Full Judgment Text
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PETITIONER:
NEYVELY LIGNITE CORPN.
Vs.
RESPONDENT:
SPECIAL TAHSILDAR
DATE OF JUDGMENT19/10/1994
BENCH:
RAMASWAMY, K.
BENCH:
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:
HEADNOTE:
JUDGMENT:
ORDER
1.These appeals arise from the judgments of the Madras High
Court in one batch in CRP Nos. 1141-1351 of 1987 and batch
dated 7-4-1989 and another batch from a judgment of the Full
Bench rendered in Neyveli Lignite Corpn. Ltd. v.
Rangaswamy1. Notification under Section 4(1) of the Land
Acquisition Act1 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 coal
in South Arcot District in the State of Tamil Nadu. The
Tahsildar, the Land Acquisition Officer awarded compensation
in the years 1977-80 under Section 11 of the Act.
Dissatisfied therewith, the
1 AIR 1990 Mad 160
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claimants sought and secured over 2000 references under
Section 18 to the Civil Court, namely, the Subordinate
Judge, Cuddalore in some of which the Civil Court made
awards and decrees under Section 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 28-11-1986. The High Court in the
revisions by judgment dated 16-2-1987 upheld the order of
the Civil Court. In the appeals filed by the State under
Section 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 Section 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
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have been filed by special leave.
2. When the appeals had come up on 3-5-1991
before a Bench of two Judges, our learned
brethren made a reference to a three-Judge
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
considered by three Judges."
Thus these appeals before this Bench. It is not in dispute
that the entire controversy hinges upon interpretation of
Section 3(b) and Section 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 Section 18
to lead evidence, contest the reference and if the
compensation is enhanced to file an appeal in the High Court
under Section 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 Article 226 of the
Constitution challenging the correctness of the award and
the decree made by the Civil Court under Section 26 of the
Act.
3. Section 3(b) defines "person interested"
thus:
"[T]he 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 deemed to 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 easementary 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
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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 unencumbered title is to be
acquired. Shri G.L. Sanghi, learned Senior Counsel
supplemented by Shri S. Balakrishnan and Shri A.L. Trehan,
learned counsel appearing for the claimants, resisted the
contention. In substance their contention is that the words
"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 are persons interested and are 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 Section
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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 Section
50(2) of the Act.
5.The question, therefore, is whether the appellant for
whose benefit the land is acquired is a "person interested"
within the meaning of Section 3(b) of the Act. In Himalayan
Tiles & Marble (P) Ltd. v. Francis Victor Coutinho2 Fazal
Ali, J., speaking for the Bench of two Judges considered the
scope of Section 3(b) and held that: (SCC p. 226, para 8)
"It seems to us that the definition of ’a
person interested’ given in Section 18
[obviously Section 3(b)] is an inclusive
definition and must be liberally construed so
as to embrace all persons 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." and it was concluded that: (SCC
p. 228, para 14)
"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 whose benefit the
land is acquired and who is bound under an
agreement to pay the
2 (1980) 3 SCC 223 :(1980) 3 SCR 235
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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 interested 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, unable to agree with
the view taken by the Orissa High Court or
even by the Calcutta High Court that a
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company, local authority or a person for 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."
6. 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 Section 4(i) 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 Section 4(1) and when a LPA
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 Article 226, when
Section 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 perfect 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 by this Court. In Neelagangabai v. State of
Karnataka3 the facts were that the Civil Court on reference
under Section 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 Article 226 of the Constitution
questioning the award passed by the Civil Court. On those
facts, this Court held that: (SCC p. 618, para 3)
3 (1990) 3 SCC 617
227
"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 Section 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 Section 20 of the Act".
Taking that fact and also the general principles, this Court
held that the Corporation was a person interested under
Section 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
Singhal4 in similar facts as in Neelagangabai case3, 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.
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7. In Union of India v. District Judge5 the land was
acquired for the benefit of Union of India for laying the
Airport at Udhampur. The award made by the arbitrator under
J. & K. Requisitioning and Acquisition 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 canvassed, 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.
8. In Union of India v. Sher Singh6 the facts were that
the acquisition made by the State Government was 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 District 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 District Judge
dismissed the application filed by the Union of India 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 case2 and of
Municipal Corpn. of the City of Ahmedabad v. Chandulal
Shamaldas Patel7, and followed the ratio in Himalayan Tiles
case2 and 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
4 1991 Supp (2) SCC 49
5 (1994) 4 SCC 737 : JT (1994) 3 SC 629
6 (1993) 1 SCC 608
7 (1971) 3 SCC 821
228
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.
9. In the case of Bihar State Electricity Board v. State
of Bihar8 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 Section 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 Section 3(b) of the
Act but also a necessary and proper party under Order1 Rule
10 of CPC. 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 Ramaiah9 in an
acquisition for Union of India under Requisitioning and
Acquisition of Immovable Property Act, 1952, the arbitration
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and in first appeal the High Court enhanced the compensation
without impleading the Central Government. On appeal a
Bench of three Judges of this Court set 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 of.
10.In N. Krishnamachari v. Managing Director, APSRTCIO when
the land was acquired for the benefit of the A.P. State Road
Transport Corporation, the notification under Section 4(1)
of the Land Acquisition Act was challenged by filing a writ
petition under Article 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 petition. 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 case2, 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 Article 226 of the Constitution, apart from impleading
itself as a party-respondent in the acquisition proceedings
or pending appeal or independently filing an appeal
8 1994 Supp (3) SCC 743 : (1994) 2 Scale 355
9 (1994) 1 SCC 367
10 (1994) 6 SCC 74 : JT (1 994) 5 SC 391
229
under Section 54 of the Act. Accordingly, it was held that
the Corporation was a person interested within the meaning
of Section 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 Section 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 case7, the Bench did not
advert to the definition of the person interested under
Section 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.
11. Shri Sanghi placed a strong reliance on Santosh Kumar
v. Central Warehousing Corpn. 11 The facts therein were
that the award made under Section 11 was challenged in the
writ petition contending that the Corporation 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 Article 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 Section
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. Dy. Land Acquisition Officer12. It is
well settled law laid in Ezra v. Secretary of State for
India in Council13 and catena of precedents that the award
made by the Collector is only an offer made on behalf of the
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State and that, therefore, the State is bound by the offer
made by the Collector. If the owner accepts it without
protest no further proceedings were required to be pursued.
But if the owner received it under protest and made a valid
application for reference, the amount determined by the
civil court under Section 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
case2 with the view in Santosh Kumar case11. The facts
therein do not touch the controversy now in this case.
Under these circumstances, the ratio in Santosh Kumar case11
renders little assistance to the respondents. However, the
Ahmedabad Municipal Corpn. case7 is not a good law. In this
view it is hardly necessary to burden the order with copious
citations of contra view in plethora of precedents of the
High Courts.
12.It is true that Section 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 Section 18 as
it was specifically stated that in any proceedings held
11 (1986) 2 SCC 343 : (1986) 1 SCR 603
12 (1962) 1 SCR 676: AIR 1961 SC 1500
13 ILR 32 Cal 605 : 32 IA 93 (PC)
230
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 Section 54. We cannot
limit the operation of Section 3(b) in conjunction with sub-
section (2) of Section 50 of the Act within a narrow
compass. The right given under sub-section (2) of Section
50 is in addition to and not in substitution 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 case2 is that the
beneficiary, i.e., local authority or company, a cooperative
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 a-
grieved 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 Section
26 or of the judgment and decree under Section 54 or is
entitled to file writ petition under Article 226 and assail
its legality or correctness. When the award made under
Section 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
Order1 Rule IO 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
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concomitantly a proper party if not a necessary party to the
proceedings under Order1 Rule 10 CPC. The denial of the
right to a person interested is in negation of fair and just
procedure offending Article 14 of the Constitution.
13.The reasons are not far to seek. It is notorious that
though the stakes involved are heavy, the Government 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, halting 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 entails
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dismissal of the appeals at the threshold without adverting
to the merits of 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
Sections 101 and 18, adduce necessary and relevant evidence
and be heard before the Collector and the court before
determining compensation. For instance that without
considering the evidence in the proper perspective, the
court determined the compensation.
14.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, who would be the affected person? Is it not
interested to see that the appellate court would reassess
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
Section 18 or in an appeal under Section 54, it/they would
be interested to defend the award under Section 11 or
Section 26 or would file an appeal independently under
Section 54 etc. against the enhanced compensation. 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 Section 18 or in appeal under Section 54 etc.
Considered from this perspective we are of the considered
view that the appellant-Company is an interested person
within the meaning of Section 3(b) of the Act and is also a
proper party, if not a necessary party under Order 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.
15.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 Section
54 of the Act and be dealt with along with the appeals filed
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by the State pending disposal in the High Court. In the
pending references under Section 18, in the Court of the
Subordinate Judge, Cuddalore, it is directed to order
impleading the appellant as a party respondent and would
give reasonable 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.
16.Against the interim orders refusing unconditional stay
and directing the payment of the entire compensation, the
appellants have sought leave of
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this Court and this Court by order dated 18-3-1989 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 disposal of the appeals. The appeals are
accordingly allowed. But in the circumstances without
costs.
In Civil Appeal Nos. 3094 of 1990 and 4448 of 1991
17.The appellant is the Housing Board and challenged the
award of the Subordinate Judge made under Section 26 of the
Land Acquisition Act. The contention raised by the
appellant is that it is an interested party within the
meaning of Section 3(b) of the Land Acquisition Act and
without notice to it, the award and decree made under
Section 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 CA Nos. 246839 of 1990 and batch, the
judgments of the High Court are set aside and the appellant
is a person interested within the meaning of Section 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
Section 54 of the Act and be dealt with and be disposed of
according to law.
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