N.D.Ojha, J. - (1.) The prayer in these two connected writ petitions is for quashing of a notification under Sec. 4 of the Land Acquisition Act (hereinafter referred to as the Act) dated 19th April, 1975, and another notification under Section 6 of the Act dated 27th March, 1977, whereby some land belonging to the petitioners of these two writ petitions was sought to be acquired. During the course of arguments, however, the validity of the notification under Section 6 dated 27th March, 1977, alone was questioned. The main argument advanced by counsel for the petitioners is that the acquisition was for Kashi Vidyapith, University Varanasi, respondent No. 3, which was a company and since the requirements of part VII of the Act had not been complied with, the notification under Section 6 was bad. Faced with the situation that the notification under Section 6 mentioned that the land of the petitioners was sought to be acquired for public purpose and not for a company it was urged by counsel for the petitioners that since no part of the compensation was stated to be paid by the Government from the public revenue the use of the words 'public purpose in the notification as the purpose for which the land was sought to be acquired was a colourable exercise of power and since there was no compliance with the second proviso to Sec. ,6 (1) of the Act the notification under Section 6 was in any case liable to be quashed.
(2.) Having heard counsel for the petitioners, the counsel for respondent No. 3 as also the Chief Standing Counsel, we are of opinion that the impugned notification under Section 6 of the Act dated 27th March, 1977, cannot be sustained. There was some controversy on the question as to whether Kashi Vidyapith, for which the acquisition was being made, was a company or not, but in our opinion on the facts of the instant case it is not necessary to go into that question. We may point out that Kashi Vidyapith became a university with effect from 15th January, 1974, in pursuance of a notification issued by the State Government under sub-section (2) of Sec. 4 of the U. P. State Universities Act, 1973. The notifications under Sections 4 and 6 of the Act were issued after 15th January, 1974, when Kashi Vidyapith had already become a university. The notification under Section 6 states that the land of the petitioners was sought to be acquired for public purpose, viz., for extension of the campus and construction of building and residential quarters of Kashi Vidyapith. In Jhandu Lal v. State of Punjab (AIR 1961 SC 343) it has been held that the essential condition for acquisition for a public purpose is that the cost of the acquisition should be borne, wholly or in part, out of public funds. Hence an acquisition for a Company may also be made for a public purpose within the meaning of the Act, if a part or the whole of the cost of acquisition is met by public funds. In such a case, it is not necessary to go through the procedure prescribed by Part VII, If, on the other hand, the acquisition for a company is to be made at the cost entirely of the company itself, such an acquisition comes under the provisions of Part VII, As such even if the submission made by counsel for the petitioners that Kashi Vidyapith was a company may be accepted for the sake of arguments the notification under Section 6 would not be bad when it seeks to acquire the petitioners land for public purpose. In that event it will not be necessary to conform with the requirements of Part VII of the Act. However, if it is not established that any part of the compensation was to be paid out oi public funds the notification would certainly be bad inasmuch as it did not meet the requirements of the second proviso to Section 6 (1) of the Act. In that event the mere use of the expression 'public purpose in the notification under Section 6 would not be of any consequence and the issue of the notification would be deemed to be a colourable exercise of power, having been 'made in fraud of the Act. (see State of W. B. v. P. N. Talukdar, AIR 1965 SC 646) .
(3.) The short question which comes up for consideration is whether any part of the compensation, is to be paid out of public funds. There is nothing on the record which may indicate the intention of the State Government that an.y part of the compensation was to be paid out of public funds. What was urged by counsel for the respondents, however, was that the Kashi Vidyapith had in pursuance of some earlier proceedings for acquisition made two deposits - one on 20th April, 1971, and the other on 15th February, 1972, to meet the cost of acquisition and the amounts so deposited could be termed as 'public revenues and since the cost of acquisition was to be paid out of that amount it was apparently a case in which the compensation was to be paid out of public funds. In the alternative it was urged that Kashi Vidyapith was a local authority and since the second proviso to Section 6 (1) of the Act contemplated payment of compensation out of some fund controlled or managed by a local authority its requirements were fulfilled.;