Citation Codes

Equivalent Citations

citation codes

Case Number

First Appeal No. 82 of 2002

Judges

A.K Parichha, J.

Acts

SECTION 54 LAND ACQUISITION ACT
Section 18 or Section 30,
Section 18(1)
Section 20(b)

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Smart Summary

Court Opinion Summary — Special Land Acquisition Officer v. Claimants & Union of India (East Coast Railways)

Factual and Procedural Background

A notification under Section 4(1) of the Land Acquisition Act led to acquisition of 1.39 decimals of land in Holding No. 14, Village Sinangbhata, Kalahandi, for the Lanjigarh Road–Junagarh Rail Link Project (Government Notification No. 36652 dated 17.4.1995; declaration No. 40-41 dated 16.09.1995). The Land Acquisition Officer (Appellant) initially awarded Rs. 21,023.10 to the Claimants (Respondent Nos. 1–6), who accepted it under protest and sought higher compensation.

On the Claimants' application the Collector referred the dispute to the Learned Civil Judge (Senior Division), Bhawanipatna under Section 18 for adjudication of the quantum of compensation. The reference Court, after receiving evidence, fixed market rates by capitalization: Rs. 48,000 per acre for the “Atta” variety and Rs. 52,000 per acre for the “Bahai” variety, thereby enhancing compensation. The Special Land Acquisition Officer appealed under Section 54 challenging (inter alia) the enhanced rates, the methodology (capitalization vs. contemporaneous sale statistics), the award of compound interest, and the failure to issue notice to the Union of India (East Coast Railways), which would ultimately pay the compensation.

Legal Issues Presented

Whether failure to issue notice to the Union of India (represented by the General Manager, East Coast Railways) in the reference proceedings violated Section 18(1) and Section 20 of the Act, rendering the award unsustainable because the railways are ultimately liable to pay compensation and thus qualify as a "person interested".
Whether the reference Court erred in applying the capitalization method to fix market value when contemporaneous sale statistics of the area were available (i.e., appropriateness of capitalization versus market sale data).
Whether the award of compound interest in the land acquisition proceeding was legally permissible (in particular, consistency with Section 28 of the Act and relevant precedent).

Arguments of the Parties

Appellant's Arguments (Special Land Acquisition Officer)

Non-issuance of notice to the Union of India (East Coast Railways) in the reference proceeding violated Section 18(1) and Section 20 because the railways, being ultimately liable to pay compensation, are a "person interested" and must be given opportunity to participate.
When contemporaneous sale statistics showing market value of land in the area were available, the reference Court's fixation of market value by capitalization was improper.
The legality of awarding compound interest in land acquisition proceedings was challenged; several decisions of the Apex Court were cited in support of these submissions.

Union of India (Respondent No. 7) — Represented Counsel

Supported the Appellant's contention that the Union (as represented by East Coast Railways) was a necessary party and should have been given notice and an opportunity to participate, since compensation is payable by the railways; an award passed without such notice is unsustainable and offends natural justice, relying on NTPC Ltd. v. State of Bihar.

Respondents Nos. 1–6 (Original Claimants)

Argued that the Union of India (a State entity) is not a "person interested" within the meaning of Section 18(1), because Section 18 refers to persons who have been awarded compensation; the State is not a "person" in that sense.
Invoked Section 20(c) of the Act to contend that where the reference relates to area or amount of compensation, only the Collector is to be noticed (i.e., no obligation to notice the Union).
Defended the reference Court's use of the capitalization method, arguing it is appropriate where contemporaneous sale statistics for the same locality are not available.
Contended that award of compound interest is permissible under Section 28 of the Act and, in the circumstances, the interest awarded was within statutory ambit.
Also argued that many of the cited Apex Court decisions relate to Section 50 (companies/local bodies) and are not applicable where the acquisition is for the State; relied on Sarada Devi v. State of Bihar and Ahad Brothers v. State of M.P. to support the limited applicability of those ratios.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Himalaya Tiles and Marble (P) Ltd. v. Francis Victor Coutinho (1980) 3 SCC 223 : AIR 1980 SC 1118	Expanded the meaning of "person interested" under Section 18 to include bodies, local authorities or companies for whose benefit the land is acquired and who are bound to pay compensation; Section 18's definition is inclusive and to be liberally construed.	The court relied on this decision to accept an expanded meaning of "person interested" under Section 18 and to support notice to authorities liable to pay compensation.
U.P. Awas Evam Vikas Parishad v. Gyan Devi (1995) 2 SCC 326 : AIR 1995 SC 724	Section 50(2) confers on local authorities for whom land is acquired a right to appear and adduce evidence before the Collector and reference Court; such local authorities, who must pay compensation, are necessary and proper parties to defend enhancements.	The court noted concurrence by a Constitution Bench with Himalaya Tiles and used the principle to show local authorities for whom land is acquired should be noticed.
Agra Development Authority v. Special Land Acquisition Officer (2001) 2 SCC 646 : AIR 2001 SC 992	Where land was acquired for Agra Development Authority but the authority was not given an opportunity to adduce evidence, the matter was remitted to refix compensation after giving notice to the authority.	The court cited this case as an example where failure to notify the acquiring authority warranted remand; it reinforced the obligation to give notice to bodies liable to pay compensation.
Abdul Rasak v. Kerala Water Authority (2002) 3 SCC 228 : AIR 2002 SC 817	Kerala Water Authority, being liable to pay compensation, was entitled to notice and participation in the proceeding.	The court used this authority to support the proposition that an acquiring authority liable to pay compensation must be given notice in reference proceedings.
NTPC Ltd. v. State of Bihar (2004) 12 SCC 96	Even if the proceeding is not under Section 50, where land is acquired for a body owned by or part of the Union, notice must be issued to that body (NTPC) and opportunity given to participate; such a body is to be treated as a "person interested".	The court relied heavily on NTPC to clarify that bodies owned by the Union for whom land is acquired are "persons interested" under Section 18 and must be noticed in reference proceedings.
Union of India v. Sher Singh (1993) 1 SCC 608	Cited by the parties in submissions.	The opinion lists this case among those relied upon but does not detail the specific principle or its application in the text.
Sarada Devi v. State of Bihar (2003) 3 SCC 128	Cited by respondents to support the position that the State cannot be said to be a "person interested" to agitate claims under Sections 18 or 30.	The court considered this authority but distinguished its applicability to the present circumstances (noting limitations of the rule when applied to Section 30 contexts).
Ahad Brothers v. State of M.P. (2005) 1 SCC 545	Observed that the State could not be said to be a "person interested" to agitate claims under Section 18 or Section 30 (observation made in context of inter se apportionment disputes under Section 30).	The court distinguished this observation as being given in a Section 30 inter se apportionment context and held it cannot be applied to the present case concerning notice to the acquiring authority who must pay compensation.
Special Land Acquisition Collector, Dhenkanal v. Narahari Sahu (First Appeal No. 18 of 1994 — disposed 25.9.2000)	Domestic precedent of this court where orders of the reference Court were set aside and remitted for fresh disposal after giving due notice to NTPC.	The court referred to this decision as an instance of following the NTPC line and remanding for fresh disposal after notice to the acquiring authority.

Court's Reasoning and Analysis

The court began by reciting Section 18(1) of the Act, which on its plain reading suggests a "person interested" is one awarded compensation who has not accepted it. The court observed, however, that the Apex Court in Himalaya Tiles and allied decisions expanded the meaning of "person interested" to include bodies, local authorities or companies for whose benefit land is acquired and who are bound to pay compensation.

The court examined the respondents' reliance on Section 20(c) and their contention that where an objection relates to area or amount of compensation only the Collector need be noticed. The court analysed Section 20 and noted that Section 20(b) requires notice to "all persons interested" (except those who have consented without protest to receive payment) and Section 20(c) requires the Collector to be noticed when the objection relates to area or amount. The court emphasised that the connecting word between subsections (b) and (c) is "and", not "or", thereby undermining the respondents' argument that notice to the Collector alone suffices.

The court then considered Apex Court jurisprudence. It noted that a Constitution Bench in U.P. Awas Evam Vikas Parishad v. Gyan Devi concurred with the expansive reading of "person interested", and subsequent Supreme Court decisions (Agra Development Authority; Abdul Rasak) applied the principle that acquiring authorities who must pay compensation are entitled to notice and participation. Most importantly, the court relied on NTPC Ltd. v. State of Bihar, where the Supreme Court clarified that even when proceedings were not under Section 50, an acquiring body (even if part of the Union) must be noticed and given an opportunity to participate.

The court addressed the respondents' reliance on Sarada Devi and Ahad Brothers and explained that the Ahad Brothers observation (that the State could not be a "person interested") arose in the distinct factual context of inter se disputes under Section 30; therefore that observation could not be extended to deny notice to an acquiring authority who is liable to pay compensation. On this basis, the court concluded that the Union of India, represented by East Coast Railways, was a "person interested" because it ultimately had to pay the compensation amount.

Given that the reference Court did not give notice to the acquiring authority (Respondent No. 7) before enhancing compensation, the court found the impugned order unsustainable. The court therefore set aside the order and remanded the matter to the reference Court for fresh determination after giving adequate opportunity to the acquiring authority to participate and to adduce evidence, and to the Claimants to produce rebuttal evidence.

Holding and Implications

Core Holding: The appeal is allowed; the impugned order of the reference Court enhancing compensation is set aside and the matter is remitted for fresh determination after giving notice and opportunity to the Union of India (East Coast Railways) to participate.

Direct consequences and practical directions given by the court:

The matter is remitted to the Learned Civil Judge (Senior Division), Bhawanipatna (M.J.C. No. 141 of 1997) for fresh determination of quantum of compensation after giving adequate opportunity to Respondent No. 7 to participate and adduce evidence and to Respondent Nos. 1–6 to adduce rebuttal evidence.
Because of the age of the matter, the court directed that all parties appear before the Learned Civil Judge on November 6, 2006, to take necessary instructions.
The Learned Civil Judge was directed to dispose of the Misc. Case expeditiously, preferably within three months of receipt of this order and the LCR.
In the peculiar circumstances of the case, the parties were directed to bear their own costs.

The opinion does not purport to lay down a new general precedent beyond applying and following existing Supreme Court authority; the decision's immediate effect is the remand for fresh adjudication with mandatory notice to the acquiring authority.

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Special L.A Officer, Lanjigarh Road-Junagarh Rail Link Project, Bhawanipatna, Kalahandi v. Prabhabati Majhi And Others

A.K Parichha, J.:— This is an appeal under Section 54 of the Land Acquisition Act (in short, ‘the Act’) filed by the Special Land Acquisition Officer, Lanjigarh Road-Junagarh Rail link project, Bhawanipatna challenging the award dated 1.9.2001 passed by the Learned Civil Judge (Senior Division), Bhawanipatna in M.J.C No. 141 of 1997.

2. On the basis of notification under Section 4 Sub-Section (1) of the Act, 1.39 decimals of land in Holding No. 14 of Village Sinangbhata in the district of Kalahandi belonging to the Claimant Respondent Nos. 1 to 6 (in short “Claimants”) was acquired for construction of Lanjigarh Road, Junagarh Rail Link Project, as per Government Notification No. 36652 dated 17.4.1995 and declaration No. 40-41 dated 16.09.1995 After conducting necessary inquiry the Appellant awarded a compensation of Rs. 21,023.10 paise in favour of the Claimants who received that amount under protest claiming higher compensation. On the prayer of the Claimants the matter was referred to Learned Civil Judge (Senior Division), Bhawanipatna under Section 18 of the Act for adjudication of the dispute regarding quantum of compensation. Learned Civil Judge (Senior Division), Bhawanipatna (hereafter called “reference Court”) received evidence of the parties and by resorting to captilization method fixed the market rate of the “Atta” variety of acquired land at Rs. 48,000/- per acre and “Bahai” variety of land at Rs. 52,000/- per acre. Challenging that enhancement in the rate of compensation, the present appeal has been preferred. Mr. Sangram Das, Learned Counsel appearing for the Appellant alleges that non-issuance of notice to the Union of India represented by General Manager, East Coast Railways in the reference proceeding was violative of Section 18(1) and Section 20 of the Act because the compensation to the Claimants is payable by the railways and notice to such interested person is mandatory as per the above noted provisions of law. He further contended that when contemporaneous sale statistics indicating market value of the land of the area were available, fixation of market value of the acquired land under capitalization process was not proper. Mr. Das also challenged the legality of the award of compound interest in a land acquisition proceeding. He cited several decisions of the Apex Court in support of the submissions.

3. Mr. A. Pal, Learned Counsel appearing for the Union of India, which was permitted to be impleaded as Respondent No. 7, supported the contention of Learned Counsel for the Appellant and specifically argued that the compensation amount being payable by the railways, it was a necessary party and so it should have been noticed and given opportunity of participating in the proceeding. According to him any award passed behind the back of the Respondent No. 7 becomes unsustainable and non est in the eye of law as such act offends the principles of Natural justice and the dictum of the Apex Court in the case of NTPC Ltd. v. State of Bihar, reported in (2004) 12 SCC 96.

4. Mr. Milan Kanungo, Learned Counsel appearing on behalf of Mr. D. Mund, Learned Counsel for Respondent Nos. 1 to 6 supporting the impugned order argued that Union of India represented through the railways is not a person interested within the meaning of Section 18(1) of the Act, as ‘State’ is not a person and Section 18(1) refers to persons who are Claimants and in whose favour compensation has already been awarded by the Land Acquisition Collector. He argued that as per the provisions of Section 20(c) of the Act in case of reference relating to quantum of compensation or area of the acquired land no other person except the Collector of the District as defined in Section 3(c) of the Act is to be noticed. According to him, for the above said reasons the reference Court was not obliged to issue notice to Respondent No. 7 inviting it to participate in the reference proceeding. Mr. Kanungo further argued that when contemporaneous Sale statistics of land situated in the same locality are not available, the Court can adopt capitalization method for determining the market value of the acquired land and thus by adopting the capitalization method the reference Court did not commit any illegality. He also argued that award of compound interest is permissible under Section 28 of the Act and the interest awarded in the impugned order being within the ambit of Section 28 of the Act no legal fault can be attributed.

5. The main grievance advanced by the Learned Counsels for the Appellant and Respondent No. 7 is that Union of India represented through the General Manager, East Coast Railways was not given an opportunity to contest the claim of the Claimants relating to the valuation of the land in the reference proceeding. According to them, Respondent No. 7, being the authority paying the compensation amount to the Claimants for the acquired land, is a person interested and was entitled to notice in the referred proceeding, so that it could have produced evidence and contested the claim of the Claimants. To support this contention Learned Counsel relied on the cases of Himalaya Tiles and Marble (P) Ltd. v. Francis Victor Coutinho, (1980) 3 SCC 223 : AIR 1980 SC 1118; U.P Awas Evam Vikas Parishad v. Gyan Devi, (1995) 2 SCC 326 : AIR 1995 SC 724; Agra Development Authority v. Special Land Acquisition Officer, (2001) 2 SCC 646 : AIR 2001 SC 992; Abdul Rasak v. Kerala Water Authority, (2002) 3 SCC 228 : AIR 2002 SC 817; NTPC Ltd. v. State of Bihar, (2004) 12 SCC 96; Union of India v. Sher Singh, (1993) 1 SCC 608.

6. Learned Counsel for the Respondents Nos. 1 to 6 counter argued that the ratios laid down in the Cases cited by the Appellant and Respondent No. 7 are not applicable to the present case as those decisions were rendered in connection with Section 50 of the Act which relates to companies and local bodies. According to him, the Union of India not being a Company or local body, the ratio of the cited cases would not apply to the present case. It is further argued that the provision of Section 20(c) of the Act not having been taken into consideration in any of he above noted Cases, the observations made in those Cases would not be binding on this Court in the present appeal. Reliance was placed in the Case of Sarada Devi v. State of Bihar, (2003) 3 SCC 128 and Ahad Brothers v. State of M.P, (2005) 1 SCC 545.

7. To resolve the controversy raised by the Learned Counsel for the parties, it is necessary to recount Section 18(1) of the Act.

“18(1). Reference to Court-(1) Any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by the Collector for the determination of the Court whether his objection be to the measurement of the land, the amount of the compensation, the persons to whom it is payable, or the apportionment of the compensation among the persons interested.” Although a plain reading of Section 18(1) indicates that the person interested for the purpose of this Section means, a person, who has been awarded compensation for the acquired land, but has not accepted the award, the meaning of “person interested” was expanded by the apex Court in the Case of Himalaya Tiles and Marble (P) Ltd. v. Francis Victor Coutinho (supra) by making the following observation.

“xxx The definition of “person interested” given in Section 18 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 of the land or in the quantum of compensation. Thus, the definition of “person interested” in Section 18 must be 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 compensation. This view accords with the principle of equity, justice, good conscience.”

8. The ratio of Himalaya Tiles and Marble (P) Ltd. v. Francis Victor Coutinho (supra) was concurred by majority of Judges of the Constitution Bench in the Case of U.P Awas Evam Vikas Parishad v. Gyan Devi (supra). In that case it was said that Section 50(2) of the Act confers on all local authorities for whom land is acquired a right to appear in the acquisition proceedings before the Collector and the reference Court and adduce evidence for the purpose of determining the amount of compensation as such local authorities are to pay the compensation for the acquired land and are necessary and proper parties, who deserve to defend any enhancement of the compensation. Reiterating the principle laid down in the above noted case, a Division Bench of the Apex Court in the case of Agra Development Authority v. Special Land Acquisition Officer (supra), remitted the matter back to the Special Land Acquisition Officer for refixing the amount of compensation after giving notice to the Agra Development Authority on the ground that although the land was acquired for Agra Development Authority, the said authority was not given any opportunity to adduce evidence in the matter of fixation of rate of compensation. The same principle was again adopted by the Apex Court in the case of Abdul Rasak v. Kerala Water Authority (Supra) and it was held that Kerala Water Authority being liable to pay compensation, was entitled to notice and right of participation in the proceeding before the reference Court.

9. It was argued on behalf of the Respondents that the above noted cases relate to Section 50 of the Act, which specifically provides for the local authority or the company concerned to appear and adduce evidence for the purpose of determining the amount of compensation and as such, the ratios/principles laid down in the above noted cases are not applicable to matters where the land is acquired for the State. In this regard, reliance is placed on Section 20(c) of the Act, which says that if objection is in regard to the area of the land or the amount of compensation, then the reference Court shall notice only the Collector of the district. According to the Learned Counsel for the Respondents, if objection is regarding the area of the land or the amount of compensation, then the reference Court is under obligation to issue notice only to the applicant and the Collector and none else. A close reading of Section 20 would show that the submission offered from the side of the Respondents is not tenable. Section 20(b) says that all persons interested except such of them who have consented without protest to receive payment are to be noticed and Sub-Section (c) says that besides the persons interested as noted in Sub-Section (b), the Collector shall also be noticed if the objection relates to the area of the land or the amount of compensation. The word occurring between Subsections (b) and (c) is ‘and’ and not ‘or’. Moreover contention of the Respondents has also been answered by the Apex Court in the case of NTPC Ltd. v. State of Bihar (supra), where despite the proceeding not under Section 50 of the Act and NTPC for whom land had been acquired being a component of the Union of India, the Apex Court observed that notice has to be issued by the reference Court to the NTPC and opportunity has to be given to the NTPC to participate in the reference proceeding. So, the matter has been virtually clarified by the Apex Court in the case of NTPC Ltd. v. State of Bihar (supra) that even if the land is acquired for a body owned by Union of India, the authority for whom the land has been acquired shall be considered as a “person interested” under Section 18 of the Act and must be noticed to participate in the reference proceeding. Following this view of the apex Court, this Court also in the case of Special Land Acquisition Collector, Dhenkanal v. Narahari Sahu (First Appeal No. 18 of 1994 disposed of on 25.9.2000) set aside the orders of the reference Court and remanded the matter for fresh disposal after giving due notice to the N.T.P.C

10. Relying on the case of Sarada Devi v. State of Bihar (supra) and Ahad Brothers v. State of M.P (supra), Mr. Kanungo argued that the State cannot be said to be “person interested” to agitate any claim under Sections 18 or 30 of the Act. In the case of Ahad Brothers v. State of M.P (supra) no doubt the Apex Court observed that the State could not be said to be a person interested to agitate any claim under Section 18 or Section 30, but that observation was made in a situation where there was inter se dispute between the Claimants for apportionment of the compensation amount. Such observation of the Apex Court, which was given in connection with Section 30 of the Act cannot be applied to the present case.

11. In view of the above noted factual and legal position, the inescapable conclusion is that the Union of India represented through the East Coast Railways is a person interested because ultimately it has to pay the compensation amount for the land acquired. Since the reference Court did not notice such interested person before passing the impugned order in the reference proceeding, the order enhancing the quantum of compensation becomes unsustainable. The impugned order, is accordingly set aside and the matter is remitted back to the reference Court for fresh determination of the quantum of compensation after giving adequate opportunity to the Respondent No. 7 to participate in the proceeding and adduce evidence in support of its plea and also giving opportunity to the Respondent Nos. 1 to 6 to adduce rebuttal evidence. Since the matter is old, the Appellant and all the Respondents are directed to appear before the Learned Civil Judge (Senior Division), Bhawanipatna in MJC No. 141 of 1997 on November 6, 2006 to take necessary instruction. The Learned Civil Judge is directed to dispose of the Misc. Case as expeditiously as possible preferably within a period of three months of receipt of this order and the LCR. The appeal is allowed. In the peculiar circumstances, the parties are to bear their own cost.

12. Appeal allowed.

Special L.A Officer,... v. Prabhabati Majhi And...