State of Haryana & Ors. v. Northern India Glass Industries Ltd.
Background
In 1973, Haryana acquired about 358 kanals of farmland in Sankhol village, Rohtak district, for a sheet-glass factory, and then transferred it to Northern India Glass Industries under a conveyance deed. The deed required the company to build the factory and barred it from selling the land without government permission. The company never built the factory, sold many plots to third parties, and the government issued a resumption notice in 2005. The High Court quashed that notice because the company and the buyers had not been given a hearing.
Decision Breakdown
The Supreme Court allowed the State's appeal and set aside the High Court's judgment. The Court held that the deed was founded on the Land Acquisition Act, so contract terms were not the only consideration, but that a hearing was not required in every case regardless of circumstances. It found that the company had breached the deed by not building the factory, using the land for other purposes and selling it without permission, and had never made a representation to the government. It said courts should be practical rather than rigid about natural justice, and upheld the resumption notice in substance. The Court imposed Rs. 2 lakh costs on the company and left the position of third-party buyers open for the State to decide in accordance with law.
Lesson Learnt
Land given by the government on conditions can be taken back if those conditions are broken, and a buyer of such land should check its title and any restrictions before purchasing. The right to a hearing before government action is important, but courts will not automatically quash an action where the party has clearly breached its obligations and never raised its objections.