"A Judicial Order Passed Behind the Back of an Affected Party Is Void": Madras High Court Quashes Land Acquisition Notice, Citing "Gross Failure of Natural Justice" and "Abuse of Power"

Kiran Raj

The Madras High Court has quashed a land acquisition notice issued to United India Insurance Company Limited by the Chennai Metro Rail Limited (CMRL), observing that the decision to acquire the land was taken without hearing the company and that the process violated the principles of natural justice. The case was adjudicated by Justice N. Anand Venkatesh, who ruled that the impugned notice under Section 3(2) of the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997, was legally unsustainable. The Court held that the land acquisition decision had already been finalized before issuing the show-cause notice, making the entire process a mere formality.

The Court recorded, "The issuance of the show-cause notice and the so-called opportunity are only empty formalities, and they virtually amount to post-decisional hearing. The CMRL had taken a specific stand that their original alignment was only through the property belonging to the temple and that the change of alignment had taken place only due to the intervening PIL that was filed by the fifth respondent."

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Further, the Court observed that the petitioner had spent over Rs. 250 crores on constructing its new head office based on approvals obtained from relevant authorities, including a no-objection certificate (NOC) from CMRL. The Court stated, "By granting the NOC and the approval, the CMRL and CMDA led the petitioner to believe that its lands would not be necessary for the metro project, thereby inducing the petitioner to put up a Rs. 200 crore construction. To allow the CMDA and the CMRL to casually resile from its earlier position would be so grossly unfair and arbitrary so as to violate Article 14 in all its hues."

The dispute arose from a notice dated September 26, 2024, issued by CMRL to United India Insurance Company under Section 3(2) of the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997, requiring the company to show cause within 30 days why its land, measuring 837 square meters, should not be acquired for the Chennai Metro Rail Phase II project.

United India Insurance Company, which had constructed its head office with a distinctive diagrid structure and obtained a three-star green building certification, challenged the notice, contending that the acquisition was arbitrary and violated the principles of promissory estoppel. The company argued that it had received all necessary approvals, including an NOC from CMRL, and that the decision to acquire its land was taken solely due to a public interest litigation (PIL) filed by Aalayam Kaapom Foundation, which led to the relocation of the metro station entry/exit point.

Initially, CMRL had planned to construct the metro station’s entry/exit within the premises of Arul Mighu Sri Rathina Vinayagar and Durgai Amman Temple, Whites Road, Chennai. However, following objections raised in the PIL, the plan was altered, and the site was shifted to the United India Insurance Company’s premises. The Court noted that the company was not made a party to the PIL and was not heard before the alignment change was decided.

CMRL defended its decision, stating that the temple was an old structure and that worshippers had objected to any disturbance. The authority argued that a revised land plan was prepared, a public notice was issued on September 27, 2024, and a hearing was scheduled for October 29, 2024, providing the petitioner an opportunity to present its objections. However, the Court found that the entire process was a fait accompli, as CMRL had already committed to shifting the site before consulting the affected party.

The Court found that the acquisition decision was made unilaterally, without affording the petitioner a meaningful opportunity to be heard. It stated, "A judicial order passed behind the back of an affected party is void vis-à-vis the said party. Useful reference can be made to the decision of the Hon’ble Apex Court in the case of A.R. Antulay v. R.S. Nayak [1988 (2) SCC 602]."

The Court also held that the principle of promissory estoppel applied to the case. The petitioner had obtained an NOC from CMRL before constructing its building, creating a legitimate expectation that its property would not be subject to acquisition. The judgment cited Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. [1979 (2) SCC 409], emphasizing that a party cannot go back on its promise if another party has altered its position based on that assurance.

Referring to the Supreme Court's decision in Noida Entrepreneurs Association v. Noida [2011 (6) SCC 508], the Court reiterated that public authorities must act transparently and in good faith. It recorded, "‘Public authorities cannot play fast and loose with the powers vested in them.’ A decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred."

The Court also addressed CMRL’s argument that lands belonging to religious institutions should not be acquired. Citing Khajamian Wakf Estates v. State of Madras [1970 (3) SCC 894] and Acharya Maharajshri Narendra Prasadji Anandprasadji Maharaj v. State of Gujarat [1975 (1) SCC 11], the Court held that there is no constitutional bar on acquiring land belonging to temples or other religious institutions.

The Court set aside the land acquisition notice dated September 26, 2024, issued by CMRL under Section 3(2) of the Tamil Nadu Acquisition of Land for Industrial Purposes Act, 1997. It held that the acquisition proceedings were vitiated by non-compliance with Article 14 of The Constitution of India and the principle of promissory estoppel.

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The Court directed CMRL to revert to its original alignment plan, which placed the metro station’s entry/exit within the premises of Arul Mighu Sri Rathina Vinayagar and Durgai Amman Temple, Whites Road, Chennai. While the Court noted that the case warranted the imposition of exemplary costs, it refrained from doing so. The Court stated, "Though this is an eminently fit case to impose exemplary costs, this Court desists from doing so in the hope that the State and the fifth respondent recognize the true meaning of the words of Swami Vivekananda that ‘the highest aim of religion is to unite mankind and serve humanity.’"

Advocates Representing the Parties

For the Petitioner:

Vijay Narayan, Senior Counsel

For the Respondents:

P.S. Raman, Advocate General, assisted by Mr. A. Selvendran, Special Government Pleader for Respondents 1 and 2

B. Vijay, Standing Counsel for Respondent 3

P. Veena Suresh, Standing Counsel for Respondent 4

Ramamoorthy for Respondent 5.

Case Title: United India Insurance Company Ltd. v. The State of Tamil Nadu & Others