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Malayan Law Journal Articles/1996/Volume 2/COMPULSORY ACQUISITION OF LAND IN MALAYSIA (PT I)

[1996] 2 MLJ xxix

Malayan Law Journal Articles

1996

COMPULSORY ACQUISITION OF LAND IN MALAYSIA (PT I)

Mp Jain LLM (Del), JSD (Yale)

Professor, Faculty of Law, University of Malaya and Grace Xavier LLB (Hons) (Lond),

LLM (Mal), CLP Advocate & Solicitor, High Court of Malaya Lecturer, Faculty of Law, University of Malaya

[This is the first of a two-part article. The second part will appear in the next issue of the MLJ.]

Introduction

At the present day, the government in Malaysia is engaged in a massive programme of construction of
various public works all over the country. This involves acquisition of private land on a big scale. Land is
acquired in Malaysia under the Land Acquisition Act 1960 ('the LAA'). This is a harsh legislation, although the
fact remains, that over a period of time, the law has been liberalized in certain respects. Nevertheless, there
are still some aspects of the law which need to be modified.

Constitutional Provisions

Before taking note of the provisions of the LAA, it may be instructive to take note of constitutional provisions
in Malaysia, USA and India extending protection to private property.

Freedom of the person and the right to acquire, hold and enjoy property are the two basic pillars on which a
democratic society is based. These are characterized as natural rights of the people.

Freedom of the person gives an opportunity to a person to develop his personality culturally, educationally
and socially. It gives him immunity from illegal arrest, torture etc.

Right to property acts as an incentive to the people in a democratic society to work hard and to acquire
wealth and property. At the basis of the present day trend towards market economy, privatization and
corporatization lies the right to acquire and to enjoy property. Property is not only an economic asset; it also
has emotional and sentimental value. That is why constitution of a democratic society seeks to extend some
protection to property rights.

However, the right to property is not absolute. This right has always
2 MLJ xxix at xxx
been regarded as being subject to eminent domain, an inherent right of the state, an essential incident of the
state sovereignty. This means taking private property for public use. Eminent domain is subject to two
essential conditions:

(i) private property is to be taken only for public use; and

(ii) just compensation must be paid for the property taken.
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Here, property is acquired by the state against the will of the landowner. This is a serious encroachment on
the right to property. But this can be done in public interest and not in private interest. Eminent domain does
not permit taking the property of A and giving it to B to confer benefit on him. This is illegitimate. It also does
not permit taking away property without just compensation. It is not eminent domain but expropriation, and
this is not legitimate.

Article 13 of the Malaysian Federal Constitution is in the following terms:

No person shall be deprived of property save in accordance with law.

No law shall provide for the compulsory acquisition or use of property without adequate compensation.

Several interesting questions arise in relation to art 13. It incorporates the basic principle that no one can be
deprived of his property merely by an executive fiat in the absence of a law authorizing such deprivation. But
art 13(1) incorporates no substantive or procedural safeguards. An important question arises: what does the
term 'law' in art 13(1) mean? Does it mean any 'enacted' law howsoever arbitrary or unreasonable it may be?
Or, can it be argued that an arbitrary law or a 'lawless' law is not law? If 'law' in art 13(1) were to mean only
an enacted law, then art 13(1), although called a 'fundamental liberty', hardly gives any protection to a person
against any harsh law made by a legislature. Can it be argued that in a democratic society based on rule of
law, an unreasonable law cannot be considered as 'law'? It was ruled in Comptroller-General of Inland
Revenue v NP1 that the word 'law' in art 13(1) can only mean an enacted law. But since then, judicial opinion
seems to have undergone some change. In Kulasingam,2 the Federal Court was prepared to read 'law' in a
broad sense as 'a system of law which incorporates those fundamental rules of natural justice that had
formed part and parcel of the common law of England that was in operation at the commencement of the
Constitution'. Further, art 13(2) does not say that acquisition of property can only be for a 'public purpose'.
Thus, one of the essential elements of eminent domain is missing from art 13(2). But, it can possibly be
argued that art 13(2) incorporates the doctrine of eminent domain and so the concept of public purpose can
be implied therein. Article 13(2) specifically makes provision for payment of compensation for
2 MLJ xxix at xxxi
property acquired. Thus, one element of eminent domain is specifically incorporated in art 13(2).

It has now been ruled that if a person is deprived of his property by state action, but without the state
acquiring the same, then no compensation is payable. Earlier, in the Selangor Pilot case,3 the Federal Court
had given an affirmative ruling in favour of payment of compensation in such a situation. The Federal Court
had taken its cue at the time from some Indian cases on the old arts 31(1) and (2) of the Indian Constitution.4
But, on appeal, the Privy Council, adopting a restrictive and literalistic view of art 13(2), ruled in the negative
and reversed the Federal Court on this point. It may also be noted that the question of 'adequate
compensation' is a justiciable matter as it is a matter of constitutional guarantee under art 13(2). Whether a
law providing for land acquisition provides for adequate compensation or not is a matter on which the courts
can always make a pronouncement. Also, what 'adequate' means is for the courts to decide. The legislature
is bound by whatever principles the courts lay down for determining adequate compensation.

The relevant constitutional provision in the USA is the fifth amendment of the constitution which runs as
follows:

No person shall be deprived of life, liberty or property without due process of law; nor shall private property be taken for
public use, without just compensation.

This provision requires: (i) procedural safeguards; (ii) a reasonable law fulfilling the requirements of due
process; (iii) acquisition be made only for public use; and (iv) just compensation. The word 'taken' in the
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above provision has been interpreted broadly. It does not necessarily mean that possession or ownership of
property should always vest in the government. If regulation of property goes too far, it may be regarded as
'taking' and compensation may become payable for the same. In the USA, the question of compensation is
justiciable as it is a matter of a constitutional guarantee. The court can rule that compensation payable is not
just for 'taking' property. Of all the constitutions, the US constitution gives the best guarantee to private
property from government interference.

In India, art 300A runs as follows:

No person shall be deprived of his property save by authority of law.

Art 300A signifies that before a person can be deprived of his property, there should be a law authorizing
such deprivation. This is a basic principle of democracy that no person can be deprived of his property
without the authority of a valid law. A person cannot be deprived of his property merely
2 MLJ xxix at xxxii
by an executive order which has no legal basis. Further, the term 'law' in art 300A does not mean merely a
law made by a legislature; it means a 'fair and reasonable' law. On the basis of Maneka Gandhi,5 it can be
argued that 'law' in art 300A cannot mean an 'unreasonable, arbitrary, oppressive or confiscatory law'.6
Article 14 can also be invoked as it has been held that an unjust or arbitrary law amounts to a denial of
equality before law.7

The Land Acquisition Act 1960

The LAA has two main parts: (i) the acquisition of property; and (ii) the assessment of compensation. The
LAA has both substantive as well as procedural provisions. Both are important to ensure that there is no
abuse of power in the matter of acquisition of property.

The basic provision in the LAA for the purpose is s 3. This may be characterized as the 'purpose' clause, as it
lays down the purposes for which private property can be acquired. This provision, before 13 September
1991, was as follows:

The State Authority may acquire any land which is needed --

for any public purpose; or

by any person or corporation undertaking a work which in the opinion of the State Authority is of public utility; or

for the purpose of mining or for residential, agricultural, commercial or industrial purposes.

The Land Acquisition (Amendment) Act 1991 amended s 3 of the LAA and inserted a new clause in place of
the old s 3(b). The new s 3(b) runs as follows:

by any person or corporation for any purpose which in the opinion of the State Authority is beneficial to the economic
development of Malaysia or any part thereof or to the public generally or any class of the public;

A new provision, s 68A, has also been added to the LAA. Section 68A runs as follows:
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Where any land has been acquired under this Act, whether before or after the commencement of this section, no
subsequent disposal or use of, or dealing with, the land, whether by the State Authority or by the Government, person
or corporation on whose behalf the land was acquired, shall invalidate the acquisition of the land.

2 MLJ xxix at xxxiii

Reference may also be made to s 8(3), which runs as follows:

A declaration in Form D shall be conclusive evidence that all the scheduled land referred to therein is needed for the
purpose specified therein.

A few words may be said about s 3 of the LAA. The term 'public purpose' used in s 3(a) is not defined
anywhere in the Act. The Supreme Court of India has, however, defined the term as follows:8

Public purpose is not capable of precise definition. Each case has to be considered in the light of the purpose for which
acquisition is sought for. It is to serve the general interest of the community as opposed to the particular interest of the
individual. Public purpose, broadly speaking, would include the purpose in which the general interest of the society as
opposed to the particular interest of the individual is directly and vitally concerned. Generally, the executive would be
the best judge to determine whether or not the impugned purpose is a public purpose. Yet, it is not beyond the purview
of judicial scrutiny.

In India, the position is that the specific purpose for which land is being acquired has to be mentioned either
in the s 4(1) notification or specified by the acquiring authority in the counter-affidavit filed in the court or is to
be evident from the record.9

It may be noted that in s 3(a), the words 'in the opinion of' are not to be found. Nor are they to be found in s
3(c). These words are to be found only in s 3(b). This may raise the presumption that the decision of the
executive under ss 3(a) or 3(c) is objective and not subjective.

Section 3(b), newly added in 1991, is indeed a very harsh provision and has a very wide scope and range.
Under s 3(b), land may be acquired for a person or a corporation and not by the government for itself, and for
a purpose which 'in the opinion' of the state authority is beneficial to the economic development of Malaysia
or any part thereof or to the public generally or any class thereof. The term 'economic development' has not
been defined. The questions whether a specific acquisition is 'beneficial' and is for 'economic development'
are left to the subjective discretion of the state authority, as the words 'in the opinion of' indicate.10 If the term
'economic development' is given a broad meaning, then every commercial activity undertaken by a
non-governmental body for its own profit may fall within the scope of this term. The questions may then arise:
why, in such a case, should not land be acquired by the concerned person through negotiations with the
landowner and why should the state machinery of acquisition be mobilized for a private, profitable,
commercial venture?
2 MLJ xxix at xxxiv

Procedure for Land Acquisition

Acquisition proceedings are initiated with a pre-acquisition notification under s 4. Section 4(1) thus provides a
procedural safeguard. Section 4(1) provides:

Whenever the State Authority is satisfied that any land in any locality in the State is likely to be needed for any of the
purposes referred to in section 3 a notification in Form A shall be published in the Gazette.
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Besides publishing a notification in the Gazette, a public notice is to be given by the land administrator as
provided in s 52. This is a pre-acquisition general notice. There is no provision for a specific notice to the
person whose land is sought to be acquired. The validity of the Form A notice is 12 months. Within this
period, the declaration under s 8(1) must be made by the state authority. Under s 8(1), when the state
authority decides that any of the lands referred to in s 7 is needed for any purpose mentioned in s 3(1), a
declaration in Form D shall be published in the Gazette. If a s 8 declaration is not made, the s 4 notification
lapses.11 Thereafter, a fresh notification is to be made under s 4(1) if the state authority is satisfied that land
is likely to be needed for a purpose mentioned in s 3.12

Formerly, there was no time limit prescribed between the issue of the notification under s 4(1) and that
issued under s 8(1). In one case, there was a gap of nine years between the two notifications, and even then
the court refused to intervene.13 Obviously, this was very harsh and inconvenient to the landowner whose
land -- being subject to a s 4(1) notification -- was practically frozen for all purposes. This situation has now
been remedied by s 4(3), which fixes a period of 12 months between the issue of notification under s 4(1)
and that under s 8(1). If the s 8(1) notification is not issued within 12 months of the issue of the notification
under s 4(1), this notification shall lapse. The state authority may, however, start fresh proceedings14 to
acquire the land by issuing a fresh notification under s 4(1).

A s 4(1) notification opens the way for survey of the land in the concerned locality by the servants and agents
of the state authority. This is provided for in s 5. The s 4 notification enables the servants and agents of the
state authority to decide whether the land is to be acquired. It also places the concerned persons on notice
that their land is likely to be acquired. From the wordings of s 4(1), it seems clear that the issue of the
notification under it is mandatory. Similarly, the giving of public notice under s 52 is also mandatory.15
2 MLJ xxix at xxxv

No right to be heard to the landowner

The first significant question which arises for consideration is: has the landowner whose land is sought to be
acquired a right to be heard and raise objections against land acquisition adversely affecting him? Such a
right is now regarded as a basic right in administrative law and is comprised within the term 'natural justice' or
'fairness'. The LAA provides no such right in specific terms. It may also be seen that under s 4(1), no notice
need be given specifically to the person whose land is sought to be acquired. Section 8(1) provides for a
general notice saying that land may be acquired in this locality. The specific land to be acquired, or the
landowner whose land is sought to be acquired, need not be identified at the stage of s 4(1) notification.
Then, under s 8(1), the state government's final decision acquiring land is published. At no stage therefore in
the pre-acquisition stage need a specific notice of land acquisition be given to the specific person concerned.
This is too harsh and inequitable a situation.

The LAA in Malaysia is based on the Land Acquisition Act 1894 of India. There is, however, one material
difference between the two statutes. In India, s 5A (added in 1923) provides for a pre-acquisition inquiry and
hearing to those who may be affected by any specific land acquisition scheme. Thus, the right to raise
objections against any proposal to acquire land is given by law in India. The courts in India do attach a great
deal of importance to the pre-acquisition hearing. For example, in Mandir Sita Ramji v Lt Governor of Delhi,16
it was held by the Supreme Court that the duty of the collector to hold a hearing under s 5A of the Land
Acquisition Act is mandatory. The court emphasized that the observance of the procedure laid down by the
statute before depriving a person of his property is necessary to generate the feeling that rule of law prevails
in the country. In this case, the order of acquisition was quashed because of the failure of giving a hearing to
the concerned party.

However, the Malaysian Act makes no such provision. Therefore, the question is whether any pre-acquisition
hearing could be claimed by the landowner from the general principles of administrative law such as natural
justice or fairness? It is now an important principle of administrative law that even when a statute is silent,
natural justice can be implied if a person is being deprived of any right, interest or legitimate expectation, if
the relevant statute does not bar it. Since the House of Lords' case Ridge v Baldwin & Ors,17 there has been
a great deal of expansion of this right in the common law world. It is an accepted principle of administrative
law that
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2 MLJ xxix at xxxvi

when a statute is silent, natural justice can be implied if a right, privilege or legitimate expectation of a person
is going to be adversely affected if the concerned statute is silent on the point and does not bar the
application of natural justice.18 This question was raised in S Kulasingam & Anor v Commissioner of Lands,
Federal Territory & Ors.19 In that case, the sports stadium belonging to the Tamilians' Physical Culture
Association was sought to be acquired for the purpose of building a hockey stadium. The sole surviving
trustee of the association challenged the acquisition, inter alia, on the ground that the plaintiff had not been
afforded any 'pre-acquisition hearing' before the concerned authority made the decision to acquire the land in
question. It was argued that even if the statute was silent as regards this right of hearing, the defendants
ought to have given an opportunity of hearing to the plaintiff since the right of property is one of the hallmarks
of democracy and the audi alteram partem rule is the corner-stone of justice. The right of hearing only on
matters of compensation as provided by the LAA is not sufficient. On the face of it, there ought to be no
difficulty in conceding the right to a pre-acquisition hearing to the landowner because of the recent expansion
generally of the concept of natural justice as stated above, and, more specifically, in view of such cases as
Cooper v Wandsworth Board of Works,20 which involved the demolition of a house, and Chief Building
Surveyor v Makhanlall & Co Ltd,21 which involved the declaration of a house as unfit for human habitation. In
both these cases, the right to be heard was conceded by the court to the concerned persons. There is a
catena of cases where the courts have implied the right of being heard in varied situations.22 When a person
is losing his property, he, at least deserves a hearing against acquisition. Surely, acquisition of property is a
much more serious matter than demolition as in acquisition, unlike demolition, the concerned person loses
his right of ownership of the property concerned. But, in Kulasingam, the Federal Court negatived any such
right to pre-acquisition hearing under the LAA as a matter of natural justice, saying that there is nothing in the
legislation imposing any such obligation in marked contrast to the specific provisions for an inquiry and
hearing in respect of the quantum of compensation payable. This argument, it may be submitted, is no longer
tenable because natural justice is an 'implied' and not an 'express' right and in a large number of cases, the
courts have conceded natural justice when the statute was silent on the point. This point has been clearly
settled by the Federal Court in Ho's case.23
2 MLJ xxix at xxxvii

The Federal Court argued in Kulasingam that since the LAA has an express provision for an inquiry and
hearing in respect of the quantum of compensation payable, but none with regard to the acquisition of land
needed for the purposes specified in s 3, this would attract the application of the maxim expressio unius est
exclusio alterius to exclude natural justice. On this basis, the court excluded right of hearing being implied in
the LAA under art 13(1) even though the court was prepared to read the word 'law' therein in a broad sense
as 'a system of law which incorporates those fundamental rules of natural justice that had formed part and
parcel of the common law of England that was in operation at the commencement of the Constitution'. The
court ruled that 'the legislature can by clear words exclude the principles of natural justice in the absence of
specific constitutional guarantees'. It may be pointed out here that the LAA contains no clear words to
exclude pre-acquisition hearing. Any argument that if one provision of a statute specifically stipulates natural
justice and another provision therein is silent, then natural justice is impliedly excluded in the latter case, is
not now accepted in other common law jurisdictions. The Supreme Court of India once entertained such an
argument,24 but has since rejected the same.25 In Canada, in Nicholson v Haldimand Norfolk Regional
Board of Commissioners of Police,26 a probationary constable in a municipality was dismissed without a
hearing. There was a statutory provision requiring hearing only for those who crossed the probationary
period, but not for one who was yet on probation. Still, the Supreme Court of Canada ruled that the
probationer must be treated 'fairly'. The consequences of dismissal to the concerned person were serious.
The dismissal was thus quashed by the court. The moral of the case is that when a statute provides for
hearing in one situation, but not in another, the court can still read the right of hearing in the latter situation
on the ground of fairness. Also, it is submitted that once the word 'law' in art 13(1) is read broadly so as to
include natural justice therein, then natural justice becomes a constitutionally-guaranteed procedural
safeguard and will have to be implied in every statute falling within the scope of art 13. The Constitution
being the supreme law of the land,27 it will be beyond Parliament to dilute the effect of art 13 and exclude
natural justice when a person is being deprived of his property.
2 MLJ xxix at xxxviii

The court also observed that any right of a 'pre-acquisition' hearing would stultify acquisition proceedings
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throughout the country and the scheme of the LAA appears in effect to specifically proceed on this basal
premises. But, it is submitted that 'hearing' ought not to be rejected merely because it may slow down
somewhat the administrative process. Administration does not always act fast. The proverbial administrative
delay is well known.

Also, natural justice is not a fixed concept.28 It can admit of a shortened hearing procedure.

In several cases, the Supreme Court of India has insisted that even when a decision has to be taken by the
administration quickly, it can still provide a hearing to the person concerned.29 The administration can strike
and adjust 'a balance between the competing claims of hurry and hearing'.30 The court has observed:31

The audi alteram partem rule ... is a very flexible, malleable and adaptable concept of natural justice. To adjust and
harmonize the need for speed and obligation to act fairly, it can be modified and the measure of its application cut short
in reasonable proportion to the exigencies of the situation. Thus, in the ultimate analysis, the question (as to what
extent and in what measure) this rule of fair hearing will apply at the pre-decisional stage will depend upon the degree
of urgency, if any, evident from the facts and circumstances of the particular case.

Moreover, merely the argument of administrative efficiency or convenience cannot be decisive to deny the
right of hearing to affected persons. The Kerr Committee in Australia, answering such an argument,
emphasized that administrative efficiency cannot be the end-all and be-all of administrative procedures.
Many substantive rights can be nullified if administration fails to follow due procedural norms. It is essential to
draw a balance between administrative efficiency and securing justice to an individual. It is, in effect, a
question of good and fair administration which ultimately leads to better administration.32 If the argument of
delay or administrative convenience or efficiency is taken to its logical end, then it will not be possible to
insist on any procedural or substantive safeguard against the administration.

On the whole, therefore, there exists a serious lacuna in the LAA in so far as the affected landowner has no
right to object to the proposed acquisition of his land before the issue of the notification under s 8.
2 MLJ xxix at xxxix

Judicial Review

Can the notification issued by the government under s 4 or s 8 be challenged in a court of law on any
ground?

The power conferred by s 3 of the LAA is characterized by administrative lawyers as a discretionary power.33
It is an important principle of administrative law that no power can be absolute as Raja Azlan Shah Ag CJ
(Malaya) (as he then was) observed in Pengarah Tanah dan Galian, Wilayah Persekutuan v Sri Lempah
Enterprise Sdn Bhd:34

Unfettered discretion is a contradiction in terms ... It does not seem to be realized that this argument is fallacious. Every
legal power must have legal limits, otherwise there is dictatorship ... In other words, every discretion cannot be free
from legal restraint; where it is wrongly exercised, it becomes the duty of the courts to intervene. The courts are the
only defence of the liberty of the subject against departmental aggression.

Over a period of time, courts have evolved certain norms for the exercise of discretionary power and the
grounds for judicial review thereof. It has been held that the courts do not review a discretionary decision on
merits. A court would not interfere with a discretionary decision on the ground that it is wise or foolish, or that
it does not agree with it; or the concerned authority should not have taken this but that decision. But the
courts have evoked certain grounds for reviewing such a decision. These grounds are: procedural ultra vires,
mala fides, improper motives, unreasonableness, non-application of relevant considerations, or application of
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irrelevant considerations, fettering discretion, dictation etc. Therefore, in theory, a decision of the state
authority acquiring land under s 3 of the LAA could be challenged on any of these grounds. Section 8(3)
does not seem to bar a judicial review of s 4 or s 8(1) notification on any of these grounds. In practice, only a
few such notifications have been challenged, and the result has not been favourable to the challenger in any
of the cases. For example, in Yew Lean Finance Development (M) Sdn Bhd v Director of Lands & Mines,
Penang,35 the notification issued by the state government under the LAA was challenged on the ground that
the lands were being acquired for a vague purpose, and therefore, the notice of acquisition was null and
void.

The said notification in that case stated in a cumulative manner that the lands were being acquired for
residential, industrial and public purposes. The notification was challenged on the ground that the purposes
mentioned therein for acquisition were vague. The court pointed out that it is an established principle of
administrative law that a discretionary power has to be exercised for a relevant purpose, and that it should
not be exercised for a purpose which is vague. It is for the court to decide whether the purpose mentioned in
the order is vague or not. In the instant case, however, the
2 MLJ xxix at xl
court rejected the challenge to the notification. Reading s 3 of the LAA, the court held that the government
has the sole right to decide what is, or is not, a 'public purpose' and the decision by the government in this
respect could not be questioned in a civil court. Once a Gazette notification has been issued under s 8 of the
LAA, it is conclusively established that the lands are needed for the purpose stated therein, and the only
complaint the owner of the acquired land can then have will be if the provisions of the LAA are not complied
with. Section 3 leaves the discretion with the state 'to choose an area of land for whatever purpose or
purposes it needs to acquire it'. The state need not confine its acquisition of land for purposes which come
under one head only of s 3, that is either under ss 3(a), 3(b) or 3(c). The state may use either head
individually or may combine one or two of them as the case may be. It may acquire land under one of the
limbs of ss 3(a), (b) or even part of the limb of s 3(c), or combine more than one of these purposes. The
purposes mentioned in the notification, namely, 'residential, industrial and public purposes', fell within ss 3(a)
and 3(c), and were not vague; therefore, the notification was held valid. It may be noted that the specific
purpose for which the land was being acquired in the instant case was nowhere mentioned in the impugned
notification.

In another case of land acquisition under the LAA,36 the preliminary notice issued under s 4 stated that the
land in question was required for an 'integrated town development project'. Later, in the declaration issued
under s 8, the purpose of acquisition was changed to construction of a 'commercial complex'. This was
challenged, but the court rejected the challenge saying that the changed purpose fell within s 3(c) of the Act
and so was lawful.37

In Syed Omar bin Abdul Rahman Taha Alsagoff & Anor v State of Johore,38 the appellant's land was
acquired by the state authority in Johore. He challenged the acquisition as null and void on the ground that
the land was acquired for unauthorized purposes. He contended that the draft lay-out plan prepared by the
state planning officer showed his lands zoned for 'recreational' purpose, and that such a purpose did not
come within s 3 of the LAA or the declaration of intended acquisition which had stated the purpose of the
acquisition to be 'construction of port, residential and industrial'. The Privy Council rejected the contention of
the appellant on the following grounds: (i) para 1 of the declaration in question was 'the material or
substantive part of the declaration'; (ii) the lay-out plan in question was not relevant, for the Act imposes no
obligation on the acquiring authority to produce a plan for inspection showing how the land to be acquired is
to be zoned; (iii) the zoning of the appellant's lands for 'recreational' purposes in the draft lay-out plan
prepared by the planning
2 MLJ xxix at xli
officer was never accepted and approved by the state authority; (iv) even if the land had been acquired for
the purpose shown in the lay-out plan, that would not suffice to show that the purpose of the acquisition
would fall outside s 3, or outside the declaration, for where a new town is to be created, the provision of
space for recreation may be regarded as incidental to zoning for residential use; (v) however, the appellant's
land had actually been used as part of a shipyard; (vi) s 8(3) provides that the declaration shall be conclusive
evidence that all the scheduled land is needed for the purpose specified therein. A declaration made
pursuant to this subsection may be treated as a nullity if it be shown that the acquiring authority has
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misconstrued its statutory powers,39 or that the purpose stated in the declaration does not come within s 3.
But, in the absence of bad faith, it is not possible to challenge the validity of the declaration by asserting that
some of the land to which it relates is not needed for the purposes stated, or that the land is in fact wanted
for purposes other than those specified, or that the purposes stated in the declaration do not come within s 3.
It would also not help to assert that the land listed in the schedule was much larger than the total area
originally intended to be acquired by the state authority; and (vii) in the instant case, there was no proof of
bad faith on the part of the acquiring authority.

It is obvious that the courts have given a much wider interpretation to s 8(3) than is warranted by its
language. This area of judicial control can be effective only if the courts adopt a somewhat probing and
scrutinizing stance in a creative manner.

It may be instructive to take note of a few cases from other jurisdictions to illustrate as to how the courts
apply the grounds mentioned above to review administrative decisions to acquire land.

In this connection, reference may first be made to Municipal Council of Sydney v Campbell & Ors,40 a Privy
Council case from Australia. The Municipal Council had statutory power to acquire land compulsorily, if
required, for the purpose of making or extending streets or for carrying out improvements in the city. The
council decided to acquire a piece of land for the purpose of improving the city. On being challenged by the
landowner, the court found that, in fact, the land was not acquired for the purpose stated, but with the object
of enabling the council to get the benefit of any increment in the value of the land in question which was
expected to accrue as a result of the extension of a street nearby. The court found that the
2 MLJ xxix at xlii
council had not prepared any plan for the improvement of the city; the minutes of the council showed that the
idea underlying the said acquisition was only financial advantage to the council. The acquisition proceedings
were consequently quashed. The Privy Council stated the legal principle as follows (at p 343):

A body such as the Municipal Council of Sydney, authorized to take land compulsorily for specified purposes, will not
be permitted to exercise its powers for different purposes, and if it attempts to do so, the courts will interfere.

In India, there has been a spate of cases in which land acquisition proceedings have been questioned in the
courts, and in some successfully. A few of the Indian cases may be cited here. In Collector, Allahabad v Raja
Ram,41 a notification was issued under s 4 of the Land Acquisition Act, for acquisition of certain land for a
specific purpose, viz, for the purpose of building a museum for a literary body known as the Hindi Sahitya
Sammelann. The court found that a plot of land already allotted to the said body for the very same purpose
was still lying vacant unutilized. This proved that the body did not actually need the plot for the purpose in
question but that the said notification had been issued for forestalling the landowner from constructing a
cinema building on that land. Taking into consideration the factual matrix of the case, the Supreme Court
said tersely, '... need of the land for museum was a figment of imagination conjured up to provide an
ostensible purpose for acquisition'. The court pointed out that s 4(1) 'confers power on the Government and
the collector to acquire land for a public purpose'. The court then raised the question: 'If the authorities of the
Sammelan cannot tolerate the existence of a cinema theatre in its vicinity can it be said that such a purpose
would be a public purpose?' Ultimately, the court concluded that the Sammelan was actuated by extraneous
and irrelevant considerations in seeking acquisition of the land and the statutory authority having known this
fact yet proceeded to exercise statutory power and initiated the process of acquisition'. The court thus
quashed the notification saying that 'the power to acquire land was exercised for an extraneous and
irrelevant purpose'.
2 MLJ xxix at xliii

In the following case,42 the land acquisition notification was quashed. The land was required for the planned
development under the State Housing Construction Board. The purpose was held to be vague and hence not
'public purpose' under the Land Acquisition Act. In Srinivasa Cooperative,43 the notification under s 4(1) was
quashed as the court found that the acquisition was for a private purpose. The Supreme Court observed that
 Page 10

in the context of land acquisition, acquisition for a private purpose under the colour of a public purpose may
be regarded as colourable exercise of power or, alternatively, as a case of improper purpose.44

Courts will never permit a mala fide acquisition of property, although, in a specific case, it may be difficult to
establish mala fide on the part of the acquiring authority. Only one case may be cited to illustrate the point. In
State of Punjab v Gurdial Singh,45 the High Court stuck down land acquisition proceedings for acquiring the
petitioner's land on the ground of mala fides. The state came in appeal to the Supreme Court, but the court
refused leave to appeal and let the High Court decision stand. From the course of events, the fact that the
acquisition proceedings were initiated at the behest of one of the respondents, who was a minister in the
government and a local politician, to satisfy his personal vendetta against the plaintiff landholder, and also
the fact that the allegations made by the petitioner remained uncontroverted by the respondents, the court
concluded that there was malice on the part of the government in acquiring the petitioner's land. The court
was satisfied that the statutory power to acquire land had been misused in the instant case to satisfy the
personal vendetta of an influential politician against the landowner. The court emphasized that under the
Land Acquisition Act, land can be acquired for a public purpose, but if it is shown that this is not the goal
pursued, but that private satisfaction of wreaking vengeance is the moving consideration in the selection of
the land for acquisition, then the exercise of the power would be bad.

These are only some out of a litany of cases in which the subjective satisfaction of the government to acquire
land has been challenged. These cases illustrate that the courts have, at their disposal, a number of grounds
by invoking which they can control an improper exercise of power to acquire land to some extent.
2 MLJ xxix at xliv

Assessment of Compensation

The next significant step in the process of land acquisition is the assessment of compensation for the land
acquired. According to art 13(2) of the Federal Constitution, 'compensation' has to be 'adequate'. Under s 14
of the LAA, the land administrator makes an award as to the amount of the compensation payable for the
land acquired. Under s 12(1), the land administrator is required to make 'full inquiry' into the value of the land
acquired with a view to fix compensation therefor. Under s 10(2), the land administrator is required to give at
least 21 days' public notice for holding an inquiry into the claims for compensation. Under s 11, a copy of a
notice is to be served on the person occupying the land and any other person interested in the land.

The nature of the inquiry is not specified. This gives rise to a few questions. Is the person interested entitled
to be heard? Can he appear through a lawyer? Can he produce his witnesses? All these questions have
been left vague by the LAA. The courts have sought to give some answers to these questions. Under s
13(1), the land administrator has power to summon witnesses and examine them on oath; he can also
summon documents etc. What is the nature of the function of the land administrator in the matter of
assessing compensation? In Oriental Rubber & Oil Palms Sdn Bhd v Pemungut Hasil Tanah, Kuantan,46
George J, in the High Court, ruled that the collector in holding his inquiry was clothed with judicial powers. It
was held (at p 318):

... there is no question but that the holding of the inquiry pursuant to s 12 and the making of the award pursuant to s 14
are quasi-judicial functions which could and do affect the individual.

A similar question was raised in Pemungut Hasil Tanah, Daerah Barat Daya (Balik Pulau), Pulau Pinang v
Kam Gin Paik.47 In that case, the High Court had ruled that there was a denial of natural justice to the
respondent at the time of the s 12 inquiry by the land administrator, but on appeal, the Federal Court
overruled the High Court holding that there was no breach of natural justice. The complaint was that the
collector disregarded evidence adduced at the inquiry, did not allow counsel to submit on facts and law, and
did not permit the government valuation officer to be cross-examined. The court ruled that none of these
amounted to a breach of natural justice. Without committing itself that natural justice was applicable to the
inquiry before the collector for the purpose of assessment of compensation, the court ruled that there was no
 Page 11

breach of natural justice in the instant case. The Federal Court said that although s 12 is entitled Procedure
at Enquiry, no detailed procedure is really laid down in the section. On behalf of the respondent, it was
argued that the words 'full enquiry' in s 12 'necessarily
2 MLJ xxix at xlv
implied' that all rules of natural justice should be observed before the collector makes the award. But, the
Federal Court observed (at p 393):

It is fairly clear from the language of s 12 that the function of the Collector is not merely administrative but there is
implied a proper exercise of discretion. It should be borne in mind however that an enquiry under section 12 is for the
purpose of assessing the amount of compensation which in the opinion of the Collector would be appropriate in each
case and towards this end he is required to make a full enquiry. Therefore the purpose of the enquiry is to satisfy the
Collector on the question of the amount of compensation and it will only be in breach of the duty imposed on the
Collector by this section if he deliberately ignores materials relevant to the assessment and the amount of
compensation. That section does not require him to go beyond that duty.

The above statement of the court seems to be somewhat equivocal on the question of application of natural
justice to the inquiry.

The statement seems to accept indirectly that the landowner whose land is being acquired has a right to be
heard at the inquiry being conducted by the collector to assess the amount of compensation for the land in
question. The collector is bound to consider all materials relevant to the assessment of compensation. This
means that the respondent must be given an opportunity to place before the collector any materials and any
fact relevant to the question being considered. It does not seem correct to suggest that the purpose of the
inquiry is limited only to the collector's satisfaction as to the appropriate compensation payable to the
landowner for the land acquired. Under art 13(1) of the Constitution, adequate compensation is guaranteed,
and therefore, it is the obligation of the land administrator to assess adequate compensation and the inquiry
ought to be directed towards that end. The assessment of compensation is more of an objective matter
rather than a purely subjective one for the land administrator.

For a comparative view of the matter, reference may be made to Singapore. In Singapore, the Land
Acquisition Act ('the SLAA') makes elaborate provisions for the assessment of compensation for the land
acquired. Like Malaysia, the responsibility for fixing the compensation in the first instance falls on the
collector of land revenue. He makes an award after holding an enquiry and hearing the persons interested in
the land acquired. These persons can appear either personally or through any other person duly authorized
to appear for them. For the purpose of inquiry, the collector has power to summon witnesses and compel
production of documents. The collector is authorized to refer certain types of questions to the High Court for
determination. The SLAA lays down the matters which the collector has to take, and those he must not take,
into consideration in determining the amount of compensation.48
2 MLJ xxix at xlvi

In Singapore, the next stage in the process of compensation determination is an appeal from the collector's
award to a tribunal known as the Appeals Board (Land Acquisition).49 There can be one or more such
boards. An appeals board consists of a Commissioner or a Deputy Commissioner of Appeals to be
appointed by the President of the Republic for two years, but he can be reappointed. No qualifications are
laid down in the Act for the Commissioner or the Deputy Commissioner. Usually, a judge of the High Court
acts as the Commissioner of Appeals. The President has authority to revoke the appointment of the
Commissioner or the Deputy Commissioner at any time. The salaries etc of the Commissioner or the Deputy
Commissioner are to be fixed by the President. The tenure and salary of the Commissioner are dependent
on the Minister's pleasure. Such provisions do not guarantee autonomy of the adjudicatory body
concerned.50 In the case of appeal from an award of RM250,000 or more, two assessors must sit on the
board along with the Commissioner or the Deputy Commissioner. In cases of less than RM250,000,
assessors are optional. The Commissioner or the Deputy Commissioner may sit alone or have two
assessors with him if he thinks fit. The assessors are selected by the Commissioner or the Deputy
Commissioner from a panel, the members of which are appointed by the Minister. The panel consists of such
 Page 12

number of persons as the Minister may think fit, and the name of every person appointed to the panel is
published in the Gazette. No qualifications are laid down in the SLAA as to the persons who can be
appointed to the panel. Appointment to the panel is for two years or for such shorter period as the Minister
may determine, but he is eligible for reappointment. The Minister may at any time revoke the appointment of
a member of the panel. Under the Land Acquisition (Appeals Board) Regulations 1967 ('the Regulation'), any
party to the proceedings before the Appeals Board may object to an assessor selected to hear an appeal.
The Commissioner may allow the objection if in his opinion sufficient grounds to the selected assessor have
been shown. The board gives a brief statement of the reasons for its decision. The board may determine its
own procedure subject to the SLAA and the Regulations. When the assessors sit on the board to hear an
appeal, their opinion is not binding on the Commissioner or the Deputy Commissioner.

The board may, after hearing the appeal, confirm, reduce, increase or annul the award or make such order
thereon as to it may seem fit. A person aggrieved by an award of compensation by the collector lodges a
written notice of appeal with the registrar of the board. The registrar sends a copy of the notice to the
collector who then lodges the grounds on which the
2 MLJ xxix at xlvii
award was made by him. The registrar then serves the grounds on the appellant who thereafter files the
grounds of appeal.51 The SLAA lays down time limit for any reasonable cause.52 The registrar then fixes a
time and place for the hearing of the appeal and gives 14 days' notice thereof both to the appellant and to the
collector. The appellant and the collector may attend the hearing either in person or by an advocate and
solicitor. The onus of proving that the award is inadequate is on the appellant. The board has power to
summon witnesses and examine them on oath. The board has power to admit or reject any evidence
adduced, whether oral or documentary and whether admissible or inadmissible under the Evidence Act.
Appeal is thus by way of rehearing before the Board which can consider fresh evidence to determine the
quantum of compensation. The point has been clarified by the Board itself in the following words:53

Appeals to the Appeals Board under the Land Acquisition Act are by way of a rehearing. The board has full power to
receive further evidence including evidence by oral examination before the board. Indeed, witnesses have invariably
been called before the board in every appeal that has been heard after the coming into force of the Land Acquisition
Act. The parties to the appeal are entitled to put before the board any fresh evidence that may have come to light after
the relevant date and which will assist the board in determining the compensation to be paid to the landowner for the
acquisition of his land by the government.

Thus, usually both the parties call expert witnesses before the board and the collector making the award may
also give evidence to explain the basis on which he made the award. The board thus decides facts for itself,
and is not bound only by the evidence before the collector.

The decision of the board on the question of compensation is final except that when the amount of
compensation exceeds RM5,000, the appellant or the collector may take a further appeal to the Court of
Appeal from the decision of the board upon any question of law.54 The procedure used in hearing such an
appeal is the same as for appeals to the court from
2 MLJ xxix at xlviii
the High Court. There is another alternative channel provided to reach the Court of Appeal from the board,
viz, the board may, in regard to an appeal, with or without proceeding to determine the appeal, state a case
on a question of law for the opinion of the Court of Appeal. A stated case is to set out the facts and finding of
facts by the board, its decision -- if any -- and the question for the opinion of the Court of Appeal. The
registrar sends a copy of the case stated to both the appellant and the collector. The court may send back a
stated case for amendment and thereupon, the board is to amend the case accordingly. In considering any
stated case, the Court of Appeal is to afford opportunity for argument to both the parties.55 The board is
bound by the opinion of the court on the case stated.

1 [1973] 1 MLJ 165.

 Page 13

2 S Kulasingam & Anor v Commissioner of Lands, Federal Territory & Ors [1982] 1 MLJ 204.

3 Selangor Pilot Association (1946) v Govt of Malaysia & Anor [1975] 2 MLJ 66.

4 See Jain, Indian Constitutional Law, (1987) at pp 662-702.

5 Maneka Ganhi v Union of India AIR 1978; SC 597.

6 Basantibai v State AIR 1984 Bom 366.

7 Supra n 4, at pp 471-497.

8 Bajirao T Kote v State of Maharashtra (1995) 2 SCC 442.

9 Ibid.

10 For further comments on s 3(b), see infra.

11 Section 4(3).

12 Section 4(4).

13 Lau Kieng Kong & Ors v Minister for Resource Planning & Anor [1994] 3 MLJ 443.

14 Section 4(4).

15 The Land Acquisition Act in India has parallel provisions which have been held to be mandatory. See, for example, Madhya
Pradesh Housing Board v Mohd Shafi (1992) 2 SCC 168.

16 AIR 1974 SC 1868.

17 [1964] AC 40.

18 Jain, Administrative Law in Malaysia & Singapore, Ch IX.

19 [1982] 1 MLJ 204.

20 140 All ER 414.

21 [1969] 2 MLJ 118. Also, Wong Kwai v President, Town Council, Johor Bahru [1970] 2 MLJ 164.

22 Jain, Administrative Law of Malaysia and Singapore, Ch IX.

23 Ketua Pengarah Kastam v Ho Kwan Seng [1977] 2 MLJ 152. Also, Sarawak Electricity Supply Corp v Wong Ah Suan [1980]
1 MLJ; on appeal to Privy Council, Wong Ah Suan v Sarawak ESC [1982] 2 MLJ 89.

24 Radeshyam Khare v State of Madhya Pradesh AIR 1959 SC 107.

25 SL Kapoor v Jagmohan AIR 1981 SC 136; Swadeshi Cotton Mills v Union of India AIR 1981 SC 818.

26 88 DLR (3d) 671 (1979).

27 See art 4(1) of the Constitution.

28 Jain, supra n 19, Ch X.

29 Jain & Jain, Principles of Administrative Law at p 174 (1987).

30 Swadeshi Cotton Mills v Union of India, AIR 1981 SC 818 at p 842.

31 Ibid.

32 Report of the Administrative Law Review Committee.

33 See, Jain, supra n 22, Ch XII.

 Page 14

34 [1979] 1 MLJ 135 at p 148. Also see, Jain, supra n 18, Ch XII at pp 343, 365-366.

35 [1977] 2 MLJ 45.

36 Tan Boon Bak & Sons Ltd v Government of the State of Perak & Anor [1983] 1 MLJ 117.

37 Yew Lean Finance Development (M) Sdn Bhd v Director of Lands & Mines, Penang [1977] 2 MLJ 45.

38 [1979] 1 MLJ 49.

39 Anisminic v Foreign Compensation Commission [1969] 2 AC 147.

40 (1925) AC 338.

41 AIR 1985 SC 1623.

42 MP Housing Board v Mohd Shafi (1992) 2 SCC 168.

43 Srinivasa Coop Housing Building Society Ltd v Madam Gurumurthy Sastry (1994) 4 SCC 675.

44 On colourable exercise of power inland acquisition cases, see: Somawanti Smt v State of Punjab AIR 1963 SC 151; HD
Vora v State of Maharashtra AIR 1984 SC 866; Collector Allahabad v Raja Ram, supra n 41.

45 AIR 1984 SC 986.

46 [1983] 1 MLJ 315.

47 [1983] 2 MLJ 390.

48 See ss 34 and 35.

49 See ss 19-32.

50 TTB Koh, Law of Compulsory Land Acquisition in Singapore [1967] 2 MLJ ix, at p xix.

51 In one case, the Commissioner commented adversely on the grounds given by the collector: 'In the so-called 'collector's
grounds of award', the collector has not given any grounds that is reasons for his award ... I am constrained to observe that the
collector's grounds of awards in this case are no grounds at all and he has failed to carry out his statutory duty. He is required
by law to justify the award he has made and the collector in this case has clearly failed to do so in his grounds of award'. See
Geoffrey Christopher Tyrwhitt Repton v The Collector of Land Revenue AB 37 of 1971.

52 Re San Development Co's Application [1971] 2 MLJ 254.

53 Manilal & Sons Ltd v Collector of Land Revenue [1977] 2 MLJ 100 at p 102. The Court of Appeal has accepted this position
on appeal: Collector of Land Revenue v Manilal & Sons (Pte) Ltd [1979] 1 MLJ 102.

54 The Official Assignee (of the property of Prabhaker Chandulal Shah) v Collector of Land Revenue [1984] 1 MLJ 155: The
Court of Appeal quashed the decision of the board on the ground of error of law.

55 For a detailed decision of the adjudicatory process under the Land Acquisition Act, see N Khublall, Law of Compulsory
Purchase and Compensation, (1984) at pp 46-85.