M/S. Neyvely
Lignite Corpn. Ltd. Vs. Special Tahsildar (Land Acquisition) Neyvely & Ors
[1994] INSC 526 (19
October 1994)
Ramaswamy,
K. Ramaswamy, K. Mukherjee M.K. (J) Sen, S.C. (J)
CITATION:
1995 AIR 1004 1995 SCC (1) 221 JT 1995 (1) 281 1994 SCALE (4)1129
ACT:
HEAD NOTE:
ORDER
1.
These appeals arise from the judgments of the Madras High Court in one batch in
C.R.P. Nos. 1141-1351/87 and batch dated April 7, 1989 and another batch from a judgment
of the full bench rendered in M/s. Neyvely Lignite Corpn. Ltd. v. P. Ramaswami Naidu
& Ors. etc. etc., AIR 1990 Mad.
160.
Notification under section 4(1) of the Land Acquisi- tion Act 1 of 1894 for
short 'the Act" was published in the year 1975 acquiring a large extent of
5200 acres of land for the, purPose of excavating inferior quality of the coal
in South Arcot District in the State of Tamil Nadu. The Tehsildar, the Land 283
Acquisition Officer awarded compensation in the years 1977- 80 under s. 11 of
the Act. Dissatisfied therewith the claimants sought and secured over 2000
references under s.
18 to
the Civil Court, namely, the Subordinate Judge, Cuddalore.
In some of which the Civil
Court made awards and
decrees under s.26. In the pending references the appellant sought to be impleaded
as a party respondent to adduce evidence for fixation of the proper
compensation. The Civil
Court dismissed the
applications holding that the appellant is not an interested person by a common
order dated November
28, 1986. The High
Court in the revisions by judgment dated February 16, 1987 up held the order of the Civil Court. In the appeals filed by the State
under s.54, the appellant sought to be impleaded as a party-respondent which
were turned down holding that the appellant is not a person interested. Against
that a batch of appeals have been filed here. The appellants also filed writ
petitions challenging the validity of the award and decree made under s.26 by
filing writ petitions. The full bench held that the appellant is not a person
interested. Therefore, dismissed the writ petitions. Thus these appeals have
been filed by special leave.
2.
When the appeals had come up on May 3, 1991 before a bench of two Judges, our learned brethern made a reference to
three Judges' Bench thus:
"We
think that it would be proper that the entire matter including right to seek
reference, to adduce evidence or to claim to be impleaded as a party before the
Civil Court or its right to file appeal before the High Court against the above
orders and all other allied questions are necessary to be consider by three
Judges." Thus these appeals before this bench. It is not in dispute that
the entire controversy hinge upon interpretation of section 3(b) and s.50(2) of
the Act whether the appellant is a person interested either to be impleaded as
a party- respondent to the pending references under s. 18 to lead evidence,
contest the reference and if the compensation is enhanced to file an appeal in
the High Court under s.54 or to get impleaded as a party-respondent in the
pending appeals filed by the land acquisition officer or to file a writ
petition under Art.226 of the Constitution challenging the correctness of the
award and the decree made by the Civil Court under s.26 of the Act.
3.
Section 3(b) defines person interested thus:
"the
expression "person interested" includes all persons claiming an
interest in compensation to be made on account of the acquisition of land under
this Act; and a person shall be interested in land if he is interested in an
easement affecting the land. "
4. It
is an inclusive definition and all persons claiming an interest in the
compensation as well as an interest in the determination of the compensation
and easementry right affecting the acquired land. It is contended by Shri Bobde,
learned Senior counsel for the appellant that this Court has consistently taken
the view that the word "person interested" is to be liberally
interpreted to include the company or the local authority for whose benefit the
land was acquired since the company or the local authority is the person
ultimately to bear the burden of the compensation.
So it
is interested to determine proper compensation payable to the land and also the
person to show that the title to the land is not clear and 284 unencumbered
title is to be acquired. Shri G.L. Sanghi, learned Senior counsel supplemented
by Shri S. Balakrishnan & Shri A.L. Trehan, learned counsel appearing for
the claimants, resisted the contention. In substance their contention is that
the word "person interested" should be interpreted-in a restricted
sense ejusdem generis to mean the persons who are entitled to receive the
compensation awarded by the Collector or the Civil Court alone arc persons
interested and arc entitled to contest the correctness of the determination of
the compensation or legality of the award. It is also contended that the right
given under the Act is only a statutory right and not a common law right. The
person interested is, therefore, the person whose interest is adversely
affected by acquisition, namely, the owner of the land but not the person for
whose benefit the land was acquired. Therefore, the Act cognizant to these
facts has given under s.50(2) to the company or local authority only a limited
right to adduce evidence in the pending references or before the Land Acquisition
Collector. Therefore, the beneficiary cannot have any higher right than was
given under s.50(2) of the Act.
5. The
question, therefore, is whether the appellant for whosebenefit the land is
acquired is a "person interested" within the meaning of s.3(b) of the
Act. In Himalayan Tiles & Marbles (P) Ltd. v. Francis Victor Coutinho
(dead) by Lrs. & Ors., 1980 (3) SCR 235, Fazal Ali, J., speaking for the
bench of two Judges considered the scope of s.3(b) and held that:
"It
seems to us that the definition of 'a person interested given in s. 18
(obviously s.3(b) ) is an inclusive definition and must be liberally construed
so as to embrace all person who may be directly or indirectly interested either
in the title to the land or in the quantum of compensation. In the instant
case, it is not disputed that the lands were actually acquired for the purpose
of the company and once the land vested in the Government, after acquisition,
it stood transferred to the company under the agreement entered into between the
company and the Government. Thus, it cannot be said that the company had no
claim or title to the land at all. Secondly, since under the agreement the
company had to pay the compensation, it was most certainly interested in seeing
that a proper quantum of compensation was fixed so that the company may not
have to pay a very heavy amount of money. For this purpose, the company could
undoubtedly appear and adduce evidence on the question of the quantum of
compensation." Art.243 it was concluded that:
"Thus
the preponderance of judicial opinion seems to favour the view that the
definition of 'person interested' must be liberally construed so as to include
a body, local authority, or a company for ",hose benefit the land is
acquired and who is bound under an agreement to pay the compensation. In our
opinion, this view accords with the principles of equity, justice and good
conscience. How can it be said that a person for whose benefit the land is
acquired and who is to pay the compensation is not a person interest even
though its stake may be extremely vital? For instance, the land acquisition
proceedings may be held to be invalid and thus a person concerned is completely
deprived of the benefit which is proposed to be given to him.
Similarly,
if such a person is not heard by the Collector or a court, he may have to pay a
very heavy compensation which, in case he is allowed to appear before a court,
he could have satisfied it that the compensation was far too heavy having
regard to the nature and extent of the land. We are, therefore, 285 unable to
agree with the view taken by the Orissa High Court or even by the Calcutta High
Court that a company, local authority or a person or whose benefit the land is
acquired is not an interested person. We are satisfied that such a person is
vitally interested both in the title to the property as also in the
compensation to be paid therefore because both these factors concern its future
course of action and if decided against him seriously prejudice his
rights." It is true that in that case the facts were that the owners of
the land questioned the correctness and the legality of the acquisition
proceedings and the notification issued under s.4(1)of the Land Acquisition
Act. The appellant therein was a company for whose benefit the land was sought
to be acquired. Therein the company sought to be impleaded as a
party-respondent. The learned single Judge quashed the notification under s.4(1)
and when a L.P.A. was filed, the division bench held that the appellant had no
locus standi to file the appeal. Accordingly it dismissed the appeals.
When
its correctness was questioned this Court laid down the, law as extracted
hereinbefore. It is to be seen that this Court had not restricted the question
for being impleaded in the proceedings under Art.226, when s.4(1) was quashed.
The entire gamut of controversy has been gone into and held that the person for
whose benefit the land is to be acquired or was acquired was a person
interested in the determination of the proper compensation and to acquire per- fect
title, to the land. Therefore, such interested person is entitled to come on
record to lead evidence for determination of proper compensation and also to
secure valid title to the land acquired for its benefit. This decision is consistently
being followed this Court. In Neelagangabai & Anr. v. State of karnataka
& Ors., 1990 (3) SCC 617. The facts were that the Civil Court on reference under s. 18, without
notice to the Corporation for whose benefit the land was acquired, recorded the
evidence and enhanced the compensation. The State had filed the appeal.
An
attempt made by the Corporation to intervene in the appeals was rejected.
Therefore, the Corporation filed the writ petitions under Art.226 of the
Constitution questioning the award passed by the Civil Court. On those facts, this Court held that:
"Since
no notice was given to the respondent Corporation and it was thus deprived of
an opportunity to place its case before the Court, the judgment rendered in the
reference case was illegal and not binding on the Corporation." It may be
noted that the Karnataka Legislature made local amendment to s.20 of the Act
and inserted therein clause 'c' that "if the acquisition is not made for
government, the person or authority for whom it is made, the notice also shall
be served under s.20 of the Act." Taking that fact and also the general
principles, this Court held that the Corporation was a person interested under s.3(b)
of the Act.
The
writ petition was held maintainable and directed the High Court to consider the
matter on merits. In Krishi Upaj Mandi Samiti v. Ashok Singhal & Ors., 1991
suppl. (2) SCC 419 in similar facts as in Neelagangabai's case, when the
reference court enhanced the market value without notice to the Samiti and on
appeal, this Court set aside the judgment of the High Court remitted to it for
its fresh disposal.
6. In Union of India & Anr. v. Dist. Judge, Udhampur &
Ors., J.T. 1994 (3) SC 629, the land was acquired for the ben- 286 efit of
Union of India for laying the Airport at Udhampur.
The
award made by the arbitrator under J. & K. A. & R. of Immovable
Property Act was questioned by filing an appeal by the Union of India. The High
Court held that the Union of India is not a person interested in determination
of the compensation. When its correctness was convassed, this Court held that
when the land was acquired for the benefit of the Union of India, it is a
person interested, since it is interested in the fixation of the proper and
just compensation of the land acquired for its benefit as well as to see that
the true extent of the land is acquired and is free from all encumbrances.
Accordingly the appeal was held maintainable at its instance.
7. In
Union of India v. Sher Singh & Ors., 1993 (1) SCC 608, the facts were that
the acquisition made by the State Government for the purpose of National
Security Guard. The Union of India sought to be intervened by making an
application in the pending reference on the ground that if enhancement of the
compensation would be made by the Dist. Judge, it would adversely affect the
Union of India and it would be deprived of an opportunity to file an appeal, in
case it is not impleaded as a party.
The
Additional Dist. Judge dismissed the application filed by the U.O.I. and when
the revision applications were heard, a full bench of five Judges held that the
Union was not a person interested. On
appeal this Court held that there is no necessity to resolve the conflict in
the Himalayan Tiles case and of Municipal Corporation of the City of Ahmedabad
v. Chandulal Shamaldas Patel, 1971 (3) SCC 821 and followed the ratio in
Himalayan Tiles case and was held that Union of India was a person interested.
It would be certainly interested to see that the proper compensation was fixed
so that a very heavy compensation may not have to be paid. It was also held
that on the principles of equity, justice and good conscience, the Union of
India should be impleaded as a person interested in the pending references.
8. In
the case of Bihar State Electricity Board v. State of Bihar & Ors., 1994
(2) Scale 355, the facts were that the land was acquired by the State
Government for the purpose of construction of 33/11 KV Mohania Sub-station and
staff quarters. After the reference made under s.18, the civil court had
enhanced the compensation. The State filed the appeals and the Board sought to
be impleaded as a party respondent in the pending appeals but was rejected.
They filed the writ petitions and questioned the award of the civil court but
the High Court dismissed writ petitions.
This
Court held that the Electricity Board for whose benefit the land was acquired
was not only a person interested under s.3(b) of the Act but also a necessary
and proper party under Order 1 Rule 10 of C.P.C. The Board is entitled to file
even an appeal by leave of the court. Accordingly instead of directing to
maintain the writ petitions, this Court directed the board to be impleaded as
party-respondent in the pending appeals, filed by the State and to raise all
the contentions impugning the legality of the enhanced award of the civil
court. In Union of India v. Kolluni Ramaiah & Ors., 1994 (1) SCC 367 in an
acquisition for Union of India under R. & A. of Immovable Property Act,
1952, the arbi- tration and in first appeal the High Court enhanced the
compensation without impleading the Central Govt. On appeal a bench of three
Judges of this Court set 287 aside the High Court Order holding that Union of
India ought to have been impleaded before the arbitration and the High Court
and remitted the case to the High Court treating it as cross objection and
directed the High Court to dispose it off.
9. In
N. Krishnamachari v. The Managing Director, APSRTC, Hyderabad & Ors., JT
1994 (5) SC 391, when the land was acquired for the benefit of the A.P. State
Road Transport Corporation, the Notification under s.4(1) of the Land
Acquisition Act was challenged by filing a writ petition under Art.226 in the
High Court. When the Corporation was sought to be impleaded as a
party-respondent to the writ petition the High Court held that the Corporation
was not a person interested. Therefore, it dismissed the petitions.
This
Court held that the Corporation was a person interested and entitled to come on
record. In that behalf, it was held that starting from Himalayan Tiles case,
this Court has consistently been holding that the beneficiary is a person
interested to protect the interest which the beneficiary seeks to acquire in
the land under the notification including perfect title to the property and payment
of proper compensation. Therefore, it is entitled to challenge the award when
it was made without notice to it even by filing a writ petition under Art.226
of the Constitution, apart from being impleading itself as a party respondent
in the acquisition proceedings or pending appeal or independently filing an
appeal under s.54 of the Act.
Accordingly,
it was held that the Corporation was a person interested within the meaning of
s.3(b) of the Act and was entitled to be impleaded as a party respondent to the,
writ petition to defend the validity of the notification under s.4(1) of the
Act. In that case also, an attempt to make a reference for the larger bench was
turned down holding that in the Municipal Corpn. of the City of Ahmedabad's
case, the bench did not advert to the definition of the person inter- ested
under s.3(b) of the Act which had led to the bench holding that the Municipal
Corporation had no locus standi to question the legality of the award of
reference court.
10. Shri
Sanghi placed a strong reliance on Santosh Kumar & Ors. v. Central
Warehousing Corpn. &.Anr., 1986 (1) SCR 603.
The
facts therein were that the award made under s. 11 was challenged in the writ
petition contending that the Corpora- tion is the affected person by
determination of the compensation and without impleading it, the award made was
illegal, The High Court exercising its jurisdiction under Art.226 of the
Constitution reduced the compensation. On an appeal, this Court had held that
when the acquisition was made on behalf of the Corporation, the Collector had
acted as an agent on behalf of the Government. The award is only an offer. When
the Government itself cannot seek a reference under s. 18, the beneficiary also
cannot seek a reference. In those circumstances, it was held that the award
made by the Collector could not be questioned except when the award was
vitiated by fraud, corruption or collusion. The ratio is clearly consistent
with the view taken by this Court in Harish Chandra v. Deputy Land Acquisition
Officer, 1962 (1) SCR 676. It is well settled law laid in Ezra v. Secretary of
Slate for India, ILR 32 Calcutta 605 (P.C.) and
catena of precedents that the award made by the Collector is only an offer made
on behalf of the State and that therefore, the State is bound 288 by the offer
made by the Collector. If the owner accepts it without protest no further
proceedings was required to be pursued. But if the owner received under protest
and made a valid application for reference, the amount determined by the civil
court under s.26 binds the parties and concludes the proceedings subject to
appeal. In that view, there is no inconsistency with the view taken in
Himalayan Tiles case with the view in Santosh Kumar's case. The facts therein
do not touch the controversy now in this case. Under these circumstances, the
ratio in the Santosh Kumar's case renders little assistance to the respondents.
However, the Ahmedabad Municipal Corpn's case is not a good law. In this view
it is hardly necessary to burden the order with copious citations of contra
view in plathora of precedents of the High Courts.
11.It
is true that s.50(2) of the Act gives to the local authority or the company
right to adduce evidence before the Collector or in the reference under s. 18
as it was specifically stated that in any proceedings held before the Collector
or the Court, the local authority or the company may appear and adduce evidence
for the purpose of determining the amount of compensation. However, it has no
right to seek reference. Based thereon, the contention is that the limited
right of adduction of evidence for the purpose of determining the compensation
does not carry with it the right to participate in the proceedings or right to
be heard or to file an appeal under s.54. We cannot limit the operation of s.3(b)
in conjunction with subs.(2) of s.50 of the Act within a narrow compass. The
right given under sub-s.(2) of s.50 is in addition to and not in substituting
of or in derogation to all the incidental, logical and consequential rights
flowing from the concept of fair and just procedure consistent with the
principles of natural justice. The consistent thread that runs through all the
decisions of this Court starting from Himalayan Tiles case is that the
beneficiary, i.e., local authority or company, a coop. society registered under
the relevant State law, or statutory authority is a person interested to
determine just and proper compensation for the acquired land and is an
aggrieved person. It flows from it that the beneficiary has the right to be
heard by the Collector or the Court. If the compensation is enhanced it is
entitled to canvass its correctness by filing an appeal or defend the award of
the Collector. If it is not made a party, it is entitled to seek leave of the
court and file the appeal against the enhanced award and decree of the Civil
Court under s.26 or of the judgment and decree under s.54 or is entitled to
file writ petition under Art.226 and assail its legality or correctness. When
the award made under s. 11 of the Collector is vitiated by fraud, collusion or
corruption, the beneficiary is entitled to challenge it in the writ petition
apart from the settled law that the conduct of the collector or Civil Judge is
amenable to disciplinary enquiry and appropriate action. These are very
valuable and salutary rights. Moreover in the language of Order 1 Rule 10 CPC,
in the absence of the beneficiary who ultimately is to bear the higher
compensation, no complete and effectual determination of binding just and
proper compensation to the acquired land would be made. So it is concommitently
a proper party if not a necessary party to the proceedings under Order 1 Rule
10 CPC.. The denial of the right to a person interested is in negation of fair
and just procedure offending Art. 14 of the Constitution.
289
12.The reasons are not far to seek. It is notorious that though the Stakes
involved are heavy, the Govt. plead or the instructing officer do not generally
adduce, much less proper and relevant, evidence to rebut the claims for higher
compensation. Even the cross examination will be formal, haulting and
ineffective. Generally, if not invariably the governmental agencies involved in
the process take their own time and many a time in collusion, file the appeals
after abnormal or inordinate delay. They remain insensitive even if the states
involved run into several crores of public money. The courts insist upon proper
explanation of every day's delay. In this attitudinal situation it would be
difficult to meet strict standards to fill the unbridgeable gaps of the delay
in filing the appeals and generally entail with dismissal of the appeals at the
threshold without adverting to the merits in the hike in the compensation. On
other hand if the notice is issued to the local authority etc. it/they would
participate in the award proceedings under ss. 11 & 18 adduce necessary and
relevant evidence and be heard before the Collector and the court before
determining compensation. For instance that without con- sidering the evidence
in the proper perspective, the court determined the compensation.
13.If
there is no right of hearing or appeal given to the beneficiary and if the
State does not file the appeal or if filed with delay and it was dismissed, is
it not the beneficiary who undoubtedly bears the burden of the compensation,
would be the effected person? Is it not interested to see that the appellate
court would reasses the evidence and fix the proper and just compensation as
per law? For instance the reference court determined market value at Rs.1,00,000/-
while the prevailing market value of the land is only Rs.10,000/-. Who is to
bear the burden? Suppose State appeal was dismissed due to refusal to condone
the. delay, is it not an unjust and illegal award? Many an instance can be
multiplied. But suffice it to state that when the beneficiary for whose benefit
the land is acquired is served with the notice and brought on record at the
stage of enquiry by the Collector and reference court under s. 18 or in an
appeal under s.54, it/they would be interested to defend the award under ss. 11
or 26 or would file an appeal independently under s.54 etc. against the
enhanced compensa- tion. As a necessary or proper party affected by the
determination of higher compensation, the beneficiary must have a right to challenge
the correctness of the award made by the Reference Court under s. 18 or in appeal under s.54 etc. Considered from
this perspective we are of the consid- ered view that the appellant-company is
an interested person within the meaning of s.3(b) of the Act and is also a
proper if not a necessary party under Order party, 1 Rule 1 0 of the CPC. The
High Court had committed manifest error of law in holding that the appellant is
not a person interested.
The
orders of the High Court are accordingly set aside.
14.
Since the writ petitions filed by the appellants were dismissed, we set aside
the orders and direct the High Court to treat them as appeals properly filed
under s.54 of the Act and be dealt with along with the appeals filed by the
State pending disposal in the High Court. In the pending references under s.
18, in the Court of the Subordinate Judge, Cuddalore, it is directed to order impleading
the appellant as a party-respondent and would give rea- 290 sonable opportunity
to cross examine the witness examined by the claimants and to examine witnesses
on its behalf to rebut the evidence for higher compensation, the appellant is
entitled to be heard in support of the determination of just and proper
compensation. In this view, the need to implead the appellant as a
party-respondent in the pending appeals in the High Court does not arise.
15.
Against the interim orders refusing unconditional stay and directing the
payment of the entire compensation, the appellants have sought leave of this
court and this court by order dated March 18, 1989 directed the appellant to
deposit 90 per cent of the enhanced amount and 40 per cent of the amount was
directed to be withdrawn without security and 50 per cent shall be withdrawn on
furnishing bank guarantee to the satisfaction of the Registrar of the High
Court. The above order and the bank guarantee now pending before the Registrar
of the High Court would be treated to be the conditional order in the pending
appeals in the High Court and the appeals of the appellant and the appropriate
orders will be passed by the High Court on the basis of the decision that would
be rendered at the time of final dis- posal of the appeals. The appeals are
accordingly allowed.
But in
the circumstances without costs.
IN
CIVIL APPEAL NOS. 3094/90 & 4448/ 91.
16.
The appellant is the Housing Board and challenged the award of the Subordinate
Judge made under s.26 of the Land Acquisition Act. The contention raised by the
appellant is that it is an interested party within the meaning of s.3(b) of the
Lan Acquisition Act and without notice to it the award and decree made under
s.26 is not valid in law. The learned single Judge of the High Court following
the full bench decision held that the appellant is not a person interested. Accordingly
dismissed the writ petitions.
Following
the judgment just now rendered in C.A. Nos.246- 839/ 90 & batch, the
judgments of the High Court are set aside and the appellant is a person
interested within the meaning of s.3(b) of the Act and also a proper party
under Order 1 Rule 10 of the CPC. Accordingly the appeals are allowed. The
order of the High Court is set aside. The writ petitions filed by the appellant
are directed to be treated as appeals under s.54 of the Act and be dealt with
and be disposed of according to law.
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