LALJIBHAI KADVABHAI SAVALIYA & ORS. Vs. STATE OF GUJARAT & ORS

LAND ACQUISITION ACT, 1894

Tags Land Acquisition

Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 10019 of 2016, Judgment Date: Oct 05, 2016

Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 10019 OF 2016
(Arising out of SLP(C) No.2725 of 2010)

Laljibhai Kadvabhai Savaliya & Ors. ….Appellants

Versus
State of Gujarat & Ors. …. Respondents

With

CIVIL APPEAL NO. 10020 OF 2016
(Arising out of SLP(C) No. 2226/2010)

CIVIL APPEAL NOS. 10021-10050 OF 2016
(Arising out of SLP(C) Nos. 2228-2257/2010)
and
CIVIL APPEAL NOS. 10051-10068 OF 2016
(Arising out of SLP(C) Nos. 2260-2277/2010)

J U D G M E N T

Uday Umesh Lalit, J.

Leave granted. These appeals take exception to the common judgment and
order dated 13.07.2009 passed by the High Court of Gujarat at Ahmedabad in
Special Civil Application Nos.5107 of 2008, 4321 of 2008, 824-853 of 2008
and 899-916 of 2008. Since all these appeals raise identical issues, they
are dealt with and disposed of by this common judgment.

The Petroleum and Minerals Pipelines (Acquisition of Right of User in Land)
Act, 1962 (herein referred to as the “PMP Act”) was enacted by Parliament
to provide for the acquisition of right of user in land for laying
pipelines for the transport of petroleum and minerals and for incidental
matters, with following Statement of Objects and Reasons :-

“As a result of the implementation of plans for the development of
petroleum resources in the country, it is anticipated that in the next few
years there will be a substantial increase in the production of crude oil,
natural gas and petroleum products by the public sector oilfields and
refineries in India. It has therefore become necessary to lay petroleum
pipelines in the country to serve as an efficient and cheap means of
transportation and distribution of petroleum and petroleum products.

2. Although land can be acquired outright for laying such pipelines
under the Land Acquisition Act, 1894 the procedure for such acquisition is
long-drawn and costly. Since the petroleum will be laid underground
outright acquisition of land is not necessary. Therefore, in the case of
these pipelines it is considered sufficient to acquire the mere right of
user in the land for laying and maintaining the pipelines. The Bill seeks
to achieve the above purpose.

3. The main features of the Bill are–

(i). No right of user of land can be acquired for the purpose of laying
pipelines unless the Central Government declares its intention by
Notification in the Official Gazette, and unless objections, if any, filed
within twenty-one days of that Notification are disposed of by the
competent authority.

(ii). When final declaration about acquisition is made the right to use
land for the purpose of laying pipelines will vest in the Central
Government, State Government or the corporation, as the case may be but
notwithstanding such acquisition, the owner or occupier of the land shall
be entitled to use the land for the purpose for which such land was put to
use immediately before the declaration by the Central Government. But
after the date of acquisition he shall not construct any building or any
other structure or construct or excavate any tank, well, reservoir or dam
or plant any tree, on that land.

iii). Compensation for the damage, loss or injury sustained by any person
interested in the land shall be payable to such person. Besides this,
compensation calculated at ten per cent of the market value of the land on
the date of the preliminary Notification is also payable to the owner and
to any other person whose right of enjoyment in the land has been affected
by reason of the acquisition. The compensation in both cases is to be
determined by the competent authority in the first instance and an appeal
lies from its decision to the District Judge.”

Section 2 of the PMP Act defines certain expressions. In terms of
Section 3, the Central Government is empowered to acquire the right of user
in any land. Under Section 4, it is lawful for any authorized person to
enter upon and cause survey in respect of such land. Under Section 5, any
person interested in the land can object to the laying of the pipelines
under the land. The objections so preferred are to be dealt with by the
Competent Authority who would then make a report for the decision of the
Central Government. Under Section 6 if the Central Government is satisfied
that the land is required for laying any pipeline for transport of
petroleum or any mineral, it may declare so by Notification in the Official
Gazette, whereafter the right of user shall vest absolutely in the Central
Government or in the State Government or the Corporation as directed.
After the right of user stands so vested it is lawful to lay pipelines in
terms of Section 7. Section 9 incorporates certain restrictions regarding
the use of such land and Section 10 lays down principles for award of
compensation in respect of acquisition of the right of user of any land and
also in respect of any damage or loss sustained by any person interested in
the land. The relevant Sections namely Sections 2, 3, 6, 7, 9 ,10 and 18
of the PMP Act are as under:-

“2. Definitions. – In this Act, unless the context otherwise requires–

(a) "competent authority" means any person or authority authorised by the
Central Government, by Notification in the Official Gazette, to perform the
functions of the competent authority under this Act 1 and different persons
or authorities may be authorised to perform all or any of the functions of
the competent authority under this Act in the same area or different areas
specified in the Notification;

(b) "corporation" means anybody corporate established under any Central,
Provincial or State Act, and includes—

(i) a company formed and registered under the Companies Act, 1956; and
(ii) a company formed and registered under any law relating to companies
formerly in force in any part of India;

(ba) "minerals" have the meanings assigned to them in the Mines Act,
1952 (35 of 1952), and include mineral oils and stowing sand but do not
include petroleum;

(c) "petroleum" has the same meaning as in the Petroleum Act, 1934 (30 of
1934), and includes natural gas and refinery gas;
(d) "prescribed" means prescribed by rules made under this Act.

Publication of Notification for acquisition.– (1) Whenever it appears to
the Central Government that it is necessary in the public interest that for
the transport of petroleum 2 or any mineral] from one locality to another
locality pipelines may be laid by that Government or by any State
Government or a corporation and that for the purpose of laying such
pipelines it is necessary to acquire the right of user in any land under
which such pipelines may be laid, it may, by Notification in the Official
Gazette, declare its intention to acquire the right of user therein.

(2) Every Notification under sub-section (1) shall give a brief description
of the land.

3) The competent authority shall cause the substance of the Notification to
be published at such places and in such manner as may be prescribed.

Declaration of acquisition of right of user.– (1) Where no objections under
subsection (1) of section 5 have been made to the competent authority
within the period specified therein or where the competent authority has
disallowed the objections under sub-section (2) of that section, that
authority shall, as soon as may be, 1 either make a report in respect of
the land described in the Notification under sub-section (1) of section 3,
or make different reports in respect of different parcels of such land, to
the Central Government containing his recommendations on the objections,
together with the record of the proceedings held by him, for the decision
of that Government and upon receipt of such report the Central Government
shall if satisfied that such land is required for laying any pipeline for
the transport of petroleum or any mineral, declare, by Notification in the
Official Gazette, that the right of user in the land for laying the
pipelines should be acquired and different declarations may be made from
time to time in respect of different parcels of the land described in the
Notification issued under sub-section (1) of section 3, irrespective of
whether one report or different reports have been made by the competent
authority under this section.

(2) On the publication of the declaration under sub-section (1), the right
of user in the land specified therein shall vest absolutely in the Central
Government free from all encumbrances.

(3) Where in respect of any land, a Notification has been issued under sub-
section (1) of section 3 but 3no declaration in respect of any parcel of
land covered by that Notification has been published under this section
within a period of one year from the date of that Notification, that
Notification shall cease to have effect on the expiration of that period.

(3A) No declaration in respect of any land covered by a Notification issued
under subsection (1) of section 3, published after the commencement of the
Petroleum Pipelines (Acquisition of Right of User in Land) Amendment Act,
1977 (13 of 1977), shall be made after the expiry of three years from the
date of such publication.

(4) Notwithstanding anything contained in sub-section (2), the Central
Government may, on such terms and conditions as it may think fit to impose,
direct by order in writing, that the right of user in the land for laying
the pipelines shall, instead of vesting in the Central Government vest,
either on the date of publication of the declaration or, on such other date
as may be specified in the direction, in the State Government or the
corporation proposing to lay the pipelines and thereupon the right of such
user in the land shall, subject to the terms and conditions so imposed,
vest in that State Government or corporation, as the case may be, free from
all encumbrances.

7. Central Government or State Government or corporation to lay
pipelines.– (1) Where the right of user in any land has vested in the
Central Government or in any State Government or Corporation under section
6–

(i) it shall be lawful for any person authorised by the Central Government
or such State Government or corporation, as the case may be, and his
servants and workmen to enter upon the land and lay pipelines or to do any
other act necessary for the laying of pipelines:

Provided that no pipeline shall be laid under–

(a) any land which, immediately before the date of the Notification under
sub-section (1) of section 3, was used for residential purposes;

(b) any land on which there stands any permanent structure which was in
existence immediately before the said date;

(d) any land at a depth which is less than one metre from the surface;

(ia) for laying pipelines for the transport of petroleum, it shall be
lawful for any person authorised by the Central Government or such State
Government or corporation to use such land for laying pipelines for
transporting any mineral and where the right of user in any land has so
vested for laying pipelines for transporting any mineral, it shall be
lawful for such person to use such land for laying pipelines for
transporting petroleum or any other mineral; and

(ii) such land shall be used only for laying the pipelines and for
maintaining, examining, repairing, altering or removing any such pipelines
or for doing any other act necessary for any of the aforesaid purposes or
for the utilisation of such pipelines.

(2) If any dispute arises with regard to any matter referred to in
paragraph (b) or paragraph (c) of the proviso to clause (i) of sub- section
(1), the dispute shall be referred to the competent authority whose
decision thereon shall be final.

9. Restrictions regarding the use of land.– (1) The owner or occupier of
the land with respect to which a declaration has been made under sub-
section (1) of section 6 shall be entitled to use the land for the purpose
for which such land was put to use immediately before the date of the
Notification under sub-section (1) of section 3:

Provided that, such owner or occupier shall not after the declaration under
sub-section (1) of section 6 –

(i) construct any building or any other structure;

(ii) construct or excavate any tank, well, reservoir or dam; or

(iii) plant any tree, on that land.

(2) The owner or occupier of the land under which any pipeline has been
laid not do any act or permit any act to be done which will or is likely to
cause any damage in any manner whatsoever to the pipeline.

(3) Where the owner or occupier of the land with respect to which a
declaration has been made under sub-section (1) of section 6-

(a) constructs any building or any other structure, or

(b) constructs or excavates any well, tank, reservoir or dam, or

(c) plants any tree,
on that land, the Court of the District Judge within the local limits of
whose jurisdiction such land is situate may, on an application made to it
by the competent authority and after holding such inquiry as it may deem
fit, cause the building, structure, reservoir, dam or tree to be removed or
the well or tank to be filled up, and the costs of such removal or filling
up shall be recoverable from such owner or occupier in the same manner as
if the order for the recovery of such costs were a decree made by that
Court.

10. Compensation.– (1) Where in the exercise of the powers conferred by
section 4, section 7 or section 8 by any person, any damage, loss or injury
is sustained by any person interested in the land under which the pipeline
is proposed to be, or is being, or has been laid, the Central Government,
the State Government or the corporation, as the case may be, shall be
liable to pay compensation to such person for such damage, loss or injury,
the amount of which shall be determined by the competent authority in the
first instance.

(2) If the amount of compensation determined by the competent authority
under subsection (1) is not acceptable to either of the parties, the amount
of compensation shall, on application by either of the parties to the
District Judge within the limits of whose jurisdiction the land or any part
thereof is situated, be determined by that District Judge.

(3) The competent authority or the District Judge while determining the
compensation under sub-section (1) or sub-section (2), as the case may be,
shall have due regard to the damage or loss sustained by any person
interested in the land by reason of—

(i) the removal of trees or standing crops, if any, on the land while
exercising the powers under section 4, section 7 or section 8;

(ii) the temporary severance of the land under which the pipeline has been
laid from other lands belonging to, or in the occupation of, such person;
or

(iii) any injury to any other property, whether movable or immovable, or
the earnings of such persons caused in any other manner:

Provided that in determining the compensation no account shall be taken of
any structure or other improvement made in the land after the date of the
Notification under sub-section (1) of section 3.

(4) Where the right of user of any land has vested in the Central
Government, the State Government or the corporation, the Central
Government, the State Government or the corporation, as the case may be,
shall, in addition to the compensation, if any, payable under subsection
(1), be liable to pay to the owner and to any other person whose right of
enjoyment in that land has been affected in any manner whatsoever by reason
of such vesting, compensation calculated at ten per cent. of the market
value of that land on the date of the Notification under sub-section (1) of
section 3.

(5) The market value of the land on the said date shall be determined by
the competent authority and if the value so determined by that authority is
not acceptable to either of the parties, it shall, on application by either
of the parties to the District Judge referred to in subsection (2), be
determined by that District Judge.

(6) The decision of the District Judge under sub-section (2) or sub-section
(5) shall be final.

18. Application of other laws not barred. – The provisions of this Act
shall be in addition to and not in derogation of any other law for the time
being in force relating to acquisition of land.

In exercise of the powers conferred by Section 3 of the PMP Act, the
Central Government by Notification published on 07.01.2006 in the Gazette
of India declared its intention to acquire the right of user in respect of
certain lands. Said Notification was as under:-

“Whereas it appears to the Central Government that it is necessary in the
public interest that for the transportation of natural gas through an
interconnection between Jamnagar-Bhopal and Kakinada-Hyderabad-Goa pipeline
a pipeline should be laid by Gas Transportation and Infrastructure Company
Ltd[1].

And whereas it appears to the Central Government that for the purpose of
laying the said pipeline, it is necessary to acquire the right of user in
land under which the said pipeline is proposed to be laid and which is
described in the Schedule annexed to this Notification.

Now, therefore, in exerciser of the powers conferred by sub-section (1) of
Section 3 of the Petroleum and Minerals Pipelines (Acquisition of Right of
User in Land) Act, 1962 (50 of 1962), the Central Government hereby
declares its intention to acquire the right of user therein.

Any person interested in the land described in the said Schedule may,
within twenty one days from the date on which the copies of this
Notification as published in the Gazette of India under sub-section (1) of
Section 3 of the said Act, are made available to the general public, object
in writing to the acquisition of the right of user therein for laying of
the pipeline under the land to Shri A.K. Sanghavi, Competent Authority, Gas
Transportation and Infrastructure Company Limited Pipeline Project, Anand
Mahal Apartment, Opposite to Bhulka Bhavan School, Anand Mahal Road, Surat-
395009, Gujarat.”

The Notification set out details of survey numbers of lands from different
villages and the extent of land in respect of which right of user was
sought to be acquired.

In these matters we are concerned with Block Nos.331, 342 and 364 of
Village Gothan, District Surat which were mentioned in the aforesaid
Notification published on 07.01.2006. In so far as Block No.331 is
concerned, non-agricultural permission was granted on 03.03.1982. However,
since there was no construction within the stipulated time, this non-
agricultural permission is said to have lapsed by efflux of time. In any
case the land had always been shown as agricultural land in Revenue
Records. The appellant Nos.1 to 3 in appeal arising from SLP(Civil)
Nos.2228-2257 of 2010 are stated to have purchased land admeasuring 29,370
sq.mtrs. and 8,531 sq.mtrs. from Block No.331 and thereafter sold sub-plots
to about 70 persons including appellant Nos.4 to 29 in that appeal. The
appellant No.1 in appeal arising out from SLP(Civil) Nos.2260-2277 of 2010
along with his brother is said to have purchased land admeasuring 50,691
sq.mtrs. from Block Nos. 342 and 364 and sold individual plots from that
land to 68 persons including appellant Nos.2 to 18 in said appeal.

On 07.03.2006, One Mr. V.I. Gohil, retired Deputy Collector was appointed
as Competent Authority vide Notification dated 7.03.2006 issued by the
Central Government which was published on 11.03.2006 in the Official
Gazette. Thereafter all the recorded owners were sought to be served with
notices inviting them to prefer objections to the proposed acquisition of
right of user. Some of the land-owners filed their objections in respect of
proposed acquisition. The Competent Authority had fixed the hearing on
2.08.2007. After considering the objections and hearing those who were
present including appellant No.1 Laljibhai, the Competent Authority
forwarded its Report dated 7.08.2007 to the Central Government. The report
indicates that the Competent Authority had held meetings with the
owners/occupiers as well as the representatives of RGTIL. The report
further shows that the average rate at which the lands in village Gothan
were sold during the years 2002-2005 was Rs.13.40 per sq.mtr. The
compensation determined by consent was Rs.181/- per sq.mtr. including
damages under Section 10(1) for lands other than those falling in
industrial zone. For those lands falling in industrial zone, the
compensation was increased to the level of Rs.201/- per sq.mtr. by consent.
Ninety percent of this compensation was paid in advance. Thereafter, spot
verification was undertaken and photographs were taken which show that
there was no construction on the lands in question. In the meantime, by
order dated 29.03.2007 District Panchayat Office, Revenue Branch, Surat had
accorded permission for conversion of certain lands including Block Nos.342
and 364 of village Gothan to non-agricultural use for the industrial
purposes. The order shows that the steps to seek such permission were
taken and the recommendations in that behalf were made after the
publication of the aforesaid Notification on 7.01.2006.

After considering the report of the Competent Authority, by Notification
dated 17.11.2007 issued in exercise of the powers conferred by Section 6 of
the PMP Act, the Government of India directed that the right of user in
respect of land mentioned in said Notification dated 17.11.2007 shall stand
vested in M/s Reliance Gas Transportation Infrastructure Ltd. (“RGTIL” for
short) free from all encumbrances. The Notification reads as under:-

“S.O. Whereas by Notification of the Government of India in the Ministry of
Petroleum and Natural Gas Number S.O. 41 dated 06th January, 2006, issued
under the sub-section (1) of Section 3 of the Petroleum and Minerals
Pipelines (Acquisition of Right of User in Land) Act, 1962 (50 of 1962)
(hereinafter referred to as the said Act), the Central Government declared
its intention to acquire the right of user in the land, specified in the
Schedule appended to that Notification for the purpose of laying Kakinada-
Hyderabad-Uran-Ahmedabad gas pipeline for transportation of natural gas by
M/s Reliance Gas Transportation Infrastructure Limited to various Consumers
of District Surat in the State of Gujarat

And, whereas copies of the said Gazette Notification were, made available
to the public on or before 08th September, 2007;

And whereas, the objections received from the public to the laying of the
pipeline have been considered and disallowed by the Competent Authority;

And whereas the competent authority has, under sub-section (1) of Section 6
of the said Act, submitted reports to the Government of India;

And whereas the Central Government, after considering the said report and
on being satisfied that the said land is required for laying the pipeline,
has decided to acquire the right of user therein;

Now, therefore, in exercise of the powers conferred by sub-section (1) of
Section 6 of the said Act, the Central Government hereby declares that the
right of user in the land specified in the Schedule appended to this
Notification is hereby acquired for laying the pipeline;

And, further, in exercise of the powers conferred by sub-section (4) of
Section 6 of the said Act, the Central Government hereby directs that the
right of user in the said land for laying the pipeline shall, instead of
vesting in the Central Government, vest, on the date of the publication of
the declaration, in M/s Reliance Gas Transportation Infrastructure Limited
free from all encumbrances.”

The Schedule appended to the Notification included Block Nos.331, 342 and
364 of village Gothan and the extent of land in respect of which right to
user was acquired from these Blocks was mentioned as 2295 sq.mtrs., 5047
sq. mtrs. and 3424 sq. mtrs respectively.

In the physical verification of Block Nos.342 and 364 carried out in
January, 2008, it was seen that some of the owners had commenced
construction activities. A communication was therefore addressed by the
Competent Authority on 08.01.2008 to the District Development Officer,
Surat annexing Notifications issued under Sections 3 and 6 of the PMP Act.
Around this time the owners/occupiers of Block Nos.331, 342 and 364 filed
Special Civil Application Nos.824-898 of 2008 and Nos.899-966 of 2008
before the High Court of Gujarat seeking declaration that RGTIL had no
authority to enter the lands of said owners/occupiers and that it be
accordingly restrained. Notices were issued in the aforesaid Special Civil
Applications on 04.02.2008 and according to the respondents therein, it was
only then it came to their knowledge that non-agricultural permissions were
granted on 03.03.1982 in respect of Block No.331 and on 29.03.2007 in
respect of Block Nos.342 and 364. RGTIL challenged these non-agricultural
permissions by filing Special Civil Application Nos.2252 of 2008 and 3380
of 2008. The High Court by its interim orders dated 06.02.2008 in Special
Civil Application No.2252 of 2008 and 21.02.2008 in Special Civil
Application No.3380 of 2008 stayed the operation of non-agricultural
permissions in respect of aforesaid Block Nos.342, 364 and 331. These
interim orders as well as the orders refusing interim relief in Special
Civil Application Nos.8992 and 996 of 2008 preferred by the
owners/occupiers themselves, were challenged by filing Letters Patent
Appeals. In those appeals, the Division Bench of the High Court permitted
RGTIL who had by then started laying the pipelines to cover the ditches and
to produce the memorandum to that effect in Special Civil Application
Nos.899-966 of 2008 and in 2252 of 2008.

The owners/occupiers of Block Nos.342 and 364 also preferred Special Civil
Application No.5107 of 2008 on or about 24.03.2008 challenging the
Notification issued by the Central Government under Section 6 of the PMP
Act. This Special Civil Application No.5107 of 2008 was heard along with
other Special Civil Applications referred to herein above and the High
Court by its order dated 11.07.2008 held that the balance of convenience
was in favour of RGTIL and as such the prayers for interim relief by the
owners/occupiers were rejected. The High Court recorded the statement of
the Counsel who appeared for RGTIL that it would deposit with the Competent
Authority provisional compensation @ Rs.300/- per sq.mtr. for the lands
including constructions thereon. Accordingly provisional compensation at
the aforesaid rate was deposited by RGTIL with the Competent Authority.

Thereafter, number of petitioners namely 70 from Special Civil
Application No.5107 of 2008, 150 from Special Civil Application No.4321 of
2008, 75 from Special Civil Application Nos.824-853 of 2008 and 68 from
Special Civil Application Nos.899-916 of 2008 withdrew their challenge,
leaving the remaining petitioners to contest the matter. The Division Bench
of the High Court by its judgment and order dated 13.07.2009, which is
presently under appeal, disposed of aforesaid Special Civil Application
Nos.824-853, 899-966, 5107 and 4321 of 2008 filed by the owners/occupiers
and Special Civil Application Nos.2252 and 3380 of 2008 filed by RGTIL with
following observations:-
“Learned counsel for the landowners fairly submitted that none of the
petitioners have challenged the validity of Section 3(1) Notification. No
grievance is also raised before us in these proceedings against the order
passed by the competent authority under sub-section (2) to Section 5 of the
Act……….

We find that the pipelines have already been laid over the properties
of the petitioners. Petitioners had not challenged at any point of time
the Notification issued under Section 3(1) of the Act. Majority of the
petitioners have withdrawn from the writ petitions as a whole. So far as
remaining petitioners are concerned, it seems that their grievance is only
about inadequacy of compensation. Section 10 of the Act specifically says
that if any party has any grievance with regard to any damage, loss, injury
or inadequacy of compensation, they can always approach the District Judge
within the limits of whose jurisdiction the land is situated. Since
effective remedy is provided under the Act, this Court under writ
jurisdiction is not justified in expressing any opinion regarding various
contentions raised by the petitioners, especially when Section 3(1)
Notifications has not been challenged and also due to the fact that
pipelines have already been laid down.

Under the circumstances, all these matters are disposed of with a
direction that if the petitioners are aggrieved they can approach the
concerned District Judge claiming compensation and obtain appropriate
orders in accordance with law.”

11. These appeals at the instance of the owners/occupiers challenge the
correctness of the decision of the High Court. RGTIL however accepted the
judgment and did not prefer any challenge. It may be mentioned that the
very same owners/occupiers had also filed Writ Petition No.569 of 2009 in
this Court challenging the vires of some of the provisions of the PMP Act.
However at the request of the petitioners, said Writ Petition No.569 of
2009 was allowed to be withdrawn on 07.01.2010. While the aforesaid
matters were pending, in another batch of matters the question of bias of
the Competent Authority was put in issue. Those matters were allowed by
this Court by its decision reported in Trilok Sudhirbhai Pandya v. Union of
India and others.[2] This Court directed Union of India to appoint another
person as Competent Authority for determination of compensation but made it
clear that the judgment therein would not affect any orders with regard to
acquisition of right of user.

12. On or about 05.11.2011, an application was filed on behalf of the
appellants herein praying that appropriate directions be issued to the
Competent Authority to decide the compensation payable to the
owners/occupiers under Section 9 as well as under Section 10 at the time of
taking actual possession. Thereafter, another application namely I.A. No.5
of 2013 was filed seeking permission to raise additional grounds. By
raising these grounds, the appellants submitted that PMP Act and the rules
framed thereunder were violative of the constitutional framework. This
Court by its order dated 10.02.2014 issued notices to State of Gujarat as
well as to the learned Solicitor General of India in aforesaid I.A. No.5 of
2013 and by subsequent order dated 02.02.2016, said application was
allowed. Union of India and other respondents were permitted to file their
affidavits in reply and it was clarified that it would be permissible for
any other interested person(s) to join these proceedings. Further, by order
dated 18.03.2016, this Court stayed further proceedings before the
Competent Authority.

13. Before we deal with the challenge raised in these appeals, it must be
noted that none of the landowners had challenged the validity of Section
3(1) Notification issued in the instant case nor any grievance was raised
against the order passed by the Competent Authority under Section 5(2) of
the PMP Act. Though a substantive Writ Petition challenging the vires of
some of the provisions of the PMP Act was filed, that petition was also
withdrawn, without seeking any liberty. Even then, we have heard the
submissions regarding validity of the PMP Act. We have heard Mr. Amar
Dave, learned Advocate in support of the appeals, Mr. Ranjit Kumar, learned
Solicitor General of India, Dr. A.M. Singhvi and Mr. Paras Kuhad, learned
Senior Advocates for RGTIL, Mr. Harin Rawal learned Senior Advocate for the
Competent Authority, Mr. Preetesh Kapoor, learned Advocate for State of
Gujarat and Mr. K.K. Venugopal, learned Senior Advocate for the intervener
namely Gujarat State Petronet Ltd.

14. On behalf of the appellants, it was submitted:-

A. Though under the PMP Act right of user simplicitor in respect of
notified lands is acquired, for all practical purposes the owners/occupiers
stand deprived of their proprietary interest and enjoyment of the lands in
toto. According to Section 9 the user of the land stands frozen for all
times to come and the owners/occupiers would not be allowed to use or
utilize the land for any construction. The acquisition of right of user
thus amounts to complete deprivation.

B. The PMP Act is a legislation to bypass the due process of law
contemplated under the Land Acquisition Act, 1894. The entire exercise
contemplated under the PMP Act is nothing but acquisition of the entire
interest of the owners/occupiers in respect of such land. Reliance was
placed on the decision of this Court in H.D. Vora v. State of Maharashtra
and others.[3]

C. The PMP Act was enacted in 1962 when the activities like production
of crude oil, natural gas and petroleum products as well as transportation
and distribution of petroleum and petroleum products were exclusively in
public sector. The then Industrial Policy was relied upon in support of
this submission. Additionally, reliance was also placed on the Statement
of Objects and Reasons to submit that certain expressions like
“Corporation” appearing in Section 2(b) ought to be construed to confine to
Corporations in public sector and the PMP Act ought not to be invoked in
favour of a company in private sector.

D. Certain provisions of the PMP Act were highlighted to show that there
was complete absence of requisite framework leading to unfair treatment to
the land owners.

1. The Competent Authority is to discharge important functions like
hearing of objections, making a report to the Central Government and
deciding the quantum of compensation in the first instance. However unlike
other pari materia enactments no qualifications are prescribed for
appointment of a person as Competent Authority.

2. Upon publication of the declarations under Section 6(1), the right of
user in the lands stands vested free from all encumbrances. The statutory
scheme shows that after such vesting, the compensation for the loss or
injury suffered under Sections 4, 7 and 8 and compensation under Section 10
is to be determined. Neither the Act nor the Rules contemplate any period
within which compensation for such damage, loss or injury and compensation
for acquisition of right of user is to be deposited or paid.

3. There are no guidelines in the PMP Act that the pipelines should be
laid in such a way so as to cause least amount of damage or loss to the
occupiers.

15. In reply, it was submitted by the learned Solicitor General and all
other Counsel:-

A. As laid down by this Court in Jilubhai Nanbhai Khachar and others v.
State of Gujarat and another[4], the right of user is a property right
which can be acquired. Further, it is not necessary that the acquisition
should be of “whole” of property rights or ownership rights. The
acquisition could be “partial” and the principles land down in the PMP Act
are designed to give fair and just compensation for acquisition of such
right of user.

B. Proviso to Section 7(1) of the PMP Act mandates that no pipeline
shall be laid under any land which was used for residential purposes, or
any land wherein any permanent structure was in existence before the date
on which Notification under Section 3(1) was issued or any land which is
appurtenant to a dwelling house. The pipeline would be laid under lands
which are primarily fallow lands or those used for agricultural purposes.
After the pipeline is so laid, the land could certainly be used for the
purpose for which it was used before such Notification was issued. The
agricultural operations could still be continued and the ownership in
respect of land is left untouched. The vesting provisions of the PMP Act
make it clear that it is an Act relating to acquisition of a limited right
namely the right of passage under the sub-soil to enable the laying of
pipelines. It would be incorrect to term the PMP Act to be acquiring
proprietary interest of the land owners in the land or taking over their
right to possess the lands in question.

C. Relying on enactments such as the National Highways Act, 1956, the
Railways Act, 1989, the Delhi Metro Railway (Construction of Works) Act,
1978, the Indian Telegraph Act, 1885 it was submitted that for sub-serving
the societal needs, right of user simplicitor is required to be acquired
rather than acquiring the entirety of interest in the land itself.

D. The definition of “Corporation” is wide enough to include Companies
in Private Sector. With the expanding frontiers where the private sector
is allowed entry in production and manufacture of petroleum, petroleum
products and natural gas as well as transportation thereof, the definition
of “Corporation” need not to be given any restricted meaning. Going by the
Expression of Interest invited from interested parties for usage of the
pipelines in the present case, the pipeline was required to have such
design capacity so as to offer on common carrier basis. Thus the pipeline
itself would be sub-serving public interest. The length of the pipeline in
question from Kakinada of Gujarat is over 1470 kilometers and if the lands
are to be acquired under Land Acquisition Act at every stage, it would lead
to enormous escalation in costs to the detriment of public interest.

E. The PMP Act and the Rules provide sufficient guidelines relating to
computation of compensation and deposit thereof. Section 10(1) of the PMP
Act provides for compensation for diminution in market value as well and
thus adequately protects the interest of the land owners. In any case,
ninety percent of the compensation assessed to be payable to land owners in
the present case was already deposited. Meetings were held with the land
owners and the representatives of RGTIL and the amount of compensation was
arrived at. As against the prevailing rates of Rs.13.40 per sq.mtr., the
compensation was given at the rate of Rs.181/- per sq.mtr. for lands
falling in zones other than industrial zone and the compensation was given
at the rate of Rs.201/- per sq.mtr. in respect of lands falling in
industrial zone.

16. Under the provisions of the PMP Act, what is taken over or acquired
is the right of user to lay and maintain pipelines in the sub-soil of the
land in question. The provisions of the PMP Act get attracted upon the
requisite Notification having been made under Section 3. If it appears to
the Central Government that it is necessary in the public interest that for
the transport of petroleum or any minerals any pipeline be made and for the
purposes of laying such pipelines it is necessary to acquire the right of
user in any land, it may by Notification issued in exercise of power under
Section 3 declare its intention to acquire such right of user. The Act
then provides for making of objections by those interested in land, which
objections are thereafter to be dealt with by the Competent Authority. The
report made by the Competent Authority is then placed before the Central
Government for appropriate decision and after considering such report and
the relevant material on record, if the Central Government is satisfied
that such land is required for laying any pipeline for the transport of
petroleum or any other mineral, it may declare by Notification in the
official gazette that the right of user in the land for laying the pipeline
be acquired. Upon the publication of such declaration under Section 6 the
right of user in the land so specified vests absolutely in the Central
Government or in the State Government or in the Corporation free from all
encumbrances. Thus what stands acquired is the right of user in the land
in question for laying pipeline for the transport of petroleum or any
mineral and not the land itself. The Statement of Objects and Reasons
throws light on this facet of the matter and shows that although the land
could be acquired outright for laying such pipelines under the Land
Acquisition Act, 1894, such procedure for acquisition would be costly. For
instance, as the facts of the present case disclose the pipeline from
Kakinada to Jamnagar would be over 1470 kilometers in length. If the lands
were to be acquired outright, it would lead to tremendous increase in costs
finally reflecting in escalation of the costs of petroleum or minerals. At
the same time, if at every stage outright acquisition is to be insisted
upon, many agriculturists would stand deprived of their holdings causing
great prejudice. The Act is thus designed to achieve the purpose of laying
of the pipelines for petroleum and minerals as “efficient and cheap means
of transportation and distribution of petroleum and petroleum products”.
At the same time Section 18 specifically lays down that the provisions of
the PMP Act shall be in addition and not in derogation to any other law for
the time being in force relating to acquisition of land. Thus in a given
case where the circumstances and the occasions so demand, a resort could
still be taken to acquire the lands by relying upon the general law of
acquisition under the provisions of the Land Acquisition Act, 1894. For
instance, for monitoring the pressure gauges or in cases where pipelines
are branching in different directions, implementations to regulate the flow
may require permanent establishments necessitating acquisition of the land
itself rather than acquisition of a mere right of user. The PMP Act is thus
a special enactment designed to achieve the purpose of laying pipelines as
efficient means of transportation and with this idea it is only the right
of user in the land to lay such pipelines is acquired.

17. Section 7 stipulates that no pipeline be laid under any land which,
immediately before the date of Notification under Section 3(1) was used for
residential purposes, or any land on which there is permanent structure in
existence or any land which is appurtenant to a dwelling house. It is
clear that only such lands are to be considered for acquisition of right of
user therein which are either lying fallow or are being put to agricultural
use. It is obvious that care is taken to cause least possible damage to
the holdings of the concerned land-owners. According to Section 9, after
the pipelines are laid, the owner/occupier could use the land for the
purpose for which it was being used before the Notification under Section
3(1) was issued. Section 9 certainly, imposes some restrictions in the
sense that such owner/occupier cannot thereafter construct any building or
any other structure or construct or excavate any lake, reservoir or dam or
plant any tree on such land. Barring such restrictions, the owner/occupier
is within his rights to use the land for the same purpose for which the
land was earlier being used. The point is clear that neither the ownership
in respect of the land itself nor the right to occupy or possess that land
is taken over permanently and those rights continue to remain with the
owner/occupier. What is taken over is only the right of user namely to lay
pipelines in the sub-soil of the land in question and the restrictions
imposed by Section 9 are designed to safeguard and secure the pipelines
underneath.

18. As laid down by this Court in Jilubhai Nanbhai Khachar and others
(Supra), the term property in legal sense means an aggregate of rights
which are guaranteed and protected by law and would extend to entirety or
group of rights inhering in a person. It was observed by this Court as
under:
“42. Property in legal sense means an aggregate of rights which are
guaranteed and protected by law. It extends to every species of valuable
right and interest, more particularly, ownership and exclusive right to a
thing, the right to dispose of the thing in every legal way, to possess it,
to use it, and to exclude everyone else from interfering with it. The
dominion or indefinite right of use or disposition which one may lawfully
exercise over particular things or subjects is called property. The
exclusive right of possessing, enjoying, and disposing of a thing is
property in legal parameters. Therefore, the word ‘property’ connotes
everything which is subject of ownership, corporeal or incorporeal,
tangible or intangible, visible or invisible, real or personal; everything
that has an exchangeable value or which goes to make up wealth or estate or
status. Property, therefore, within the constitutional protection, denotes
group of rights inhering citizen’s relation to physical thing, as right to
possess, use and dispose of it in accordance with law. In Ramanatha
Aiyar’s The Law Lexicon, Reprint Edn., 1987, at p.1031, it is stated that
the property is the most comprehensive of all terms which can be used,
inasmuch as it is indicative and descriptive of every possible interest
which the party can have. The term property has a most extensive
signification, and, according to its legal definition, consists in free
use, enjoyment, and disposition by a person of all his acquisitions,
without any control or diminution, save only by the laws of the land.”

19. We therefore proceed on the premise that the right of user sought to
be taken over under the provisions of the PMP Act amounts to acquisition of
one of the facets of property rights which inher in the owner/occupier.
For the acquisition of such right of user, the compensation is prescribed
in terms of Section 10 of the PMP Act. There are two elements of
compensation under Section 10. The first part deals with any damage, loss
or injury sustained by any owner/occupier as a result of exercise of powers
conferred by Sections 4,7 and 8 of the PMP Act that is to say the actual
damage, loss or injury sustained because of entry upon and/or digging or
marking levels and survey of land under Section 4 or while actual laying
of the pipeline including digging of trenches and carrying of requisite
material for such operations under Section 7 or at any stage of
maintenance, examinations, repairing and altering or removing of pipeline
in terms of Section 8 of the PMP Act. The measure for determining such
compensation is given with sufficient clarity in sub-section (3) of Section
(10). The idea is to compensate the owner/occupier for actual damage, loss
or injury sustained by him as a result of the operations carried out in
terms of Section 4, Section 7 or Section 8 of the Act. One of the indicia
under sub-Section 3 could be “any injury to any other property whether
movable or immovable, or the earnings of such persons in any other manner”.
All possible acts as a result of which the damage, loss or injury could be
so occasioned are taken care of and stipulated in said sub-section. Over
and above such compensation for actual damage, loss or injury, additional
compensation @ 10% of the market value of the land is given to the
owner/occupier under sub-section 4 of Section 10 for taking over the right
of user to lay the pipelines. This element of additional compensation is
independent of any actual loss or damage and is purely linked to the value
of the land for the purposes of computation. This element of compensation
is purely for acquisition of right of user simplicitor. The damage/loss or
injury to the property is separately dealt with under first part of Section
10 and has to be compensated in toto. Theoretically, it is possible that
in a barren piece of land as a result of exercise of powers under Sections
4, 6 and 7 there may not be any damage/loss or injury. However
compensation under sub-section (4) for acquisition of right of user would
still be independently payable. The expression “in addition to the
compensation, if any, payable under sub-section (1)” clearly shows the
intent that the compensation for acquisition of right of user shall be in
addition to the actual damage/loss or injury under first part of Section
10. This part will also be clear from para (iii) of Statement of Objects
and Reasons extracted above.

20. The provisions of PMP Act do specify the principles and the manner
in which the compensation is to be determined. Not only the actual damage,
loss or injury suffered as a result of exercise of various activities in
terms of Sections 4, 6 and 7 are compensated in toto but additionally
compensation linked to the market value of land is also to be given for
acquisition of right of user in respect of such land. What is taken over
is mere right of user to lay the pipeline in the sub-soil of land in
question, leaving the title to the land as well as the right to possess
that land intact in the hands of the land owner/occupier. It is no doubt
that the enjoyment thereof after the pipelines are laid is impaired to a
certain extent, in that the owner/occupier cannot raise any permanent
construction or cause any excavation or plant any trees. Barring such
restrictions, the enjoyment and the right of possession remains unaltered.
The lands under which the pipeline would be laid are primarily, going by
the mandate of Section 7, agricultural or fallow and there would normally
be no occasion for any rendering of the holding completely unfit for any
operations. Even in such cases where the holding is rendered unfit, sub-
section 3(iii) of Section 10 could be relied upon and any diminution in
market value as permanent impairment could sustain a claim for
compensation. The principles of compensation as detailed in the PMP Act are
thus reasonable and cannot in any way be termed as illusory. The principle
laid down in H.D. Vora v. State of Maharashtra (Supra) has no application
at all.

21. Coming to the facts of the present case, Block Nos.331, 342 and 364
of village Gothan were agricultural lands and recorded so in the revenue
records on the day the Notification under Section 3(1) was issued. The
permission to convert Block Nos.342 and 364 to non-agricultural use was
granted after such Notification. In any case, the compensation including
damages, was arrived at by consent in the meeting held with the land
owners/occupiers and determined at the level of Rs.181/- per sq.mtr. for
lands other than those falling in industrial zone and in respect of those
falling in industrial zone, the compensation was at Rs.201/- per sq.mtr.
If the average rate at which the lands were sold in preceding five years
was taken into account, this compensation was not inadequate. In any case,
while the matter was pending in the High Court, provisional compensation @
Rs.300/- per sq.mtr. was deposited with the competent authority. This
compensation in our view, for acquisition of right of user cannot be called
inadequate or illusory on any count.

22. We now turn to the submissions advanced with respect to the terms
“Corporation” and “Competent Authority” under the PMP Act.

23. Natural gas is one of the most important and environment friendly
sources of energy. Easy access to the deposits of natural gas and quick
and cost effective transportation thereof are critical for fulfilling basic
necessities of the society. Petroleum and Natural Gas Regulatory Board
Act, 2006 enacted by Parliament creates Petroleum and Natural Gas
Regulatory Board to authorize entities to lay, build, operate or expand to
a common carrier or contract carrier; regulate access to common carrier or
contract carrier; regulate transport rates and ensure adequate availability
of natural gas and secure equitable distribution for petroleum products.
The activity of transportation of gas is thus recognized as an activity of
highest national importance and subjected to statutory control in all its
dimensions. Transportation of natural gas requires creation of necessary
infrastructure either by the State on its own or through private
enterprise. The pipeline in question was designed to sub-serve public
interest and as rightly contended by the learned Solicitor General the
element of public interest is present all through, even when the activity
is undertaken through an entity in private sector. Considering the nature
of activity where entities in private sector are encouraged to participate,
it would be incorrect to put any restricted meaning as regards the
expression “Corporation”. The definition of “Corporation” under Section
2(b) of the PMP Act is wide enough to include entities in
private sector. This definition is designedly kept wide enough to include
all such possibilities and there is no reason for giving any restricted
meaning to such expression. We, therefore, reject the submission advanced
by the appellants.

24. As per Section 2(a) of the PMP Act, “Competent Authority” means any
person or authority authorized by the Central Government to perform
functions of the Competent Authority under that PMP Act. According to
Section 5, all objections preferred by interested persons to the laying of
the pipeline are to be dealt with and heard by the Competent Authority, who
may allow or disallow such objections. Under Section 5(3) the order so
passed by the Competent Authority is to be final. As per Section 6, the
Competent Authority thereafter has to make a report to the Central
Government containing his recommendations on the objections together with
the record of the proceedings held by him. After the order is passed by
the Central Government under Section 6(1), the role of the Competent
Authority is to assess compensation for damage, loss or injury occasioned
to any person as a result of exercise of the powers conferred under
Sections 4, 7 and 8. Section 10(3) obliges the Competent Authority inter
alia to have due regard to facets enumerated in sub clauses (i), (ii) and
(iii) of Section 10 (3). In addition, the Competent Authority is also to
determine the market value of the land, 10% of which is required to be paid
by way of compensation for acquisition of right of user under Section 10
(4). Section 12 confers powers of Civil Court on the Competent Authority.

25. It is thus clear that “Competent Authority” is given wide ranging
powers under Section 5 for considering the objections, under Section 6 for
making the report to the Central Government and under Section 10 for
determining compensation for damage/loss or injury under first part of
Section and to determine the market value under the second part of the
Section. By virtue of these powers, crucial rights of the persons
interested in the land are bound to be affected. His orders and report
would certainly deal with variety of civil rights of the interested persons
and issues pertaining to compensation. At this stage, the observations of
this Court in Trilok Sudhirbhai Pandya (Supra), in the context whether the
person appointed as Competent Authority could be a person other than a
public servant are quite eloquent:-
“17. The aforesaid reference to the various provisions of the Act shows
that the competent authority has got vast powers, which affects the rights
of persons interested in the land over which the pipeline is to be laid and
on the reports of the competent authority, the Central Government and the
State Government are to take decisions affecting the rights of persons
interested in the land. Under the provisions of the Act, therefore, the
competent authority does not merely determine the compensation at the first
instance in accordance with the statutory rules as has been contended by
the learned counsel for Respondent 4, but has to perform various other
quasi-judicial functions which are normally performed by public servants
whose pay allowances and other incidentals of service are met out of the
public exchequer. If instead of public servants, a person is appointed
whose pay, allowances and other incidentals are not paid out of the public
exchequer but directly paid by a private employer such as Respondent 4, for
whom the right of user is being acquired and by whom the compensation is
payable, persons interested in the land will have reasonable grounds for
assuming that such a competent authority, who is dependent on a private
corporation for his salary, allowances, accommodation and transport
allowances, will have a bias in favour of the private corporation.”

26. It is axiomatic that a person who occupies the position of Competent
Authority under the PMP Act must evoke and enjoy public confidence.
Neither the Act nor the Rules framed thereunder deal with the
qualifications required of a person before his appointment as Competent
Authority nor do they deal with any transparent process for such
appointment. We may now turn to see the requirements in that behalf in an
enactment which is pari materia. Section 2(e) of the Metro Railway
(Construction of Works) Act, 1978 (Metro Act, for short), defines Competent
Authority as the one appointed under Section 16. Section 16(2) then sets
out, “a person shall not be qualified for appointment as a Competent
Authority unless he is holding, or has held, a Judicial Office, not lower
in rank than that of a Subordinate Judge.” Like the PMP Act, the Metro Act
also confers power upon the Competent Authority therein to consider
objections to the construction of the Metro Railway or any other work and
to determine the amount payable for acquisition. The orders passed by the
Competent Authority under the Metro Act are also appealable before an
Appellate Authority. In our view, the Competent Authority under the
provisions of the PMP Act must also be someone who is holding or has held a
Judicial Office not lower in rank than that of a Subordinate Judge or is a
trained legal mind. If such requirement is not read into and not taken as
an integral and essential qualification before appointment of any person as
Competent Authority, the provisions in that behalf will not be consistent
with the doctrine of fairness under Article 14 of the Constitution of
India. At the same time, we hasten to add that actions taken by the
Competent Authority till now, will not in any way stand impaired or be
invalidated purely on this count. But the Central Government may do well
to step in immediately and remedy the situation with appropriate measures.

27. Lastly, it is correct that the PMP Act and the Rules framed
thereunder do not stipulate any period within which compensation for
damage, loss or injury and compensation for acquisition of right of user is
to be deposited. While damage, loss or injury occasioned as a result of
exercise of power under Sections 4 and 7 could be one time damage, that in
respect of Section 8 could re-occur as a result of repeated entries for
maintenance. Even when no time limit is fixed, it is expected of the
concerned authorities to determine and deposit compensation within
reasonable time. In so far as the facts of the present case are concerned,
ninety percent of the amount so determined by the Competent Authority in
the first instance, was deposited in advance.

28. We thus do not find the provisions regarding computation of
compensation with regard to both elements under Section 10 of the PMP Act
to be invalid on any count. We further find that the definition
“Corporation” is wide enough to take within its sweep entities in private
sector as well. We also do not find the provisions of the PMP Act to be
lacking on any count, except to the extent indicated above as regards
appointment of Competent Authority. Civil Appeals are thus disposed of
without any order as to costs.

…………………….…J.
(V. Gopala Gowda)

..…………..…….……J.
(Uday Umesh Lalit)
New Delhi,
October 05, 2016

-----------------------
[1]

[2] The name has since then been changed to Reliance Gas
Transportation Infrastructure Ltd.
[3]

[4] (2011) 10 SCC 203
[5]

[6]1984 SCR (2) 693/(1984) 2 SCC 337
[7]

[8] (1995) Suppl 1 SCC 596

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