' GHAZANFAR ALI GONDAL, J.-This 1.-C. A. Is directed against the order dated 2-3-1983 of the learned Single Judge whereby Writ Petition No, 448 of 1982, filed by 41 residents of village Dandot against acquisition of their land was dismissed.
2. The facts of the case, relevant for the purpose of this appeal, are that State Cement Corporation of Pakistan Limited, a. Private limited. Company, wanted to set up a cement factory at Dandot, Tehsil Pind Dadan Khan, District Jhelum, with production capacity of 1,000 tons of cement a day.
Necessity for the same arose on account of acute' shortage of cement in the. Country and also on account of National Cement Factory, Dandot (earlier kno.. n as Dalmia Cement Factory, and set up in 1941 with a production capacity of 250 tons of cement per day) having outlived its utility.
Accordingly a notification dated 15-3-1979, issued by the Collector Jhelum District, Jhelum under section 4 of the Land Acquisition Act, 1894 (hereinafter to be called the Act) was published in the Punjab Gazette, dated 4-4-1979. Material portion of the said notification is as below :- "Whereas it appears to the Collector, Jhelum District that land is likely to be required to be taken up by. The Government at the expense of the State Cement Corporation of Pakistan Ltd., for its Dandot Cement Project for the purpose of construction and setting up of a cement factory, the manufacture of which shall be useful to the public, for the construction of roads quarrying and transportation of raw materials, installations connected with and necessary for running of the cement factory and for erection of the dwelling houses for the workers and other employees and for providing amenities to the workers and employees of the Project, it is hereby notified that land in the locality described below is likely to be required for the above purpose.
3. It appears that the land required to be taken by virtue of this notification as amended by later corrigendum notifications whereby details of the land were corrected was 1,391 Kanals and 4 Marlas of village Dandot and some land of two other villages of .Tehsil Pind Dadan Khan, District Jhelum. On 9-9-1980, a sum of Rs, 4,80,465 was deposited by the State Cement Corporation Ltd., in the treasury in favour of the Land Acquisition Collector, Pind Dadan Khan, as probable cost of the said land. Subsequently, on 3-11-1980, the State Cement Corporation of Pakistan Ltd., entered into an agreement with the Governor of the Punjab. This agreement was published in the Punjab Gazette, dated 19-11-1980, in compliance with section 42 of the Act. Para. 3 of the said agreement reads as below "And whereas, the Government of Punjab being satisfied that the land is needed by the Corporation for its Dandot Cement Project for the purpose of construction and setting up a cement factory, the manufacture of which shall be useful to the public, construction of roads, quarrying and transportation of raw materials, installation connected with and necessary for the running of the cement factory and for the erection of dwelling houses for the workers and other employees and for providing amenities to the workers and employees of the project, has consented to acquire the land on 'iehalf of the Corporation."
4. Thereafter on 3-11-1980, a notification by the Commissioner, Rawalpindi Division, Rawalpindi, under section 17(4) and section 6 of the Act was issued and was published in the Punjab Gazette on 26-11-1980. Material portion of the said notification relevant for purpose of this case reads as below :- "Whereas it appears to the Commissioner, Rawalpindi Division, Rawalpindi that the land (hereinafter referred to as said land) specified in the notification under section 4 of the Land Acquisition Act, 1894, issued by the Collector, Jhelum District, Jhelum, on 15th March, 1979 published in the Government Gazette, dated 4th April, 1979, is required to be taken by the State Cement Corporation of Pakistan Limited, Dandot for its Cement Project at Dandot and setting up of Cement Factory, the manufacture of which shall be useful to the public, at their expenses for the said public purpose.
(2) .
(4) A declaration is also made under the provision of section 6 of the Land Acquisition Act, 1894, to all whom it may concern and under the provision of section 7 of the said Act, the Land Acquisition Collector Pind Dada Khan is hereby directed to take order for acquisition of the land."
5. On 22-4-1981, a notice under section 9(1) of the Act was issued by the Acquisition Collector, calling upon all the persons interested in the said land to make their claims to compensation for their interests in the said land. The residents of village Dandot agitated against the said acquisition of about 100 acres of their cultivable land on the ground that it was purely agricultural land on which their livelihood depended and it was being acquired for providing raw material of clay to Dandot Cement Project when alternate deposits of clay were available in the area. The stand of the State Cement Corporation of Pakistan Ltd., in reply was that 100 acres of land was required for a guaranteed supply of clay for the project for a period of 50 years which corresponded to the probable life of the plant intended to be installed. It was also submitted that the said 100 acres approximately of the said cultivable land of village Dandot, had been selected after necessary tests by Japanese experts and there was no other deposits of clay of required standard and of sufficient quantity available in the area. Representation of residents of Dandot village was rejected finally by order dated 25-4-1982 of the Member Board of Revenue on the ground that project had been prepared after due tests and after alternative sites had . Been technically examined and found deficient and not suitable. He also found that the total area being acquired from village.
Dandot was about 173 (actually 172) acres out of which 108 acres were cultivated and remaining were ghair mumkin pahar. After the order of Board of Revenue, the Land Acquisition Collector published a notice in Daily Jang Rawalpindi, dated 26-5.1982, asking the ex-propriated land- owners to handover possession by 10th of July, 1982. The residents of the village Dandot, however, resisted the delivery of the possession and it was with the aid of the police that the possession was obtained on 16-8-1982.
6. Raja Muhammad Amir and 14 others, residents of village Dandot filed Writ Petition No, 448 of 1982, out of which present appeal has arisen, on 20th October, 1982. Later, many others joined them in the writ petition. However, out of them only 26 paid the court-fees for their individual reliefs and others who failed to do so were dropped out. There thus remained 41 persons as petitioners in the writ petition. The challenge by these 41 persons was confined only to acquisition of their culturable land for the purpose of supply of clay to the plant. It is, however, stated that the total holding of these 41 persons, out of a total area of about 100 acres of cultivated land acquired from village Dandot is 416 Kanals approximately. The main point raised in the writ petition was that the State Cement Corporation of Pakistan Ltd., was not a department of the Government but was a company within the meaning assigned to it in section 3(e) of the Act and, therefore, in order to lawfully acquire the said land for it, compliance with the procedure provided in Part VII of the Act had to be made and since this was lacking, the impugned acquisition was illegal. It was also contended that for procuring raw material of clay for the said company, the acquisition of said land was not warranted by clauses (a) and (b) of subsection (I) of section 40 of the Act which appeared to have been considered by the learned counsel filing the writ petition to be the only clauses available then in said subsection and for that reason it was submitted that there could never be any acquisition for obtaining raw material.
7. In written statement, .The State Cement Corporation of Pakistan Ltd., controverted the averments made in the writ petition. It was also pleaded therein that the State Cement Corporation was a concern of the Government of Pakistan and the whole of its authorised capital which came to 100 crores had been provided by the Government of Pakistan from public funds which includes foreign loan obtained by the Government of Pakistan from the Government of Japan. A certificate of a Joint Secretary in the Ministry of Production, Government of Pakistan, Islamabad, was appended to the written statement. It was to the effect that the State Cement Corporation of Pakistan (SCCP), a company registered under the Companies Act, 1913, was wholly owned and controlled by the Ministry of Production, Government of Pakistan, Islamabad, and that Dandot Cement Project, one of its Projects was wholly financed from the public funds including foreign loan. On these facts it was pleaded that the acquisition of land was not for a company simpliciter but for a public purpose although in the name of a company and since the whole of the cost of the acquisition was to be met from public funds, it was not necessary to comply with the procedure prescribed in Part VII of the Act. There was no specific averment in the written statement that provision under Part VII of the Act had actually been complied with although it was alleged in answer to ground No, 1 of the writ petition that acquisition proceedings were strictly, in accordance with law and objection regarding non-compliance with Part. VII of the Act was vague and did not state in what manner the provisions of Part VII of the Act had not been complied with. Nevertheless, documents showing compliance with Part VII, namely, issue of Gazette notification, dated 28-11-1980, containing agreement dated 3-11-1980 between the Governor of the Punjab and the State Cement Corporation of Pakistan (which also recited the consent having been given by the Commissioner of the Division to the said acquisition) was appended to the written statement as an annexure. So far as the second point is concerned, it was submitted in the written statement that land of village Dandot had not been acquired only for excavation of clay but for many other works too, namely, establishment of a labour colony and utility works, like road, water and electric supply systems etc. It was also contended that 100 acres of cultivable land of village Dandot had been selected for providing clay as raw material for the manufacture of cement and that the said tract of 100 acres of land bad beers selected after Japanese experts had carried out a thorough survey of qualitative and quantitative reserves of clay in the area and had approved the land in question as most suitable one available in the area.
8. At the hearing before the learned Single Judge, the first point, it appears, was amplified in arguments. It was submitted that when funds come from the Government and go to the company, they do not remain public funds any more as they become the funds of the company which is not a department of the Government and has its own individuality and if, therefore, the said funds are utilized by the company for the purpose of acquisition of land for it, payment cannot be said to have been made out of public funds which was a necessary condition for acquisition for public purposes as prescribed in section 6 of the Act and, therefore, acquisition being for a company, it was necessary to satisfy the conditions laid down in Part VII of the Act before land could be lawfully acquired. Reliance in this respect was placed on a decision of the Indian Supreme Court in State of Punjab and others v. Raja Ram and others (1), also reported in 1982 Pakistan Supreme Court Cases at page 997. It was maintained that since there had been no compliance with Part VII of the Act, therefore, the said acquisition was a nullity in the eye of law. It was additionally submitted at the hearing before the learned Single Judge that notification under section 4 and the agreement arrived at between the State Cement Corporation and Governor of the Punjab merely stated that, the land was needed by the State Cement Corporation for its Dandot Cement Project for the purpose of construction of a factory for cement, the manufacture of which would be useful to the public and .Not for public purposes and, therefore, the acquisition was not for a public purpose. As for the second point, it appears, learned counsel for the appellants-petitioners was pointed out that clause (aa) of subsection (1) of section 40 had been added in section 40 by means of West Pakistan Ordinance I of 1965 and that catered to the situation. The reply of the learned counsel, however, appeared to be that even the said clause did not cover the acquisition for the purpose of acquiring clay.
9. As for the main point raised in the writ petition, the learned Single Judge came to a finding of fact that the State Cement Corporation was a company owned and controlled by the Federal Government and the Dandot Cement Project was being financed by the Federal Government out of its own funds and for the public purpose and on this data held 'that the acquisition of said land was not for the benefit of company simpliciter but for public purpose and, therefore, compliance with the procedure prescribed in Part VII of the Act was not necessary. In coming to the above conclusion, the learned Single Judge observed that it was true that in view of the ratio laid down in State of Punjab and others v. Raja Ram and
(1) AIR 1981 SC 1964 ' others, the respondent-Corporation could not be treated as a Government Department, but a Division Bench of this Court had in Khushi Muhammad v. Commissioner, Muitan Division etc. (1), taken a different view and bad drawn a distinction between acquisition of land for a company simpliciter and acquisition of land. For a company which was financed and controlled by the Government out of public funds. As regards the objection that the acquisition in question has been shown to be only useful for the public and not for the public purpose, learned Single Judge held that the factum of being useful for public was also for public purpose. He also held that the word 'works' in phrase industry or work as used in clause (aa) of section 40(1) of the Act meant works other than industrial works and had been used in its widest sense and would, therefore, include within its ambit the quarrying of clay deposits and due to that it was not possible for him to hold that quarrying of clay deposits was not covered by clause (aa) of subsection (1) of section 40 of the Act. On that basis he held that even if the provisions of Part VII of the Act had to be resorted to, to acquire land in dispute, the case was covered by section 40 of the Act (and there had been compliance with Part VII of the Act). On the basis of the above findings the learned Single Judge by his order dated 2-3-1983, dismissed the said writ petition.
10. In this Intra-Court Appeal, the same points, as raised before the learned Single Judge, have been urged. The particular emphasis has, however, been laid by the learned counsel for the appellants on the circumstance that as shown in notification under section 4, acquisition in question was being made at the expense of the State Cement Corporation of Pakistan which was not a department of Government of Pakistan and had its own individuality and public funds which came into its hand became funds of the Corporation and, therefore, the essential condition of payment of cost of acquisition from . Public funds had not been complied with and payment being from the funds of the company, it was acquisition for a company and, therefore, compliance with provisions made under Part VII of the Act was essential for lawful acquisition of said land and this not having been done, the acquisition was wholly without lawful authority. For this, the said case from Supreme Court of India was strongly relied upon. It is also 'reiterated that acquisition of land for the purpose of quarrying clay deposits from cultivable land of appellants to feed the cement factory did not fall under any of the clauses of subsection (1) of section 40 of the Act and, therefore, no consent could be given by Commistioner under section 39 of the Act nor any agreements could have been entered into by the State Cement Corporation of Pakistan with the Governor of the Punjab and, therefore, there being no proper compliance with provisions made in Part VII of the Act, the acquisition was illegal. Learned counsel for the respondents has, ho Never, submitted in reply that learned Single Judge was bound by the decision in Khushi Muhammad's case and that the view taken in that case was sound in law and should, therefore, be followed by this Bench as well and that in any case there had been full compliance with the procedure laid down in Part VII of the Act as the acquisition of land for the purpose of quarrying clay deposits to feed the cement factory fell under clause (aa) of section 40 of the Act and respondent-Company had entered into the required agreement with the Punjab Government after the necessary satisfaction of and consent to said acquisition by the Commissioner of Rawalpindi Division. He has, therefore, submitted that this appeal should, for the said reasons, be dismissed.
11. We would like to take the second pint first and would scrutinize as to whether in acquiring the said land there has been a ptoper compliance (1) PLD 1965 Lah. 250 with the provisions made in Part VII of the Act. The quarrying of clay deposits for the purpose of cement factory is obviously not covered be clause (a) of subsection (1) of section 40 of the Act, as the same is restricted to acquisition of land for erection of dwelling houses for workers employee by a company or for provision of amenities directly connected therewith. Clause (b) is also inapplicable as the said clause is confined to acquisition of land for a company which is needed by it for the construction of some work and that work is basically meant for the advancement of interest of shareholders of the company but is also likely to prove useful to to public as for example construction of a bridge or water supply system or giving training to certain classes of persons. This clause is, on the face of it, respect of a company other than a company engaged in a work or industry which is for a public purpose. Clause (aa), however, is in respect of a company which is engaged in or is taking steps for engaging itself in an industry or work which is for a public purpose and the acquisition of land is needed for the construction of some work for it. The respondent State Cement Corporation of Pakistan was undoubtedly making efforts for engaging itself and has now got itself actually engaged in the industry of producing cement. In the notification under section 4 and in the agreement it was stated that setting up of a cement factory was likely to be useful to public. The words useful to public have been used here as synonym for a public purpose. In the notification under section 6, apart from saying that manufacture of cement shall be useful to the public, it has been expressly declared that it would be for public purpose which declaration is conclusive under section 6(3) of the Act. Even otherwise, it is clear that in these day of extreme shortage of cement, setting up of a cement factory for production of cement is a national need and is obviously for public purpose The said company needs the work of establishing a quarry to excavate clay deposits to feed the cement plant for the preparation of cement as the said clay is an indispensible ingredient of the cement to be produced be the plant installed at the Dandot Cement Project. We are also clear in our mind that the word 'work' in the expression building or work as used in clause (aa) of subsection (1) of section 40 of the Act is not confined to work of industrial nature and has a much wider meaning and it embrace within its ambit setting up of a quarry for excavation of clay to provid the same to the said cement factory. The acquisition of land for the purpose of quarrying clay deposits, therefore, clearly falls within clause (aa) of sub section (1) of section 40 of the Act. The consent of the Commissioner having, therefore, been properly obtained and agreement between the Governor of the Punjab and the company having been validly arrived at, it cannot be said that there was no compliance or no proper compliance with provision of Part VII of the Act. The acquisition of said land for the purpose of to said company was, therefore, made after full satisfaction of conditions laid down in Part VII of the Act and accordingly the said acquisition was perfectly in order and was unexceptionable.
12. The above finding clinches the matter and concludes this appeal and renders it liable to be dismissed straightaway and we would have dismissed it on this sole ground, but for the extensive .Arguments advanced before us on the other point viz. That though the acquisition in question was for a public purpose' and. Though costs of acquisition of land had originally been paid by the Federal Government from public funds, the said funds had lost their character as public funds when they came into the hands of the company and had been paid by the company towards the cost of acquisition as its own money and, therefore, in consonance with the Spirit of section 6 of the Act, compliance with Part VII of the Act was necessary. We 'think in view of the time and energy spent in arguing this point by the learned counsel for the parties and in our giving anxious thought to the said arguments and also on account of the general judicial disinclination for fragmentary decisions, we should proceed to determine this point as well.
13. The learned Single Judge has rejected the said point on the basis of law laid down in case of Khushi Muhammad v. Commissioner, Multan Division etc. In that case, one-third capital of Sui Northern Gas Pipelines Limited had been subscribed by the Government of Pakistan out of public revenue and a loan in the sum of 6 crores 32 lacs had been advanced to finance the said company which had to lay the gas pipeline from Multan to Northern areas to supply sui gas to the said areas. The said investment was made because gas was urgently needed in-Northern region of Province of West Pakistan and for that reason it was mentioned in the notification under section 4, that land is required for a public purpose. On this data, it was held that acquisition in that case was for a public purpose to be executed by a company. Within the purview of section 6 of the Act and accordingly compliance with Part VII of the Act was not necessary and, therefore, provisions of section 17(4) were properly invoked to dispense with application of sections 5 and 5-A of the Act before execution of agreement as required by section 39 of the Act. It was also held that if the acquisition had been for the benefit of a company simpliciter, Commissioner would have been incompetent to dispense with the provisions of sections 5 and 5-A before execution of agreement under section 39 of the Act. It is notable that though the dictum laid down in this case apparently is that it is only in case of acquisition of land for a company for a public purpose that the provisions of Part VII of the Act would be inapplicable, from the description of the circumstance that 1/3rd of the share capital of the company had been furnished by Government of Pakistan, what actually appears to have been laid down in the said case is that where acquisition of land is for a public purpose and even a part of the cost of the acquisition is met by public funds, it is not necessary to go through the procedure prescribed by Part VII of the Act: The support for the view taken in the said case was obtained from the observations made in Jhandu Lai etc. v. State of Punjab etc. (1) and Somawanti etc. v. State of Punjab etc. (2). The case of Jhandu Lai of Punjab High Court was appealed against . And the final decision was given by the Supreme Court of India in Jhandu Lal v.
The State of Punjab (3). Dispute in that case was in respect of acquisition of land for public purpose, namely, for construction of a Labour Colony under the Government-sponsored Housing Scheme for the Industrial. Workers of the Thapar Industrial Workers Co-operative Housing Society Limited, in which a notification under section 17(4) was issued dispensing with the provision of section 5-A of the Act and later issuing a notification under section 6, without any agreement having been entered into as required by Part VII of the Act. This scheme was to be subsidised by the Government out of the public funds. Supreme Court of India held as below :- "Section 6 is, in terms, made subject to the provisions of Part VII of the Act. The provisions of Part VII, read with section 6 of the Act, lead to the result that the declaration for the acquisition for a company shall not be made unless the compensation to be awarded for the property is to be paid by a company. The declaration for
(1) AIR 1959 Pb. 535 (2)AIR 1963 SC 151
(3) A I it 1961 SC 343 ' the acquisition, for a public purpose, similarly, cannot be made unless the compensation, wholly or in part, is to be paid out of public funds. Therefore, in the case of an acquisition for a company simpliciter, the declaration cannot be made without satisfying the requirements of Part VII. But that does not necessarily mean that an acquisition for a company for a public purpose cannot be made otherwise than under the provisions of Part VII, if the cost or a portion of the cost of the acquisition is to come out of public funds. In other words, 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 finals. 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 in the present instance, it appears that part at any rate of the compensation to be awarded for the acquisition is to come eventually from out of public revenues, it must be held that the acquisition is not for a company simpliciter. It was not, therefore, necessary to go through the procedure prescribed by Part VII."
14. The said dictum of law was followed by Full Bench of Supreme Court of India consisting of five Judges in Somawand v. The State of Punjab. In that case land was acquired by State of Punjab for Air-conditioning Corporation (1) Ltd., a private limited concern expressly for the public purpose of setting up a factory for manufacture of various ranges of refrigerator compressors and ancillary equipments. The cost of land acquired was 4,50.000 but Government of State of Punjab sanctioned the expense of Rs, 100 only for the purpose of acquisition of this land and made a contribution of this paltry sum towards the payment of compensation out of the public revenues. The challenge to the said acquisition was based, inter alia, on the ground that property was in fact being acquired for a company and, therefore, the provisions of Part VII of the Act should have been, complied with and that the acquisition stood vitiated on account of non-compliance with Part VII of the Act and further on the ground that the alleged contribution of Rs, 100 mads by the government was so unsubstantial a sum as compared to the value of the property that it could not raise an inference of Government participation in the proposed activity as contemplated by proviso to subsection (I) of section 6 of the Act and, therefore, the said acquisition amounted to a colourable exercise of power by the .Government. The plea in defence Ara.; that Part VII of the Act had not been complied with on the ground that acquisition is not for a company but for a public purpose and partly at public expense. In deciding this case, five Judges of Supreme Court of India proceeded on the hypothesis of the dictum laid in Jhandu Lal's case being settled law and proceeded to determine as to whether the contribution of Rs, 100 only by the State Government amounted to part payment by State Government out of public revenues within the meaning of the words as used in proviso of subsection (1) of section 6 of the Act.
15. The above dictum of law laid down in Jhandu Lal's case and subsequently followed in Somawanti's case is fully sustainable on the wording of section 6 of the Act. The decision of the Division Bench of this Court in Mush, Muhammad's case cited above, is consistent with the direct decision of the Supreme Court of India given in Jhandu Lars case as followed in Somawanti's case.
In the first place, in Khushi Muhammad's case, toe Division Bench of this Court had drawn a distinction between acquisition for a company simpliciter and acquisition for a company for a public purpose just in the same manner as had been done by Supreme Court of India in Jhandu Lars case. In the second place, as is clear from facts recited in Khushi Muhammad's case, Sui Northern Gas Pipelines Limited was established inter alla, for the purpose of laying pipelines for transmission of gas and 1/3rd of the share capital of the said company had been contributed by the Government and, therefore, a part of the cost of acquisition of land in which said pipeline was to be laid came from public funds just in the same manner as part of cost of acquisition of land for construction of houses for industrial workers in Jhandu Lal's case came from public revenues on account of scheme being subsidized by the Government. If in Khushi Muhammad's case, 1/3rd of the share capital of Sui Gas Northern Limited and in consequence, 1/3rd of cost of acquisition had come first into the hands of the said company, subsidy granted by the Government in Jhandu Lal's case also appears to have first come into the hands of the company, a co-operative society set up by workers for construction of a Labour colony. Supreme Court of India had in spite of it considered the said sum to have not become the money of the company and Division Bench of this Court had also not considered the said sum to have become the funds of the company. It is clear, therefore, that the said decision of Division Bench draws full support from the pronouncement of Supreme Court of India made in Jhandu Lal's case as followed in Somawanti's case.
16. We, on our own part, have given a good deal of thought to the distinction between acquisition for a company simpliciter and acquisition for a company for a public purpose and have come to the conclusion that the said distinction is entirely justifiable. Ours is an age where on account of inherent handicaps from which they suffer, the Governments are increasingly relying upon public corporations to carry out development activities. These corporations are established either entirely or mostly out of the public funds. The public at large has a real interest in their working as well as in the functions they perform. To equate them with other bodies whose pursuits are confined to the enrichment of their shareholders would not only be unrealistic but also detrimental to the public interest. We do not see why the acquisition of land on behalf of a company which is engaged in executing projects of great public interest be not treated as acquisition for public purpose so as to avoid the application of provisions of Part VII of the. Land Acquisition Act. It is to be noticed that the Land Acquisition Act permits acquisition of land for a company for only limited purposes as are detailed in section 40(1) thereof. It would not be conducive to public interest if we apply the same limitations to a corporation established by the Government when seeking to acquire land to carry out a purpose for the benefit of the public. We would regard such acquisition as one for public purpose and one for a company within the meaning of section 4 of the Act. We, therefore, do not think that any justification for taking a view different from the one expressed by the Division Bench in Khushi Muhammad's case has been made out on that account.
17. We have also given our anxious consideration to the point that sums of money paid by Government to a company as a contribution towards the cost of acquisition of land for setting up a project for a public purpose lose their character as public funds and become the money of the said company and for that reason payment by the said company of the said money towards the cost of the acquisition would not be payment out of public funds but payment out of money held by the company and for that reason non-compliance with Part VII of the Act rendered the acquisition illegal. We have also perused State of Punjab and others v. Raja Ram and others on which the said point is based. It is notable that decision in question has been rendered by two learned Judges of the Supreme Court of India and that (we say with utmost respect) they had not taken into consideration the decision given by five Judges of Supreme Court earlier in Jhandu Lars case wherein also subsidy to be advanced by the Government for the scheme for construction of houses to establish a labour colony was obviously to go first to the company and case of Somawanti etc. v. The State of Punjab etc. Another decision given again by five Judges of Supreme Court of India wherein a contribution of a sum of Rs, 100 was also, on the face of it, to go first to the company which was to pay the compensation for the land and yet the said five learned Judges of the Supreme Court of India did not consider in each case the said sums to have ceased to retain their identity as public funds. In our opinion the proposition that when a sum of money from public funds is paid by Government to a company for acquisition of land, it becomes the money, of that company is inapplicable to a company which is set up primarily to start a project with the object of executing a public purpose. Under subsection (I) of section 6, Government can declare an acquisition to be one for public purpose and the underlying object of laying down a condition in proviso to said subsection (that Government can declare an acquisition to be for public purpose only if part or whole of cost of such acquisition is paid by Government) is to provide for a safeguard against abuse of power by the Government in declaring an acquisition to be one for public purpose. However, there can possibly be no abuse of power on the part of the Government in declaring a project of public interest to be one for public purpose when it is sought to be executed by it through the agency or instrumentality of a company, set by especially for the purpose of implementing a public cause. The said sums are given to such a company specifically for the purpose of acquisition of land for a'scheme meant for a public purpose and there is no apprehension of their getting mixed up with such funds of the company as are meant solely for the private purpose of mere enrichment of members/shareholders of the company. Such sums of money remain public funds even in the hands of such a company. Thus, no case for differing from dictum laid down in Khushi Muhammad's case has been made out on that ground also.
18. In any case, facts of the case in hand, put it on a far higher pedestal than the case of Khushi Muhammad. In the case of Khushi Muhammad, 1/3rd of share capital of the company had been contributed by the Federal Government. In the present case, however, the company is wholly owned and controlled by the Federal Government. Such corporations are formed by the Government to undertake governmental functions, particularly, in the industrial and commercial spheres so that these bodies flexible as the are, may, free from inhibiting effect of red-tapism perform their duties D more speedily, efficiently and profitably than a department of the Government, but their creation is in the nature of delegation to them of sovereign functions of the State. Therefore, though the said corporations are not a department of the Government and have their own individuality, they are a substitute for a Government department and are an agency or instrumentality of the Government for realization of public purposes for which they are created.
Even in case of R. D. Shetty v. International Airport Authority (1), cited with approval in case of State of Punjab and others v. Raja Ram and others, case relied upon by the learned counsel for the appellants, it had been laid down that where a corporation is wholly controlled by Government not only in its policy making but alia in carrying out the functions entrusted to it by the law establishing it or by the charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of the Government. It was further held in that case that it was clear that if the entire share capital of the corporation is held by the Government,, it would go a long way towards indicating that corporation is an instrumentality or agency of the Government. In our opinion, money spent by such like corporation towards acquisition of land from out of its funds is public money. Apart from that we are of the opinion, if public funds are separately provided by the Government to such like corporations for the express purpose of execution of projects of public nature, then that delivery of public funds at any rate does not change the character of said funds as public funds which continue to retain their identity as such. When the corporation itself belongs H to the Government which is having its full control over it, we do not think that the public funds given to it for a specific project required by the Government to be executed by it become funds of the corporation. We believe that they continue to remain public funds. In this view of the I matter, we hold that the public money which constitutes a part of funds of the corporation wholly owned and controlled by the Government and created by the Government for fulfilment of public purposes or at any rate, the public funds provided by the Government separately to such a corporatil for execution of a project of public nature continue to remain to be publi funds and fall within the meaning assigned to them in section 6 of the Pct.
19. Now Federal Government had power under section 7-E of Economics Reforms (Amendment)
Act, 1973 (Act LXIV of 1973) to set up a corporation wholly owned and controlled by it for the public purpose of production of cement in the country. It created State Cement Corporation of Pakistan as a company wholly owned and controlled by it. The certificate- to that effect given by a responsible officer of the Federal Government-and appended to the written statement was never controverted at any stage. The correctness of the matter certified therein is established to the hilt. It is, therefore, established beyond any shadow of doubt that respondent-Corporation in wholly owned and controlled by Federal Government. Applying the above findings of law to the above finding of fact, we think that funds provided to the said company for acquisition of land continued to retain their character as public funds as the company was totally owned and controlled by the Federal Government. Further, the uncontroverted certificate of the Joint Secretary to the Ministry of Production also stated that Dandot Cement Project, which was one of the projects of State Cement Corporation of Pakistan, was wholly financed from public funds including foreign loan. Certificate of incorporation of State Cement Corporation appended in the book containing memorandum and articles of association of said company shows that said company was incorporated in 1973-74, while proceedings for acquisition of land in village Dandot were initiated some times in the year 1979. The certificate seen in the light of these facts shows that public funds including the
(1) (1979) 3 SC C 489 ' sum of foreign loan to finance the said project were given by the Government to the State Cement Corporation of Pakistan somewhere in 1979. It cannot be said that sum of public money furnished to the State Cement Corporation of Pakistan much subsequent to incorporation of the company lost its identity as public money and became money of the State Cement Corporation especially when said money had in terms of said certificate been advanced to the State Cement Corporation of Pakistan for the express purpose of establishing cement factory at Dandot, which embraced within its ambit the acquisition of land for the project in question also. It is also pertinent to note that public funds furnished to State Cement Corporation of Pakistan for establishment of Dandot Cement Project contained also money received by Federal Government from Government of Japan by way of loan for the project in question. This loan has obviously been contracted for by the Federal Government with the Government of Japan. It is obvious that this loan is to be paid back by the Government to the Japanese's Government. It cannot, therefore, be said that public funds furnished by Federal Government to finance the Dandot Cement Project changed its character as public funds and became the funds of a company, namely, State Cement Corporation of Pakistan.
The public funds provided by Federal Government to the respondent-Company for establishing Dandot Cement Project continued to remain public funds even in the hands of the company and payment of the same for acquisition of disputed land, did not turn the acquisition in question as an acquisition for a company simpliciter but it continued to remain an acquisition for a company for a public purpose at the expense of the State. Therefore, we reject this point as well and maintain the finding of the learned Single Judge though for different reasons.
20. For the foregoing reasons, we find no substance in this appeal and dismiss the same with costs.