SUPREME COURT STRIKES DOWN KOLKATA MUNICIPAL CORPORATION’S ACQUISITION OF PROPERTY

INTRODUCTION

A Two- Judge Bench of the Supreme Court comprising of Justice Pamidighantam Sri Narasimha and Justice Arvind Kumar passed an Order dated 16.05.2024 in Civil Appeal No. 6466 Of 2024 Arising Out Of SLP (C) No. 4504 Of 2021 in Kolkata Municipal Corporation (KMC)& Anr Vs. Bimal Kumar Shah & Ors. and held that the compulsory acquisition of the property shall be held unconstitutional if the proper procedure is not established and followed.

FACTS

i) The Kolkata Municipal Corporation, Appellant had acquired a property of Mr. Bimal Kumar Shah, Respondent No. 1, Premises no. 106C, situated at Narikeldanga North Road, Kolkata – 700011 (Property) in exercise of powers under Section 352 of the Kolkata Municipal Corporation Act, 1980 (Act) (Power to acquire lands and buildings for public streets and for public parking places), which was succeeded through a deed of settlement executed by Respondent No 1’s father.

ii) The Respondent No. 1 was a minor at the time when his father passed away, and his elder brother managed and administered the Property, and in that process he had also let out the premises admeasuring 2 bighas 18 kathas 6 chitaks and 40 square feet in favour of one M/s Arora Film Corporation.

iii) Upon the maturity of the Respondent No. 1, the Property was mutated in the name of Respondent No. 1 in the assessment book of the Appellant.

iv) The Respondent No. 1 was paying all the municipal dues including the taxes with respect to the Property regularly and the same was acknowledged by the Appellant by a letter dated 07.04.2000 that there were no outstanding dues with respect to the property tax.

v) That in the year 2009, an attempt was made by the Appellant to forcefully enter and occupy the Property, to which the Respondent No. 1 filed a Writ Petition being P. No. 126 of 2009 before the High Court of Calcutta seeking a restraint order against the Appellant.

vi) As there was no contest about the title in the Property and as the Appellant had not filed any Affidavit-in Opposition, the High Court disposed of the Writ Petition vide an Order dated 17.09.2009 directing that the Appellant must hold an inquiry about the encroachments. The High Court further directed the Appellant not to make any construction over the Property.

vii) In the year July 2010, the Respondent No. 1 received an information that the Appellant had deleted his name from the category of owners and had inserted its own name in the official records.

viii) Aggrieved by the same, the Respondent No. 1 approached the High Court and filed W.P. No. 981 of 2010, not only for correction of the entries but also to restrain the Appellant from interfering with his peaceful possession over the Property.

ix) The Ld. Single Judge, by an Order dated 08.01.2015, recorded the statement of the Appellant that they are unable to controvert the averments made in the Writ Petition with respect to title and ownership of the Property. The Writ Petition was disposed of restraining the Appellant from interfering with the possession of the Respondent No. 1 and also injuncted them from giving effect to the wrongful recording of its name in the official records. The Appellant was also directed to remove its men and material from the Property within two weeks from the date of the said order. The specific finding of the High Court that the Appellant could not establish its right and the title in the Property was significant.

x) Aggrieved by the Order dated 08.01.2015, the Appellant filed a Writ Appeal bearing P.O. No. 51 of 2015 against the Order of the Ld. Single Judge and contended that their Affidavit-in-Opposition could not be filed before the Ld. Single Judge as the records were misplaced.

xi) The plea of acquisition was taken for the first time before the Division Bench, and that was the reason for the Division Bench to remand the matter back to the Ld. Single Judge after imposing a cost of Rs. 50,000/- on the Appellant.

xii) After remand, the Appellant filed an Affidavit-In-Opposition before the Ld. Single Judge claiming that the land was acquired. In view of new developments, Birinchi Shah sought permission to withdraw the pending Writ Petition with the liberty to file a fresh Writ Petition. The High Court permitted this by an Order dated 11.08.2016.

xiii) Accordingly, Writ Petition No. 930 of 2016 was filed by the Respondent no. 1, the executor to the estate of Birinchi Shah, inter alia, seeking an Order quashing the alleged acquisition as illegal and to restore their name as owners in the official records.

xiv) The Ld. Single Judge of the High Court vide Order dated 14.09.2017 held that the Appellant purported to acquire the Property under Section 352(a) of the Act when there was no power of compulsory acquisition thereby quashed the acquisition of the Appellant.

xv) The Appellant as well as the Respondent no. 1 assailed the Order of Ld. Single Judge in Writ Appeals bearing APO No. 523 of 2017 and APO No. 210 of 2018, respectively.

xvi) The Division Bench of the High Court, by its Order, affirmed the order of the Single Judge and accordingly, disposed of the appeals with a direction that the appellant-Corporation may initiate acquisition proceedings for the Property under Section 536 or 537 of the Act, within five months, or in the alternative, restore the name of the last recorded owner as the owner of the Property.

xvii) Aggrieved by the Order of the Division Bench of the High Court, the Appellant filed Civil Appeal No. 6466 Of 2024 Arising Out Of SLP (C) No. 4504 Of 2021 before the Supreme Court.

LEGAL CONTENTIONS

The Appellant argued that their actions were supported by Section 352 of the Kolkata Municipal Corporation Act, 1980, which allowed the Municipal Commissioner to acquire land for public purposes like parks and streets. The Appellant also referred to Section 363 of the Act (Compensation to be paid), which provided for compensation when land was acquired.

Conversely, Bimal Kumar Shah contended that the Appellant’s interpretation was flawed. The Respondents argued that compulsory acquisition should only occur under Section 537 (Procedure when immovable properly cannot be acquired by agreement) of the Act, which mandates a comprehensive legal process ensuring fair compensation and public purpose validation, as outlined in Article 300A of the Constitution of India (Persons not to be deprived of property save by authority of law).

SUPREME COURT ANALYSIS

The Apex Court vide Order dated 16.05.2024, made the following observations:

1) The Bench, while deciding the case highlighted the necessity of a structured process in property acquisition, and emphasized that Section 532 merely allowed the Municipal Commissioner to identify the land for public use but did not provide the authority for compulsory acquisition.

2) The Apex Court further held that the acquisition power lies under Section 537 of the Act, which involved State Government intervention and ensured compliance with Constitutional safeguards like fair compensation and due process.

3) The Bench further reinforced the significance of property rights under Article 300A of the Constitution, which protects individuals from arbitrary deprivation of property.

4) The Supreme Court delineated the essential procedural safeguards, which must accompany any acquisition. These are:

a) Right to Notice- the duty of the State to inform the person that it intends to acquire his property.

b) Right to be Heard- the duty of the State to hear the objections to the acquisition

c) The Right to a reasoned decision– the duty of the State to inform the person of its decision to acquire.

d) The Duty to acquire only for public purposes- the duty of the State to demonstrate that the acquisition is for public purposes only.

e) The Right of Restitution or fair compensation- the duty of the State to restitute and rehabilitate.

f) The Right to an efficient and expeditious process- the duty of the State to conduct the process of acquisition efficiently and within prescribed timelines of the proceedings.

g) The Right of conclusion- Final conclusion of the proceedings leading to vesting.

5) Further the Bench held that Appellant’s failure to adhere to these principles rendered their actions invalid.

6) That Section 352, devoid of explicit procedural safeguards, cannot be invoked for compulsory acquisition, reaffirming the High Court’s stance.

Conclusion:

The Supreme Court upheld the High Court’s Order, declaring Appellant’s acquisition attempt under Section 352 illegal and restoring the property rights of Bimal Kumar Shah. The Apex Court further dismissed the Appeal arising out of SLP (C) No. 4504 of 2021 filed by the Appellant against the judgment of the High Court of Calcutta in APO No. 523 of 2017 dated 17.12.2019 with costs quantified at Rs. 5,00,000/-, to be paid to Respondent no. 1 within a period of sixty days from 16.05.2024. The Apex Court’s decision serves as a pivotal affirmation of property rights, mandating municipal authorities to follow stringent legal protocols in land acquisition, thus safeguarding citizens against arbitrary state actions.

 

Kartik Khandekar

Senior Legal Associate

The Indian Lawyer & Allied Services