Land Acquisition - Allottee Co. Can Neither Be 'Person Interested' Nor Entitled For Hearing Before Determination Of Compensation - SC

The Supreme Court Bench of Justice MR Shah and Justice B.V. Nagarathna while placing reliance on a catena of judgments has held that an allottee company can neither be 'person interested' nor entitled to hearing before determination of compensation.

The Court observed -

"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."

The Court noted that the said ration was binding upon the High Court.

In this case, the lands belonging to the original claimants/original landowners/appellants- Gregory Patrao and Ors. were acquired under Section 28(4) of the Karnataka Industrial Areas Development Act, 1966. The lands were sought to be acquired by the state government for the development of the Karnataka Industrial Areas Development Board (KIADB) for the establishment of industrial areas.

After the lands were acquired, Mangalore Refinery and Petrochemicals Limited (MRPL) was allotted the lands acquired as per the agreements between the KIADB and the MRPL.

MRPL appealed before the High Court against the decision of the reference court enhancing the amount of compensation. It was the case of MRPL that as it was 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".

The High Court placed reliance upon the decision of the Supreme Court in the case- UP Awas Evam Vikas Parishad Vs. Gyan Devi (Dead) by LRs. and Ors., and 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".

The High Court remanded the matter back to Reference Court for a fresh decision.

Aggrieved by the High Court's Order, original claimants/original landowners moved Supreme Court.

Advocate Shailesh Madiyal appearing on behalf of the appellants/original claimants contended that the High Court erred in quashing and setting aside the judgment passed by the Reference Court by holding that MRPL can be said to be a "person interested" and therefore, MRPL ought to have been heard by the Reference Court before enhancing the amount of compensation.

He submitted that in terms of Section 32(2) of the KIAD Act, 1966, the KIADB was empowered to deal with the land so transferred in accordance with the regulations made and the directions given by the State Government on this behalf.

He argued that the company to which land is allotted under the KIAD Act, 1966 cannot be said to be the beneficiary of the acquisition.

He further contended that reliance placed by the High Court on the judgments of the Supreme Court in the case-UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. Vs. Francis Victor Countinho (Dead) By LRs, were not applicable at all with respect to an acquisition under the KIAD Act, 1966.

He further submitted that the High Court has committed a grave error in not following a binding precedent of the Supreme Court rendered in the case of Peerappa Hanmantha Harijan Vs. State of Karnataka, (2015).

On the other hand Advocate Shalini Sati Prasad, appearing on behalf of the MRPL, vehemently submitted that the MRPL can be said to be a "person interested" for the purpose of Sections 18 and 20 of the Land Acquisition Act and Section 29(4) of the KIAD Act, 1966 and therefore was a proper party in the proceedings before the Reference Court.

She argued that MRPL cannot be made liable to bear the financial burden of the enhanced amount of compensation without being given a fair chance of contesting the enhancement of the amount of compensation.

The Court observed that an allottee company cannot be said to be a beneficiary or a "person interested" entitled for hearing before the determination of compensation.

"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 Court observed.

The Court further held "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."

The Court noted that the High Court committed a grave error in passing the impugned judgment and order by relying upon the judgments of the Supreme Court.

The Court observed that the judgments relied upon by MRPL and by the High Court in the case-UP Awas Evam Vikas Parishad (supra) and Himalayan Tiles and Marble (P) Ltd. (supra) were made with respect to the acquisition under the Land Acquisition Act, 1894.

The Court as held by it in the subsequent decision in the case of Peerappa Hanmantha Harijan (supra), observed that 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.

"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.", the Court held while quashing the order of the High Court.

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