State of Andhra Pradesh v Star Bone Mill

Facts

• The Government of Andhra Pradesh granted land to Star Bone Mill for setting up an industrial unit
• The grant was subject to conditions including timely establishment of the industry and continuous operation
• Star Bone Mill failed to comply with the conditions of the grant
• The Government initiated resumption proceedings
• Star Bone Mill challenged the resumption, arguing it amounted to acquisition without compensation

Issue

1. Whether resumption of land for breach of conditions of grant amounts to compulsory acquisition requiring payment of compensation, or whether it is a distinct power of the State.

Held

• Resumption is distinct from acquisition; it is the taking back of what was conditionally given
• Where land is granted on conditions, the grantee holds subject to those conditions
• Upon breach, the State's reversionary interest revives and no compensation is payable
• The power of resumption is inherent in the conditional nature of the grant
• No violation of Article 300A occurs because the grantee never had unconditional ownership

Ratio Decidendi

The power of resumption is fundamentally different from the power of eminent domain. When the State grants land subject to conditions and those conditions are breached, resumption is merely the enforcement of the terms of the grant. The grantee's title was always subject to the conditions, and upon breach, the State reclaims what it conditionally parted with. No compensation is payable because no vested unconditional right is being taken away.