land making it clear that the amount of compensation awarded and all other charges i .....

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State nor the Collector or the State Government had taken possession from the farmers/land owners. 27. The land was acquired by the State Government under Section 30 and 31 of the GID Act and in furtherance of the object of the GID Act, the State Government entered into agreement with GIDC as provided in Section 32 of the GID Act. Section 32 of the GID Act is reproduced as under :- (32) (1) For the furtherance of the objects of this Act, the State Government may, upon such conditions as may be .....

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te Government, the Corporation shall replace it at the disposal of the State Government upon such terms and conditions as the State Government may after consultation with the Corporation determine. 28. It was clear to GIDC that the land was vested in GIDC free from all encumbrances as entire cost of expenses for acquisition and payment of compensation under consent award passed under Section 11 (2) was paid by the GIDC and the farmers/land holders directly gave possession to the GIDC. At no poin .....

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egard to Undhera village filed by GIDC along with the additional affidavit-inreply is reproduced as under :- : AGREEMENT : AN AGREEMENT made this 1st day of August One Thousand nine hundred and seventy nine BETWEEN THE GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION, a Corporation established by the Government of Gujarat under the Gujarat Industrial Development Act, 1962, (hereinafter referred to as the Corporation which expression shall unless the context does not so admit include its successor or s .....

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measuring about 17-15-86 H-A-Sq. Mtr. Sectors bounded on North by village boundaries of ______________ on South by _____________________ on East by the village boundary of ________________________ and western boundary of) as shown in the map and schedule more particularly described in the schedule hereunder written hereinafter called the said land together with the trees, houses and all other things whatsoever standing on the same or attached thereto or permanently fastened to anything attached .....

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upon the Corporation to enter into an agreement hereinafter contained with the Government. Now these presents witness that the Corporation doth here by bind itself to pay to the Government the cost of the acquisition of the said land excluding rupees one thousand that will be paid by the Government and such charges as may be incurred by the Government or by any of the officer of the Government in respect of the said acquisition at such time or times as the Collector of (hereinafter referred to a .....

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nding thereon or attached thereto or permanently fastened to anything attached thereto shall be transferred to the Corporation so as to vest in the Corporation and be henceforth held by it for the purpose of the Gujarat Industrial Development Act, 1962 free from all claims or charges whatsoever on the part of Government. If at any time or times the whole or any part of the said land is required by Government or for the purpose of making any new public road or for any purpose connected with Publi .....

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said Act and paid by the Corporation in respect of the lands so transferred, including the percentage awarded under Section 23 (2) of the said Act, together with such amount as shall be estimated by the Executive Engineer whose decision in the matter shall be final at the costs of the development of the land so transferred, which shall include the value at the date of transfer of any structures standing thereon, and when part of a building is on the land so transferred and part is on an adjoini .....

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written. The common seal of the Gujarat Industrial Development Corporation was affixed hereto pursuant to a resolution of the Corporation dated Sd/- Asstt. Chief Executive (Land) In the presence of :- (1) Sd/- (2) Sd/- (3) SIGNED, SEALED AND DELIVERED by Officer On Special Duty, Industries Commissioner's Office, Ahmedabad. Officer on Special Duty (LA), Industries Commissioner's Office, Ahmedabad. In the presence of (1) (2) SCHEDULE District Taluka Village S. No. Area of the land under a .....

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d's Kharabo. 0 - 40 - 47 0 - 90 - 04 0 - 08 - 09 0 - 26 - 30 0 - 18 - 21 0 - 51 - 60 0 - 21 - 25 0 - 25 - 29 0 - 19 - 22 0 - 39 - 46 0 - 40 - 47 0 - 18 - 21 0 - 18 - 21 0 - 40 - 47 0 - 32 - 37 0 - 51 - 65 0 - 18 - 16 0 - 15 - 18 0 - 96 - 12 For construction of township for Petrofils by G.I.D.C. 1 276+ 2 + 277 +278 + 279 Total 17 - 15 - 86 Sd/- Asstt. Chief Executive (Land) 29. Almost similar agreement was executed with regard to land situated at village Ranoli. From the agreement extracted a .....

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empowered under Section 16 to take possession of the land, if the possession was not already taken, exercising power under Section 17(4). Thereupon, the land shall vest absolutely in the Government free from all encumbrances. It is well settled law that taking possession of the land is by means of a memorandum (panchnama) prepared by the Land Acquisition Officer and signed by Panch witnesses called for the purpose. Subsequently, the Collector hands over the same to the beneficiary by means of a .....

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cated in the acquisition of the property shall be paid by the Commissioner; "thereupon the said property shall vest in the Corporation". In other words, on payment of compensation by the Corporation to the Land Acquisition Officer, statutorily the Corporation gets transfer of possession from the State and the acquired property vests in the Corporation free from all encumbrances. Thereby the Corporation becomes the absolute owner of the land free from all encumbrances including tenancy .....

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t by the learned Additional Advocate General that since the land has been acquired by the State, it has vested in the State free from all encumbrances. It is necessary to reproduce Section 16 of the LA Act which reads as under :- 16. Power to take possession. When the Collector has made an award under section 11, he may take possession of the land, which shall thereupon [vest absolutely in the [Government]], free from all encumbrances. 32. The Apex Court had the occasion to consider the scope of .....

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possession by the Collector, the acquired land shall vest absolutely in the Government free from all encumbrances. In terms of the plain language of this section, vesting of the acquired land in the Government takes place as soon as possession is taken by the Collector after passing an award under Section 11. To put it differently, the vesting of land under Section 16 of the Act presupposes actual taking of possession and till that is done, legal presumption of vesting enshrined in Section 16 ca .....

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o state that when the Government proceeds to take possession of the land acquired by it under the Land Acquisition Act, 1894, it must take actual possession of the land, since all interests in the land are sought to be acquired by it. There can be no question of taking "symbolical" possession in the sense understood by judicial decisions under the Code of Civil Procedure. Nor would possession merely on paper be enough. What the Act contemplates as a necessary condition of vesting of th .....

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herwise would be sufficient to constitute taking of possession of land in every case. But here, in our opinion, since the land was lying fallow and there was no crop on it at the material time, the act of the Tehsildar in going on the spot and inspecting the land for the purpose of determining what part was waste and arable and should, therefore, be taken possession of and determining its extent, was sufficient to constitute taking of possession. It appears that the appellant was not present whe .....

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ulent or collusive transaction of taking of mere paper possession, without the occupant or the owner ever coming to know of it." (emphasis supplied) 15. In Balmokand Khatri Educational and Industrial Trust v. State of Punjab (1996) 4 SCC 212, the Court negatived the argument that even after finalization of the acquisition proceedings possession of the land continued with the appellant and observed :- "4. It is seen that the entire gamut of the acquisition proceedings stood completed by .....

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thereto, the retention of possession would tantamount only to illegal or unlawful possession". 16. In P.K. Kalburqi v. State of Karnataka (2005) 12 SCC 489, the Court referred to the observations made by Bhagwati, J. in Balwant Narayan Bhagde v. M.D. Bhagwat (supra) that no hard and fast rule can be laid down as to what act would be sufficient to constitute taking of possession of the acquired land and observed that when there is no crop or structure on the land only symbolic possession co .....

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en of a large tract of land then it is permissible to take possession by a properly executed panchnama. Similar view was expressed in the recent judgment in Brij Pal Bhargava v. State of UP 2011(2) SCALE 692. 19. The same issue was recently considered in C.A. No. 3604 of 2011 - Banda Development Authority, Banda v. Moti Lal Agarwal decided on 26.4.2011. After making reference to the judgments in Balwant Narayan Bhagde v. M.D. Bhagwat (supra), Balmokand Khatri Educational and Industrial Trust v. .....

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uthority to go to the spot and prepare a panchnama will ordinarily be treated as sufficient to constitute taking of possession. (iii) If crop is standing on the acquired land or building/structure exists, mere going on the spot by the concerned authority will, by itself, be not sufficient for taking possession. Ordinarily, in such cases, the concerned authority will have to give notice to the occupier of the building/structure or the person who has cultivated the land and take possession in the .....

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cument in the presence of independent witnesses and getting their signatures on such document. (v) If beneficiary of the acquisition is an agency/instrumentality of the State and 80% of the total compensation is deposited in terms of Section 17(3A) and substantial portion of the acquired land has been utilised in furtherance of the particular public purpose, then the Court may reasonably presume that possession of the acquired land has been taken." 33. The State Government neither in the re .....

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and cannot be deemed to have been vested in the State Government. In another decision, the Apex Court in State of Uttar Pradesh v. Hari Ram, (2013) 4 SCC 280 in paragraph 25 to 32 has held as under :- 25. The word vest or vesting has different meaning. Legal Glossary, published by Official Language (Legislative) Commission 1970 Edition at Page 302 : Vest: 1. To give a person a legally fixed, immediate right or personal or future enjoyment of (an estate), to grant, endow, clothe with a particular .....

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ment present or prospective has become property of some particular persons or persons as present interest; mere expectancy or future or contingent interest in property founded on anticipated continuance of existing laws does not continue vested right Vaughan v. Nadel; 228 Kan. 469, 618 p. 2d 778, 783. See also Accrue Vest and specific typed of vested interest infra. 27. Webster s Third New International Dictionary, of the English Language unabridged, Volume III S to Z at page 2547 defines the wo .....

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ny of investiture ….. to become legally vested (normally) title to real property vests in the holder of a property executed deed.) 28. Vest / vested , therefore, may or may not include transfer of possession the meaning of which depends on the context in which it has been placed and the interpretation of various other related provisions. 29. What is deemed vesting absolutely is that what is deemed to have acquired . In our view, there must be express words of utmost clarity to persuade a .....

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t of possession of land, and which gave rise to the old saying that possession is nine points of the law. The effect of the statute is this, that when a man is in possession, he may use force to keep out a trespasser; but if a trespasser has gained possession, the rightful owner cannot use force to put him out, but must appeal to the law for assistance. 30. Vacant land, it may be noted, is not actually acquired but deemed to have been acquired, in that deeming things to be what they are not. Acq .....

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t object, various procedures have to be followed for acquisition and vesting. When we look at those words in the above setting and the provisions to follow such as sub-sections (5) and (6) of Section 10, the words acquired and vested have different meaning and content. Under Section 10(3), what is vested is de jure possession not de facto, for more reasons than one because we are testing the expression on a statutory hypothesis and such an hypothesis can be carried only to the extent necessary t .....

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context controls the text and the purpose and scheme project the particular semantic shade or nuance of meaning. The court in Rajendra Kumar v. Kalyan (dead) by Lrs. (2000) 8 SCC 99 held as follows: We do find some contentious substance in the contextual facts, since vesting shall have to be a vesting certain. To vest, generally means to give a property in. (Per Brett, L.J. Coverdale v. Charlton. Stroud s Judicial Dictionary, 5th edn. Vol. VI.) Vesting in favour of the unborn person and in the .....

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t de facto but it is always open to a person to voluntarily surrender and deliver possession, under Section 10(3) of the Act. 34. From the decision in Hari Ram (supra), it is clear that the land in dispute vested in GIDC under Section 30 (2) of the GID Act free from all encumbrances and the GIDC was in de jura and de facto possession of the land in dispute. The Apex Court in another decision in the case of V. Chandrasekaran and another v. Administrative Officer and others, (2012) 12 SCC 133 has .....

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t Authority v. Nasiruzzaman & Ors., (1996) 6 SCC 424, M. Ramalinga Thevar v. State of Tamil Nadu & Ors., (2000) 4 SCC 322; and Government of Andhra Pradesh v. Syed Akbar & Ors., AIR 2005 SC 492). 26. The said land, once acquired, cannot be restored to the tenure holders/persons-interested, even if it is not used for the purpose for which it was so acquired, or for any other purpose either. The proceedings cannot be withdrawn/abandoned under the provisions of Section 48 of the Act, or .....

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dia v. Subodh Singh & Ors., (2011) 11 SCC 100). 27. The meaning of the word 'vesting', has been considered by this Court time and again. In Fruit and Vegetable Merchants Union v. The Delhi Improvement Trust, AIR 1957 SC 344, this Court held that the meaning of word 'vesting' varies as per the context of the Statute, under which the property vests. So far as the vesting under Sections 16 and 17 of the Act is concerned, the Court held as under :- "In the cases contemplated .....

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uses the excess land is no concern of the original owner and cannot be the basis for invalidating the acquisition. There is no principle of law by which a valid compulsory acquisition stands voided because long later the requiring Authority diverts it to a public purpose other than the one stated in the ….declaration. 29. Similarly, in State of Kerala & Anr. v. M. Bhaskaran Pillai & Anr., (1997) 5 SCC 432, this Court held as under: It is settled law that if the land is acquired fo .....

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to the Government of Tamil Nadu & Ors., (1997) 2 SCC 627; Bhagat Singh v. State of U.P. & Ors., AIR 1999 SC 436; Niladri Narayan Chandradhurja v. State of West Bengal, AIR 2002 SC 2532; Northern Indian Glass Industries v. Jaswant Singh & Ors., (2003) 1 SCC 335; and Leelawanti & Ors. v. State of Haryana & Ors., (2012) 1 SCC 66). 30. In Government of Andhra Pradesh & Anr. v. Syed Akbar (Supra), this Court considered this very issue and held that, once the land has vested i .....

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p; Ors. (2004) 4 SCC 460; Bangalore Development Authority v. R. Hanumaiah , (2005) 12 SCC 508; and Delhi Airtech Services (P) Ltd. & Anr. v. State of U.P. & Anr. (2011) 9 SCC 354). 31. In view of the above, the law can be crystallized to mean, that once the land is acquired and it vests in the State, free from all encumbrances, it is not the concern of the land owner, whether the land is being used for the purpose for which it was acquired or for any other purpose. He becomes persona non .....

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od non habet. However, this Rule has certain exceptions and one of them is, that the transfer must be in good faith for value, and there must be no misrepresentation or fraud, which would render the transactions as void and also that the property is purchased after taking reasonable care to ascertain that the transferee has the requisite power to transfer the said land, and finally that, the parties have acted in good faith, as is required under Section 41 of the Transfer of Property Act, 1882. .....

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uisition is held to be valid and title vests in GIDC, how GIDC uses the land is of no concern of the Court as it has become the absolute owner of the acquired property free from all encumbrances. Therefore, no one can claim any right, title and interest in respect of the acquired land which has vested in GIDC. Once the land had vested in GIDC, it has a right to change its user on its own according to the object of GID Act. Though, in the case in hand, even the public purpose for which the land i .....

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ustry by the Society, leasehold rights for the balance of 99 years lease period had been purchased in Court auction by the respondent No.18 for establishing an industry. From the aforesaid facts, it is clear that the original public purpose for which the land had been acquired had not been changed either by GIDC or by the respondent Nos.16 to 18. Neither the State Government nor the original owner of the land in dispute have any concern as to how the land was being used. The Apex Court had held .....

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f the State Government was required. We deem it necessary to extract Section 17A of the Gujarat Act which reads as under :- Section 17A. Use of land for any public purpose permitted :- When any lands vests in the State Government or in a corporation owned by the State Government under the provisions of this Act, it shall be lawful, with the previous sanction of the State Government to use such land also for any public purpose other than that for which its possession was taken. 37. In the earlier .....

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land owners. Therefore, the entire acquired land vested in GIDC free from all encumbrances under Section 30 (2) of the GID Act. It is also relevant to point out over here that there was no necessity for the GIDC to enter into agreement with the State Government under Section 32 of the GID Act as GIDC was the absolute owner of the land in dispute but at that time, since the law was not clear to GIDC, they under a bonafide mistake entered into agreement with the State Government. The agreement can .....

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in process to permit the respondent No.18 to establish an industry over the land purchased by respondent No.18 in Court auction. The entire amount which was received in auction proceedings has been released by this Court to the Liquidator who has also paid the amount to the Secured Creditors on pro-rata basis. The review application filed by the State Government was nothing but an abuse of the process of the Court. Though 15 properties belonging to the Society were sold in Court auction, the St .....

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vernment had no right to file a review petition before this Court on the ground that the writ petition was filed without joining the State Government as party as the State Government had no right whatsoever as the land in dispute never vested in the State Government nor the State Government ever took possession over the land in dispute. Therefore, there was no question of vesting the land in the State Government under Section 16 of the LA Act. The GIDC never raised any objection to the auction s .....

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