New Delhi, Sept. 12: Any land acquisition by the government, even for a private company, can be said to be for a “public purpose”, the Supreme Court has said in a ruling relevant to the Singur standoff.

The only requirement, the court said, is the government should pay part of the compensation instead of the company paying the whole of it.

“Simply because a company has been chosen for fulfilment of such public purpose does not mean the larger public interest has been sacrificed, ignored or disregarded. It will also not make exercise of power bad, mala fide,” the court said.

“Public purpose”, it added, was a generic term and could include any purpose in which even a fraction of the community may be interested, or which may benefit them.

A two-judge bench ruled that the government was the best judge of what constituted public purpose and observed that courts would normally refrain from substituting their own judgement for the government’s on the subject.

The court ruled that government entities had inherent powers to acquire privately owned property, especially land, and convert it for public use, subject to reasonable compensation.

The bench, therefore, upheld land acquisition by the Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC) in several villages of Ranga Reddy district bordering Hyderabad.

The land had later been handed over to Dubai-based property developer Emaar MGF for a project to turn Hyderabad into a business-cum-liaison destination. The APIIC held 26 per cent stake and Emaar Properties 74 per cent.

Some farmers approached the high court saying the government should not have acquired land for a company. They said the law regulating acquisition by a company was different from that for government acquisition.

The government can acquire land under Part II of the Land Acquisition Act, 1894, but a company can only invoke Part VII of the act, which requires it to directly buy the plots at market prices, the farmers said.

They claimed the government had acquired the land with the mala fide intention of transferring it to a foreign company.

“This is clear from the fact that huge land owned and possessed by influential persons such as well-known actress Vijay Nirmala and other persons in public life had been excluded,” the petitioners argued.

They also claimed that the state had been wrong in invoking the urgency clause of the act, which allowed it to bypass the procedure of inviting objections from the owners of the land being acquired.

On April 25, 2003, the high court held the acquisition valid but struck down the state government notification invoking the urgency clause. It asked the government to hear out farmers’ objections to the acquisition.

“The acquisition was to enable the activities of APIIC…. The purposes of APIIC were demonstrably public purposes,” the high court said.

The farmers appealed to the Supreme Court saying the acquisition could not be said to be for a public purpose since the APIIC was the sole beneficiary. The state defended itself, saying the APIIC was to pay the entire compensation.

Upholding the acquisition, the apex court said: “It is now well-established that if the cost of acquisition is borne either wholly or partly by the government, the acquisition can be said to be for a public purpose. But if the cost is entirely borne by the company, then it is an acquisition for a company under Part VII of the act.”