Case: Gregory Patrao and Ors Vs. Mangalore Refinery and Petrochemicals Limited &amp; Ors

2. The lands belonging to the original claimants/original landowners/appellants herein were acquired under Section 28(4) of the Karnataka Industrial Areas Development Act, 1966 (hereinafter referred to as KIAD Act, 1966) under three different notifications. The lands were sought to be acquired for the development of the Karnataka Industrial Areas Development Board (hereinafter referred to as KIADB) for establishment of industrial areas. The Land Acquisition Officer after affording an opportunity of hearing to the owners of the land passed an award on 06.10.2009. At the instance of the landowners, the references were made to the Reference Court. The Reference Court vide judgment dated 29.07.2020 enhanced the amount of compensation.2.1 Feeling aggrieved and dissatisfied with the judgment and award passed by the Reference Court dated 29.07.2020, enhancing the amount of compensation, respondent No.1 herein – MRPL, who was allotted the land as a lessee by the KIADB, preferred the present appeals before the High Court and prayed for leave to appeal. It was the case on behalf of the MRPL that as the MRPL is the beneficiary of the acquisition and under the agreement between the KIADB and MRPL, the latter has to pay the additional amount of compensation and, therefore, the burden to pay the additional compensation would be upon the MRPL, therefore, MRPL ought to have been heard by the Reference Court. It was the case on behalf of the MPRL that MRPL can be said to be a person interested. Heavy reliance was placed upon the decisions of this Court in the case of Himalayan Tiles and Marble (P) Ltd. Vs. Francis Victor Countinho (Dead) By LRs, (1980) 3 SCC 223 ; UP Awas Evam Vikas Parishad Vs. Gyan Devi (Dead) by LRs. and Ors., (1995) 2 SCC 326 ; Neelagangabai & Another Vs. State of Karnataka & Others, (1990) 3 SCC 617 ; and Neyvely Lignite Corporation Ltd. Vs. Special Tahsildar (Land Acquisition) Neyvely and Others, (1995) 1 SCC 221 .2.2 On the other hand, it was the case on behalf of the original owners that the MRPL, being an allottee from the KIADB and the beneficiary of the land acquisition proceedings is the KIADB and not the MRPL and the amount awarded by the Land Acquisition Officer was deposited by the KIADB, MRPL cannot be said to be a person interested. Relying upon the decision of this Court in the case of Peerappa Hanmantha Harijan Vs. State of Karnataka, (2015) 10 SCC 469,  it was prayed to dismiss the appeals.2.3 By the impugned common judgment and order and mainly relying upon the decision of this Court in the case of UP Awas Evam Vikas Parishad (supra), the High Court has granted the permission to MRPL to file the appeals challenging the judgment and award passed by the Reference Court and thereafter has quashed and set aside the judgment and award passed by the Reference Court by holding that the MRPL can be said to be a person interested and therefore, ought to have been heard before enhancing the amount of compensation. Thereafter, the High Court has remanded the matter back to the Reference Court for a decision afresh after affording an opportunity to all the parties to adduce evidence including MRPL.2.4 Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the High Court, the original claimants/original landowners have preferred the present appeals.

Reasoning:
7. While answering the aforesaid issue/question, it is required to be noted that in the present case, the land has been acquired under the provisions of the KIAD Act, 1966 and the notification has been issued under Section 28(1) of the KIAD Act, 1966. The land has been acquired by the State Government for KIADB under three different notifications. After the lands were acquired, respondent No.1 – MRPL has been allotted the lands acquired as per the agreements between the KIADB and the MRPL. The present is not an acquisition under the provisions of the Land Acquisition Act and therefore, as such, neither Section 50 of the Land Acquisition Act, 1894 nor any other provisions of the Land Acquisition Act, 1894 shall be applicable with respect to the lands acquired under the provisions of the KIAD Act, 1966. Taking into consideration, the aforesaid factual aspects, the impugned judgment and order passed by the High Court in which it has heavily relied upon the decisions of this Court in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) are required to be considered.7.1 At the outset, it is required to be noted that as such, the issue involved in the present appeal in respect of the acquisitions under the KIAD Act, 1966 and the right of the subsequent allottee to participate in the reference proceedings and whether the subsequent allottee can be said to be a person interested under the provisions of the KIAD Act, 1966 is no longer res integra. While deciding the acquisition under the very KIAD Act, 1966 and the right of the subsequent allottee, who has been allotted the land by the KIADB in the case of Peerappa Hanmantha Harijan (supra) after distinguishing the decision of this Court in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra), it is specifically observed and held by this Court that an allottee company cannot be said to be a beneficiary or a person interested entitled for hearing before determination of compensation. By observing and holding so, this Court had an occasion to consider the entire scheme of acquisition under the KIAD Act, 1966 and has distinguished the acquisition under the Land Acquisition Act, 1894. Before this Court also, the High Court remanded the matter at the instance of the allottee company in the writ petition filed by the allottee company to the Reference Court. This Court set aside the same while holding that the allottee company, who has been allotted the land under the provisions of the KIAD Act, 1966, can neither be said to be a beneficiary nor a party interested entitled for hearing before determination of compensation. This Court in the case of Peerappa Hanmantha Harijan (supra) considered in detail the allotment/lease agreement in favour of the allottee/lessee and also the relevant provisions of the KIAD Act, 1966 and has observed in paragraphs 50 to 54 as under:-50. On a careful examination of the aforesaid clauses of the lease agreement executed between the parties in respect of the land of the appellants, it becomes manifestly clear that the said agreement is executed by KIADB in favour of the Company after allotment of land was made in favour of the Company as provided under Regulations 10(a) and (c) of the KIADB Regulations respectively by following the procedure of inviting applications and submission of the applications by the interested parties along with the required deposits towards the cost of the land. Further, Clauses 5(a) and (b) of the lease agreement referred to supra, would clearly state that the premium indicated in Clause 1 of the lease agreement represents the tentative cost of the land and in the event of the lessor incurring payment of amounts to the landowners over and above the awards made by the acquiring authority by virtue of the award passed by the competent court of law or in view of the provisions of the LA Act in respect of demised premises or any part thereof, the same shall be met by the lessee within one month from the date of receipt of the communication signed by the Executive Member or any other officer authorised by the lessor. Clause 5(b) also makes similar provision to that effect between the lessor and the lessee.51. From a careful reading of the aforesaid clauses of the lease agreement along with the provisions of Section 32(2) of the KIAD Act and Regulations 4, 7, 10(b), (c) and (d) of the KIADB Regulations, it is clear that the Company is only the lessee by way of allotment of the land as the same has been allotted by KIADB in its favour and has executed the lease deed in its favour in respect of the allotted land.52. In view of the aforesaid documents, namely, the notifications issued under Sections 28(1) and 28(4) of the KIAD Act by the State Government, it can be safely concluded by us that the acquisition of the land involved in these proceedings is for the purpose of industrial development by KIADB in Sedam Taluk. Therefore, the beneficiary of the acquired land is only KIADB but not the Company as claimed by it. A reading of Section 28(5) of the KIAD Act makes it clear that the land which is acquired by the State Government statutorily vests absolutely with it. After following the procedure provided under Sections 28(6) and (7) of the KIAD Act, the State Government takes possession of the acquired land from the owners/person/persons who are in possession of the land and transfers the same in favour of KIADB for its development and disposal of the same in accordance with Regulation 10(a) of the KIADB Regulations, referred to supra.53. In the instant case, a perusal of the provisions of the lease agreement executed between the parties referred to supra and Regulation 10 clauses (a), (c), (d) and (e) of the KIADB Regulations make it abundantly clear that the Company is only the allottee/lessee of the acquired land and as per Clauses 5(a) and (b) of the lease agreement referred to supra, the premium indicated in the lease agreement in respect of the allotted land in its favour represents the tentative cost of the land. It has been further specified in the lease agreement that in the event of the lessor incurring the payment of amounts to the landowners over and above the awards made by the acquiring authority by virtue of awards passed by the competent court of law in view of the provisions of the Land Acquisition (Amendment) Act, 1984 in respect of demised premises or any part thereof, the same shall be met by the lessee within one month from the date of receipt of communication signed by the Executive Member or any other officer authorised by the lessor. In view of the above conditions of the lease agreement, neither KIADB nor the Company can contend that the acquisition of the land involved in these proceedings is in favour of the lessee Company. Therefore, the Company is neither a beneficiary nor an interested person as claimed by them in terms of Section 2(11) of the KIAD Act or under Section 3(b) of the LA Act as per which, person interested includes all persons claiming an interest in compensation to be made on account of the acquisition of land under the KIAD Act and that a person shall be deemed to be interested in the land if he is interested in an easement affecting the land. It is necessary to examine Section 3(b) read with Section 9 of the LA Act, which deals with notice to persons interested and Section 11, which deals with enquiry and award to be passed by the Deputy Commissioner/Land Acquisition Officer.54. A careful reading of the aforesaid provisions of the LA Act, the KIAD Act and the KIADB Regulations would clearly go to show that the Company is neither a beneficiary, nor an interested person in the land as on the date of acquisition of the land, as the land was acquired by the State Government in favour of KIADB who is the beneficiary and it has allotted in favour of the Company after the acquired land was transferred in its favour by the State Government and executed the lease agreement referred to supra.7.2 Thereafter, this Court distinguished the nature of acquisition under the Land Acquisition Act from the acquisition under the KIAD Act, 1966 by observing as under in paragraphs 57, 58 and 60 to 65:-57. For the acquisition of land under the provisions of the LA Act in favour of a company the mandatory procedure as provided under Part VII of the LA Act and Rules must be adhered to, that is not the case in the acquisition of land involved in these proceedings as the acquisition of land is under the provisions of the KIAD Act and therefore the reliance placed upon the provision of Section 3(f)(viii) of Karnataka LA Amended Act 17 of 1961 is not applicable to the facts of the case on hand and therefore, the said provision cannot be made applicable to the case on hand.58. The definition of public purpose under the LA Act cannot be imported to the acquisition of land by the State Government for the industrial development under the provision of the KIAD Act as the words development, industrial area and industrial estate have been clearly defined under sub-sections (5), (6) and (7) of Section 2 of the KIAD Act which reads thus:2. (5) Development with its grammatical variations means the carrying out of levelling, digging, building, engineering, quarrying or other operations in, on, over or under land, or the making of any material change in any building or land, and includes redevelopment; and to develop shall be construed accordingly;(6) Industrial area means any area declared to be an industrial area by the State Government by notification which is to be developed and where industries are to be accommodated; and industrial infrastructural facilities and amenities are to be provided and includes, an industrial estate;(7) Industrial estate means any site selected by the State Government where factories and other buildings are built for use by any industries or class of industries.X X X X60. The reliance placed upon the provisions of Sections 50(1) and (2) of the LA Act, also are not applicable to the case on hand for the reason that Section 50 of the LA Act applies to the acquisition of land in favour of a company by the State Government by following the mandatory procedure contemplated under Part VII of the LA Act and relevant rules framed for that purpose. Therefore, the claim made by the Company that it has got every right to participate in the proceedings for determination and redetermination of the market value of the acquired land and award of compensation passed by the Land Acquisition Officer or Deputy Commissioner or before the Reference Court or the appellate court is wholly untenable in law and therefore, the submissions made on behalf of the Company cannot be accepted and the same is rejected.61. Further, both the learned Senior Counsel on behalf of KIADB and the Company have placed reliance on various decisions rendered by this Court in support of their above respective legal submissions that the Company is an interested person and, therefore, it has got right to participate in the proceedings before the Reference Court for determination of compensation before passing the award either by the Land Acquisition Officer or the Deputy Commissioner or the Reference Court at the instance of the owner or any other interested person. These include judgments rendered by this Court in U.P. Awas Evam Vikas Parishad v. Gyan Devi [(1995) 2 SCC 326]  , Himalayan Tiles and Marble (P) Ltd. v. Francis Victor Coutinho [(1980) 3 SCC 223]  and P. Narayanappa v. State of Karnataka [(2006) 7 SCC 578]  and other decisions which are not required to be mentioned in this judgment as they are all reiteration of the law laid down in the above cases.62. The reliance placed on the various decisions of this Court by both the learned Senior Counsel on behalf of KIADB and the Company, is misplaced as none of the said judgments relied upon are applicable to the fact situation in the present case for the reason that those cases dealt with reference to the acquisition of land under the provisions of the LA Act, either in favour of the company or development authorities, whereas in the case on hand, the acquisition proceedings have been initiated under the KIAD Act for industrial development by KIADB. Further, the original acquisition record in respect of the acquired land involved in the proceedings by the learned Standing Counsel on behalf of the State of Karnataka as per our directions issued vide our orders dated 17-11-2014 [Peerappa Hanmantha Harijan v. State of Karnataka, 2014 SCC OnLine SC 1678, wherein it was directed: Issue notice to the State Government. The learned counsel for the petitioners to take out notice to the learned Standing Counsel appearing for the State Government. Dasti, in addition, is also permitted. Mr V.N. Raghupathy, learned counsel accepts notice for the State of Karnataka and Mr Nishanth Patil, learned counsel accepts notice for Karnataka Industrial Area Development Board (for short KIADB). The learned counsel appearing for the State Government and the learned counsel appearing for KIADB are directed to produce the relevant records in respect of the proceedings relating to land acquisition involved in these matters. There shall be stay of the effect and operation of the impugned order during the pendency of these petitions. List the matters after four weeks. In the meanwhile, all the respondents are at liberty to file written statements, if any.] and 24-3-2015 [Peerappa Hanmantha Harijan v. State of Karnataka, 2015 SCC OnLine SC 1707, wherein it was directed: Heard Ms Kiran Suri, learned Senior Counsel for the petitioners in SLPs (C) Nos. 31624- 25 of 2014 in part. List all the matters as part for further hearing. Vide order dated 17-11-2014, learned counsel for the State as well as the learned counsel for KIADB were directed to produce the relevant records in respect of the proceedings relating to land acquisition involved in these matters, record as well as the records relating to allotment of land. However, as per office records, nothing has been produced so far. In this view of the matter, the learned counsel for the State as well as the learned counsel for KIADB are directed to comply with the order dated 17-11- 2014 and produce the relevant records in respect of the proceedings relating to land acquisition and the allotment of land involved in these matters before the next date of hearing. List the matters on 15-4-2015.], do not disclose the fact that the acquisition of lands covered in the acquisition notifications are in favour of the Company. Thus, the acquisition of land in favour of KIADB is abundantly clear from the preliminary and final notifications issued by the State Government and thereafter following the procedure under sub-sections (6) and (7) of Section 28 of the KIAD Act, it took possession of the acquired land from the owners who were in possession of the same and was transferred in favour of KIADB for its disposal for the purpose for which lands were acquired as provided under Section 32(2) of the KIAD Act read with the Regulations referred to supra framed by KIADB under Section 41(2)(b) of the KIAD Act. Therefore, the reliance placed upon the judgments of this Court by the learned Senior Counsel on behalf of the Company and KIADB, are wholly inapplicable to the fact situation and do not support the case of the Company.63. In view of the foregoing reasons recorded by us on the basis of the acquisition notifications issued by the State Government under the statutory provisions of the KIAD Act and therefore, we have to answer Points (i), (ii) and (iii) in favour of the landowners holding that the Company is neither the beneficiary nor interested person of the acquired land, hence, it has no right to participate in the award proceedings for determination of the market value and award the compensation amount of the acquired land of the appellants. Hence, the writ petition filed by the Company questioning the correctness of the award passed by the Reference Court which is affirmed by the High Court is not at all maintainable in law. On this ground itself, the writ petition filed by the Company should have been rejected by the High Court, instead it has allowed and remanded the case to the Reference Court for reconsideration of the claims after affording opportunity to the Company, which order suffers from error in law and therefore, the same is liable to be set aside.64. Further, the learned Judge of the High Court has erroneously held that the allottee Company is a beneficiary of the acquired land of the appellants, which finding of the learned Judge is not correct both on facts and in law. The findings and reasons recorded by the High Court in the impugned judgment in allowing the writ petition and quashing the award of the Reference Court and remanding it back to the Reference Court and allowing the Company to participate in the proceedings for redetermination of compensation for the acquired land is wholly impermissible in law and the same are in contravention of the provisions of the KIAD Act, the LA Act, the KIADB Regulations and the lease agreement, which has been executed by KIADB in favour of the Company and therefore, the impugned judgment and order [State of Karnataka v. Peerappa Hanmantha Harijan, Review Petition No. 2537 of 2013 in MFA No. 32157 of 2012, order dated 22-9-2014 (KAR)] is liable to be set aside by allowing the appeals of the owners.65. Further, the learned Single Judge of the High Court has further committed an error in law in not appreciating Section 54 of the LA Act, which provision provides the right to appeal to the landowners, or State Government and beneficiaries of the acquired land but not to the company which is the lessee. When the company does not have the right to file an appeal against the award it also has no right to file a writ petition. KIADB has filed the belated appeal after disposal of the appeal filed by the appellants by the High Court and against which award it has filed the present appeal questioning the correctness of the same and prayed for enhancement of compensation and the said appeal is being disposed of by this common judgment after adverting to the rival legal contentions urged on behalf of the parties. The High Court has rightly dismissed the belated appeal filed by KIADB.7.3 This Court thereafter had considered the decisions in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) and has distinguished the same and has observed and held that the decisions in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) shall not be appliable with respect to the acquisition under the KIAD Act, 1966. Once, this Court in the subsequent decision in the case of Peerappa Hanmantha Harijan (supra) dealt with and considered the earlier decisions in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) and distinguished the same and observed and held with respect to the acquisition under the KIAD Act, 1966 that the allottee company can neither be said to be a person interested nor entitled for hearing before determination of compensation, the said ratio was binding upon the High Court. Thus, it was not open for the High Court to not follow the binding decision of this Court in the case of Peerappa Hanmantha Harijan (supra) by observing that in the subsequent decision in the case of Peerappa Hanmantha Harijan (supra), the earlier decisions in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) have not been considered. The High Court has not noted that as such while deciding the case of Peerappa Hanmantha Harijan (supra), this Court did consider the earlier decisions in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) and had clearly distinguished the same. Not following the binding precedents of this Court by the High Court is contrary to Article 141 of the Constitution of India. Being a subsequent decision, in which the earlier decisions were considered and distinguished by this Court, the subsequent decision of this Court was binding upon the High Court and not the earlier decisions, which were distinguished by this Court.7.4 Under the circumstances, the High Court has committed a grave/serious error in passing the impugned judgment and order by relying upon the judgments of this Court in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) and by not following the subsequent decision of this Court in the case of Peerappa Hanmantha Harijan (supra).7.5 Now, so far as the reliance placed upon the decisions of this Court in the case of UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) relied upon by the respondent No.1 – MRPL and even relied upon by the High Court is concerned, at the outset, it is required to be noted that the said decisions were with respect to the acquisition under the Land Acquisition Act, 1894 and the provisions of Land Acquisition Act, 1894, more particularly, Section 50 of the Land Acquisition Act fell for consideration before this Court. As observed and held by this Court in the subsequent decision in the case of Peerappa Hanmantha Harijan (supra), the acquisition under the Land Acquisition Act, 1894 and the acquisition under the KIAD Act, 1966 are both distinct and the provisions under both the Acts are distinguishable.7.6 We see no reason to take a different view than the view taken by this Court in the case of Peerappa Hanmantha Harijan (supra) that the MRPL being a subsequent allottee after the land was acquired by KIADB, can neither be said to be a beneficiary nor a person interested for the purpose of determination of compensation. Under the circumstances, the impugned judgment and order passed by the High Court taking a contrary view is unsustainable and the same deserves to be quashed and set aside.