Supreme Court of India
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. & ORS.versusSTATE OF KARNATAKA&ANR.
- Citation
- 2015 INSC 536
- Decided
- 30 July 2015
- Disposal
- Disposed off
- Bench
- V GOPALA GOWDA
Holding
The lessee company is only a tenant and not a beneficiary or "person interested" under the KIAD Act or Land Acquisition Act, so its claim to participate in the compensation proceedings and to file a writ petition is untenable.
Summary
The State of Karnataka acquired agricultural land for industrial development under the Karnataka Industrial Area Development Act, 1966, and transferred it to the Karnataka Industrial Area Development Board (KIADB), which later allotted the land to Ultra Tech Cement Ltd on a lease basis. The landowners sought compensation, which was enhanced by the Reference Court, but the company filed a writ petition claiming to be a "person interested" and demanding participation in the compensation proceedings. The Karnataka High Court allowed the company to be heard and remanded the matter, prompting the Supreme Court to examine whether the lessee company qualifies as a beneficiary or interested person under the KIAD Act and the Land Acquisition Act. The Court held that the company is merely a lessee, not a beneficiary, and therefore has no locus standi to intervene or appeal under Section 54 of the Land Acquisition Act, rendering its writ petition untenable. Consequently, the Court set aside the High Court's remand order, enhanced the compensation to Rs 1,92,000 per acre with statutory solatium and interest, awarded costs to the landowners, and dismissed the appeals of KIADB and the company.
Issues considered
- The company is a "person interested" or beneficiary under the KIAD Act and Land Acquisition Act for the purpose of participating in compensation proceedings.
- Whether the writ petition filed by the lessee company is maintainable in law.
- Whether the High Court's order remanding the case to the Reference Court to hear the company is valid.
- The appropriate method for determining market value and the quantum of compensation for the acquired land.
- Whether the company can invoke Section 54 of the Land Acquisition Act to appeal the award.
Legislation cited
- Karnataka Industrial Area Development Act, 1966s. 2(11), s. 28(1), s. 28(4), s. 28(5), s. 28(6), s. 28(7), s. 29, s. 30, s. 32(2), s. 40, s. 41
- Karnataka Industrial Area Development Board Regulations, 1969s. 10, s. 4, s. 5, s. 7, s. 9
- Land Acquisition Act, 1894s. 11, s. 12(2), s. 18, s. 20(b), s. 23(1-A), s. 23(2), s. 27, s. 28, s. 30, s. 3(b), s. 3(f)(viii), s. 50(1), s. 50(2), s. 54, s. 9
- Land Acquisition (Amendment) Act, 1984
Subjects
land acquisitioncompensationmarket valueperson interestedKIAD ActKIADBleaseindustrial developmentwrit petitionreference courtSection 54Section 28
Judgment
(2015] 9 S.C.R. 498
A PEERAPPA HANMANTHA HARIJAN (D) BY LRS. & ORS.
v.
STATE OF KARNATAKA&ANR.
(Civil Appeal No. 5804 of2015 etc.)
B
JULY30, 2015
[V. GOPALA GOWDA AND C. NAGAPPAN, JJ.]
Land Acquisition - Acquisition of land by State - Under
c s.28(1) and (4) of Karnataka Industrial Area Development
Act- For the purpose of industrial development by Industrial
Area Development Board - Land was further allotted by the
Board to the appellant-Company on lease - Compensation
awarded to the land owners and further enhanced by the
D Reference Court - Writ petition by the allottee-Company
challenging the correctness of the award, taking the plea that
they being beneficiary of the acquisition, were the 'person
interested' and hence were the necessary party to the
reference proceedings - High Court setting aside the order
E of Reference Court, directed it to afford opportunity of hearing
to the Company- On appeal, held: In view of the clauses of
the lease agreement along with the provision in s.32(2) of
the Kamataka Industrial Area Development Act (KIAD Act)
and Regulations of Kamataka Industrial Area Development
F Board Regulations, it is clear that the Company is only the
lessee by way of allotment - Thus, the Company is neither
the beneficiary nor the 'person interested' in terms of s. 2(ii)
of the KIAD Act or uls.3(b)of Land Acquisition Act- Therefore,
G the claim of the Company to participate in the proceedings
for determination of the market value of the acquired land
and award of compensation is untenable in law- In view of
the provision in s. 54 of Land Acquisition Act also the
Company does not have right to file the writ petition - The
.H 498
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE499
OF KARNATAKA
writ petition filed by the Company was not maintainable in A
law - Kamataka Industrial Area Development Act, 1966 -
ss.2(11), 28 and 32(2) - Karnataka Industrial Area
Development Board Regulations, 1969 - Reg.4, 7, 10(b),
(c) and (d) - Land Acquisition Act, 1894 - ss.3(b), 9, 20(b)
and54. a
Land Acquisition Act, 1894- s.3(f)(viii) (as amended by
the Kamataka Legislature by Act No.17 of61) and s.50(1) &
(2) - Applicability of - To the acquisition of land under the
provisions of Kamataka Industrial Area Development Act, C
1966 - Held: s.3(f)(viii) is not applicable to the acquisition
under 1966 Act - Kamataka Industrial Area Development
Act, 1966.
Land Acquisition - Compensation - Determination of - o
Acquisition of non-agricultural land - Under s. 28 of
Kamataka Industrial Area Development Act, 1966 - For the
purpose of industrial development- Land further teased out
to a Company for the purpose of extracting sand-stone from
the land which was used as raw material for manufacture of E
cement and for providing infrastructure of the Company -
Competent authority awarded compensation fixing the
market value of the acquired land at Rs. 17001- per acre
a/ongwith other statutory benefits - Reference Court
enhanc;ed the compensation to Rs. 1, 37, 0001- per acre after F
redetermining the market value of the land - The High Court
upheld the determination by Reference Court - On appeal,
held: In the facts and circumstances of the case, it would be
just and proper to fix the compensation at Rs. 1, 92, 0001- per
acre with all statutory benefits from the date of taking G
possession of the land till the date of payment of
compensation - The land-owners are also entitled to costs
throughout as provided uls. 27 of Land Acquisition Act- Land
Acquisition Act, 1894 - ss. 27, 23(2), 23 (1-A) and 28 - H
500 SUPREME COURT REPORTS (2015) 9 S.C.R.
A Kamataka Industrial Area Development Act, 1966 - s. 28.
Land Acquisition - Land acquired - Market value of -
Determination - Criteria for - Held: The criteria for
determining the market value of the acquired land has to be
B by taking into consideration that the land has been put to
uses to which it is reasonably capable of being put to in the
future.
Words & Phrases :
c 'Person interested' - Meaning of, in the context of Land
Acquisition Act and Kamataka Industrial Area Development
Act, 1966.
Disposing of the appeals, the Court
D
HELD: 1.1 The provisions of the Karnataka Industrial
Area Development Act, 1966 (KIAD Act) and Karnataka
Industrial Area Development Board Regulations, 1969
(KIADB Regulations) make it abundantly clear that the
E acquisition of the agricultural land in the notified
Industrial Area vide notifications issued u/s. 28(1) and
(4) of the KIAD Act, empowers the State Government to
acquire the land for the purpose of industrial
development by the Karnataka Industrial Area
F Development Board (KIADB). 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
G 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 the KIADB
for its development and disposal of the same in
H accordance with Regulation 10(a) of the KIADB
PEERAPPAHANMANTHAHARIJAN (0) BYLRS. v. STATE501
OF KARNATAKA
Regulations. [Paras 41 and 49] [528-B, C; 533-B-C] A
1.2 Sections 29 and 30 of the KIAD Act r/w. ss. 11, 18
and 30 of the Land Acquisition Act, 1894 (L.A. Act) would
clearly mandate that both, the State Government and the
KIADB are liable, jointly or severally, to pay the B
compensation to the owners or interested persons of
the acquired land. [Para 42] [528-D-E]
1.3 The KIADB Regulations make it abundantly clear
that the land acquired shall be disposed off by the KIADB c
by inviting applications from the eligible applicants,
notifying the availability of land, prescribing the manner
of such disposal and fixing the last date for submitting
applications and giving such particulars as it may
consider absolutely necessary by publishing it in the o
newspapers having wide circulation in and outside the
State of Karnataka. [Para 43] [528-G-H]
1.4 On a careful examination of the clauses of the
lease agreement executed between the parties in respect E
of the land of the appellants, it becomes manifestly clear
that the said agreement is executed by the KIADB in
favour of the Company after allotment of land was made
in favour of the Company as provided under Regulation
10(a) and (c) of the KIADB Regulations respectively by F
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, would clearly state that the premium G
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 land owners over
and above the awards made by the acquiring authority
by virtue of the award passed by the competent court of H
502 SUPREME COURT REPORTS [2015] 9 S.C.R.
A law or in view of the provisions of the L.A. Act in respect
of demised premises or any part thereof, the same shall
be met by the lessee. Clause 5(b) also makes similar
provision to that effect between the lessor and the
lessee. [Para 47] [532-A-E]
B
1.5 Thus, in view of the clauses of the lease
agreement along with the provision in Section 32(2) of
the KIAD Act and Regulation Nos. 4, 7, 10 (b), (c) and (d)
of the KIADB Regulations, it is clear that the Company is
C only the lessee by way of allotment of the land, as the
same has been allotted by the KIADB in its favour and
has executed the lease deed in its favour in respect of
the allotted land. [Para 48] [532-F-G]
o 1.6 The Company is neither a beneficiary nor an
interested person as claimed by them in terms of Section
2(11) of the KIADActor 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
E 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. Sections 3(b), 9 and 20(b) of the L.A. Act, which deal
with service of notice to all persons interested, do not .
F support the case of either the KIADB or the Company.
[Paras 50 and 56] [533-H; 534-A-B; 536-C-E]
1. 7 It cannot be said that in view of Section 3(f)(viii)
of the L.A. Act, as amended by the Karnataka legislature
G by Act No.17 of 61, the Company is an 'interested person'
in the proceedings of determination of the market value
of the acquired land and passing of an award. Section
· 3(f)(viii) includes the provision of land for acquisition in
favour of a company - a) where the land is needed for
·H the construction of some work, and such work is likely
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE503
OF KARNATAKA
to prove substantially useful to the public; or b) where A
the land is needed by a building co-operative society or
corporation for the construction of houses. The said
provision has no application to the fact situation. In the
present case, the acquisition of land involved in these
proceedings as the acquisition of land is under the B
provisions of KIAD Act and not under L.A. Act. The
definition of "public purpose" under the L.A. Act cannot
be imported to the . acquisition of land by the State
Government for the industrial development under the
provision of KIAD Act as the -words 'Development', C
'Industrial Area' and 'Industrial Estate' have been clearly
defined under sub-Sections(5), (6) and (7) of Section 2
of the KIAD Act. [Paras 53, 54 and 55) [534-H; 535-A-F]
1.8 Sections 50(1) and (2) of the L.A. Act, also are not D
applicable to the present case for the reason that Section
50 of the L.A. 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 L.A. Act and relevant Rules framed for that E
purpose. [Para 57) [536-F, G]
1.9 Thus, the provisions of the L.A. Act, KIAD Act
and the KIADB Regulations would clearly go to show
that the Company is neither a beneficiary, nor an F
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 G
the State Government and executed the lease agreement.
Therefore, the claim made by the Company that it has
got every right to participate in the proceedings for
determination and re-determination of the market value H
of the acquired land and award of compensation passed
504 SUPREME COURT REPORTS [2015] 9 S.C.R.
A by the Land Acquisition Officer or Deputy Commissioner
or before the Reference Court or the Appellate Court is
wholly untenable in law. [Paras 51 and 57] [534-C-E; 536-
H; 537-A]
B 1.10 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
C rejected by the High Court instead it has allowed and
remanded the case to the Reference Court for re-
consideration of the claims after affording opportunity
to the Company which order suffers from error in law
and and in contravention of the provisions of the KIAD
D Act, L.A. Act, the KIADB Regulations and the lease
agreement, which has been executed by the KIADB in
favour of the Company. Therefore the same is liable to
be set aside. [Paras 58 and 59] [538-G-H; 539-A, C, D]
E 1.11 The High Court has also committed an error in
law in not appreciating Section 54 of the L.A. Act, which
provision provides the rightto appeal to the land owners,
or State Government and beneficiaries of the acquired
land, but not to the Company which is the lessee. When
F the company does not have the right to file an appeal
against the award it also has no right to file a writ petitjon.
[Para 60] [539-E-F]
U.P Awas Evam Vikas Parishad v. Gyan Devi 1994 (4)
G Suppl. SCR 646: (1995) 2 SCC 326; Himalayan Tiles and
Marble Pvt. Ltd. v. Francis Victor 1980 (3) SCR 235: (1980)
3 SCC 223; P Narayanappa and Anr v. State of Karnataka &
Ors. 2006 (4) Suppl. SCR 716: (2006) 7 sec 578 -
distinguished.
H
2. The KIADB has fi!.;d the belated appeal after the
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE505
OF KARNATAKA
High Court dispose<:f of the appeal filed by the appellants. A
The High Court has rightly dismissed the belated appeal
filed by the KIADB. [Para 60) [539-F-G]
3.1 Market value of the land acquired has to be.
determined notwithstanding the fact that the date of the 8
notification issued under Section 28(1) of the KIAD Act
has not been taken into consideration, but the criteria
for determination of market value of the land put to uses
to which it is reasonably capable of being put to, in the
future, shall be considered by the Court. The market C
value of the land covered in another case(MFA No. 3796
of 2005 and Cross Objection No. 213 of 2005) has to be
applied to the land of the appellants in the present case
for the reason that in both the notifications as the
required land has been put to use for the industrial D
development by the KIADB, and the lands have been
allotted to the Company for the purpose of extracting
sand stone from the lands which is used as raw
material for manufacture of cement and for providing
infrastructure of the Company. [Para 74) [547-F-G; 549- E
F-G]
3.2 As per the survey conducted by the State
Government, it is an undisputed fact that mineral is
available in the land and the Company is extracting the F
same to be used as raw material for the manufacture of
cement in its factory. Therefore, though the land in the
present case is a short distance away from the lands
covered in MFA No. 3796 of 2005 and Cross Objection
No. 213 of 2005, both have been acquired for the purpose G
of industrial development and sought to be used for the
same purpose by the Company. Thus, the land of the
appellants is acquired for the non-agricultural
potentiality and the same is used for commercial
purpose. The deductions towards de-escalation at 5% H
per year for 7 years and 10% towards waiting and other
506 SUPREME COURT REPORTS [2015] 9 S.C.R.
A incidental charges would justify the re-determination of
the market value of the land of the appellants. [Para 73]
[546-B-F]
3.3 (n view of the factthat the land in question has
B got non-agricultural potentiality, a 25% deduction
towards development charges and 5% deduction
towards waiting period for every year and expenses for
conversion by the Reference Court is definitely on the
higher side. Hence, the same is required to be rejected,
C as it is erroneous and suffers from error in law. [Para 73]
[545-F-G]
3.4 Having regard to the facts and circumstances
of the present case, considering the fact that acquisition
D of the land was made in the year 1981, it would be just
and proper to fix the compensation at Rs.1,92,000/-
per acre, with all statutory benefits such as solatium at
30% as provided under Section 23(2) and statutorily
payable interest under Sections 23(1-A) and 28 of the
E L.A. Act, from the date of taking possession of the land
. till the date of payment. The appellants are also entitled
to costs throughout as provided u/s. 27 of the L.A. Act.
[Para 74] [549-H; 550-A-B]
F Raja Vyricherla Narayana Gajapatiraju v. Revenue
Divisional Officer, Vizagapatnam AIR 1939 Privy Council
98 - relied on.
Chandrashekar and Ors. v. L.and Acquisition Officer and
Anr. 2011 (15) SCR 414: (2012) 1SCC390-distinguished.
G
Olga Tellis & Ors. v. Bombay Municipal Corporation &
Ors.1985 (2) Suppl. SCR 51: (1985f 3 SCC 545;
Ramchandra Dahdu Sonavane (dead) by LRs and Ors. v.
Vithu Hira Mahar (dead) by LRs. and Ors. 2009 (15) SCR
H 222: (2009) 10 SCC 273; Hari Das v. Usha Rani Banik 2006
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE 507
OF KARNATAKA
(3) SCR 87: (2006) 4 SCC 78; Ba/larpur Industries Ltd & A
KIADB v. Civil Judge (ILR) 1987 KAR 3445; DOA v. Bhola
Nath Sharma (2011) 2 SCC 54- referred to.
Case Law Reference
B
1985 (2) Suppl. SCR 51 referred to. para 5
2009 (15) SCR 222 referred to. para 18
2006 (3) SCR 87 referred to. para 18
c
(ILR) 1987 KAR 3445 referred to. para 18
(2011) 2 sec 54 referred to. para 23
ILR 1987 Kar 3445 referred to. Para 24
D
1994 (4) Suppl. SCR 646 distinguished. para 58
1980 (3) SCR 235 distinguished. para 58
2006 (4) Suppl. SCR 716 distinguished. para 58
E
2011 (15) SCR 414 distinguished. para 65
AIR 1939 Privy Council 98 relied on. para 74
CIVIL APPELl:ATE JURISDICTION: Civil Appeal No.
F
5804 of 2015.
From the Judgment and Order dated 05.03.2013 of the
Karnataka Circuit Bench at Gulbarga in MFA No. 32157 of
2012 (LAC).
G
WITH
Civil Appeal Nos. 5806-5807 and 5808-5810 of 2015.
Ranjit Kumar, S. G., Kiran Suri, Mohan Parasaran,
Abhishek Manu Singhvi, Basava Prabhu Patil, Sharanbos;:ippa H
508 SUPREME COURT REPORTS [2015] 9 S.C.R.
A V. Nisty, Ameet Kumar Deshpandey, S. J. Amith, Dr. Vipin
Gupta, Nishanth Patil, Anup Jain, Ashwin Kumar, Abhijat P.
Medh, V. N. Raghupathy, Parikshit P.Angadi, Vanita Bhargava,
Arvind Kumar Ray, Abhishar Bairagi (For Khaitan & Co.) for
the appearing parties.
B
The Judgment of the Court was delivered by
V. GOPALA GOWDA, J. 1. Leave granted in all the special
leave petitions.
c 2. Challenge in the appeal arising out of SLP No. 19819
of 2013 is arising out of the impugned judgment and order
dated 05.03.2013 passed in Misc. FirstAppeal No.32157 of
2012 (LAC) by the High Court of Karnataka, Circuit Bench at
D Gulbarga (filed against the judgment and order dated
29.09.2012 of Principal Civil Judge (Sr. Divn.), Gulbarga,
Reference Court in LAC No. 943 of 1997) whereby, the High
Court upheld the quantum of compensation awarded by the
Principal Civil Judge (Sr. Divn.) and declined to interfere with
E the same and dismissed the appeal filed by the appellants.
3. Challenge in the appeals arising out of the SLP
Nos.31624-31625 of 2014 is preferred against the judgment
and order dated 22.09.2014 passed in Review Petition No.
F 2537 of2013 in MFA No. 32157 of2012 (filed by the KIADB)
and Writ Petition No. 100860 of 2013 (filed by the Company)
of the Karnataka High Court, Gulbarga Bench whereby the High
Court has remanded the matter to the Reference Court for
reconsideration of the case.
G 4. Challenge in the appeals arising out of SLP Nos.3482-
3484 of 2015, filed by the Karnat2ka Industrial Area
Development Board is arising out of the judgment and order
dated 22.09.2014 passed by the High Court of Karnataka,
H Gulbarga bench, in Review Petition No. 2537 of 2013 in MFA
No.-32157 of 2012, Misc. First Appeal No. 30702 of 2013
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE 509
OF KARNATAKA[V. GOPALAGOWDA, J.]
and writ petition No. 100860 of 2013, whereunder the High A
Court was pleased to dispose of the above mentioned appeal
and petitions by remitting the matter to the Reference Court to
give an opportunity of hearing to the beneficiary and incidentally
to the petitioner therein (the allottee Company). The said
appeals were filed by the KIADB as it was aggrieved of certain B
observations made in the judgment, while remanding the case,
which affects the merits of the case.
5. This is the most pathetic case of a land owner, and af-
ter his death his legal heirs, who have been made to litigate C
the case for more than three decades to get just and reason-
able compensation, after having lost their land in the acquisi-
tion proceedings at the instance of the Karnataka Industrial
Areas Development Board (in short 'KIADB') which was their
only source of income and livelihood, which right to livelihood D
is a fundamental right guaranteed under Article 21 of the Con-
stitution of India as held by this Court Constitution Bench in the
case of Olga Tellis & Ors. v. Bombay Municipal Corpora-
tion & Ors. 1 The matter has been pending before the courts
.for more than three decades. The appellant-landowners have E
been crying for justice for enforcement of their legitimate right
of getting just and reasonable compensation under the Land
Acquisition Act, 1894 (for short "the L.A. Act"). The land in the
instant case has been acquired by the State Government of F
Karnataka in exercise of its power of eminent domain under
Section 28 of the Karnataka lndustrialAreas DevelopmentAct,
1966 (in short 'the KIAD Act') at the instance of KIADB. The
said acquisition of land had been done by the State Govern-
ment for the purpose of establishment of industries in the land G
vide notifications under Section 28(1) and 28(4) of the KIAD
Act. By an earlier notification issued by the State Government
under Section 3 of the KIAD Act, the land involved in these
1
(1985) 3 sec 545
H
510 SUPREME COURT REPORTS [2015] 9 S.C.R.
A proceedings had also been included in the an Industrial Area.
The KIAD Act provides for securing the establishment of in-
dustrial area in the State of Karnataka with a view to promote
the establishment and orderly development of industries therein
after formation of Industrial Estate in the acquired land.
B
The relevant facts which are required for the purpose of
considering the rival legal contentions urged on behalf of the
parties in these appeals are stated in brief hereunder.
c 6, The appellant (s'ince deceased), represented by his
legal representatives was the absolute owner of the land bear-
ing survey No. 306/9/1, measuring 5 acres 20 guntas at
Malkhed village in Sedam Taluka, Gulbarga District,
Karnataka. It is claimed that on 12.2.1981, the predecessor
o of M/s Rajashree Cement Works, a unit of M/s Ultra Tech Ce-
ment Ltd. (originally a unit of India Rayon & Industries ltd.)
made a proposal to the State of Karnataka-respondent to set
up a cement manufacturing plant and applied for acquisition
and allotment of 1187 acres and 5 guntas of land towards set-
E ting up of a factory, residential colony etc at Malkhed, Gulbarga.
This fact is not supported by the original land acquisition record
of the government produced before this Court by the State
government's counsel.
F 7. The state government issued preliminary notification
dated 18.06.1981 under Section 28(1) of the KIAD Act for
acquisition of land measuring 1187 .15 acres in favour of the
KIADB which included the land of the appellants. The
notification also stated that the acquisition of land was for the
G purpose of establishment of industries. The State Government
on 24.11.1981 issued declaration as contemplated under
. section 28(4) of the KIAD Act. The state government on
03.12.1981 issued notices upon the interested parties under
Section 28(6) of the KIADAct.
. H
PEE RAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE511
OF KARNATAKA [V. GOPALA GOWDA, J.]
8. The Special Deputy Commissioner, Gulbarga, vide A
award dated 28.05.1982 fixed the market value of the acquired
land at Rs.1700/- per acre along with other statutory payments
such as 15% solatium and statutory interest payable on the
compensation amount
B
9. On 07.06.1990, the state government took possession
of the acquired land from the landowner and transferred the
same to the KIADB which in turn, allottea the same in favour of
the Company as per the provisions of the KIAD Act and relevant
provisions of the Karnataka Industrial Areas Development C
Board Regulations, 1969 (hereinafter the "KIADB
Regulations"). The appellants received the compensation
under protest and made an application on 20.06.1982 to the
Special Deputy Commissioner to make reference of the award
to the Reference Court for enhancement of compensation D
under Section 18( 1) of the L.A. Act. The reference application
filed by the appellants before the Deputy Commissioner under
Section 18(3) of the Act dated 12.4.1991 was numbered as
Misc. Petition No.101 of 1991. The Special Deputy
Commissioner, vide supplementary awards dated 30.12.1992 E
and 02.01.1993 granted solatium at the rate of 30% in view of
the provisions under the Land Acquisition (Amendment) Act
(No.68 of 1984). The reference papers were sent by the Land
Acquisition Officer to PrinCipal Civil Judge (Sr. Divn.), F
Gulbarga, was registered as .LAC No. 943 of 1997. The
learned judge refused to condone the delay of the application
filed by the appellants under Section 18(3) of the L.A. Act on
the ground that the date of first application had been
interpolated. A Civil Revision Petition was filed by the G
appellants before the High Court against the order of the
Principal Civil Judge, which was dismissed by the learned
single judge of the Karnataka High Court vide order dated
21.08.2003.
H
10. Aggrieved by the same, the appellants filed an appeal
512 SUPREME COURT REPORTS [2015] 9 S.C.R.
A before this Court being Civil Appeal No.3244 of 2005. This
Court set aside the order of the Reference Court and
remanded the case to it with a direction to re-decide the
application of the appellants on merits and to re-determine
the market value of the acquired land and award compensation
B accordingly. This Court further held that the Reference Court
erred in holding that the petition of the appellants was barred
by limitation as the award could be said to have been passed
only on 07.06.1990, the date on which the state government
took possession of the acquired land and compensation was
C offered to the appellants. It was further held by this Court that
the Deputy Commissioner did not have the jurisdiction to pass
the award in the first place on 28.05.1982, as all the acquisition
proceedings with respect to the notifications of the state
government dated 24.11.1981 had been stayed by the learned
0
single Judge of the Karnataka High Court vide an interim order
dated 05.03.1982 in Writ Petition Nos. 9356 to 9361 of 1982,
filed by the appellants and other land owners who were affected
by the acquisition of land and the interim order was operating
E on the date of passing of the award referred to supra, which
fact was neither noticed by the Reference Court nor by the
High Court.
11. Accordingly, the amended claim petition was filed by
F the appellant (since deceased) before the Reference Court
after remand order passed by this Court seeking compensation
at the rate of Rs.2,50,000/- per acre before the Principal Civil
Judge, Gulbarga, who relied upon the judgment and order of
the Karnataka High Court dated 27.02.2005 in MFA No. 3796
G of2005 and Cross Objection No. 213 of2005, which had relied
upon the sale deeds of the sites carved out in Sy. No,389 at
the rate of Rs.7.5/-persq. feet. The reference of the Sy. No.414/
2 of the same village according to which the sale deed had
been executed at the rate of Rs.13/- per sq. feet in the year
H 1985-1986.was also relied on, on the bm;is of which the learned
PEERAPPAHANMANTHAHARIJAN (D) BY LRS. v. STATE513
OF KARNATAKA[V. GOPALAGOWDA, J.]
Principal Civil Judge allowed the claim petition of the appellants A
in part and enhanced the compensation awarded initially from
Rs.1,700/- per acre of land to Rs.1,37,000/- per acre of land
after re-determination of the market value of the land and
awarded the other statutory benefits payable to the owners
under the provisions of the L.A. Act vide order dated B
29.09.2012 passed in LAC No. 943of1997.
12. Aggrieved by the said judgment and order of Reference
Court passed in LAC No. 943of1997, the appellants preferred
MFA No. 32157 of 2012 before ttie Karnataka High Court, C
Gulbarga Bench. The State Government, through KIADB
belatedly preferred MFA 30702 of 2013 before the High Court
after the dismissal of the above Miscellaneous appeal of the
appellants seeking for enhancement. The learned single Judge
of the High Court held that the Reference Court while fixing the D
market value of the acquired land had taken into consideration
the fact that it has got the Non-Agricultural (NA) potential and
had also deducted charges towards the waiting period as well
as development charges at the rate of 30%. and had re-
determined the market value of the acquired land at E
Rs.1,37,000/- per acre. Therefore, t~e learned single Judge
of the High Court has held that the same did not call for its
interference and accordingly dismissed the appeal of the
appellants vide judgment and order dated 05.03.2013:
F
13. Aggrieved by the said judgment and order, the
appellants-land owners filed the present appeal arising out of
special leave petition No. 19819 of 2013 before this Court
seeking for enhancement of compensation after re-
determination of the market value of the land on the basis of G
the award passed by the High Court in MFA No. 3796 of 2005
and Cross Objection No. 213 of 2005 on the ground that on an
examination of Ext. P.5, which is the village map of the land, it
becomes abundantly clear that the land covered in the award H
passed in the Cross Objection NO. 213 of 2005 is comparable
514 SUPREMECOURT REPORTS [2015] 9 S.C.R.
A to the land of the appellants which were acquired by the State
Government for industrial development at the instance of
KIADB.
14. While the matter was yetto be heard by this Court, the
B respondent-State through KIADB filed Review Petition
No.2537 of 2013 before the High Court in MFA No.32157 of
2012. It had also filed belated MFA No. 30702 of 2013 against
the judgment and Award passed by the Reference Court in
LAC No. 943of1997 M/s Ultra Tech Cement Ltd. through its
C Unit M/s. Rajashree Cement Ltd. filed Writ Petition No. 100860
of 2013 before the High Court on 19.03.2013 questioning the
correctness of the award of compensation passed in favour of
the land owners on the ground that they are the necessary party
to the reference proceedings before the Reference Court and
D they were not notified in the said proceedings. The learned
single Judge set aside the judgment and award order of the
Reference Court by allowing the above writ petition and
directed it to afford an opportunity of hearing to the alleged
.beneficiary-Company to participate in the proceedings and to
E decide the matter on merits in accordance with law after
affording opportunity to the Company.
15. Aggrieved by the supplementary awards passed by
the Special Deputy Commissioner dated 30.12.1992 and
F 02.01.1993, the Company filed Writ Petition No. 8707of1993
before the High Court of Karnataka challenging the legality ,
and validity of the same. The learned single judge held that
after the amendment in the L.A. Act, the land owners were
entitled for 30% of solatium and additional benefits under
G Sections 23(1-A), 23(2) and 28 for the reason that the
acquisition proceedings in the case were pending as on
30. 04 .1982 in respect of the lands as no award had been
passed by the Special Deputy Commissioner on or before
H 30.04.1982. The learned single judge further held that the
Special Deputy Commissioner was justified in passing a
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE515
OF KARNATAKA[V. GOPALAGOWDA, J.]
supplementary award, awarding benefits under the above said A
provisions of the L.A. Act. Hence, it was concluded by the
learned single judge that the Company cannot have any
grievance as against the supplementary awards and
dismissed the Writ Petition.
B
16. Being aggrieved, the Company filed Writ Appeal No.
4321 of 1998 before the Division Bench of the Karnataka High
Court for setting aside the order of dismissal dated 17.06.1998
passed in the writ petition by the learned single judge. The
learned Division Bench allowed the appeal of the Company C
and set aside the supplementary awards dated 30.12.1992
and 02.01.1993 of the Special Deputy Commissioner by
judgment and order dated 29.05.2000 holding that since the
appellants had entered into an agreement with the State
Government and KIADB as well as the Company as regards D
the compensation, the initial award had attained finality and
thus, the Special Deputy Commissioner did not have the
jurisdiction to pass the supplementary awards. The Division
Bench further held that the said land had been allotted by KIADB
in favour of the Company and that the Special Deputy E
Commissioner had no power to pass supplementary awards
when no reference was pending. However, the rejection order
passed in the reference case by the Reference Court affirmed
by the High Court in the above Civil Revision Petition was set F
aside by this Court in the Civil Appeal No.3244 of 2005 vide
its judgment and order dated 27.04.2011. Thereafter, the
Reference Court re-determined the market value of the
acquired land of the appellants-landowners as directed by this
Court in which proceedings the state government through G
KIADB was a party.
17. The learned senior counsel on behalf of the appellants
Ms. Kiran Suri has contended that the Company need not be
party to the proceedings as it is not the beneficiary of the H
acquired land in terms of the provisions of the KIAD Act and
516 SUPREME COURT REPORTS [2015) 9 S.C.R.
A L.A. Act to be party in the proceedings for determination of the
market value of the acquired land before the Reference Court.
18. The learned senior counsel has further contended that
the State Government through KIADB should not have been
s allowed to file either MFA or writ petition after the same matter
had already been decided by the High Court at the instance of
the appellants. In support of her above legal submission she
has placed reliance upon the decision of this Court in the case
of Ramchandra Dahdu Sonavane (dead) by LRs and Ors.
C v. Vithu Hira Mahar (dead) by LRs. And Ors2 on the question
of res judicata wherein this Court has observed that once the
matter which was the subject matter of /is stood determined
by a competent court, no party thereafter can be permitted to
reopen it in a subsequent litigation. Such rule was brought into
D the statute book with a view to bring such litigation to an end
whose ultimate purpose is to harass the other party. It is further
contended by the learned senior counsel that the matter is
concluded by the.High Court in the MFA filed by the appellants
and as such the question of reviewing the judgment and order
E passed by it does not arise unless there is an error apparent
on the face of the record. She has placed reliance on the case
of Hari Das v. Usha Rani Banik3 . Reliance has also been
placed on the decision in the case of Ballarpur Industries
F Ltd & KIADB v. Civil Judge4 in support of the contention that
the lessee/ allottee need not be a party to the proceedings
either before the Land Acquisition Collector or before the
Reference Court as provided under Section 20 (c) of the L.A.
Act, 1894.
G 19. Referring to the Review Petition and the appeal filed
by the State of Karnataka, represented by KIADB before the
2
(2009) 10 sec 273
3
(2006) 4 sec 78
H • (ILR) 1987 KAR 3445
PEERAPPAHANMANTHAHARIJAN (D) BY LRS. v. STATE517
OF KARNATAKA[V. GOPALAGOWDA, J.]
High Court, it is further contended by the learned senior counsel A
on behalf of the appellants that at the relevant point of time
when the matter was decided in MFA of the appellanUowners
by the High Court at the instance of the land owners, no appeal
was filed by the KIADB questioning the correctness of the re-
determination of the market value of the acquired land and the B
award passed by the Reference Court, which has been
confirmed by the High Court holding that the market value of
the land of the owners at Rs.1,37,000 per acre. The same could
not have been interfered with by the High Court in the writ
petition as the Company is not entitled to challenge the award C
by filing writ petition. The belated MFA filed by the KIADB was
rightly dismissed by the High Court. It was further contended
by the learned senior counsel that neither the review petition
filed by the KIADB nor the Writ Petition filed by the Company .
0
should have been entertained by the High Court as the same
was not maintainable for more than one reason. Firstly, the
Company had no locus standito challenge the award passed
by the Reference Court in the Writ Petition, when the remedy
of appeal was provided to the aggrieved party viz. to the State E
Government and the KIADB. Secondly, the High Court had
rightly rejected the review petition and belated Misc. First
Appeal filed by the KIADB after disposal of the MFA filed by
the landowners seeking for enhancement of compensation.
F
20. It is further contended by the learned senior counsel
on behalf of the appellants that the High Court has committe.d
a serious error in law by remanding the matter back to the
Reference Court to give an opportunity to the Company without
recording the specific finding as to whether the Company is a G
beneficiary of the acquired land either"under the provisions of
KIAD Act or the L.A. Act. It is further submitted by the learned
senior counsel on behalf of the appellants that this specific
issue was raised before the High Court, the same was not
answered and therefore, there is no question of remanding H
518 SUPREME COURT REPORTS [2015] 9 S.C.R.
A the matter back to the Reference Court without recording the
finding with valid and cogent reasons.
21. It is further contended by the learned senior counsel
appearing on behalf of appellants that the High Court has
B committed a serious error in law in remanding of matter to the
Reference Court after about 33 years of initiation of acquisition
proceedings in a casual manner without examining the relevant
provisions of the KIAD Act, L.A. Act, Regulations and the law
laid down by this Court in this regard. It is impermissible in law
C for the High Court to entertain a non maintainable Writ Petition
filed by the Company which is an allottee, and it has no right
under the provisions of the L.A. Act to get impleaded as a
party either in the reference proceedings or avail appeal
remedy provided under Section 54 of the L.A. Act against the
D award passed by the Reference Court as it has no right under
the provisions of the L.A. Act to question the correctness of
the award with regard to the re-determination of quantum of
compensation as it is governed by the terms and conditions
of the order of allotment and lease deed executed by it when
E the law on this aspect is clear with regard to the right of the
Company as it is an allottee and therefore, the Writ Petition
filed by it questioning the correctness of award passed by the
Reference Court is not maintainable in law and the order of
F remand passed by the High Court in exercise of its
extraordinary, discretionary and supervisory jurisdiction under
_Articles 226 and 227 of the Constitution of India, is void ab
initio in law as the Writ Petitiol} proceedings before the High
Court are not at all maintainable in law. Further, the order of
G remand passed by the High Court without even deciding the
legal right of the Company which was claimed by it stating that
it is a beneficiary even though it is admittedly a lessee of the
acquired land, which was allotted in its favour by the KIADB
on the market value of the acquired land as per the provisions
H of the KIADActand Regulations. The letter dated 07.04.1982
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE519
OF KARNATAKA[V. GOPALAGOWDA, J.]
relied upon by the state government clearly shows that the A
KIADB had intimated the Indian Rayon Corporation Ltd., that
the land to an approximate extent of 971.07 acres has been
decided to be allotted in favour of the Company on lease cum
sale basis for a period of 21 years. One of the conditions at
No.14 of the above said letter shows that the KIADB, on being B
satisfied that the land is not being put to use for the purpose
for which it was asked for will be free to re-enter upon ancj
take possession of tl;le whole or that part of the land which has
not been put to proper use by the Company. It is further
submitted by the learned senior counsel that the agreement C
dated 30.03.2005 entered between KIADB and the Company
relied on by the Company shows that the Company had applied
for grant of lease of 27 acres 21 guntas of land including that
of the landowners and the lease of the same is made by KIADB
0
in favour of the Company for a period of 21 years which is
independent from the acquisition proceedings initiated by the
State Government at the instance of the KIADB in the case on
hand. It is submitted that all the documents produced by the
Company, which are relied upon would show that either the E
acquired land of the owners is for industrial development and
that the Company is the lessee of the lands acquired in favour
of KIADB. The material documents produced in these
proceedings either by the state government or KIADB to
assume the fact that the acquisition of the land is made at the F
behest of and at the expense of the Company is not factually
correct. This fact is evident from the acquisition notifications
issued by the state government under the provisions of the
KIAD Act. On the contrary, as per the acquisition notifications
it is acquired in favour of the KIADB for the formation of an G
Industrial Estate in the Industrial Area. Therefore, the Company
cannot assert that it is either a beneficiary of the acquisition of
land or a person interested for the purposes of KIAD Act or
L.A. Act to give an opportunity for it to participate in the
proceedings to determine the market value of the acquired H
520 SUPREME COURT REPORTS [2015] 9 S.C.R.
A land either before the Special Deputy Commissioner or
Reference Court to pass an award, awarding just and
reasonable compensation in favour of the appellants in respect
of their acquired land.
B 22. It is further contended by the learned senior counsel
on behalf of the appellants that as per Section 29 of the KIAD
Act, where any land is acquired by the State Government, it
· shall pay for such acquisition cost of the acquired land in
accordance with the provisions of the Act. The notifications
C issued by the state government under Sections 28(1) & 28(4)
of the KIAD Act would clearly show that the land is acquired by
the state government not in favour of any particular Company
but for KIADB for establishing industries in the industrial area
as notified by the state government under Section 3 of the KIAD
D Act. Therefore, there is no specific role of the Company to
take part in the proceedings either before the Land Acquisition
Officer or the Reference Court for the purpose of determining
just and reasonable compensation of the land payable to the
land owners.
E
23. Further, the learned senior counsel has vehemently
contended that the High Court committed an error in law by
applying the law laid down by this Court in the case of DDA v.
Bhola Nath Sharma5, to the facts of the case on hand. In that
F case, the acquisition of the land covered was atthe instance
of the ODA, and the ODA was asked to pay the compensation
amount determined in respect of the acquisition of the land in
favour of the respondent-landowners therein. In the facts of the
present case, the acquisition of land was not at the instance of
G the Company but at the instance of the KIADB which fact is
evident from the acquisition notifications issued by the· state
government for the purpose of formation of industrial estate to
H • (2011) 2 sec 54
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE521
OF KARNATAKA[V. GOPALAGOWDA, J.]
establish industries in the industrial area already declared by A
the KIADB.
24. It is further contended by the learned senior counsel
on behalf of the appellant-owners that the High Court has erred
in not following the law laid down by the Division Bench of the B
High Court in the case of Ballarpur Industries v. Court of
Civil Judge 6, wherein it was held by the court as under:
"28. Provisions of Ss. 29 and 30 provide for the
determination. of compensation in respect of the land c
acquired. Payment of compensation is in accordance with
the provisions of the Act. See. 29(2) contemplate
determination of compensation by agreement between
the State Government and the person to be compensated.
Before such an agreement is arrived at between the D
Government and the person to be compensated, the Act
does not require the KIADB to be a party to the
negotiations or to the agreement. No provision of the Act
contemplates a tripartite discussion or agreement in this
regard. SimilarlVi no other private person like the Company E
has a say in this matter.
29. It is only when such an agreement cannot be reached,
State Government has to refer the case to the 'Deputy
Commissioner' for determination of the amount of com- F
pensation. On receipt of reference, the Dy. Commissioner
has to issue notice under S. 29(4) on the owner or occu-
pier of the land and on all persons known or believed to
be interested herein to appear before him and state their
respective interests in the said land. Here, again, no pro- G
vision to notify the KIADB or the Company is contem-
plated."
(emphasis laid by this Court)
6 ILR 1987 Kar 3445
H
522 SUPREME COURT REPORTS [2015] 9 S.C.R.
A 25. Further, it is contended by the learned senior counsel
on behalf of the appellants that this Court issued notice and
permitted Dasti in SLP No.19819 of 2013 arising out of the
judgment and order passed by the High Court in MFA 32157
of 2012 vide order dated 11.07.2013. This Court has also
B additionally mentioned in the said order that the notice shall
indicate that this Court is likely to grant leave, set aside the
impugned order and enhance the compensation awarded by
the Reference Court.
C 26. On the other hand, Mr. Ranjit Kumar, learned Solicitor
General and Mr. Mohan Parasaran, the learned senior coun-
sel on behalf of the respondents-KIADB contended that the
High Court having set aside the award passed by the Refer"
ence Court on the ground that the Company has claimed to be
D the beneficiary of the acquired land is neither a party in the
reference proceedings nor heard and therefore, the Reference
Court must decide the matter afresh as directed by the High
Court in the order of remand passed by it with regard to the
compensation of the acquired land to be awarded after hear-
E ing all the interested parties including the Company. Further, it
is urged that the High Court has erred in holding that compen-
sation awarded by the Reference Court in favour of the land
owners is just and proper.
F 27. It is further contended by ~he learned senior counsel
on behalf of the respondents that the Reference Court has not
taken into account and considered the sales statistics of the
similar lands during the relevant period to that of acquired land
which were produced at the time of re-determination of the
G market value of the land. The High Court has erred in not no-
ticing the fact that the amount of compensation awarded by
the Reference Court is 1000 times more than the value indi-
cated in the sales statistics. It is further contended by them
H that the High Court erred in not considering the application
filed under Order 41 Rule 27 of the Code of Civil Procedure,
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE523
OF KARNATAKA[V. GOPALAGOWDA, J.]
1908 for production of the certified copies of the sale deeds A
of the land in the vicinity of the acquired land during the rel-
evant period and to show that the compensation re-determined
by the Reference Court in respect of the land of the appellants
is exorbitant and unconscionably on the higher side.
8
28. On the basis of the rival legal contentions, the follow-
ing points would arise for our consideration:
1) Whet_her the allottee Company (M/s Ultra Tech Cement
Ltd.) is either a beneficiary or interested person entitled C
for hearing before determination of the market value to
award just and reasonable compensation in respect of
the acquired land of the appellants either before the
Deputy Commissioner or Reference Court?
D
2) Whether the Writ Petition filed by the allottee Company
before the High Court is maintainable in law?
3) Whether the order of remand allowing the Writ Petition
of the allottee Company to the Reference Court is legal
and valid? E
4) Whether the owners of the land are entitled for the
enhanced compensation?
5) If so, what award? F
29. The point Nos.1, 2 and 3 are answered together as
they are inter-related by assigning the following reasons:
It is an undisputed fact that the acquisition of land of the
appellants was acquired along with the lands of the other own- G
ers at the instance of the KIADB by the state government in
exercise of its power under Section 28 of the KIAD Act in favour
of the KIADB for the purpose of formation of industrial estate
in the Industrial Area to establish industries at Sedam Taluk, H
Gulbarga District.
524 SUPREME COURT REPORTS [2015] 9 S.C.R.
A 30. Section 28 (1) of the KIAD Act, envisages that if, at
any time, the State Government is of the opinion that any land
is required for the purpose of development by KIADB or for
any other purpose in furtherance of the objects of this Act, it
may by notification, give notice of its intention to acquire such
B land. The Land Acquisition Officer after considering the cause,
if any, shown by the owner of the land and by any other person
interested therein and after giving such owner and person an
opportunity of being heard, may pass such orders as it may
deem fit for acquiring the land for establishment of industries.
C When the state government is satisfied that any land should
be acquired for the purpose specified in the notification is-
sued under Section 28(1) of the KIAD Act, and after such or-
ders passed by the State government as per Section 28(3) of
the KIAD Act are passed, the state government shall issue the
0
declaration notification in the official Gazette to that effect as
per Section 28(4) of the KIAD Act declaring the land mentioned
in the notification under section 28 (1) of the Act to be acquired
in favour of the KIADB for the purpose of industrial develop-
E mentbyit.
31. As can be seen from the facts of the case on hand, in
the notification under Section 28(1) of the KIADAct, the pur-
pose specified by the State Government for acquisition of the
F land of the appellants and other land owners is for establish-
ment of industries by the KIADB. Further, it should also be
remembered that in terms of the Act, the ownership of the land
after acquisition by publication of the notification under Sec-
tion 28(4) of the KIAD Act shall absolutely vest in the State
G Government under Section 28(5) of the Act and the same will
be free from all encumbrances.
32. The State Government thereafter may by issuing no-
tice in writing, order any person who may be in possession of
H the land to surrender or deliver possession of the land thereof
in its favour or any person duly authorised by it within 30 days
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE525
OF KARNATAKA[V. GOPALAGOWDA, J.]
of the service of the notice. As per Section 28(7) of the KIAD A
Act, if any person refuses or fails to comply with the order made
under sub-Section (5), then the state government or any of-
ficer authorised by it in this behalf may take possession of the
land from either owner or interested person. Section 28(8) of
the KIAD Act, in express terms states that where the land has B
been acquired by the state government for the KIADB, the state
government, after it has taken possession of the land from ei-
ther owner or interested person may transfer the land to the
KIADB for the purpose for which the land has been acquired
bylt. c
33. Further, the provision under Section 29 of the KIAD
Act speaks of the compensation payable in relation to the ac-
quired land to either owners or interested persons of such land
and that the State Government shall pay such compensation D
in respect of the acquired land in accordance with the provi-
sions of the KIAD Act. Section 30 of the KIAD Act states that
the provisions of the L.A. Act shall mutatis mutandis apply in
respect of holding enquiry and to pass an award of compen-
sation by the Deputy Commissioner by determining the mar- E
ket value of the land. The case may be referred to the Refer-
ence Court for the apportionment of the compensation pay-
able to such person or persons if there is any dispute regard-
ing claims and the payment of compensation in respect of the F
acquired land under Chapter VII of the KIAD Act. In view of the
above statutory provisions of the KIAD Act, the provisions of
Sections 11, 18 and 30 of the L.A. Act are applicable for the
purpose of determination of just and reasonable compensa-
tion of the acquired land payable to the land owners either by G
the Deputy Commissioner or Reference Court.
34. Further, it is necessary for us to examine Section 32(2)
of the KIAD Act, which provides that any land transferred in
favour of the KIADB by the State Government, developed by H
or under the control and supervision of the KIADB shall be
526 SUPREME COURT REPORTS [2015] 9 S.C.R.
A dealt with by it in accordance with the Regulations framed by it
after approval by the state government and as per directions
given by the state government in that behalf. Section 40 of the
KIAD Act confers power upon the state government to frame
Rules after previous publication by way of notification.
B
35. Further, Section 41 of the KIAD Act confers power
upon the KIADB by notification to make regulations consis-
tent with the Act and the rules made thereunder to carry outthe
purposes of the Act with the previous approval of the State
C Government. Section 41 (2) (b) of the KIAD Act is most rel-
evant for the purpose of this case, which states that the KIADB
can frame regulations laying down the terms and conditions
under which it may dispose of the land acquired in its favour
by the State Government under the provisions of Section 28(1)
D and (4) of the KIADAct.
36. Further, it is also important in this case to refer to the
relevant provisions under the KIADB Regulations. Regulation
4 under Chapter 11 of the KIADB Regulations prescribes the
E form of application to be filed and submitted by the applicant
for the allotment of land or shed in an Industrial Area. It also
provides that the application shall be made to the Executive
Member of the KIADB in the prescribed form (Form-I} obtained
from it in duplicate along with an earnest money. This proviso
F was inserted by notification dated 13.09.2002, w.e.f.
03.10.2002.
37. Regulation 5 of the KIADB Regulations pertains to
the manner of disposal of land/shed in each Industrial Area or
G part thereof, whether by lease, lease-cum-sale, sale, auction-
sale, auction-lease, assignment or otherwise. It also provides
that in each case, the KIADB will also have the discretion to
decide the detailed conditions in such agreement which shall
be binding on the applicant.
H
PEERAPPAHANMANTHAHARIJAN (D) BY LRS. v. STATE527
OF KARNATAKA[V. GOPALAGOWDA, J.]
38. Regulation 7 of the KIADB Regulations provides for A
the KIADB to notify the availability of land, the manner of dis-
posal, the last date for submission of applications and such
other particulars as the KIADB may consider necessary in each
case, by giving wide publicity through newspapers having cir-
. culation in and outside the state of Karnataka, and invite ap- B
plications from industrialists or persons intending to start in-
dustries in the Industrial Area.
39. Regulation 9 of the KIADB Regulations provides for
the KIADB to register all the applications which are complete C
in order in the Register maintained in Form 2 and grant re"
ceipts for all sums received as application fee, initial deposit
or other deposits.
40. Regulation 10 ofthe KIADB Regulations provides that D
the KIADB after being satisfied that the person, firm or Com-
pany who makes an application is likely to start production
within a reasonable period, and is not one which is declared
obnoxious under Regulation 14, may make an allotment in his/
their favour thereafter. Clause (b) of the Regulation 10 of the E
KIADB Regulations empowers the KIADB to constitute sub-
committees for considering the applications for allotment of
plots and also delegate its power to the Executive Member of
the Board; if necessary for the purpose of allotment of indus-
trial planV shed. Clause (c) of the Regulation 10 of the KIADB F
Regulations empowers Executive Member to notify such ap-
plicant to whom an allotment is made and to execute the agree-
ment in Form 3 or 4 or 5 as the case may be with such modi-
fication as may be required in each case on such date, time
and place. Clause (d) of Regulation 1Oof the KIADB Regula- G
tions provides that failure to execute the agreement or to pay
the sums demanded by the Executive Member as per notice
given under Regulation 10 (c) will render the allottee to have
deemed to have declined the allotment; Clause (e) of Regula- H
tion 10 grants the discretion to the KIADB or the Executive
528 SUPREME COURT REPORTS [2015] 9 S.C.R.
A Member with the authority of the KIADB to grant extension of
time for complying with the terms of the notice issued under
Regulation 10 (c) with or without payment of interest at nine
per cent on the sums payable to the KIADB in terms of the
said notice for the extended period.
B
41. The aforesaid provisions of the KIAD Act and KIADB
Regulations make it abundantly clear that the acquisition of
the agricultural land in the notified Industrial Area vide notifica-
tions issued under Section 28(1) and (4) of the KIAD Act,
C empowers the State Government to acquire the land for the
purpose of industrial development by the KIADB after the ac-.
quired land possession is transferred in its favour by the State
Government.
D 42. Sections 29 and 30 of the KIAD Act read with Sec-
tions 11, 18 and 30 of the L.A. Act would clearly mandate that
both the state government and the KIADB are liable, jointly or
severally, to pay the compensation to the owners or interested
persons of the acquired land. The market value of the acquired
E land is required t~ be determined by the Reference Court by
applying the provisions of Section 18 of the L.A. Act, after pass-
ing an award as provided under Section 11 and notifying the
same to the landowners or interested persons under Section
12(2) of the L.A. Act if the owners are not satisfied with either
F the compensation awarded by the Deputy Commissioner or
with regard to the area of acquisition of land.
43. A careful reading of the regulations referred to supra
make it abundantly clear that the land acquired shall be dis-
G posed off by the KIADB by inviting applications from the eli-
gible applicants, notifying the availability of land, prescribing
the manner of such disposal and fixing the last date for sub-
mitting applications and giving such particulars as it may con-
sider absolutely necessary by publishing it in the newspapers
H having wide circulation in and outside the state of Karnataka.
PEERAPPA HANMANTHA HAR IJAN (D) BY LRS. STATE 529 v.
OF KARNATAKA[V. GOPALAGOWDA, J.]
44. In the appeals arising out of SLP (C) Nos. 31624- A
31625 of 2014, it has been specifically mentioned in Annex-
ure P-1, that the lands specified in the schedule mentioned in
the notification are required for the development by the KIADB
for the establishment of the industries therein. In exercise of
powers conferred by sub-Section (1) of Section 28 of the KIAD B
Act, the state government had given notice to the landowners
of its intention to acquire the said land in favour of industrial
development by the KIADB.
45. Clause 1 ofAnnexure P-5, which isa copy of the agree- C
ment made between KIADB and M/S Rajshree Cements reads
thus:
"An agreement made at Gulbarga the Second day of April,
2005 between the Karnataka Industrial Area Development o
Board having its office at Kapnoor 1st Stage Industrial
Area Humnabad Road Gulbarga represented by Sr. G.H.
SREEDHARA, Deputy Development Officer hereinafter
called the 'lessor' (which term shall wherever the context
so permits, and include its successors in interest) of the E
one part M/s. Rajashree Cement, Aditya Nagar, Malkhed,
represented) by Sri Sunil Kothari Vice-President (F&C)
hereinafter called the 'lessee' {which term shall wherever
the context so permits, mean and include his/her/its heirs,
executor, administrators, assignee and legal F
representatives) of the other part ....
NOW IT IS HEREBY AGREED BETWEEN THE PARTIES
HERETO as follows:
G
1. In consideration of the sum of Rs. 65,704.00 paid by
the lessee to the lessor as premium and of the rent
hereby reserved and of the covenants and agreements
on the part of the lessee hereinafter contained the les-
sor hereby demise unto the lessee all that piece of land H
530 SUPREME COURT REPORTS [2015] 9 S.C.R.
A known as Sy. Nos. 306. Sy. Nos. 306/9/1. 306/10/J of
Malkhed (J) village Sedam Taluk and Sy. Nos. 323/1.
324/1. 325/1 of Diggaon village ChittapurTaluk District
·Gulbarga containing by admeasurements 27 acres 21
Guntas or thereabouts and more fully described in the
B first schedule hereunder written and delineated on the
plan annexed hereto and thereon surrounded by a red
colour boundary line together with the buildings and erec-
tions now or at any time hereafter standing and being
thereon and together with all rights, easements and
c appurtenances thereto belonging except and reserving
unto the lessor all mines and minerals in and under the
said land, or any, part thereof to hold the land and pre-
mises hereinbefore expressed to be there by demised
(hereinafter referred to as the 'demised premises') unto ·
D
the lessee for the terms of 21 years computed the the
31st day of March, 2005 unless the lease is determined
earlier under clause-4 hereof PAYING therefore yearly,
during the said term unto the lessor at the office of the
E Executive Member or as otherwise required the yearly
rent of R.100/- the said rent to be paid over a period of
21 years without any deductions whatsoever on the 31st
day of March month in each and every year.
Provided always that in case any payment is not made
F
on the date on which day it becomes due amount in
shall be charged interest at 18% per annum or such
rates as may be fixed by the les$or from time to time
the due date to the date of payment."
G (Emphasis laid by this court)
46. The said lease deed is executed between the parties
viz. KIADB and the Company with such terms and conditions
as mentioned under Clauses 5 (a) and (b) which are extracted
H
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE531
OF KARNATAKA[V. GOPALAGOWDA, J.]
hereunder: A
"5(a) The premium indicated in clause I of this agreement
represents the tentative cost of land. In the event of lessor
incurring the payment of amounts to the land owners over
and above the awards made by the acquiring authority by B
virtue of awards passed by the competent court of law or
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 C
signed by the Executive or any other officer authorized by
the lessor. Further, in the event of lessor incurring the
payment amounts to the land owners for the Malkies and
structures existing on the demised premises, the same
shall be met by the lessor within one month from the date D
of receipt of communic;:ation signed by the Executive
Member or any other officer authorised by the lessor.
b) As soon as it may be convenient the lessor will fix the
price of the demised premises at which it will be sold to E
the lessee and communicate it to the lessee and decision
of the lessor in this regard will be final and binding, on, the
lessee. The lessee shall pay the balance of the value of
the property, if any after adjusting the premium and the
total amount of rent paid by the lessee and earnest money F
deposit within one month from the date of receipt of
communication signed by the lessor or any other officer
authorised in this behalf by the lessor. On the other hand,
if any sum is determined as payable by the lessor to the
lessee after the adjustment as aforesaid, such sum shall G
be refunded to the lessee before the date of execution of
the sale deed."
(Emphasis laid by this court)
H
532 SUPREME COURT REPORTS [2015] 9 S.C.R.
A 47. 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 the KIADB in favour of the
Company after allotment of land was made in favour of the
B Company as provided under Regulation 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
C 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 land owners over
and above the awards made by the acquiring authority by
0
virtue of the award passed by the competent court of law or in
view of the provisions of the L.A. 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
E 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.
48. From a careful reading of the aforesaid clauses of the
F lease agreement along with the provision Section 32(2) of the
KIAD Act and Regulation Nos. 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 the KIADB in its favour and has executed the lease
G deed in its favour in respect of the allotted land.
49. In view of the aforesaid documents, namely, the
notifications issued under Section 28(1) and 28(4) of the KIAD
Act by the State Government, it can be safely concluded by us
H that the acquisition of the land involved in these proceedings
is for the purpose of industrial development by the KIADB in
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE533
OF KARNATAKA[V. GOPALAGOWDA, J.]
the Sedam Taluk. Therefore, the beneficiary of the acquired A
land is only the 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 B
government takes possession of the acquired land from the
owners/person/persons who are in possession of the land and
traQsfers the same in favour of the KIADB for its development
and disposal of the same in accordance with Regulation 1O(a)
of the KIADB Regulations, referred to supra. C
50. 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 D
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 E
that in the event ofthe lessor incurring the payment of amounts
to the land owners 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 F
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 authorized by the lessor. In view of the above conditions G
of the lease agreement, neitherthe 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 KIADAct H
534 SUPREME COURT REPORTS (2015] 9 S.C.R.
A or under Section 3 (b) of the L.A. 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
B affecting the land. It is necessary to examine Section 3(b) read
with Section 9 of the L.A. 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.
c
51. A careful reading of the aforesaid provisions of the
L.A. Act, 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
D 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.
E
52. The strong submissions made by learned senior
counsel on behalf of the respondents Dr A.M.Singhvi and Mr.
Basava Prabhu Patil, in interpreting the aforesaid provisions
of Sections 3(b), 9, 11 and 20(b) read with Section 54 of the
F L.A. Act are totally misplaced and misconceived for the reason
that the Company cannot be considered as "person interested"
to claim interest in the compensation to be made to the owners
on account of the acquisition of the land of the appellants/
owners and other landowners.
G
53. Further strong reliance has been placed by the learned
senior counsel on behalf of the Company upon Section 3(f)
(viii) of the L.A. Act, as amended by the Karnataka legislature
by Act No.17 of 61 to show that the Company-is an 'interested
H person' in the proceedings of determination bf the market value
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE535
OF KARNATAKA[V. GOPALAGOWDA, J.]
of the acquired land and passing of an award. Section 3 (f) A
(vii~ includes the provision of land for acquisition in favour of a
company- a) where the land is needed for the construction of
some work, and such work is likely to prove substantially useful
to the public; orb) where the land is needed by a building co-
operative society or corporation for the construction of houses. B
The said contention of the learned senior counsel is wholly
misconceived as the said provision has no application to the
fact situation.
54. The acquisition of land under the provisions of the L.A. C
Act in favour of a Company the mandatory procedure as
provided under part VII of the L.A. 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 KIAD Act and therefore the reliance D
placed upon the provision of Section 3(f)(viii) of the Karnataka
L.A. Amended Act of 17/1961 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.
E
55. The definition of "public purpose" under the L.A. Act
cannot be imported to the acquisition of land by the State
Government for the industrial development under the provision
of KIAD Act as the words 'Development', 'Industrial Area' and
'Industrial Estate' have been clearly defined under sub- F
Sections(5), (6) and (7) of Section 2 of the KIAD Act which
reads thus:-
"(5)Development with its grammatical variations means
the carrying out of levelling, digging, building, engineer- G
ing, quarrying or other operations in, on, over or under
land, or the making of any material change in any building
or land, and includes re-development; and 'to develop'
shall be construed a~cordingly;
H
536 SUPREME COURT REPORTS [2015] 9 S.C.R.
A (6)1ndustrial area means any area declared to be an in-
dustrial area by the State Government by notification which
is to be developed and where industries are to be ac-
commodated; and industrial infrastructure facilities and
amenities are to be provided and includes an industrial
B estate;
(?)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.
c
56. Reliance has also been placed by the learned senior
counsel upon Sections 3(b), 9 and 20(b) of the LA.Act, which
provisions deal with service of notice to all persons interested
in the possession of the acquired land except such (if any) of
o them as have consented without protest to receive payment of
compensation awarded for the purpose of holding an enquiry
by the Special Deputy Commissioner for determination of
compensation of the acquired land. None of the above
provisions of the L.A. Act supports the case of either the KIADB
E or the Company. Therefore, the contention urged on their behalf
that the Company is an interested person in the acquired land
for determination of compensation to be paid to the landowners
for their acquired land is wholly untenable and therefore, the
same cannot be accepted by this Court.
F
57. The reliance placed upon the provisions of Sections
50 (1) and (2) of the L.A. Act, also are not applicable to the
case on hand for the reason that Section 50 of the L.A. Act
applies to the acquisition of land in favour of a Company by
G the State Government by following the mandatory procedure
contemplated under Part VII of the L.A. 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 re-determination of the
H market value of the acquired land and award of compensation
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE537
OF KARNATAKA [V. GOPALA GOWDA, J.]
passed by the Land Acquisition Officer or Deputy A
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.
B
58. 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 C
proceedings before the Reference Court for determination of
compensation before passing the award either by Land
Acquisition Officer or 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 D
the cases of U.PAwas Evam Vikas v. Gyan Devi,(1995) 2
SCC 326, Himalayan Tiles and Marble Pvt Ltd v. Francis
Victor (1980) 3 sec 223, and P Narayanappa and anr v.
State of Karnataka & Ors., (2006) 7 SCC 578 and other
decisions which are not required to be mentioned in this E
judgment as they are all reiteration of the law laid down in the
above cases.
The reliance placed on the various decisions of this Court
by both the learned senior counsel on behalf of the KIADB and F
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 L.A. Act,
either in favour of the Company or Development Authorities, G
whereas in the case on hand, the acquisition proceedings have
been initiated under the KIAD Act for industrial development
by the KIADB. Further the original acquisition record in respect
of the acquired land involved in the proceedings by the learned H
538 SUPREME COURT REPORTS [2015] 9 S.C.R.
A standing counsel on behalf of the State of Karnataka as per
our directions issued vide our orders dated 17.11.2014 and
24.3.2015, 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 the KIADB
B 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
C transferred in favour of the 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 the KIADB under Section 41 (2)
(b) of the KIAD Act. Therefore, the reliance placed upon the
0
judgments of this Court by the learned senior counsel on behalf
of the Company and the KIADB, are wholly inapplicable to the
fact situation and do not support the case of the Company. In
view of the foregoing reasons recorded by us on the basis of
E the acquisition notifications issued by the State Government
under the statutory provisions of the KIAD Act and therefore,
we have to answer the point nos.1, 2 and 3 in favour of the
landowners holding that the Company is neither the beneficiary
nor interested person of the acquired land, hence, it has no
F 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
G 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 re-consideration of the claims
after affording opportunity to the Company which order suffers
H from error in law and therefore the same is liable to be set
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE 539
OF KARNATAKA[V. GOPALAGOWDA, J.)
aside. A
59. Further, the learned Judge of the High Court has
erroneously held that the allottee Company is a beneficiary of
the acquired land of the 9ppellants, which finding of the learned
Judge is not correct both on facts and in law. The findings and B
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 re-determination of compensation for the acquired land is C
wholly impermissible in law and the same are in contravention
of the provisions of the KIAD Act, L.A. Act, the KIADB
Regulations and the lease agreement, which has been
executed by the KIADB in favour of the Company and therefore,
the impugned judgment and order is liable to be set aside by D
allowing the appeals of the owners.
60. Further, the learned single Judge of the High Court
has further committed an error in law in not appreciating
Section 54 of the L.A. Act, which provision provides the right E
to appeal to the land owners, 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. The KIADB has filed the belated appeal after F
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 G
rival legal contentions urged on behalf of the parties. The High
Court has rightly dismissed the belated appeal filed by the
KIADB.
61. Therefore, the appeal filed by KIADB questioning the H
540 SUPREME COURT REPORTS [2015) 9 S.C.R.
A order of remand passed in the Writ Petition and Review
Petition is liable to be set aside.The appeal has been filed by
the KIADB as it is aggrieved of the findings and certain
observation recorded against them by the High Court and it
has got reasonable apprehension that the Reference Court
B may not appreciate the facts and evidence that may be
produced before it. For the reasons stated above, the appeal
filed by the KIADB has no merit and they have become
unnecessary hence, the same are liable to be dismissed.
Accordingly, we dismiss the same.
c
· Answer to Point Nos. 4 & 5 regarding enhancement
of Compensation
62. Since the appeals arising out of S.L.P. Nos. 31624-
D 31625 are allowed and the appeals arising out of S.L.P. Nos.
3482-3484 of 2015 filed by the State of Karnataka through
Special Deputy Commissioner, Gulbarga, wherein it has sought
to set aside certain findings in the impugned judgment and
order dated 02.09.2014 passed in Review Petition No. 2537
E of2013filed in MFA No. 32157 of2012 and Writ Petition No.
100860 of 2013 passed by the learned Judge, are dismissed,
we are required to consider the appeal arising out of SLP (C)
No. 19819 of 2013 filed by the appellants as they are aggrieved
by the inadequate compensation awarded by the Reference
F Court, which has been upheld by the High Court.
63. The Reference Court vide its judgment and order dated
29.09.2012 enhanced the compensation from Rs 1,700/- per
acre to Rs. 1,37,000/- per acre. The Reference Court relied
G on the judgment and order of the Karnataka High Court dated
27.02.2005 in MFA No. 3796 of 2005 and Cross Objection
No. 213 of 2005, which pertains to the same village, where
the lands of the owners were acquired for establishment of
industries under notification in the year 1988. The High Court
H in the said case questioned the correctness of determination_
PEERAPPA HANMANTHA HAR IJAN (D) BY LRS. v. STATE 541
OF KARNATAKA [V. GOPALA GOWDA, J.]
of market value by the Reference Court at Rs. 5.7/- per sq. ft. A
in Cross Objection No. 213 of 2005 filed by the respondent-
landowner in the said appeal. In arriving at the market value of
the land under acquisition, the said compensation was made
on the basis of the average of the va~ious rates covered under
various sale-deeds under different sites, carved out from the B
lands in survey numbers which lands are adjacent to the land
covered in the said MFA and Cross Objection, located at
different places and sold on different dates, which had been
taken at Rs.6.33 per sq.ft. The same had been escalated by
10% on the ground that the date of preliminary notification in C
that case was issued on 03.11.1988. The said sites under the
said sale-deeds referred to above were sold two to three years
earlier. The High Court held that taking the average of the prices
of different sites situated at different places and sold at different
0
points of time is not permissible in law. The High Court took
the value of the plot as would be the most beneficial to the
claimant which was Rs.7.5/- per sq. ft for land carved out of Sy.
No. 389 and at Rs. 13/- per sq. ft for the land carved out of Sy.
No, 414/2. The High Court enhanced the compensation E
accordingly, after deduction of 10% towards escalation
charges. ·
The Reference Court in the present case after taking the
aforesaid criteria of developmental charges, de-escalation F
charges and waiting period charges, awarded the
compensation at Rs 7.5/-persq.ft. in relation to the land of the
appellants in the present case. The compensation was fixed
at Rs.7.5 x 43,560 sq.ft. which came to Rs.3,26,700/- after
giving the necessary deduction towards developmental G
charges was made at the rate of 25% and 5% towards waiting
period and expenses for conversion i.e. 30%, which came to
Rs.98,000/- deducte·d from Rs.3,26,700/-. This was
determined as the market value of the land as on the date of
the preliminary notification dated 03.11.1988 as in the MFA H
542 SUPREME COURT REPORTS [2015] 9 S.C.R.
A No. 3796 of2005 and Cross Objection No. 213 of2005. Since
in the instant case, the notification was issued on 18.06.1981,
de-escalation charges were deducted at the rate of 5% for 8
years, and an award of Rs.1,37,000/- per acre was arrived at
in the present case by the Reference Court as compared to
B Rs.2,50,000/- per acre as demanded by the appellants, which
was upheld by the High Court.
64. The correctness of the same has been challenged by
the learned senior counsel on behalf of the appellants
C contending that the methodology adopted by the High Court in
determining the market value of the land covered in the MFA
3796 of 2005 and Cross Objection No. 213 of 2005 by
deducting charges including developmental charges, waiting
period charges, de-escalation and conversion expenses is
D arbitrary and unreasonable. The same could not have been
adopted by the High Court.
65. Mr. Ranjit Kumar, the learned Solicitor General
appearing on behalf of the respondent State placed reliance
E on the decision of this Court in the case of Chandrashekar'
and Ors. v. Land Acquisition Officer and Another7, and
contends that the deduction to be made from the value of the
acquired land to be kept aside for providing developmental
infrastructures like roads, parks etc and second component
F under the head of "development" should not exceed upper
benchmark of 67%. It was further contended that the
deductions towards the de-escalation and waiting charges can
be made at appropriate rates but all the deductions put
together should not exceed upper benchmark of 75%. In the
G Chandrashekarcase referred to supra, the High Court had
allowed 55% under the heading of development, 10% under
de-escalation and 5% under waiting period which works out
cumulatively to 70%. This Court had held that it did not call for
H 1
(2012i 1 sec 390
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE543 <~
OF KARNATAKA[V. GOPALAGOWDA, J.]
any interference which is well within the upper benchmark of A
75%.
66. It is further contended by the learned Solicitor General
that the lands acquired by way of notification Sy. No. 389 were
acquired in 1988, which could not be compared to the land in s
the instant case, which had been acquired by way of notification
seven years earlier in 1981. It is further contended by him that
the lands covered in this case are situated at 4 kms away from
the land in Sy. No. 414/2, by relying on the village map. Hence,
it is contended by the learned Solicitor General that the same C
could not have been taken by the Reference Court as the
criteria to re-determine the market value of the land of the
appellants in the award passed in respect of the land covered
in the notification of 1988. Therefore, it is submitted that the
enhancement of compensation sought by the appellants is D
without any basis, hence they are not entitled for the same and
prayed for the dismissal of the appeal.
67. It is further contended by the learned senior counsel
on behalf of the KIADB that on the basis of the sale statistics, E
the sale deeds produced in this appeal along with counter
statements after collecting the same from the Sub~Registrar's
office in relation to the lands which are sold nearby to the
acquired land should be applied for the purpose of re-
determination of the market value of the acquired land. It is F
contended that if the said sale-deeds are taken into
consideration, the appellants are not even entitled to the
compensation of Rs.1,37,000/- awarded by the Reference
Court, which award is affirmed in the MFA filed by the appellant
landowners. Therefore, he prayed for dismissal of the appeal G
of the landowners seeking for enhancement.
68. The learned senior counsel Mr. Mohan Parasaran,
appearing on behalf of the respondent KIADB in the connected
appeals arising out of SLP (C) Nos.3482-3484 of 2015 has H
544 SUPREME COURT REPORTS [2015] 9 S.C.R.
A vehemently requested this Court, if this Court is of the view to
re-determine/enhance the compensation, then it may confine
it to the owners of the land involved in this case only for the
reason that the said benefit cannot be extended to other land
owners as a vast extent of land has been acquired by the state
B government in the 1981 notification along with the land of the
owners herein for the purpose of industrial development by
the KIADB and will have serious financial implications on the
part of the allottee if the benefit is extended to all land owners
whose lands were acquired vide 1981 notification.
c
69. This Court at the time of issuing notice in the Civil
Appeal arising out of SLP (c) No. 19819 of 2013 has indicated
to the respondents that the owners are entitled for enhancement
of compensation and directed the Registry of this Court to
D secure the original LAC record from the Reference Court. We
have heard the learned counsel on behalf of the parties at length
and perused the records made available for our perusal.
70. The statutory notifications of acquisition of land would
E clearly go to show that the land of the appellants was acquired
way back in the year 1981 for the purpose of establishment of
industries The land of the appellants has non-agricultural
potentiality, which fact is proved from the notifications published
by the State Government under Sections 28( 1) and (4) of the
F KIAD Act, as the State Governme_nt specifically mentioned
therein that the acquisition of the land of the appellants is for
the industrial development and establishment of industries
which is for non agricultural and commercial purpose.
G 71. Further, the land which has been covered under
notification in 1988 is also adjacent to the residential sites
which were formed. The land owners in that case produced
the sale deeds of the year 1986 and 1988 respectively, which
was 2 years and 2 months earlier respectively to the notification
H issued in the year 1988 and some of which were two to three
PEERAPPAHANMANTHAHARIJAN (D) BYLRS. v. STATE545
OF KARNATAKA[V. GOPALAGOWDA, J.]
years earlier. Taking the said relevant facts into consideration, A
the High Court of Karnataka re-determined the compensation
at Rs. 7.5/- per sq. ft of land bearing Sy. No. 389 covered in
award passed in MFA No. 3796 of 2005 and Cross Objection
No. 213 of 2005 after giving deduction towards the
developmental charges, de-escalation and conversion B
charges. The same method should be applied in the case on
hand.
72. Further, the High Court ought to have taken into
consideration the relevant fact that though, the final notification C
for the land covered in MFA No. 3796 of 2005 and Cross
Objection No. 213 of 2005 was in the year 1988, it was for the
industrial development and the said land was also leased in
favour of the allottee Company by the KIADB to be used for
the industrial development. The land along with the other lands D
covered in 1981 notification was also acquired by the State
Government for the purpose of the industrial development and
allotted to the Company for the development of the industrial
estate. Therefore, apart from the fact that there was a gap of 7
years in which the lands of the appellants were notified for E
acquisition to the land covered in MFA No. 3796 of 2005 and
Cross Objection No. 213 of 2005, it is an admitted fact that
there is similarity in the nature of the land and the purpose for
which they were acquired.
F
73. Keeping in mind that the land in question has got
non-agricultural potentiality, a 25% deduction towards
development charges and 5% deduction towards waiting
period for every year and expenses for conversion by the
Reference Court is definitely on the higher side. Hence, the G
same is required to be rejected, as it is erroneous and suffers
from error in law. Further, the reliance placed by the learned
Solicitor General on Chandrashekars case referred to supra
is misplaced, as the case has no relevance to the facts of the H
546 SUPREME COURT REPORTS [2015] 9 S.C.R.
A case on hand. The total amount of charges deducted in that
case were to the tune of 55%. In the instant case, a 30%
deduction was made towards development and waiting
charges. As per the survey conducted by the state government,
it is an undisputed factthat mineral is available in the land and
B the Company is extracting the same to be used as raw material
for the manufacture of cement in its factory. Therefore, though
the land in the present case is a short distance away from the
lands covered in MFA No. 3796 of 2005 and Cross Objection
C No. 213 of 2005, both have been acquired for the purpose of
industrial development and sought to be used for the same
purpose by the Company. The land of the appellants herein
along with other lands that was acquired vide notification in
1981 have been allotted in favour of the Company for the
purpose of extracting the mineral of limestone which is the raw
0
material used for the purpose of manufacturing the cement
used for the commercial purpose. Therefore, the land of the
appellants is acquired forthe non-agricultural potentiality and
the same is used for commercial purpose. Therefore,
E determining deductions towards de-escalation at 5% per year
for 7 years and 10% towards waiting and other incidental
charges would justify the re-determination of the market value
of the land of the appellants. There is no need to deduct the
developmental charges as has been done by the Reference
F Court and Appellate Court in respect of the land covered under
MFA No. 3796 of 2005 and Cross Objection No. 213 of 2005
upon which strong reliance has been placed by the learned
senior counsel for the appellants, for the reason that there is
no development activiti.es involved in respect of the land
G involved in these appeals, as the same is being used by the
Company for extraction of minerals from the land, which are
used as a raw material for the purpose of manufacturing
cement and also for development of infrastructure of its factory.
Therefore, the enhancement of compensation at Rs.1,92,000/
H - per acre as per the calculation below would be just and
PEERAPPA HANMANTHA HARIJAN (0) BY LRS. v. STATE547
OF KARNATAKA[V. GOPALAGOWDA, J.]
reasonable. A
CALCULATION
i. Persqft = Rs.7.5/-
ii. Peracre=Rs.7.5X43,560squarefeet= B
Rs.3,26,700/- per acre.
iii. Incidental and other charges@ 10%= Rs.32,
6701- c
iv. After the above deduction= Rs.2,94,030/-
v. De-escalation charges= 5% for 7 years (5% x
7x
D
2,94,030/- = Rs.1,02,910/- per acre( rounded off)
vi. Compensation= Rs. 2,94,030/-(-) Rs. 1,02,910/
-- Rs.1,91,120/-·
vii. Final Compensation= Rs.1,92,000/- (rounded E
off)
74. It would be relevant to state here that compensation of
market value has to be determined notwithstanding the fact
that the date of the notification issued under Section 28( 1) of F
the KIAD Act has not been taken into consideration, but the
criteria for determination of market value of the land put to
uses to which it is reasonably capable of being put to in the
·future shall be considered by the Court, as was held by the
Privy Council in the case of Raja Vyricher/a Narayana G
Gajapatiraju v. Revenue Divisional Officer, Vizagapatam8,
wherein the law on the subject has been succinctly I.aid down
as under:
•Al R 1939 Privy Council 98 H
548 SUPREME COURT REPORTS [2015) 9 S.C.R.
A 'The compensation must be determined therefore by
reference to the price which a willing vendor might
reasonably expect to obtain from a willing purchaser. The
disinclination of the vendor to part with his land and the
urgent necessity of the purchaser to buy must alike be
B disregarded. Neither must be considered as acting under
compulsion. This is implied in the common saying that
the value of the land is not to be estimated at its value to
the purchaser. But this does not mean that the fact that
some particular purchaser might desire the land more than
c others is to be disregarded. The wish of a particular
purchaser, though nothis compulsion, may always be
taken into consideration for what it is worth. But the
question of what it may be worth, that is to say, to what
extent it should affect the compensation to be awarded is
D
one that will be dealt with later in this judgment. It may also
be observed in passing that it is often said that it is the
value of the land to the vendor that has to be estimated.
This, however, is not in strictness accurate. The land, for
E instance, may have for the vendor a sentimental value far
in excess of its "market value". But the compensation must
not be increased by reason of any such consideration.
The vendor is to be treated as a vendor willing to sell at
"the market price", to use the words of Section 23 of the
F Indian Act.
It is perhaps desirable in this connection to say something
about this expression "the market price". There is not in
general any market for land in the sense in which one
G speaks of a market for shares or a market for sugar or
any like commodity. The value of any such article at any
particular time can readily be ascertained by the prices
being obtained for similar articles in the market. In the ease
of land, its value in general can also be measured by a
H consideration of the prices that have been obtained in the
PEERAPPA HANMANTHA HARIJAN (D) BY LRS. v. STATE549
OF KARNATAKA[V. GOPALAGOWDA, J.]
past for land of similar quality and in similar positions, and A
this is what must be meant in general by "the market value"
in Section 23. But sometimes ii happens that the land to
be valued possesses some unusual, and it may be, unique
features as regards its position or its potentialities. In such
a case the arbitrator in determining its value will have no B
market value to guide him, and he will have to ascertain
as best he may from the materials before him, what a
willing vendor might reasonably expect to obtain from a
willing purchaser, for the land in that particular positio.n
and with those particular potentialities. For it has been C
established by numerous authorities that the land is not to
be valued merely by reference to the use to which it is
being put at the time at which its value has to be
determined [that time under the Indian Act being the date
0
of the notification under Section 4 (1 )], but also by reference
to the uses to which it is reasonably capable of being put
in the future."
(Emphasis laid by this Court)
E
The above position of law laid down by the Privy Council
has been reiterated by this Court in a catena of cases. In view
of the same, we are of the considered view that the market
value of the land covered in MFA No. 3796 of 2005 and Cross
Objection No. 213 of 20.05 has to be applied to the land of the F
appellants in the present case for the reason that in both the
notifications as the required land has been put to use for the
industrial development by the KIADB, and the lands have been
allotted to the Company for the purpose of extracting sand stone
from the lands which is used as raw material for manufacture G
of cement and for providing infrastructure of the Company.
However, having regard to. the facts and circumstances of the
present case, considering the fact that acquisition of the land
was made in the year 1981, it would be just and proper to fix H
550 SUPREME COURT REPORTS [2015] 9 S.C.R.
A the compensation as per the above referred calculation at
Rs.1,92,000/- per acre, with all statutory benefits such as
solatium at 30% as provided under Section 23 (2) and
statutorily payable interest under Sections 23(1-A) and 28 of
the L.A. Act, from the date of taking possession of the land till
B the date of payment. The appellants are also entitled to costs
throughout as provided under Section 27 of the L.A. Act. The
Respondents are directed to pay the compensation to the
appellants-landowners as directed above, within eight weeks
from the date of the receipt of the copy of this judgment and
C award after proper computation in the above terms.
(I} Accordingly, the appeals arising out of SLP (C)
Nos.31624-31625 of2014 for setting aside the
judgment and order of remand passed by the
D High Court in Writ Petition No. 100860 of 2013 ·
(filed by the Company) and the Review Petition
No. 2537 of 2013 (filed by KIADB) are allowed
and set aside the same by allowing these ap-
peals. .
E
(II) The appeals arising out of SLP (C} Nos.3482-
3484 of 2015 filed by the KIADB for setting aside
the observations and findings recorded in the
judgment and order of remand passed by the
F High Court at the instance of KIADB and the
Company are dismissed as it is unnecessary in
the light of the setting aside of the impugned
judgment and order of remand to the Reference
Court by this Court.
G
(Ill) The appeal arising out of SLP (C) No. 19819 of
2013 filed by the landowners for enhancement
of compensation in respect of their acquired land
is allowed as clearly mentioned in the
H
.
PEERAPPA HANMANTHA HARi JAN (D) BY LRS. v. STATE 55 ~
OF KARNATAKA[V. GOPALAGOWDA, J.]
penultimate paragraph of this judgment i.e. en- A
hancement of the compensation amount from
Rs.1,37,000/-to 1,92,000/- per acre along with
solatium at the rate of 30% under Section 23
(2)and statutorily payable interest under Sections
23 (1-A), 28 of the LA Act upon the compensa- B
tion awarded in this appeal. The appellants are
also entitled to the costs of the proceedings
throughout as provided under Section 27 of L.A.
Act. The memo of costs may be filed within three
weeks to prepare the decree. c
I.A. No. 2 for impleadment of Ultra Tech Cement Ltd. is
dismissed as not main~ainable, however, they have been heard
in the matter.
D
Kalpana K. Tripathy Appeals disposed of.
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