FA/1994/1998 1/29 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1994 of 1998 With FIRST APPEAL No. 1996 of 1998 And FIRST APPEAL No. 1997 of 1998 For Approval and Signature: HONOURABLE MR.JUSTICE AKSHAY H.MEHTA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= LALJIBHAI PRANBHAI PATEL & 1 - Appellant(s) Versus LAND ACQUISITION OFFICER & 1 - Defendant(s) ========================================================= Appearance : MR AMAR N BHATT for Appellant(s) : 1 - 2. MS HANSA PUNANI, AGP for Defendant(s) : 1, MR AJAY R MEHTA for Defendant(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE AKSHAY H.MEHTA Date : 27/12/2006 CAV JUDGMENT FA/1994/1998 2/29 JUDGMENT 1. This group of appeals arises from a common decisions passed by the Assistant Judge, Mehsana, in Land Reference Cases No. 522/1990, 523/1990 and 521/1990. The date of the decision is 7th October, 1997. The original applicants have preferred these appeals to challenge the decision of the Court regarding the quantum of compensation determined by it for the land under temporary occupation of the respondents. 2. The appellants are the owners of agricultural lands [the "land" for short] situated on the outskirts of village Borisana, Taluka Kadi, District Mehsana. As these lands were required for drilling oil wells, the Project Manager, ONGC, Sabarmati Project, submitted a proposal for temporary occupation of the land. Since it appeared to the appropriate Government that land was needed for public purpose, the said proposal was accepted by it and in pursuance thereof, it exercised powers under section 35 (1) of the Land Acquisition Act, 1894 [hereinafter referred to as 'the Act'] and directed the Collector to procure the occupation of the land. After complying with the necessary formalities, the Collector procured the occupation of the land on 27th August, 1985 by private negotiations. The Collector thereafter fixed the compensation which can also be termed as rent for the land under occupation on 17th February, 1988 at Rs.0=80 paise per sq. mtr., per year. Since the appellants were totally dissatisfied with the rate of compensation fixed by the Collector they raised dispute. The Collector referred the difference as to the FA/1994/1998 3/29 JUDGMENT sufficiency of compensation to the Court for its decision. The proceedings were numbered as Land Acquisition Reference Cases No. 522/1990, 523/1990 and 521/1990. Before the Civil Court the claim was made for Rs.3.50 ps. per sq. mtr., per year. The claim was based on the averments that the land was fertile land; there was facility of irrigation and the appellants obtained various crops in three seasons. According to them, annual yield of the agricultural produce was Rs.12,000/-. On these averments, it was pleaded that the compensation at the rate of Rs.0=80 paise per sq. mtr., was hopelessly inadequate and the appellants deserved to have it at the rate of Rs.3.50 ps. per sq. mtr. 2.1. The aforesaid case of the appellants was resisted by the respondents by filing written statement and they denied the averments of the appellants. According to the respondents, the rate of compensation determined by the Collector was just, fair and adequate and there was no need to enhance it. Parties led oral as well as documentary evidence to substantiate their respective averments. 2.2. On the basis of the material produced before it, the Reference Court arrived at a conclusion that the appellants proved that compensation fixed and paid to them was inadequate. The Court also held that the appellants were entitled to receive Rs.1=20 paise per sq. mtr., per year as additional compensation. Accordingly, the Court awarded total compensation at the rate FA/1994/1998 4/29 JUDGMENT of Rs.2=00 paise per sq. mtr. Since the appellants are dissatisfied with the rate of compensation fixed by the Reference Court, now they have approached this Court by filing the present appeals. 3. I have heard Mr. Amar Bhatt, for the appellants, Ms. Hansa Punani, Ld. AGP for respondent no. 1 - State and Mr. Ajay R Mehta, learned advocate for respondent no. 2 - ONGC. They have taken me through the record of these appeals. Common evidence has been recorded in all the three reference cases. 3.1. Submission of Mr. Bhatt is that the Reference Court has not properly appreciated the evidence produced on behalf of the appellants and in particular the oral evidence of the witness examined by them. He has submitted that the learned Judge has not taken into consideration this reliable and cogent evidence without assigning any proper reason for ignoring it even when it has remained uncontroverted. According to him, the Reference Court ought to have awarded the full amount i.e. Rs.3.50 ps. per sq. mtr. He has further submitted that the agreement for occupation of the land was only for three years, even then, till this date the possession is not returned to the appellants. He has submitted that the claimants are poor farmers. They have been deprived of the land right from August 1985 till this date. However, they are not getting the return by way of compensation equivalent to the annual income that they could FA/1994/1998 5/29 JUDGMENT have earned had they been in possession of the land. The occupation of the land by respondent no. 2 is unauthorized and illegal. According to Mr. Bhatt, the ONGC is mighty Corporation [now Company] and it should not exploit poor farmers and it should pay them just compensation. According to him, the rent paid by the ONGC was lesser than the prevailing market rent and therefore the Court is required to determine compensation at the rate of market rent. He has submitted that every year atleast 10% increase should be given in the compensation. According to him, under section 35(3) of the Act, the Reference Court has power to resolve the dispute with regard to the rate of compensation and award just compensation even for the period beyond three years if the possession is continued. He has made submission on the scope of reference and has submitted that even when the occupation is beyond three years, the reference can lie. He has placed extensive reliance on the decision rendered by the Division Bench of this Court dated 6th November, 2001 rendered in the case of General Manager v. Special Land Acquisition Officer in First Appeal No.3658 of 2001 and its allied matter. He has submitted that in the case before the Division Bench the occupation of the land was beyond the period of three years. Inspite of that, the Court entertained the appeal and determined the just compensation. He has drawn my attention to observation made on page 4, which is as under:- "As a matter of fact, after a period of three years the beneficiary will have no right to retain possession of the land. Once possession is taken, FA/1994/1998 6/29 JUDGMENT ONGC enters into an agreement." 3.2. As against that, Mr. Ajay Mehta, learned advocate for the ONGC has submitted that the rate of compensation per square meter decided by the Court is just and proper considering the then prevailing rent of the land. The claimants have no reason to make any grievance because periodically the rent is voluntarily being revised upwardly by the ONGC by negotiations and the same is being accepted by them. Hence the possession cannot be said to be illegal, wrongful or unauthorized. It is his submission that new rent is contractual rent and any dispute with regard to such rent cannot be entertained by the Reference Court. For that purpose, the claimant has to approach the Civil Court. It is his submission that beyond the period of three years, the Collector has no jurisdiction to deal with the land under section 35. According to Mr. Mehta at no point of time the farmers have made any effort to recover the possession of the land in question. It is submitted that instead of cultivating the land, the farmers found it more profitable to give it on rent to ONGC and earn more money and that too without putting in any labour of cultivation. It is submitted by Mr. Mehta that the judgment of the Division Bench has no relevance because before that Bench the question with regard to period of temporary occupation and the powers of Collector under section 35 was not directly under consideration. According to Mr. Mehta, the ONGC can never be termed as unauthorized occupant because the appellants have been willingly accepting the FA/1994/1998 7/29 JUDGMENT rent and thereby permitting ONGC to retain the possession. He has submitted that the Reference Court has no plenary jurisdiction. To support his submissions on the point, he has relied upon decision of the Apex Court rendered in Delhi Cloth & General Mills v. Its Workmen reported in AIR 1967 S.C. 469 para. 9. He has submitted that the annual 10% rise relates to market value of the land and compensation under section 35 has no relevance with market value. He has further submitted that oral evidence of the appellants does not inspire confidence. He has stated that there is periodical increase of rent is granted by the ONGC. He has submitted that judgment relied upon by the Reference Court pertains to irrelevant instance of occupation of land and the data cannot be adopted. He has placed reliance on the judgment of Ld. Single Judge of this court rendered in the case of ONGC v. Pandya Prahladbhai Manilal & ors., in First Appeal Nos. 1048 of 2006 and its allied matters and in particular, page 8 and onwards. According to him, the learned Single Judge had directly considered and dealt with provisions of sections 35 and 36 of the Act; whereas these aspects were never before the Division Bench in the case of General Manager v. Special Land Acquisition Officer (supra). 3.3. Ms. Punani, Ld. AGP appearing for the State has supported the submissions of ONGC. 4. Before I deal with the submissions, provisions with respect to FA/1994/1998 8/29 JUDGMENT temporary occupation are required to be looked into. 4.1. Part-VI of the Act deals with temporary occupation of the land, which contains sections 35, 36 and 37. The legislative history of these provisions can be traced back to the year 1861. This can be found from the report of the Select Committee dated 23rd March, 1898. The Select Committee in para. 10 of the report observed as under :- "Part VI of the Act deals with occupation of land by the Government for temporary purposes as opposed to permanent acquisition by the Government under the preceding part of the Act which under the land 'vested absolutely in the Government free from all other estates, rights, titles and interest'. In the year 1861 it was found necessary to amend the Act (IV of 1857) on two points, Act II of 1861 provided for the case of an acquisition of land needed for the construction of any road, canal or railway, and authority was given form the temporary occupation of adjacent lands not more than 100 yards, and in certain cases not more than two miles from the 'centre line' of the same, for the purpose of taking earth or other materials for making or repairing the same, or for depositing earth, etc, thereon, or for erecting temporary buildings or workshops or for the construction of temporary roads or railway. The full value of all 'clay, stone, gravel, sand and other materials taken therefrom 'was to be given as agreed upon, or, in the event of any dispute, by an award, as in the case of a permanent acquisition". They further said : "Part VI of the revised Bill, as of the present Act (X of 1870), concerning the temporary occupation of land permits a FA/1994/1998 9/29 JUDGMENT reference to the civil court as to the sufficiency of the Collector's compensation. The Government of Bombay and the North Western Provinces have asked that the reference may include a question as to the apportionment of the compensation. We have adopted this suggestion." In this background the legislature has framed provisions regarding temporary occupation. Sections 35, 36 and 37 read as under :- "35. Temporary occupation of waste or arable land, procedure when difference as to compensation exists.- (1) Subject to the provisions of Part VII of this Act, whenever it appears to the appropriate Government that the temporary occupation and use of any waste or arable land are needed for any public purpose, or for a company, the appropriate Government may direct the Collector to procure the occupation and use of the same for such terms as it shall think fit, not exceeding three years from commencement of such occupation. (2) The Collector shall thereupon give notice in writing to the persons interested in such land of the purpose for which the same is needed, and shall, for the occupation and use thereof, for such term as aforesaid, and for the materials (if any) to be taken therefrom, pay to them such compensation, either in a gross sum of money, or by monthly or other periodical payments, as shall be agreed upon in writing between him and such persons respectively. (3) In case the Collector and the persons interested differ as to the sufficiency of the compensation or apportionment thereof, the Collector shall refer such difference to the decision of the Court." FA/1994/1998 10/29 JUDGMENT [vide Gujarat Act 20 of 1965 'waste' or 'arable' words have been deleted ] "36. Power to enter and take possession, and compensation on restoration.- (1) On payment of such compensation, or on executing such agreement, or on making a reference under section 35, the Collector may enter upon and take possession of the land and use or permit the use thereof in accordance with the terms of the said notice. (2) On the expiration of the term, the Collector shall make or tender to the persons interested compensation for the damage (if any) done to the land and not provided for by the agreement, and shall restore the land to the persons interested therein; Provided that, if the land has become permanently unfit to be used for the purpose for which it was used immediately before the commencement of such term, and if the persons interested shall so require, the appropriate Government shall proceed under this Act to acquire the land as if it was needed permanently for a public purpose or for a Company." "37. Difference as to condition of land.- In case the Collector and persons interested differ as to the condition of the land at the expiration of the term, or as to any matter connected with the said agreement, the Collector shall refer such difference to the decision of the Court." 4.2. Thus, it can be seen that Chapter-VI simply deals with temporary FA/1994/1998 11/29 JUDGMENT occupation of land. It contains only three sections, namely sections 35, 36 and 37, which are inter linked. Apart from these provisions, which are subject to chapter VII which deals with acquisition in case of companies, there are no other provisions which deal with temporary occupation of the land. This chapter is a slight deviation from the other provisions. The provisions previous to Chapter VI deal with acquisition of land on permanent basis. As opposed to that, this is merely temporary occupation for some particular public purpose for limited period. 4.3. Under sub-section (1) of section 35 the appropriate Government has to be satisfied about the need of temporary occupation or use of any land for public purpose. If it is for the company, the Government has to make inquiry as prescribed in Sec. 40 (Chapter VII) of the Act r/w. Rule 4 of Land Acquisition (Companies) Rules, 1963 prior to arriving at the satisfaction. Upon arriving at such satisfaction, the Government can grant consent and direct the Collector to procure the occupation and use of the same for such period as it shall think fit, but not beyond the period of three years. Sub-section (2) of section 35 provides for giving written notice to the person interested in the land and for determining the compensation and executing written agreement. Sub-section (3) of section 35 provides that in case there is difference with regard to sufficiency of compensation or apportionment thereof between the Collector and the person interested, the Collector shall refer such difference to the decision of the Court. FA/1994/1998 12/29 JUDGMENT Sub-section (1) of section 36 empowers the Collector to enter upon and take possession of the land upon happening of any of the three eventualities mentioned therein, namely, payment of compensation, or executing the agreement or making reference under section 35. Sub-section (2) of Section 36 enjoins upon the Collector that on expiry of the term, he shall make or tender to the persons interested, compensation for the damage, if any, done to the land and not provided for by the agreement and shall restore land to the persons interested therein. Thus, the duty is cast upon the Collector to ascertain the damage to the land in question and, if there is any, to pay compensation for it, and to restore the possession to the original owner. Proviso to sub-section (2) of section 36 deals with the permanent acquisition in certain circumstances such as when the land has become permanently unfit for its former use and the persons interested so require. Section 37 only envisages that if there is any difference between the Collector and person interested i.e., owner with regard to the condition of the land, he shall refer the matter to the Court. 5. Keeping in view the provisions of Sec. 35 and 36 of the Act and the submissions made by the Ld. Advocate for the rival parties the questions that may arise for my consideration can be spelt out as under: 1. Whether the occupants of the land are authorized to retain the possession of the land beyond the maximum period of 3 years ? 2. Whether the subsequent occupation of the land by the ONGC FA/1994/1998 13/29 JUDGMENT can be termed as unauthorized possession in the present facts and circumstances ? 3. Whether the collector has power to refer the difference as to the sufficiency of compensation for the period subsequent to expiration of the term agreed upon by the parties or the maximum period of 3 years ? 4. When such reference is made whether decision of the court on such reference can be legal and in accordance with provisions of this Chapter? 5. Even if the reference u/S. 35 is made by the collector within the stipulated period or within 3 years can the decision of the court cover the period subsequent to expiration of maximum 3 years ? 6. Whether the appellants have made out a case for grant of additional compensation by this court and if yes, at what rate and upto what period ? 5.1. As can be seen from foregoing discussion, the procedure for temporary occupation of land, is substantially contained in Sections 35 and 36 of the Act. The said procedure of-course is subject to Chapter VII which deals with acquisition of land for companies. The occupation of land can be for such term as the appropriate Government may think fit, but such term cannot exceed FA/1994/1998 14/29 JUDGMENT three years from the commencement of such occupation. In such case, though the possession is taken under the provisions of section 36 (1) of the Act, the ownership of the land remains with the person interested in it. This is exactly Contrary to the case of permanent acquisition wherein the possession is taken under section 16 of the Act and thereby the ownership of the land is divested with its title and the title to the land vests in the Government absolutely free from all encumbrances. Section 35 (1) provides for retention of the land by the Government or the company for maximum period of three years and there is no provision in the Act whereby extension of that period can be granted or deemed to be granted automatically. But there is also no specific bar to procure land for further temporary occupation by exercising power under section 35 (1) and (2) from time to time so long as the public purpose subsists. But in absence of the same, the possession has to be surrendered to the owner i.e person interested in the land upon expiration of the maximum period of three years, failing which, it becomes illegal and unauthorized possession. In other words, the occupant is not authorized to retain the land beyond 3 years. Of course the parties can arrive at consensus and the owner can permit the occupier to continue with the possession. But in absence of compliance of requisite procedure, it will not be governed by the provisions of the Act though the possession can not be termed as unauthorized one. In that case it will be governed by the provisions under common law. FA/1994/1998 15/29 JUDGMENT 5.2. The compensation and the manner in which it is to be received have to be determined by agreement in writing between the Collector and the person interested in the land. If there is any difference between the two, the said difference is required to be referred to the Court by the Collector as per provisions of section 35 (3) of the Act, which has to be in relation to the sufficiency of the compensation. The difference is when the collector determines the compensation at figure A and in the opinion of the person interested in the land, the compensation has to be at figure B, then it is this difference between the two figures which has to be referred to the Court to inquire whether compensation offered by the Collector is sufficient. Thus, sub- section (3) of section 35 only confers the power of making reference on the question of sufficiency of the compensation or apportionment thereof and not beyond that. If conjoint reading of sub-sections (2) and (3) of section 35 and sub-section (1) of section 36 is made, it shows that the Collector may enter upon and take possession of the land on payment of the compensation or on executing such agreement or on making a reference under section 35(3) of the Act. The period of three years or the stipulated term under the agreement will commence only from the date of occupation of the land. Sub-section (2) of section 36 prescribes what Collector has to do on the expiration of the term. He has to tender to the person interested compensation, if there is any damage done to the land and it is not covered under the agreement and also to restore the land to the persons interested therein. Therefore, it is incumbent upon the Collector FA/1994/1998 16/29 JUDGMENT to return the possession to the persons interested in the land on expiration of period of three years. The provisions of Section 35 and 36(1) of the Act are made applicable only upto expiration of term or three years from occupation whichever is earlier. Whereas Section 36(2) and 37 become effective immediately upon expiration of stipulated period only for the limited purpose already stated above. In the circumstances, it is clear that when term of occupation gets over, the provisions of Section 35 and 36(1) of the Act cease to apply. The retention of possession either by consent or unauthorized ceases to be governed by the Act. The only exception is section 37, which provides that at the expiration of the term, if there is any difference about the condition of land or there is any other matter connected with the agreement, the Collector can refer such difference to the decision of the Court. But