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Sumeshchandra Kailashchandra and Co. and ors. Vs. State of Maharashtra and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil;Property
CourtMumbai High Court
Decided On
Case NumberFirst Appeal No. 524 of 1975
Judge
Reported in1986(1)BomCR103
ActsLand Acquisition Act, 1894 - Sections 18 and 30
AppellantSumeshchandra Kailashchandra and Co. and ors.
RespondentState of Maharashtra and anr.
Appellant AdvocateM.S. Sanghvi, ;S.N. Loya and ;S.C. Bora, Advs.
Respondent AdvocateB.B. Jadhav, A.G.P.
DispositionAppeal partly allowed
Excerpt:
(i) property - compensation - sections 18 and 30 of land acquisition act, 1894 - civil judge reduced amount of compensation which was offered by land acquisition officer (lao) to appellant and ordered same to be refunded - whether decision of civil judge tenable - pursuant to section 18 government could not reduce amount which was offered by lao - decision of civil judge was not tenable. (ii) reference - sections 18 and 30 of land acquisition act, 1894 - whether consent decree passed by land acquisition officer for enhancement of compensation for land under section 30 was valid - consent decree to enhance compensation was not valid without making reference under section 18 for same. - indian evidence act, 1872 section 24: [v.s. sirpurkar & deepak verma,jj] dying declaration -..........the appellant is a firm and had preferred a claim by an application made under section 18 of the land acquisition act of 1894, which was referred to the civil court by the land acquisition officer. by the aforesaid decree, the civil court not only dismissed the claim of the appellant but also passed a decree against the appellant though the appellant was in the character of a plaintiff before it. the latter part of the decree is wholly wrong and will have to be set aside for reasons which we proceed to give in this judgment. but, we must now narrate the facts first. they are unusual facts.2. land survey no. 11 measuring 33 acres and 3 gunthas located at jangamwadi, a village on the periphery of the municipal town of nanded, originally belonged to one kadar ali kasam ali. from what has.....
Judgment:

R.A. Jahagirdar, J.

1. This is an appeal from the decree passed by the learned Civil Judge (Senior Division), Nanded in Land Acquisition Reference No. 42 of 1971. The Appellant is a firm and had preferred a claim by an application made under section 18 of the Land Acquisition Act of 1894, which was referred to the Civil Court by the Land Acquisition Officer. By the aforesaid decree, the Civil Court not only dismissed the claim of the appellant but also passed a decree against the appellant though the appellant was in the character of a plaintiff before it. The latter part of the decree is wholly wrong and will have to be set aside for reasons which we proceed to give in this judgment. But, we must now narrate the facts first. They are unusual facts.

2. Land Survey No. 11 measuring 33 acres and 3 gunthas located at Jangamwadi, a village on the periphery of the Municipal town of Nanded, originally belonged to one Kadar Ali Kasam Ali. From what has been stated in the record of this case, it is seen that the said Kadar Ali Kasam Ali died several years ago leaving behind him three sons. These three sons represented themselves to be the owners of the land and as such executed an agreement of sale on 25th of March, 1964 in favour of the appellant. The total consideration of the land was Rs. 35,000 of which Rs. 2,000 were paid as earnest money. The agreement stipulated that the balance of the amount was to be paid at the time of the sale deed. Before the time for the execution of the sale deed arrival, certain developments took place.

3. On the date of the agreement of sale itself, the land was the subject-matter of a notification issued under section 3 of the Hyderabad Land Acquisition Act. However, that notification was withdrawn on 5th of August, 1965. Subsequently, on 2nd of September, 1965 a notification under section 4 of the Land Acquisition Act, 1894, was issued declaring the intention of the Government to acquire land Survey No. 11 along with several other lands for the public purpose of an agricultural school. The efficacy of notification issued under section 3 of the Hyderabad Land Acquisition Act had, therefore, been exhausted. Proceedings pursuant to the notification under section 4 of the Land Acquisition Act were taken up and in due course the notification under section 6 was also issued. In the claim proceedings the appellants asked for a sum of Rs. 14,40,747 as compensation for itself plus interest and solatium on the same. The three brothers who had agreed to sell the land to the appellant put forth a claim before the Land Acquisition Officer for a sum of Rs. 35,000, which was, according to them, the market value of the land. The Land Acquisition Officer by this award dated 10th of August, 1970 fixed the total value of the land at Rs. 1,24,687 of which Rs. 35,000 was held to the payable to the vendors, while the sum of Rs. 87,724 was held to be payable to the appellant. There was between the vendors and the appellant a dispute about the apportionment of compensation.

4. On 15th of September, 1970 the appellant made an application under section 18 of the Land Acquisition Officer requiring him to refer its claim for enhancement of compensation to the Civil Court. By a letter dated 11th of November, 1971 the Land Acquisition Officer made the reference to the District Court and that is Land Acquisition Reference No. 42 of 1971 leading to the present proceedings.

5. In the application made for reference under section 18, which application was treated as a statement of the claim before the Civil Court, the appellant contended that the market value of the land fixed by the Land Acquisition Officer was inadequate. The appellant repeated the claim which it had made before the Land Acquisition Officer. The vendors themselves did not ask for a reference under section 18 of the Act. However, the appellant in paragraph 13 of the statement of claim pleaded that the three brothers by their application to the Land Acquisition Officer had made clear to the latter that they were entitled to Rs. 35,000 in all as the price of the land. On the basis of this, the appellant contended that apart from Rs. 35,000, whatever else becomes payable by way of enhanced compensation should be made payable to the appellant. In the statement of claim, the appellant did not, as indeed it could not, make any reference to an agreement alleged to have taken place later with the vendors and all other persons claiming title or interest in the land that they had agreed that the appellant alone is entitled to the enhance compensation.

6. It has already been mentioned above that a dispute had arisen before the Land Acquisition Officer himself about the apportionment of compensation which had been fixed by him. He, therefore, made a reference under section 30 of the Land Acquisition Act to the District Court to resolve that dispute. That reference is Land Acquisition Reference No. 4 of 1971. During the proceedings pursuance to Land Acquisition Reference No. 4 of 1971, the appellant entered into several compromises on different dates with the original vendors and some others who appeared to claim compensation from time to time and went on paying various amounts to them. On 13th of February, 1974, the Civil Court in proceedings under section 30 of the Act passed what has been called a consent decree which is at Exh. No. 75, without deciding anything regarding the issue referred to it. The decree shows that it was passed as per the terms of the compromises entered into between the parties from time to time. The sum and substance of the compromises on the basis of which the Civil Court proceeded to pass the decree under section 30 of the Land Acquisition Act was that the owners of the land and others who had put forth their claim agreed to accept the various amounts offered to them by the appellant and in return agreed that the appellant should take whether enhanced compensation that may be awarded in Land Acquisition Reference No. 42 of 1971, that is, the reference under section 18 of the Act. In the statement of claim in Land Acquisition Reference No. 42 of 1971, for obvious reasons, no reference to these compromises could be made. This is because the application for reference under section 18 of the Act which was treated as the statement of claim had been made on 15th of September, 1970, which was, in fact, the last date on which such an application could be made. Neither the reference under section 30 of the Act nor the compromises entered into in proceedings under section 30 of the Act could have taken place before the application for reference under section 18 was made. It is thus obvious that on the date on which reference under section 18 was made, the various persons apart from the appellant who appeared in proceedings under section 30 of the Act had no right to enhanced compensation. More would be said on this aspect of the question later in this judgment.

7. The learned trial Judge as many as nine issues and on the evidence led before him he came to the conclusion that the appellant was not entitled to any compensation in respect of the acquired land. According to the learned trial Judge, the appellant was not entitled to even the amount which had been offered to the appellant by the Land Acquisition Officer. He came to this conclusion by holding that the agreement of sale pursuant to which the appellant had acquired interest of an intending purchaser was itself void, because several other persons apart from the three vendors who were parties to that agreement had right, title and interest in the land and they had not joined the vendors in the execution of the agreement of sale. The learned trial Judge held that if that agreement of sale was valid, then the appellant could be treated as one having interest in the compensation and would, therefore, be entitled to ask for a reference under section 18 of the Act. The entire discussion in the judgment revolved on the question whether the appellant had acquired interest in the land. Since the agreement of sale was held to be void by the learned trial Judge, which finding was given on Issue No. 1, the learned trial Judge proceeded to hold that the claim of the appellant was wholly untenable.

8. In a rambling judgment which is, to a great extent, vitiated by conjectures and surmises, the learned trial Judge condemned the appellant's partner one Sumeshchandra who was in charge of this litigation as a cunning person. He also has made several observations in the judgment raising suspicion even about the persons in the Collector's office being hand in glove with the said Sumeshchandra enabling him to obtain enhanced compensation. Underlying the reasoning contained in the judgment is the finding of the learned trial Judge that Sumeshchandra was fully aware of the intended acquisition and with the object of making quick money he had entered into agreement of sale. Mr. Sanghvi, the learned Advocate appearing for the appellant before us, has justifiably made a grievance about the intemperate language used by the learned trial Judge and the findings given by him without there being any evidence in support of the same. We have gone through the judgment of the learned trial Judge carefully. Though it is not possible to say that everything that has been said in the judgment was irrelevant to the determination of the questions before him, the learned trial Judge has so inextricably mixed up irrelevant material with the relevant material that one would require great patience to separate that two and to arrive at the appropriate conclusions. Since, however, we are hearing an appeal, the entire case is before us and we are disposing of this appeal without taking into account the remarks made by the learned trial Judge about the conduct of the appellants and its partner.

9. We have already chronologically set out the facts in the earlier part of the judgment. The following facts can be taken to be admitted or established from the evidence on record :

(1) Three brothers claiming to be the full owners of the land agreed to sell the same for Rs. 35,000 to the appellant and pursuant to that agreement they accepted a sum of Rs. 2,000 as earnest money;

(2) At the time of this agreement, the land was the subject-matter of intended acquisition under section 3 of the Hyderabad Land Acquisition Act, but after the agreement the notification was withdrawn and the land became free from the clog of land acquisition proceedings;

(3) Thereafter, the notification under section 4 of the Land Acquisition Act of 1894 was issued. Therefore, it could be said that on the date of the agreement of sale, the land to be acquired was not the subject-matter of any notification proceedings;

(4) A certain amount was awarded as the price of the land and major portion of the same was directed to be given to the appellant. Some amount of the compensation so awarded by the Land Acquisition Officer remained in dispute among the different claimants;

(5) The appellant filed an application on 15th of September, 1970 under section 18 of the Land Acquisition Act leading to Land Acquisition Reference No. 42 of 1971. No other person apart from the appellant asked for a reference under section 18 of the Act. They were, therefore, content with the amount of compensation payable to them. Later, the Land Acquisition Officer referred the dispute in respect of the apportionment of compensation awarded by him among the different claimants to the Civil Court under section 30 of the Act;

(6) A decree was passed in proceedings under section 30 of the Act by the Civil Court incorporating various compromises which the appellant had entered into with different claimants. The right to take the entire enhanced compensation was assigned by the different claimants in favour of the appellant. The decree itself has not been registered.

10. Against this background and on the arguments which had been advanced before us, the following points, in our opinion, emerge for determination by us:

(1) Is the appellant a person interested in compensation to ask for a reference under section 18 of the Land Acquisition Act?

(2) If it is, what is the amount of compensation it is entitled to ?

(3) Can the Court order the refund of compensation offered by the Land Acquisition Officer on the ground that the appellant was not entitled to any compensation from the Land Acquisition Officer ?

(4) Is the appellant entitled enhanced compensation, if awarded, on the basis of the consent decree passed in proceedings under section 30 of the Land Acquisition Act?

11. The learned trial Judge agreed that an intending purchaser under an agreement of sale could be said to be a person interested in compensation and, therefore, he could maintain a reference under section 18 of the Act. However, he held that the acquired land belonged to more persons than the ones who had joined in the agreement of sale. Therefore, the agreement of sale was void. On the basis of the finding which he thus gave, the learned trial Judge held that the appellant had not acquired the interest of an intending purchaser in a valid way. Therefore, he could not be regarded as a person interested in compensation.

12. It is not necessary for us to examine the correctness or otherwise of the finding of the learned trial Judge on the question of the validity of the agreement of sale. Indeed, no arguments in facts were advanced before us challenging the said finding, because, even looked from another point of view, the appellant could be regarded as a person interested in the compensation. The Land Acquisition Officer had recognised the right of the appellant to part, at least, of the compensation awarded on the basis of the market price fixed by him. Even if the agreement is void, the fact that in the land acquisition proceedings certain amount was directed to be given to the appellant necessarily makes him a person interested in the compensation. This fact gives him a locus to make an application under section 18 of the Act. In this view of the matter, the necessity of examining the finding on the validity of the agreement does not arise at all.

13. On the question as to how much amount of compensation could be legitimately given to the appellant who was an intending purchaser under an agreement of sale, two possibilities arise. If the agreement of sale was valid, the intending purchaser can legitimately claim the entire amount paid by him under the agreement. The agreement itself does not pass the title of the land to the intending purchaser. The only right that an intending purchaser under an agreement of sale has, is to ask for the specific performance of the agreement. That stage did not arise in the present case, because, in the meantime, the land became the subject-matter of acquisition proceedings. The appellant had paid only a sum of Rs. 2,000 as earnest money. In the normal course, therefore, it could be given compensation equivalent to that amount, because it is only that amount which it has lost as a result of the acquisition.

14. However, in the present case the Land Acquisition Officer has awarded a sum over Rs. 85,000 to the appellant. This is an offer made by the Land Acquisition Officer to the appellant for whatever interest it had in the land. This amount cannot be revised downwards in land acquisition reference under section 18 of the Act. The Government could not under law reduce the amount which was offered in land acquisition proceedings. Therefore, even in proceedings pursuant to the reference made under section 18 of the Act, the appellant would be entitled to at least that amount which had been offered to it by the Land Acquisition Officer. Even if the Court comes to the conclusion that the claimant before it has no tenable right to compensation on some ground or the other, the Court cannot say that the amount awarded by the Land Acquisition Officer was illegitimate and illegal. Taking that view, the Court cannot also order the refund of the amount which has been offered by the Land Acquisition Officer and taken by the claimants, though under protest. The part of the decree of the Court below directing the refund of Rs. 85,724/- is wholly wrong and will have to be set aside. This is our finding on Point No. 2 which also answers Point No. 3, which we have formulated above.

15. The point which has been persistently pressed before us is naturally Point No. 4. This relates to the question whether the appellant is, on the facts and circumstances of this case, entitled to the entire enhanced compensation, if awarded, in proceedings under section 18 of the Act. The whole claim of the appellant is based upon the alleged acquisition of a right by it to the entire enhanced compensation under the various compromises which it entered into with different persons in proceedings under section 30 of the Act. Those compromises as already mentioned above, have been incorporated in the consent decree at Exh. No. 75. The examination of the claim of the appellant in this regard must begin with an analysis of section 30 of the Land Acquisition Act, which is in the following terms :

'30. Dispute as of apportionment.

When the amount of compensation has been settled under section 11 if any dispute to arises as to the apportionment of the same or any part thereof, or as to the persons to whom the same or any part thereof is payable, the Collector may refer such dispute to the decision of the Court.'

It is clear from the aforesaid provision that the reference made under section 30 is in respect of a dispute arising about the apportionment of the compensation which has already been settled under section 11 of the Act. That is clear language of section 30 when it says 'when the amount of compensation has been settled under section 11............'. The dispute envisaged under section 30 is a dispute only about the apportionment of the compensation settled under section 11. It cannot be a dispute about the apportionment of compensation which is to be decided in proceedings under section 18 of the Act. On the date on which the consent decree was passed, the different persons who purportedly renounced their right to receive any part of the enhanced compensation had no right at all in respect of the enhanced compensation. They had no right because none of them had made an application under section 18 of the Act complaining about the inadequacy of the compensation awarded by the Land Acquisition Officer. If they had asked for a reference under section 18 of the Act and had in pursuance of the reference appeared before the Court, the question of enhanced compensation as well as apportionment of the same would have been decided by the Court. Section 16 of the Act envisages an enquiry about not only the amount of compensation but also about the persons to whom it is payable or the apportionment of the compensation among the persons interested. If the persons who purportedly renounced their right to enhanced compensation had come before the Civil Court through the intervention of section 18 of the Act, they could have entered into a compromise and adjusted the proportion of the compensation which would be paid amongst themselves and the appellant. They had not done so. Therefore, we do not see how they could convey or assign anything to the appellant because they did not possess that thing which they purportedly assigned.

16. Mr. Sanghvi, however, insists that it is open to the persons who would otherwise be entitled to enhanced compensation to renounce their right in favour of a third party which has been done in the instant case and the said third party on the basis of the rights so acquired can put forth claim in respect of the enhanced compensation. We are reluctant to accept this argument. The simple reason is, the so-called assignment or the agreements renouncing the right to enhanced compensation were in respect of matters which were non-existent. The other persons in law could not have given something which they did not possess.

17. Apart from this, a simple agreement to take enhanced compensation if it is given in proceedings under section 18 of the Act would not invest a person with the character of a person interested in compensation. This is so because the enhanced compensation is to be given only to persons who have obtained a reference under section 18 of the Land Acquisition Act and have appeared before the Civil Court. A view which would invest a person with a right under a simple agreement to take enhanced compensation in place of the persons who would otherwise be eligible for the same in proceedings under section 18 of the Act is, apart from being legally untenable, a dangerous view. Such a view would lead to trafficking in litigation in acquisition proceedings and could be safely regarded as one opposed to public policy. Any person without having any pretence of right to the acquired land can, if such a view is upheld, enter into agreements with the owners or others interested in the land and displacing them proceed to obtain reference under section 18 of the Act. Our this view is not based upon the English doctrine of Champertuous agreement. It is based upon interpretation of the provisions of the Act and in particular of sections 18 and 30 thereof. A person having interest in compensation can ask for enhanced compensation under section 18. If the market price is fixed at a higher level, that person can get part of the enhanced compensation only in proportion to his interest. It is conceivable that others who are also interested in a share in the enhanced compensation are before the Court having asked for a reference under section 18. In that case all of them may ask for the enhanced compensation in agreed proportions. But this is not the case before us. The others did not even ask for reference under section 18 of the Act complaining that the market price fixed for the land by the Land Acquisition Officer was inadequate or that they were entitled to enhanced compensation. Legally, therefore, the appellant in these proceedings under section 18 of the Land Acquisition Act where it alone is joined could not ask for enhanced compensation which would otherwise be payable to those interested in the land. Acting upon an agreement merely to obtain enhanced compensation is also, in our opinion, opposed to public policy and has a potentiality of great public mischief. Though Champertuous agreements are not totally alien in India, a Court may legitimately refuse to uphold a right on a type of the agreement pleaded before us on the ground that it is iniquitous to those persons.

18. Mr. Sanghvi relied upon a judgment in Secretary of State v. Naresh Chandra Bose, A.I.R. 1926 Cal. 1000. This judgment undoubtedly supports the contention of Mr. Sanghvi to a great extent. From what has been mentioned in the judgment, it can be seen that the Secretary of State had contended, among other things, that the whole additional amounts allowed should not have been given to the respondent, because part of the enhanced value would belong to the tenants who had not appealed. We presume that when it is mentioned that the tenants had not appealed, they had not appealed against the compensation awarded by the Land Acquisition Officer. Dealing with that contention, the Calcutta High Court held as follows :---

'...The learned Special Judge disputed the apportionment made in favour of the tenants and apportionment cases were instituted with the result that the tenants came to a settlement with the landlords accepting definite amounts of the compensation moneys. It accordingly seems to me that the tenants have no further interest and that the landlord if the enhancement stands is entitled to receive the compensation money in accordance with the decision of the Special Land Acquisition Judge....................'

For reasons which we have already mentioned above, we are unable to agree with this view.

19. Mr. Sanghvi has also advanced an argument on the basis of the transfer of actionable claim. We do not see how this argument can be accepted, because if there was an actionable claim in the form of a right to obtain a reference under section 18 of the Act, that right has not been assigned to the appellant. The statement of claim does not speak of such assignment at all for the obvious reason that the so-called assignments under the compromises took place long after the time for obtaining a reference under section 18 was over.

20. We may now, therefore, conclude by saying that (1) the appellant was a person interested in compensation to maintain a reference under section 18 of the Act by virtue of the fact that his claim in respect of compensation had been recognised by the Land Acquisition Officer; (2) that under a valid agreement of sale the intending purchaser is entitled to the amount paid by him under that agreement; (3) that on facts of this case the appellant is entitled to retain the amount of compensation awarded to it by the Land Acquisition Officer and the same could not have been ordered to be refunded by the Civil Court in a reference made at its instance; (4) that the compromise arrived at in proceedings under section 30 of the Land Acquisition Act and the consent decree passed upon the same were wholly outside the scope of section 30 of the Act; (5) that under those compromises and under that decree the appellant acquired no right because no right was in existence which could be transferred to it; (6) that the other persons having not preferred a claim under section 18 of the Act had not acquired a right to receive enhanced compensation and, therefore, that right also could not have been transferred as an actionable claim; and (7) that a simple agreement between the persons interested in the land or in compensation and another giving a right to the latter to get the enhanced compensation does not confer upon the purported transferees the right to receive enhanced compensation under section 18 of the Act and, that in any case, a view which upholds such a right has a potentiality for great public mischief and can be safely said to be opposed to public policy.

21. If, however, we were required to fix the market price of the land in this appeal, we would have fixed it at Re. 0.50 P. per square foot following the decision of this Court in Hariram Lalman Gawali v. The State of Maharashtra and another, First Appeal No. 835 of 1974 decided by Khandekar, J. (With Kanade, J.) on 13th of July, 1983. That was an appeal from the decree passed by the Civil Court in a reference made in aspect of land which was simultaneously or contemporaneously acquired along with the land involved in this appeal. All these lands are in the vicinity of each other and are more or less similar in nature. For example, compensation for Survey No. 16 was fixed by the Division Bench at Re. 0.50 P. per square foot.

22. In the result, we proceed to pass the following order.

The appeal is partly allowed. The decree passed by the learned Civil Judge (Junior Division), Nanded, in Land Acquisition Reference No. 42 of 1971 directing the Collector for recovering Rs. 85,724/- from the appellant (claimant before him) is set aside. However, the order rejecting the reference with costs is maintained. In this appeal, the appellant shall pay to the respondents the costs on the claim disallowed.


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